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Optus pushes service as new decade dawns

THE country’s second major telecommunications company, Optus, this year marks a decade of operations in Australia.

In those 10 years Optus has grown to control about one-third of the national mobile telephony business and sizeable portions of the fixed-line phone and retail and business Internet markets.

Last year the company was bought by Asia’s sixth largest communications company, Singapore Telecommunications (SingTel), after its (then) 52.3 per cent owner – Britain’s Cable & Wireless – accepted SingTel’s bid for its stake in Optus.

When WA’s proximity to Singapore is considered, it seems logical the new parent company would take a particular interest in Optus’s fortunes in this State.

This is true, according to Optus WA general manager Richard Thorning, who says SingTel’s influence has not been to change Optus’s focus, but to refine and reinforce the company’s efforts to grab a larger share of the business market in particular.

Mr Thorning’s personal brief is to double Optus’s business in WA, a task he believes can be achieved in the next three years.

To do this, the company’s WA operations are not focusing on the retail market but on the business side, which it divides into three sectors – government and significant major corporate accounts, general corporate accounts and the small-to-medium enterprises. The size of government telecommunications revenues makes this the key target for Optus, and the company has been discussing various investment plans with the WA Government.

The first such plan of any significance came last week when Optus confirmed it would be setting up a national account management centre at its West Perth offices for 10,000 small-business customers across Australia.

Optus will invest several million dollars in the employment of 20-30 relationship managers at the centre.

Mr Thorning said the decision to locate the centre in Perth was significant for the company as it was the first time a national function had been placed in Perth.

To date, Optus has based its major operations in Sydney, where the company has its headquarters. But Mr Thorning said a number of factors, including WA’s proximity to Singapore and the efforts of the Minister for State Development Clive Brown to encourage SingTel to invest here, had sufficiently influenced the parent company’s decision.

The other major plan previously mooted is for SingTel to lay an under-sea fibre-optic cable between Singapore and Perth, via Jakarta. Feasibility studies have been undertaken on this project and it is understood the topic is discussed monthly at SingTel head-quarters, but a firm decision on whether to proceed is yet to be made.

Though the cable’s bandwidth capacity has not been publicly disclosed, it would be the biggest link from Asia to Australia and, in Mr Thorning’s opinion, would offer many opportunities for Perth-based businesses to reach further into Asia.

This is really a grand plan, however, and Optus has more practical matters to deal with, not the least of which is that its national growth rates are at historically low levels of about 7 per cent. While Mr Thorning suggested this was superior to the industry standard of about 3 per cent, he said Optus was keen to get back into double-digit growth.

“There are two ways that we can grow our business: we can keep our current market share and

hope the market will grow; and the other way is to take a share from the opposition, which will primarily be Telstra,” Mr Thorning said.

He attributes the fall in growth to a global outbreak of over-optimistic forecasts from communications analysts rather than any direct failing on Optus’s part.

“The forecasters were trending the usage factors for all sorts of products like broadband at home, for example, at much higher levels of growth than actually happened. So I think it’s fair to say (that) right across the world telcos have found that the demand for a product has not met up with the forecast, and that’s put some companies into severe financial issues,” Mr Thorning said.

Optus’s mobile telephony business continues to be the jewel in the company’s crown. It continues to grow at double-digit levels and in 2001 accounted for 41 per cent of the company’s total sales revenues.

Perhaps mindful that there are only so many new users to be introduced to products, Optus is developing its image as a service provider rather than a product seller.

As Mr Thorning noted, the Optus brand is based on the company saying ‘yes’ to customers’ requests rather than ‘no’, though such an approach needs to be backed up in reality.

“As other companies found when they used slogans like ‘Absolutely’, if you don’t actually back up the slogan with reality of service, then that can actually come back on you very negatively,” Mr Thorning said.

“Telcos, I think it’s fair to say, have been known for bare-boned services in the past.

“We’re now certainly getting into the business of providing services, whether it’s content or professional services around a product.

“I think it’s also fair to say we’re still very much at the beginning of making this happen, but it’s certainly the vision for the future in terms of where we want to go.”

SingTel is due to release its fourth quarter results on May 9. The company is currently trading around its lowest levels since listing on the ASX, due to both broad investor concerns about the global telco industry, but also because the Optus acquisition is expected to drag down SingTel’s annual earnings to March 31 by as much as 20 per cent.

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