Optus rings up an upwardly mobile profit

Optus chief executive Chris Anderson says growth has doubled the industry average

In this story: Positive cable contribution Capital expenditure falling Complex takeover bid RELATED SITES

By CNN's Grant Holloway

SYDNEY, Australia (CNN) -- Australia's number 2 mobile phone company, Cable & Wireless Optus, has lifted its bottom-line full year profit by 60 percent to $220 million (Australian $424 million).

Optus, which is currently under a $9 billion takeover offer from Singapore Telecommunications, struck the result on 21 percent lift in revenues to $731 million from $605 million a year earlier.

Profit before tax and abnormals was $193 million, up 21 percent, and at the higher end of market expectations.

Optus shares were trading as much as 7c higher at $3.49 on the Australian Stock Exchange Thursday following the release of the figures.

Chief executive officer Chris Anderson said the company had achieved compound growth of nearly 20 percent annual for the past four years, compared with an industry average of nearer 10 percent.

Positive cable contribution

The company predicted Thursday that growth for the 2002 financial year would still be double digit, but more likely to be in the low teens.

This year's result was helped by a positive contribution from the Southern Cross cable network joint venture -- the first in three years. Optus expects the cable venture, which runs between New Zealand, Australia and the United States, to pay annual dividends of around $40 million over the next few years.

The bottom line result also reflected strong growth in revenues and profits, carefully managed costs and an increased market share, Anderson said.

Optus now has 3.7 million mobile phone customers -- a jump of more than 1 million from a year ago -- representing 33.3 percent of the Australian market.

Capital expenditure falling

Chief financial officer Norman Gillespie the result had been achieved "on a capital expenditure 24 percent lower than last year", and that spend was likely to fall further now Optus had passed through the "investment phase" of its growth.

This meant the company's funding requirement fell last year to 9 percent, and would fall again in 2002.

Referring to the takeover offer from SingTel, chief executive Anderson said if the bid were successful, Optus would become a "vital part of a powerful regional telecoms player".

SingTel's bid for Optus, launched in late March this year, has not been well received by financial markets who have marked down the share prices of both companies.

Complex takeover bid

Prior to the bid Optus shares were trading as high as (Australian) $4 a share and SingTel was fetching (Singaporean) $2.40, compared with $1.76 in afternoon trading Thursday.

The bid is a complex one, offering three options. These are a scrip-for-scrip deal; a scrip plus cash offer; or a scrip, plus cash plus bond offer.

SingTel on Wednesday issued a statement assuring investors the bid was on track following media reports that key regulatory approvals in Australia and the U.S. were threatening to derail the takeover.

Cable & Wireless Optus
Singapore Telecommunications

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