Tuesday, September 18, 2007

Optus Is flat but is the outlook better ?

Singtel Optus has forecast flat earnings in spite of growing sales. On 17 September 2007, Optus predicted that sales growth would be between 2.5 per cent and three per cent in the year to 31 March 2008, above the industry average of about two per cent. EBITDA fell by 2.4 per cent to $A1.99 billion in 2006-07 and Optus does not expect to exceed this figure in 2007-08. Margins are declining because of the preference of mobile telephone customers for capped plans.

Is this going to be a longterm problem for optus ? My guess is no. they are building their customer base and although EBITDA fell this is an industry wide problem. the phone industry can be a hard place to make a few dollars but in order to reduce overhead costs you need a large customer base on which to spread it. Longer term optus has a good outlook in my opinion.

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