Question 1

How are major mobile operators maintaining margins as hardware sales decline?

Accepted Answer

Optus maintained a 29.2% consumer EBITDA margin in FY22 by implementing aggressive operational cost reductions to offset a 16.9% collapse in equipment revenue. This strategy allowed the consumer segment to achieve a 2.6% EBITDA growth to $1,933 million despite total mobile revenue falling 3.2%.

Question 2

What is the current market valuation for Australian mobile infrastructure?

Accepted Answer

The market has set a high premium for passive assets, evidenced by TPG Telecom’s sale of 1,237 sites for $950 million. This transaction achieved a significant EV/EBITDA multiple of 32.1x and marks the completion of structural separation for all major Australian mobile network operators.

Question 3

Are telcos successfully finding alternatives to the NBN wholesale model?

Accepted Answer

Fixed Wireless Access (FWA) has emerged as a critical high-margin alternative, with Optus growing FWA revenue by 3.0% to $171 million. This shift allows operators to reclaim value from the NBN, particularly as NBN Co proposes indexing lower-tier wholesale prices to CPI.

Question 4

What are the primary concerns regarding the new NBN pricing proposal?

Accepted Answer

The ACCC and major retailers have flagged that NBN Co’s Special Access Undertaking (SAU) variation may result in excessive returns and prohibitively expensive entry-level pricing. While the proposal removes CVC charges for high-speed tiers, the indexation of lower tiers to CPI remains a major point of industry friction.

Telco Roundup of May 2022

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