Optus to focus on fixed-line broadband

Telco sacks 300 staff as it prepares for NBN and a renewed focus on fixed line broadband

a woman

Broadband and mobile phone provider Optus has cut 290 jobs as part a restructure announced last month.

Australia’s second biggest telco, behind Telstra Corporation (ASX: TLS), has now cut almost a thousand employees in the past twelve months, as it prepares to prepare for the rollout of the National Broadband Network (NBN), and focuses on its stagnant fixed-line broadband business.

Optus – which is owned by Singapore Telecommunications (ASX: SGT) has seen flat growth and declining revenues in its fixed-line business. Optus said it was also attempting to improve its brand and customer communication by establishing a new marketing communications group, end third party door-to-door sales to focus on branded channels, and improve the efficiency of IT systems and network functions through regional alignment.

Just last week Singtel, as it’s known, appointed investment banks to look at a potential sale of Optus’ Satellite business, which could be worth up to $2 billion. Optus is the only Australian-based telco to own and operate a fleet of satellites. It is believed that Optus has a relatively young fleet of satellites, with most launched in 201, and which generally last up to 15 years.

The review could lead to an outright sale or even a public listing of Optus Satellite, which offers free-to-air and pay TV, mobile telephony and broadband services to two million Australian customers.

It’s perhaps no wonder that Optus wants to refocus on its fixed-line broadband offerings. Its larger rival Telstra added 200,000 fixed broadband customers in 2012, while up and comers TPG Telecom (ASX: TPM) and iiNet Limited (ASX: IIN) are steadily growing their subscribers either through acquisitions or by focusing on offering cheaper and more comprehensive broadband plans. Optus also faces a new competitor in M2 Telecommunications (ASX: MTU), which has expanded rapidly into retail broadband.

Foolish takeaway

With Telstra’s plan to acquire Adam Internet and roll out a cheaper second brand (much like Qantas and Jetstar) as well as stronger competitors, Optus appears to be making the right moves to protect its turf.

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