Strategic Marketing Report: Optus Market Analysis (2024)

This report provides a comprehensive analysis of Optus, the second-largest telecommunications brand in Australia, examining its company overview, its relationship with parent company Singtel, and the impact of Singtel's management. The report delves into Optus's market position, strategic alliances, and corporate social responsibility (CSR) initiatives. It highlights challenges such as customer satisfaction issues, ACCC charges, and the impact of offshore customer service centers. Furthermore, the report identifies opportunities for Optus, including the National Broadband Network (NBN), and concludes with an assessment of Optus's overall performance and prospects in the Australian telecommunications market. The analysis covers various aspects of Optus's operations, including its competitive strategies, financial performance, and customer service, offering insights into its strengths, weaknesses, and future potential.

Strategic Marketing
[OPTUS MARKET ANALYSIS]
[NAME]
[INSTITUTE AFFILIATION]
[DATED]
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Table of Contents
Optus Company Overview...............................................................................................................................................3
Singtel and its effect on Optus’s Business.......................................................................................................................3
Optus Potential Problems due to Singtel Management..............................................................................................3
Optus Corporate Culture.............................................................................................................................................4
Optus Market Position-Situational Analysis....................................................................................................................4
Optus and its Strong Alliances.....................................................................................................................................5
Strategic CSR and Agendas..........................................................................................................................................5
Optus Failure in the Telecommunication Industry..........................................................................................................6
Charges by Australian Competitions and Customer Commission................................................................................6
Delay in answering time-Threat to Customer Satisfaction..........................................................................................6
Opportunities for Optus in Australian Telecommunication Industry...............................................................................7
Conclusion....................................................................................................................................................................... 7
References.......................................................................................................................................................................8
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Optus Company Overview
Founded in the year 1981, Singtel Optus Pty Limited is now the second largest telecommunication brand in
Australia (Buvaneswari & Babu, 2013). The wholly owned subsidiary of Singapore headquartered company,
Singtel, mostly operates its infrastructure. Optus provides services to the end users directly, and also works
as a wholesaler to multiple service providers like Amaysim and Exetel. Headquartered in Macquarie Park,
Sydney, Optus deals with numerous services including mobile telephony, Internet Access, Fixed Telephony,
Cable Television, Data Transmission, and Leased Lines. As of the data accessed in 2015, Optus has over
8000 employees working in its stores (Bhatti, Abareshi, & Pittayachawan, 2016).
Optus now owns multiple subsidiary brands like Boost Mobile and Virgin Mobile Australia. The company
also operates its network infrastructure and resells the services from Telstra, its main supplier. Optus has
been providing services to residential customers, corporates, and small to medium businesses as well. Over
the last three years, the company has introduced the latest technologies to stay competitive with other major
players of the telecommunication industry in Australia. But, the introduction of innovative technologies and
products has backfired such new technologies ended up frustrating customers and acted as a repellent to
Optus’s business prospects (Barney & Hesterly,2010).
This report is written with a purpose to analyze the success of Optus, conduct the situation analysis, and
provide an overview of problems and opportunities in the telecommunication industry (Declerck & Hayes,
2016).
Singtel and its effect on Optus’s Business
Singtel Group is a monopoly telecommunication company in Singapore, which is owned by Temasek
Holdings-the financial investment branch of Government of Singapore. Hence, ever since Optus went under
Singtel’s wings, the company, the company developed a close relationship with the government of
Singapore and now they are operating under a hierarchy and centralized structure as depicted in their level
of division in management roles- ‘Breaking barriers and Building Bonds (Thompson, 2018).”
Optus Potential Problems due to Singtel Management
Singtel boasts of having a high influence in the management and establishment of Optus as shown in
Optus’s code of conduct. Optus shares the core purpose, vision, mission, and all values of the Singtel.
However, despite this stronghold of Singtel Group over Optus, Optus gets to enjoy the benefits from the
parent company is providing, for example, the infrastructure, finance, and knowledge. Yet, the strong
control of actions and the management level influences has raised concerns for the Government of Australia
and other regulatory bodies (Teece, Pisano, & Shuen, 2017).
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The strong aggressiveness and power for expansion control in the foreign market can be estimated through
the takeover bid where Singtel paid a sum of $16 billion for Optus, irrespective of the fact that Optus had the
market value of only $12 billion during that time (Thompson, 2015).
Such control and power have raised concern like foreign government ownership and an alarming influence
over an Australian company in a major industry like telecommunication, which has suggested major issues
like the security of the nation in terms of data transmission and delivery of intelligence information(Teece,
Pisano & Shuen, 2017).
Further, the Optus company is continuously expanding its business through the acquisition of small or
emerging names like Uecomm, and, Virgin Mobile. Apart from this, Optus is focusing on getting ownership
like ‘Southern Class Cable’ which has raised the issue on the possible misuse of Australian resource, the
threat of resources getting sold off as there is zero control over the management activity of the enterprise
(Clarkson, 2016).
SingTel’s ownership of Optus also reveals another matter of concern after Singtel announced their 15%
shareholding acquisition of the Australian Stock Exchange. But this acquisition was later knocked off due to
Australian Government’s unwillingness to lose Australia’s financial arm to a foreign company (and
indirectly, the foreign government) (Pearce, Robinson, & Subramanian, 2015).
Optus Corporate Culture
SingTel’s ownership of Optus has its impact on the corporate culture too. SingTel has significant influence
since the two countries (Australia and Singapore) have varying cultural values. Where SingTel values long
term associations and orientations, Australia prefers short-terms oriented values. Being owned by a
Singapore company, Optus corporate governance enforces long-term success that enhances the company’s
accountability and performance. This controversial difference in corporate culture has exposed several
problems for Optus. For example, the takeover bid with Foxtel in the year 2000, where another company
ACCC stepped in for the bid after disallowing takeover by Optus because of the anti-competition nature of
Optus’s corporate culture (Pearce, Robinson, & Subramanian, 2015)
Optus follows a monopolistic nature (same as SingTel’s) which has introduced employment relation
conducts in the company, like anti-unionism. To adapt and understand the cultural differences in the
Australian work culture which has a high individualism and a low power distance, Paul O’Sullivan, Optus’s
CEO, acts as a spokesman and a mediator to present the core competencies as encouraging innovation,
flexibility, and entrepreneurship (Pearce, Robinson, & Subramanian, 2015).
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Optus Market Position-Situational Analysis
Having established its position as the second largest brand in the telecommunication industry, Optus availed
the revenue profit of $740 in the FY2016 (Mahoney, & Pandian2016). For Optus, the potential market is the
prepaid mobile service although the revenue per user is considerably lower when compared to the post-paid
users (Covin&Slevin,2017). The carriers get higher profit margin given the nature of service doesn’t require
a handset, customer care, or billing. Though the revenue made in relation to this service was not much
predictable, given the low switching cost between the carriers(Mahoney & Pandian, 2016).
Optus has been very responsive to the needs of customers and the competitor’s action. The company has
obtained several shares in Australia’s prepaid market as compared to their other competitors. In the year,
2015, Optus has a prepaid consumer base of 8.9 million. Telstra lagged in the prepaid service with a
customer base of 7.7 million in the same year. Optus took a defensive position when Telstra announced that
prepaid users were going to be their main target group. Optus protected its share through a highly
competitive pricing strategy by announcing calls for $1 a day. Optus can be called a pre-emptive
organization, given how they respond quickly to their competitor’s moves.
The success of SingTel Optus came from their focus on the CSR approach as they strategically respond to
what their customers want and prefer pre-emptive strike as a response to the action taken by their
competitors, and they create aggressive strategies to win competitor’s market share. Also, the credit to their
strong situation goes to the strong financial background, infrastructure support, and knowledge from its
parent company, SingTel.
Optus and its Strong Alliances
The company follows an aggressive approach for acquisition and expansion of strategic alliances to foster
the expansion of their market shares and to strengthen their market share. Optus acquired 3/4th of Virgin
Mobile Australia Pty Limited for $30 million in the year 2006, which increased their shareholding to 100 per
cent. VEL granted Optus 15-year license for the use of Virgin mobile brand, which allowed the company to
increase the product ranges for customers using the Virgin brand. Later, Optus acquired Alphawest and
expanded its customer base by introducing services like cloud computing. Optus’s alliance with Southern
Cross Network and Uecomm became another reason for its expansion and strong partnerships.
Strategic CSR and Agendas
Optus is one of those companies of SingTel that uses a strategic CSR approach, which all emphasis on
responding to the demands and interest of consumers, and the agenda of the organization’s long-term
success and profitability. Through the CSR they paint the brand as having very high conduct level in the
company by being transparent, responsible, and accountable to its customers. The 2016 Optus’s Corporate
responsibility report highlighted the company’s commitment to improving the customer experience by
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introducing their products and services in a transparent and responsible manner(Mahoney & Pandian2016).
The company reported a 2% increase in the customer care service quality and overall satisfaction of 90%. It
also reported the 14% decline in the complaints received from their customers (Mahoney & Pandian, 2016).
Optus Failure in the Telecommunication Industry
Despite being one the largest telecommunication companies in Australia, Optus has faced their share of
problems and critic which has resulted in negative brand awareness for the company such as poor customer
satisfaction and the commercial ‘supersonic deer (Covin, 2017).’
Charges by Australian Competitions and Customer Commission.
Due to the deceptive and misleading conduct which arose from Optus’s advertising campaigns about the
broadband offers, Optus got notice and claimed by ACCC. ACCC accused Optus of misleading the
customers with phrases like ‘there’s no limit to achieving’ and for not clearly describing what the plan
offered to the users and for creating the wrong impression of unlimited quota limit and fastest connection
speed. ACCC accused Optus of not mentioning the specific data allowance which a buyer would receive.
The ad must have included all the terms and conditions or at least mentioned that there were terms and
conditions that haven’t been mentioned in the advertisement. Even when Optus replaced the advertisement
by making changes, the ACCC barrister argued that ad was still not clear or suitable since the ‘up to’ terms
was misleading the consumers. These charges and acquisitions by ACCC thus created a problem for Optus
in the long run (Covin, 2017).
Delay in answering time-Threat to Customer Satisfaction
Though there was a 14% reduction in consumer complaints in the year 2014. Optus witness an increase of
54% in complaints against Optus in the telecommunication companies (Shafei and Tabaa, 2016). There were
complaints about the payment of telephone, billing, and quality of calling and internet services. There was
the highest increase in internet users and mobile premium services. But the majority of the complaint against
Optus was the holding time users spend on waiting for reply or assistance from the representatives at the call
centre. In the year 2010, Optus place its customer care centre in India because SingTel owned 30% share of
Indian communication. This set-up was to acquire advanced infrastructure overseas and to obtain the low
labour cost available in India. The movement was on Optus’s purpose to follow the offshore strategy of
saving the cost of operation(Shafei and Tabaa, 2016).
But the representatives at these call centres left the callers waiting for hours, even when the issues customers
were facing were related to technical errors caused by Optus. After the call’s waiting time passed, the caller
would automatically get transferred to speak to the representative’s based overseas, who were unable to
assist them because the solution wasn’t available at their end (Hitt, Ireland & Hoskisson, 2016). Through
Optus’s strategy of availing service at low labour cost in India was a cost-effective measure, it only resulted
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in many weaknesses against the company. In India, the staff was poorly trained, negligent, and due to the
difference in culture and working environments, they lacked the ability to resolve and clear customer’s
query (David, 2018).
Apart from this, Optus was frequently attacked by its consumers for poor internet connection, lack of
functional and dedicated skills of sellers in their store, and the slow and fluctuated speed. Dissatisfaction
towards their call centre and products quality have impacted the customer’s consideration and the
company’s reputation. This could influence the sales, revenue, and create obstacles against SingTel’s aim of
expanding market share and sustaining their customers (Covin, 2017).
Opportunities for Optus in Australian Telecommunication Industry
1. National Broadband Network
NBN was established by federal labour and NBN Co. will be investing over $50 billion to fund the
ongoing operation and rollout of the network. It will also extend the optical fibre and offer speed of
100 MB per second. NBN will enable a competitive telecom industry for the next twenty years in
Australia, and Optus must avail this opportunity through service differentiation and value-added
services to attract and retain customers. Optus must upgrade and negotiate their technologies to
provide services that will be in line with NBN (Óskarsdóttir, Baesens & Vanthienen, 2016).
2. Broadband Take-Up
Since Australia is one of the few developed countries in OECD, where Broadband internet
connection take-up when backwards. Australia has an increasing number of broadband subscribers,
with 23.3 connections in every 100 people. Optus should use this opportunity.
3. Maintaining their cable and network for providing quality service
Optus must maintain their cable and network for providing quality service with affordable pricing
plans to retain their old customers and to attract new consumers because the market is saturated and
very competitive (Óskarsdóttir, Baesens & Vanthienen, 2016).
Conclusion
Optus has been providing services to residential customers, corporates, and small to medium businesses as
well. Over the last three years, the company has introduced the latest technologies to stay competitive with
other major players of the telecommunication industry in Australia. Despite being one the largest
telecommunication companies in Australia, Optus has faced their share of problems and critic which has
resulted in negative brand awareness for the company such as poor customer satisfaction and rising
complaints against their customer care services. The strong influence of SingTel will continue to have its
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impact on the future direction of Optus. With recent development in the infrastructure, which has built over
one thousand mobile sites all over Australia, Optus is sure to provide better services to their customers and
also increase infrastructure connections with the Asian Pacific regions to assist the Global networking for
SingTel. By analysing of the last ten year’s financial review, Optus is very likely to secure its position as an
integral part of SingTel with their increasing revenue and the steady growth.
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