Telstra accused of fudging figures on Optus ULLS margins

The data that Telstra is currently using with regards to costs and margins for Optus in order to make claims that Optus, and any others seeking access would be left with adequate margins on ULLS based services with a $30 ULLS price is both inappropriate and out of date, according to accusations from Optus.

The submission made by Telstra to the ACCC’s enquiry into its ULLS access undertaking has led Optus to make this latest claim in response.

The claim by Optus stated “Telstra’s submission quoted an out-dated Optus investor presentation and historic financial reports to support its view that access seekers generate high margins on ULLS. Telstra therefore inferred that moving to a price of $30 per month for access to the ULLS would have a limited impact on the margins of access seekers and would not negatively impact upon the state of competition.”

These statements, said Optus “are misleading and do not present a true picture of the returns available to access seekers using the ULLS. As a result they should be given no weight in the Commission’s assessment on Telstra’s ULLS Undertaking.”

In order to make estimates of Optus’ ARPU, capex charges and monthly costs Telstra has used three year old data, which had been used in an Optus presentation in June 2006, according to Optus.

Optus claims “This presentation merely highlighted the gross margin improvement through the reduction in interconnect costs as between services offered over ULLS rather than resale. It did not present a true EBITDA margin analysis taking account of the additional costs Optus would incur to utilise ULLS.”

Telstra have been further accused by Optus of taking financial data from different reporting period and combining them and Optus concluded by saying it was “a piecemeal approach [that] clearly undermines the validity of the end results as Telstra has simply strung together historic information without any justification of how it may relate to Optus’ present situation. The reality is that whilst using the ULLS affords access seekers lower costs than resale (leading to higher returns), access seekers must pay more than the monthly access charge to utilise the ULLS. Optus submits that access seekers incur significant capital, once-off and recurring operating costs in addition to the access charge paid to Telstra [and] Telstra do not appear to have adequately accounted for all of these costs in its analysis.”

Optus also noted that “the Imputation Testing Reports that Telstra submits to the ACCC quarterly indicate that Telstra makes an imputed margin of -6.24 percent on a bundle of ADSL and voice package (using historic costs)…based on a ULLS access price of $14.60.”