Optus may suffer a huge hit to its earnings due to 3G iPhone subsidies, according Optus’s parent company Singapore Telecommunications.
Optus may suffer a huge hit to its earnings due to 3G iPhone subsidies, according Optus’s parent company Singapore Telecommunications.
In a statement to the Singapore Stock Exchange, SingTel says marketing costs for the 3G iPhone may slice approximately $44 million off Optus earnings before interest, tax, depreciation and ammortisation.
SingTel says it also expects its own EBITDA to take a $22.5 million hit as a result of iPhone subsidies and marketing costs.
SingTel says it has sold 170,000 iPhones in the September quarter, and claims this number is higher than other suppliers, and Optus claims it has sold considerably more iPhones than other Australian carriers (although exact numbers have not been released).
However, this big win appears to have come at a cost, as the Optus iPhone start-up package is also considerably more generous than other carriers.
“It is estimated that Optus accounted for the majority share of iPhone 3G activations in Australia during this period,” SingTel says. “[However], higher subsidy costs are associated with iPhone 3G. Consequently, the successful iPhone 3G initiative will have a dilutive impact on earnings and margins in the near term.”
In the June quarter Optus incurred acquisition costs of $155 per subscriber.
But SingTel is confident that its iPhone push will pay dividends and points to data showing average revenue per user for iPhone users was one and a half times higher than its overall post-paid subscriber base.
“Integrated handset devices and smart phones, including the iPhone 3G, are key to driving mobile data revenue growth. Early indications showed that iPhone 3G subscribers delivered an average revenue per user of approximately 1.5 times higher than the overall postpaid base.”
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