Tuesday, 3 February 2009

Optus goes slow on expansion plans – Australia

Optus, the leading telecommunication company in Australia, has put the brakes on part of an AUD 125 million (USD 78.98 million) expansion of its retail network. Virgin Mobile, Optus’ wholly-owned youth mobile unit, recently put on hold plans to open 50 new stores, significantly impacting Optus’ plans to take on Hutchison 3, its competitor. However, the company will continue work on a ‘white label’ network service, which is expected to be launched within a month. Optus will also go ahead with the addition of around 100 company branded “yes” stores to its existing 103 stores. Each store, costing around AUD 500,000 (USD 315,920), will be a joint venture between Optus and the selected partner.

According to Mike Smith, Optus Consumer Head, the company will continue to add “yes” branded stores, a majority of which are owned by franchisees. Optus was recently hit by the fall of Strathfield Group, one of its largest third-party retailers with 72 outlets and sales nearing 500 new Optus connections per week.

According to The Australian, despite denials by Woolworths on plans to offer mobile services, the company signed a deal with Optus in September last year. As part of the deal, Optus is building and operating the MVNO network through a ‘white-label’ arrangement using Project Reitz, a new software platform. While Optus is building the infrastructure and network systems, Woolworths is finalizing IT systems for customer relationship and billing. The launch has been delayed so far, owing to some integration problems with Woolworths’ IT systems. Woolworths is expected to follow the same MVNO model used by Tesco, by providing attractive discounts on handsets and prepaid charges in lieu of a certain amount being spent at the supermarket.