2010 Australia - Telco Company Profiles - Telstra and Optus

Publication Overview

This annual publication provides the reader with an overview of the major telecommunications providers. The publication provides substantial analyses of the market in 2010, revenue, revenue growth, statistics and forecasts.

Topics covered include:

• Industry revenue overviews, revenue growth statistics and analysis for the telecommunications market between 2000 and 2010 by major telecommunications provider
• Telstra Corporation – company overview, operating statistics and financial statistics
• Australian National Broadband Network – Telstra
• Optus – company overview, operating statistics, financial statistics and analysis
• Optus – the network

Researcher:- Paul Budde
Current publication date:- October 2010 (16th Edition)
Next publication date:- October 2011

Executive Summary

Telstra and Optus battle moves to the NBN

Industry revenue overview

BuddeComm estimates that the overall telecoms services revenue exceeded $41 billion in 2010, reflecting the mildness of the downturn in Australia compared with other countries. However growth is likely to remain very subdued in 2011 and 2012. This is attributable to the decline in 2009/10 in key Telstra segments such as its fixed line business.

While Telstra has successfully defended its market share in the past the carrier no longer expects this to continue. In particular it reported an accelerating decline in its fixed line business. As a result of this, in June 2010 its share of the total market was just over 60% and this is expected to decline further in 2011 and 2012.

Optus’s share of service revenues continues to languish at between 21% and 22%. However Telstra’s inability to sustain its growth suggests that even with subdued growth Optus’s share could surpass 23% in 2011 and 2012. Although the Vodafone and Hutchison merger created a significant competitor to Optus the full potential of the VHA business has not yet been realised in its share of total industry revenue.

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, and mobile and Internet services. This report gives an overview of Telstra’s main areas of operation, strategic business units, local and international subsidiaries, and a brief financial result summary, as well as key operating statistics in the areas of network and operations data, billable traffic data, and mobile, broadband and pay TV subscribers up to mid-2010. An overview of Telstra’s Next Generation Network and ADSL network is also provided.

The report also provides financial results for Telstra for FY2008-FY2010, together with an overview of the key highlights during each period. Detailed financial statistics and comparisons are given for each of Telstra’s service areas including mobile, Internet and Internet protocol solutions, public switched telephone network, and international operations.

Soon after the government announced the National Broadband Network in April 2009, Telstra finally accepted that change was inevitable and it acted swiftly. The company announced its support for the NBN and its willingness to work together with the government. The company also put its weight behind the trans-sector concept, which will be the avenue to generating new revenue. Negotiations were launched, with the government investigating how Telstra could best participate. These negotiations have been complex and tough, and they are continuing. An initial agreement to negotiate further was signed in December 2009, followed by the signing of a Heads-of-Agreement in June 2010.

Sensis

Sensis is Telstra Corporation’s advertising subsidiary and Australia’s leading information resource. Since its inception in 1991 the company’s core business has been advertising through its White and Yellow Pages print directories, which are distributed to 97% of Australian metropolitan households. Other divisions include the Sensis search portfolio, including sensis.com.au, Sensis 1234 and Sensis Mobile; CitySearch, an online city guide; and Whereis products and services which deliver location and navigation services.

Sensis is also a partner in some of China’s most popular websites including real estate and home furnishings website, SouFun.com (sold); auto websites Autohome.com and Che168.com; and digital devices websites IT168.com and PCPop.com.cn.

Optus

Optus offers 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. This report provides an overview of the main divisions within Optus, including consumer, business, small and medium business, and wholesale and satellite. A breakdown of key operating statistics is provided for Internet, broadband, voice, and pay TV services, along with highlights of the company’s financial results.

Financial summaries for Optus are provided for the years 2009 and 2010. For the latest financial year, results include revenue and EBITDA for each main operating division of mobile, business, wholesale, consumer and SMB fixed; revenue breakdowns for each service division of mobile, voice, Internet, pay TV, data and IP, satellite, ICT and managed services; plus a detailed breakdown of revenue within each of these service divisions. An analysis of Optus’s 2010 financial results and a market analysis for 2010 are also included.

The Optus customer access network is comprised of a fibre and an HFC network.

• The fibre network serves major business customers via Optus-laid fibre in all capital cities, major suburban business districts and major regional centres, and also provides transmission capacity between the Optus network facilities (exchanges and fibre access nodes), and to many of Optus’s DSLAM sites.
• The HFC network is a wholly Optus-owned network used for telephony, high-speed data and pay television to residential, non-business customers.

The company has 3G services in Sydney, Canberra, Melbourne, Brisbane, Adelaide and Perth and is expanding to many regional areas. In 2010 Optus began trialling LTE technology in Australia in a bid to establish a regionally compatible LTE network to enhance and enable mobile broadband services.

The company is also encouraging businesses to use cloud services over the IP network, which were launched after successful trials during early to mid-2010.

Market highlights:

• Telstra still dominates the overall Australian telecoms market with more than a 60% market share of overall revenues in 2009/2010.
• Telstra’s annual results for 2010 showed declining revenue in most segments, and this is expected to fall further during 2011 and perhaps into 2012.
• Telstra and NBN Co entered into a Financial Heads of Agreement on the rollout of the NBN.
• There were a number of changes to the Sensis group which impacted the growth rates during both FY2009 and FY2010.
• Optus has continued the rollout of its 3G dual band mobile network, with voice coverage now reaching over 97% of the Australian population.
• Optus mobile continued to grow, with service revenue increasing 13% on strong demand for smartphones, mobile broadband, and popularity of cap plans.
• In 2010 Optus began trialling LTE technology in Australia

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

Table of Contents

• 1. Industry Revenue Overview
  • 1.1 Total telecommunications services market
    • 1.1.1 Revenue, revenue growth and market share by major provider
  • 1.2 Telstra
    • 1.2.1 Financial results by sector
    • 1.2.2 Analysis of financial results
    • 1.2.3 Sensis under growing pressure from the online sector
  • 1.3 Optus
    • 1.3.1 Overview
    • 1.3.2 Financial results
  • 1.4 Vodafone Hutchison Australia Pty Ltd (VHA)
    • 1.4.1 Background
    • 1.4.2 Hutchison Telecommunications (Australia) Limited (HTA) - financial highlights as at 30 June 2010
    • 1.4.3 HTA - operating highlights as at 30 June 2010
  • 1.5 Second-tier market
• 2. Telstra
  • 2.1 Company overview and operating statistics
    • 2.1.1 Synopsis
    • 2.1.2 Company overview
    • 2.1.3 Business systems
    • 2.1.4 Networks
    • 2.1.5 Analysis and comments on the 2010 results
    • 2.1.6 Telstra in transition
    • 2.1.7 Controlled and associated entities
  • 2.2 Financial statistics
    • 2.2.1 Group results summary
    • 2.2.2 Results for FY2010
    • 2.2.3 Public switched telephone network (PSTN) revenue
    • 2.2.4 Mobile revenue
    • 2.2.5 Internet revenue
    • 2.2.6 IP and data access
    • 2.2.7 International operations
    • 2.2.8 Capital expenditure
  • 2.3 Telstra and the NBN
    • 2.3.1 Telstra and the National Broadband Network (NBN) after the election
    • 2.3.2 Telstra and government agree on NBN future
    • 2.3.3 The new Telstra?
  • 2.4 Company overview Sensis
    • 2.4.1 Company information
    • 2.4.2 Sensis distribution channels
    • 2.4.3 Chinese operations
    • 2.4.4 Financial results
    • 2.4.5 Latest developments
    • 2.4.6 Company history
• 3. Optus
  • 3.1 Overview and operating statistics
    • 3.1.1 Introduction
    • 3.1.2 Network overview
    • 3.1.3 Optus continues its strong performance
    • 3.1.4 Financial highlights – 2010
    • 3.1.5 Consumer and multimedia
    • 3.1.6 Internet and broadband services
    • 3.1.7 Mobile services
    • 3.1.8 Business and wholesale
  • 3.2 Financial statistics and analysis
    • 3.2.1 Analysis 2010
    • 3.2.2 Financial results
  • 3.3 The network
    • 3.3.1 Infrastructure overview
    • 3.3.2 Consumer customer access network - the hybrid fibre coax (HFC) network
    • 3.3.3 Fixed networks
    • 3.3.4 Core network
    • 3.3.5 Mobile network
    • 3.3.6 Fibre access network
    • 3.3.7 Wireless networks
    • 3.3.8 Business and IT transformation program
    • 3.3.9 Asymmetrical Digital Subscriber Line (ADSL), ADSL2+ Digital Subscriber Line Access Multiplexer (DSLAM) network
    • 3.3.10 Voice over Internet Protocol (VoIP) network
    • 3.3.11 Satellite networks
• 4. Glossary of Abbreviations

• Table 1 – Total telecoms service market share by major provider – 2003 - 2012
• Table 2 – Telstra Group total revenue and annual change – 2000 - 2012
• Table 3 – Telstra Group revenue by service and annual change – 2009 - 2010
• Table 4 – Telstra fixed telephony revenue and annual change – 2009 - 2010
• Table 5 – Telstra PSTN products revenue and annual change – 2009 - 2010
• Table 6 – Telstra mobile revenue and annual change – 2009 - 2010
• Table 7 – Telstra Internet revenue and annual change – 2009 - 2010
• Table 8 – Telstra IP and data access revenue and annual change – 2009 - 2010
• Table 9 – Telstra offshore controlled entities revenue and annual change – 2009 - 2010
• Table 10 – Optus overall operating revenue summary and annual change – 2000 - 2012
• Table 11 – Optus Consumer and SMB fixed revenue by service and annual change – 2008 - 2009
• Table 12 – Headline statistics – Telstra results 2010
• Table 13 – Telstra statistical overview (calls/subscribers/networks) – 2005 - 2010
• Table 14 – Telstra statistical overview (calls/subscribers/networks), annual change – 2005 - 2010
• Table 15 – Telstra Group revenue by segment – 2006 - 2010
• Table 16 – Telstra Group revenue and annual change by segment – 2009 - 2010
• Table 17 – Telstra Group EBIT by segment – 2009 - 2010
• Table 18 – Telstra Group revenue and annual change by service – 2009 - 2010
• Table 19 – Telstra mobile revenue – 2009 - 2010
• Table 20 – Telstra mobile ARPU – 2009 - 2010
• Table 21 – Telstra Internet revenue – 2009 - 2010
• Table 22 – Telstra IP and data access revenue – 2009 - 2010
• Table 23 – Telstra offshore controlled entities revenue – 2009 - 2010
• Table 24 – CSL New World revenue, expenses, EBITDA, EBIT, CAPEX – 2009 - 2010
• Table 25 – TelstraClear revenue, expenses, EBITDA, EBIT, CAPEX – 2009 - 2010
• Table 26 – Telstra Group operating capital expenditure – 2009 - 2010
• Table 27 – Sensis revenue by operating division – 2009 - 2010
• Table 28 – Optus consumer telephony statistics – 2007 - 2010
• Table 29 – Optus mobile key operating statistics – 2007 - 2010
• Table 30 – Optus revenue by major and minor service category – 2009 - 2010
• Table 31 – Optus revenue by major and minor service category – 2008 - 2009

• Chart 1 – Total telecoms service revenue by major provider – 2000 - 2012
• Chart 2 – Telstra – fixed line by sector and mobile voice minutes of use – 2005 - 2010
• Chart 3 – Telstra – fixed-line, mobile and broadband services in operation – 2005 - 2010
• Chart 4 – Telstra Group total revenue – 1994; 1996; 1998; 2000 - 2010
• Chart 5 – Telstra Group sales revenue, EBITDA, EBIT and net profit – 2002 - 2010
• Chart 6 – Telstra Group revenue, EBITDA, EBIT and net profit by annual change – 2003 - 2010
• Chart 7 – Telstra Group revenue by service – 2009 - 2010
• Chart 8 – Telstra PSTN products revenue – 2009 - 2010
• Chart 9 – Telstra mobile prepaid and postpaid revenue – 2008 - 2010
• Chart 10 – Sensis revenue – 1998; 2000 - 2010
• Chart 11 – Sensis financial summary – 2009 - 2010
• Chart 12 – Sensis revenue by operating division – 2006 - 2009
• Chart 13 – Optus overall operating revenue summary – 1994; 1996; 1998; 2000 - 2010
• Chart 14 – Optus operating revenue by operating division – 2006 - 2010
• Chart 15 – Optus operational EBITDA by operating division – 2006 - 2010
• Chart 16 – Optus on-net ARPU – 2007 - 2010
• Chart 17 – Optus consumer Internet statistics – 2007 - 2010
• Chart 18 – Optus total Internet subscribers (broadband and dialup) – 1996; 1998; 2000 - 2010
• Chart 19 – Optus mobile subscribers – 1998 - 2010
• Chart 20 – Optus business and wholesale statistics – 2007 - 2010
• Chart 21 – Optus operating revenue and annual change by operating division – 2009 - 2010
• Chart 22 – Optus capital expenditure by operating division – 2009 - 2010
• Chart 23 – Optus capital expenditure by operating division – 2008 - 2009

• Exhibit 1 – Telstra Corporation Ltd at a glance
• Exhibit 2 – Telstra’s NGN planned implementation time-line
• Exhibit 3 – Telstra-controlled entities (Australia) – 2010
• Exhibit 4 – Telstra-controlled entities (offshore) through Telstra Holdings – 2010
• Exhibit 5 – Jointly controlled and associated companies – 2010
• Exhibit 6 – Sensis Pty Ltd at a glance
• Exhibit 7 – Sensis key products and services
• Exhibit 8 – Sensis Chinese website investments
• Exhibit 9 – Optus key results – first quarter – 2010
• Exhibit 10 – The SingTel Optus network
• Exhibit 11 – HFC network status