Australia - Analysis - Tough times ahead for Optus SingTel

Telecom Investment Research Note

Synopsis

Optus has been doing well during a period in which Telstra took its eyes off retail competition. It also embarked on a far more sophisticated approach to customer acquisition, and its head start in the iPhone market has been one of the best marketing coups in the industry.

But with Telstra becoming far more aggressive, and with the changes that are taking place in the industry around the announcement of the NBN, the company is now facing interesting times.

Optus will need its superior marketing skills to retain its leading position. Sophisticated customer marketing based on new technologies that will assist it to create lifelong customer relationships will be the next battleground in the retail market, and Optus is well-positioned to seize the opportunities that these new technologies offer. It will be assisted by the ongoing growth in smartphones as that will allow it to maximise its relationships with its customers.

Obviously the mobile market remains the company’s key market. However, as its first quarter results showed, ARPU is under pressure either to remain stable or to decline slightly during 2012. At the same time, more investments are needed to stay ahead in the all-important mobile broadband market.

The company has been taking a cautious approach in relation to digital media but it is set to increase its efforts in 2012 as it has launches its version of the FetchTV services within a triple play model. Other IPTV services include a record now TV service for mobiles allowing FTA TV watching and recording.

The company also maintains its leadership role in making sure that correct regulations are in place so that the rest of the industry is not disadvantaged in the transition towards the NBN. With its experience in HFC broadband it is in a good position to embrace the fresh opportunities that this new infrastructure has on offer.

Companies mentioned in this report include:

Companies mentioned in this report include –Telstra, Optus, Vodafone, Hutchison, Google, Apple, Lebara, FetchTV, AUSTAR, FOXTEL.

Hot topics and technologies mentioned in this report include:

Hot topics and technology mentions in this report include – Femtocell, HFC, IPTV, NBN.