Boston, MA -- (SBWIRE) -- 03/06/2013 -- BMI View: The Australian telecommunications industry is one of the highest value markets in Asia Pacific and even the world, underpinned by high incomes and strong uptake of higher value services such as broadband and smartphone handsets. However, subscription growth opportunities are severely limited in the years ahead due to the highly saturated nature of the market. Operators are increasingly focused on value generation strategies, although the drop in ARPUs in Q312 demonstrates this has yet to pay off dramatically. However, the market is currently seeing high levels of investment in next generation broadband technologies which we believe will buoy ARPUs through 2013.

Key Data:

- While full data was not available for all the main operators, Optus and Vodafone have released Q312 data. Optus finished Q312 with 9.5mn mobile subscribers, and Vodafone with 3.2mn.
- Optus ARPU remained unchanged on Q212, at AUD43, down 8.5% y-o-y.
- The number of internet subscribers in Australia grew to 12mn. Of these, 11.6mn were broadband connections, of which 4.6mn were DSL, 5.9mn mobile, and 917,000 cable.

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Key Trends And Developments

Telstra and Vodafone Hutchison Australia had yet to release data for Q312 at time of writing. However, results from second-largest operator Optus were disappointing. Optus has reported that its operating revenue for the quarter ended September 2012 fell by 4.2% y-o-y to AUD2.239bn while net profit decreased by 10.0% to AUD164mn. The negative headline growth was attributed to the mandated reduction in mobile termination rates, lower equipment sales and introduction of service credits associated with device repayment plans. Given the mature Australian competitive landscape, we expect Optus' recovery to be a gradual process.

It is difficuslt to strive for mobile subscriber growth in the mature market, and Optus has rightly decided to focus on maximising revenue from its existing subscriber base. This is done through the deployment of LTE services across the country (4G is online in Sydney, Melbourne, Perth and the Hunter Valley region), upgrading the 3G network and bolstering of value-added services (VAS) portfolio such as the acquisition of restaurant review website Eatability. Additionally, Optus has reduced the number of employees from 9,726 in end-December 2011 to 9,069 in end-September 2012, and the operator will continue to streamline its business.

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