Australian Telecom Sector：Optus 1Q25. Mobile ARPUs lift another +$1 QoQ

Investment Rating - The report assigns a "Buy" rating for the Australian Telecom Sector, indicating a positive outlook for the industry based on current performance metrics and future expectations [12]. Core Insights - The Australian Telecom Sector, particularly Optus, has shown a recovery in mobile subscriber numbers, adding 38,000 subscribers in 1Q25, which is a significant improvement compared to the previous quarter [2]. - Mobile service revenues for Optus increased by 4.6% in the quarter, primarily driven by a 3% growth in blended Average Revenue Per User (ARPU), with postpaid ARPU rising to $43 per month [3][4]. - Optus reported an EBIT growth of 4.2% year-over-year, with EBIT margins improving to 5.1% in the quarter, reflecting the benefits of mobile ARPU growth [4]. Subscriber Trends - The total mobile subscribers for Optus reached 10,506,000, marking a 0.7% year-over-year increase, with postpaid subscribers growing by 10,000 and prepaid subscribers by 23,000 in the quarter [1]. - The report notes a softening in subscriber net additions for TLS in the second half of 2024 compared to the first half, suggesting that the tailwinds from international migration may be diminishing [2]. Financial Performance - The blended ARPU for Optus increased by 3% year-over-year to $32, with postpaid ARPU showing a stronger growth of 5% year-over-year [1][3]. - Despite the positive trends in revenue and margins, the report highlights that Optus's Return on Invested Capital (ROIC) remains low, indicating a focus on recovery in this area over the medium term [4].