2008 Australia - Telco Company Profiles - Telstra and Optus

Telstra
Telstra is Australia’s largest telecommunications provider, offering a full range of telecom services throughout Australia including basic access services to most homes and businesses, local and long-distance telephone call services, mobile and Internet services. It remains one of the most, if not the most profitable incumbent telcos in the developed market.

This report includes an overview of Telstra’s main areas of operation as well as key operating and financial statistics and analysis in areas such as mobile, broadband, data, local access and pay TV. It also includes a wide range of market analyses covering topics such as corporate strategies, broadband, mobile, and international issues.

A detailed overview of Telstra’s broadband network, Next G network and NGN are also provided. For more information, see chapter 1.5, page 40.

Sensis, a major subsidiary of Telstra, provides advertising and search solutions through print, online, voice, wireless and satellite navigation networks. For more information, including operating statistics and market analyses, see chapter 1.4, page 30.

SingTel Optus
The 2nd largest telco in Australia, Optus provides a range of communications services including mobile, national and long-distance services, local and international telephony, business network services, Internet and satellite services and subscription TV. Belatedly, Optus has become more active in infrastructure-based developments in the Australian telecoms market.

This report provides an overview of the main divisions within Optus including Consumer and Multimedia, Mobile, Business and Wholesale. A breakdown of key operating and financial statistics is provided for sectors including Internet, broadband, voice services, mobile and pay TV. Financial and marketing analyses cover topics such as corporate strategies, broadband and mobile. For more information, see chapter 2, page 52.

A detailed overview of the Optus network is also included along with overviews of the company’s major subsidiaries including and Virgin Mobile, a consumer focused MVNO, and Uecomm, a high bandwidth data specialist providing dark fibre services and converged solutions such as VoIP. For more information, see chapter 2.2, page 59.

Key highlights:
Telstra

• Overall revenue growth for Telstra was very solid at 4.3%, a rise on the 3.9% delivered in the previous financial year.
• Broadband access revenue growth was 39%, and BuddeComm predicts further strong revenue growth of 32% in the 2009 financial year.
• Telstra’s mobile revenue showed a very impressive 12.7% growth, fuelled by very strong mobile data growth from wireless broadband of 44% to $1.5 billion.
• The changing nature of media is presenting a significant range of new challenges for Sensis, despite its strong recent growth. Social networking sites could offer a factor that Sensis’ options lacked - the ability to personally recommend specific businesses.
• BuddeComm predicts overall revenue growth for Telstra of 3.8% for 2008/9 and 3.6% for 2009/10. These growth rates could however be about 10-20% below this if there is an unfavourable outcome for Telstra regarding the National Broadband Network tender to be finalised by the government.

Telstra Group total revenue and annual change - 2002 - 2010
Year ends Jun Revenue ($ billion) Annual change

• 2002 20.80 -9.2%
• 2003 21.62 3.9%
• 2004 21.28 -1.6%
• 2005 22.44 5.5%
• 2006 23.06 2.8%
• 2007 23.96 3.9%
• 2008 25.00 4.3%
• 2009 (e) 25.95 3.8%
• 2010 (e) 26.89 3.6%

(Source: BuddeComm based on company data)

Optus

• Telstra caught Optus on the back foot in the mobile market. Optus relies for most of its revenue on mobile and with its 3G HSDPA service Telstra has been able to undermine Optus’ position in that market.
• Of particular concern for Optus was the drop in consumer off-net fixed voice products, which voice fell 34%. While the latter decline can be attributed to the cancellation of a reselling contract with Telstra, the overall consumer fixed voice revenue still showed a big decline.
• Over the last eighteen months Optus has taken the lead in the industry. This has further confirmed its position in the market and will also assist it in shaping the future of the market and the industry moving into the next generation of telecoms.

There are good indications that Optus’ parent SingTel is prepared to invest further in Australia once the conditions are right.

Phil Harpur
September 2008

Data in this report is the latest available at the time of preparation and may not be for the current year.

For those needing detailed overviews and statistics as well as objective analysis on all aspects of Telstra and Optus, this report provides essential reading and gives in-depth information on:

• Company overviews and structure;
• Major divisions and subsidiaries;
• Financial and operating statistics;
• Marketing and financial analyses and strategic overviews;
• Network overviews.

In a separate report the following Australian companies are covered: AAPT, Amcom, Austar, Commander, Foxtel, Gotalk, Hutchison, iiNet, Macquarie Telecom, Nextgen Networks, People Telecom, Powertel, Primus, Soul, TransACT, Unwired, and Vodafone.