Blog - Wednesday, December 15, 2010 14:39 - 22 Comments

Don’t protect Australia’s mobile telcos, Mr Turnbull

blog I’m not surprised, but I am somewhat disappointed, by Shadow Communications Minister Malcolm Turnbull’s implication in a blog post today that Australia’s mobile telcos can’t afford the money the Federal Government is (admittedly) attempting to gouge them for in the upcoming wireless spectrum auction. Writes Turnbull:

“… an article in the AFR, placed there no doubt by Senator Conroy’s own department … indicates that the Government is working hard to screw the very last cent out of the wireless carriers for the renewal of the spectrum licences they are currently using to deliver their services. There is a legitimate debate about how the renewal fees should be calculated and concern expressed by the industry that if the prices are set too high it will inhibit carriers in making the investments to deliver new wireless broadband services.”

Frankly, I think Turnbull is overlooking here the fact that Australia’s mobile telcos — Telstra, Optus and VHA are currently pulling fat buckets of cash out of the nation’s telecommunications sector and have been for some time. A quick look at Optus’ latest quarterly results shows the telco made A$2.2 billion in revenue in a three month period, with earnings before interest, taxation, depreciation, amortisation — EBITDA, a measure of a company’s operating cash flow — being A$556 million.

The overwhelming majority of that revenue — A$1.5 billion — came from Optus’ mobile division; and it was up 9 percent year on year. And if you look at SingTel’s underlying profit, the picture gets even starker; the company made S$891 million in net profit in the quarter, from a total of S$4.4 billion in revenues. The situation at Telstra is even better; and certainly VHA has similar deep pockets courtesy of its global Vodafone relationship.

In short, these are not small companies we are talking about; they are not without significant resources, and they do not need the protection of the Federal Shadow Communications Minister or the Government. If anything, both Optus and VHA should be criticised by politicians for a continued level of underinvestment in their mobile networks which has led over the past few weeks to a series of embarassing outages and ongoing poor performance.

Let’s get real about this: Australia’s mobile telcos can take care of themselves.

Image credit: Office of Malcolm Turnbull