Assignment help on Issues Faced by Optus in Australia
Leverage of advance technologies and growing demand for fastest means of communications has made the telecom industry one of the highly competitive industry across the globe. Telecom companies are continuously adopting varied strategies taking aid of modern technologies to expand their operations in urge of gaining maximum market shares. Optus Telecommunication, operating in Australia is also such company which, since its establishment in 2001 is constantly striving to improve and expand its operations throughout Australia.
Though, Optus is the second largest telecom company in Australia, having 4G network coverage of 94% and 3G network coverage of 98.5% of the Australian population (Wood et al, 2020), its operations are still not seamless and are constantly countering with varied difficulties. Optus is the subsidiary of Singapore Telecommunication (SingTel), as one of the leading telecom company is being owned by a foreign company it is a major concern for the Australian government, owing to the security of country’s sensitive information and data. Another difficulty Optus is facing is the difference of company’s and host countries culture, being a subsidiary of Singaporean company and its main operations still controlled by SingTel, Optus culture reflects Singapore’s culture.
Moreover, Telstra the main rival of Optus, being a local and the oldest telecom company, have more coverage than Optus, particularly in most of the remote areas Optus have no coverage. This is another significant hurdle in expansion of Optus’s business. Also, Optus having its call centers in India and individual employees trained for specific areas, the company is loaded with heaps of complaints regarding long waiting time and unavailability of concerned experts to deal with the customer’s issues.
As stated by Moutinho (2016) that SingTel still faces a hard battle against Australian incumbent Telstra Corp., even after its $7.2 billion acquisition of the country’s second largest telco from Cable & Wireless plc. The most prominent challenge of OPTUS is the growing competition among the telecommunication sector and the parent company SingTel’s influence over the company’s policies and strategies. The strategies Optus had been implementing have not been productive in the long run, somehow its policies and techniques adopted to maximize its operations superseding its main rival Telstra has affected its brand reputation and customers loyalty. Moreover, it has also raised concerns of the Australian government.
Optus in urge to take the lead among its competitors in the Australian market, acquired the Virgin Mobile in 2006. Through acquisition of Virgin Mobile, Optus planned to offer low budget and more data packages to the young mobile users who are more concerned about the cost of the packages being offered. However, owing to the growing competition and low budget packages being offered by the giant rivals like Telstra, also another giant TPG enhancing its infrastructure through pouring in more investments, in 2008 Optus announced to terminate its Virgin mobile affiliation. Though, Optus decided to discontinue its Virgin mobile operations as continuing with the same operations it cannot compete in the market and Optus wanted to search for alternate avenues to maintain its competitive position, it’s announcement of phasing out Virgin mobile brand adversely affected its reputation and consumer’s loyalty.
As the process of phasing out Virgin mobile operations involved closure of Virgin Mobile outlets throughout the Australia, affecting up to 200 workers (Crozier, 2018), developed mistrust over the company’s policies among the Australian employees sector. Moreover, it also developed uncertainty among the existing consumers of Virgin mobile promoting sense of unsatisfaction among them and the potential consumers. Due to the same announcement of closure of Virgin mobile brand, Optus lost many of its consumers as they switched to other telecommunication brands, thus Optus lost good business in times when it was struggling for more market share. Moreover, in consideration of the enhanced competition and Telstra already holding more market share than its competitors being a local company, it would be a challenge for Optus to redevelop its image over the Australian consumers, and continue with the same pace as it had been working with Virgin mobile brand.
Optus is also faced with the issue of unprofessionalism of its managers. Managers at Optus had been implementing unethical strategies to promote Optus and convince subscribers of competitors brand to switch to Optus. In 2019 the Federal Court has ordered Optus to pay $6.4 million in penalties, as Optus emailed 138,988 mobile customers notifying them that their existing home broadband services from rival telcos would be ‘disconnected very soon’, and urged them to change to Optus’s NBN products (Arboleda, 2019). It was not the first time, Optus had been involved in sending similar emails between 2015 and 2017, for which the company was fined $1.5 million in 2018.
