Question 1

How significant is the current profit decline for the major Australian carriers?

Accepted Answer

Earnings are under severe contraction, with Telstra reporting a 27.4% drop in 1H19 net profit to A$1.23 billion. Optus faced a steeper decline, with 3Q19 net profit falling 32% to A$172 million as NBN migration and mobile competition intensified.

Question 2

Is the NBN migration still the primary driver of margin erosion?

Accepted Answer

The transition to NBN remains the largest structural headwind, specifically resulting in an estimated A$3 billion annual EBITDA hit for Telstra. Despite this financial pressure, Telstra maintains a dominant 51% market share of NBN connections, representing 2.25 million customers.

Question 3

What is the outlook for mobile revenue and pricing stability?

Accepted Answer

Mobile service revenues are declining as aggressive competition forces ARPUs lower. Optus postpaid ARPU fell 7.3% and its prepaid handset ARPU dropped 9.6%, while Telstra’s prepaid ARPU saw a marginal decline to A$22.54.

Question 4

Where will growth come from in a saturated market?

Accepted Answer

The Australian telco market is forecast to grow at a 2.3% CAGR through 2024, driven by mobile hardware and the 5G rollout. Optus is already challenging fixed-line margins with a A$70 monthly unlimited 5G home broadband product targeting 60 regional suburbs.

Question 5

How advanced is the 5G infrastructure rollout among the leaders?

Accepted Answer

Telstra currently holds the lead in infrastructure with over 200 live 5G sites switched on. Optus is focusing on a rapid commercial launch, aiming to have its 5G fixed wireless service active in 60 suburbs by March 2019.

Telstra and Optus – nbn pain, falling ARPUs and the fight for 5G supremacy

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