Optus has reported a 12 percent rise in first quarter earnings, with an underlying net profit of AU$122 million despite a decrease in mobile termination rates and a decline in off-net fixed telephony revenues.

Operational earnings before interest, tax, depreciation and amortisation (EBITDA) was steady at AU$481 million. While operating revenue rose 3.5 percent to AU$1.9 billion in the quarter ending June 30.

"Despite a highly competitive market, these financial results show Optus maintaining both market momentum and profitability," Optus chief executive Paul O'Sullivan said.

"In this quarter, revenue growth was achieved despite a 20 percent decrease in mobile termination rates and a decline in off-net fixed telephony revenues."

Optus, which accounts for about a third of SingTel's operating revenue, said its mobile revenue grew three percent to AU$1.04 billion.

The telco added 65,000 mobile customers and its mobile customer base reached 6.8 million, up 3.8 percent from a year ago.

Its post-paid mobile average revenue per user (ARPU) was generally stable, notwithstanding the increased penetration of capped plans.

Pre-paid mobile ARPU was up by 10 percent, and its mobile EBITDA margin was 34 percent, down one percentage point from a year ago.

"The decline was mainly due to higher handset subsidies as a result of targeted customer acquisition and recontracting activities," it said.

Optus said it had maintained its scale in the consumer market and increased SMS and other data revenue to 27 percent of ARPU.

"Thirdly, Optus grew its market share in the business mobile market, with business mobile subscribers increasing by nine percent compared to a year ago," it said.

In the quarter, total business and wholesale fixed revenue grew 6.6 percent, with Optus Business fixed revenue up 6.5 percent and Optus Wholesale fixed revenue showing a 6.9 percent increase.

"Growth was driven by Data and IP products," the telco said.

Business data and IP revenue increased by 10 percent in the first quarter, with a strong 39 per cent growth in Uecomm revenues.

Optus won major corporate deals with News Ltd and Boral Ltd.

Operational EBITDA for the combined division grew 11 percent to AU$96 million, with EBITDA margin at 21 percent up from 20 percent last year.

Optus said also that its consumer fixed on-net revenue grew by 13 percent reflecting the migration.

Off-net revenue declined by 12 percent due to the action taken to cease unprofitable re-sale business.

"Broadband revenue grew strongly by 26 percent to AU$88 million," Optus added.

As at June 30, Optus had 834,000 broadband customers including business grade customers, an increase of 53,000 customers in the quarter.

In June, the federal government announced that OPEL Networks (OPEL), the 50/50 joint venture between Optus and Elders, had been awarded AUA$958 million in funding to extend high-speed broadband services to rural and regional Australia.

"This project will create a competitive wholesale market to provide affordable backhaul capacity to local Internet service providers and drive significant benefits for rural and regional customers," Optus said.

The government expects the network to be built by June 30 2009.