As Optus customers raged amid a damaging outage on Wednesday, shares in rival telco Telstra climbed higher, fast outpacing the broader market.
The differing fortunes of the telcos speaks to the huge challenge facing Optus barely a year after it was hit by the worst cyber breach in Australian history.
Once again, the company has been widely criticised for its response, with the communications minister, Michelle Rowland, urging the telco to be “transparent and timely” amid surging customer complaints.
One analyst said the outage, and Optus’s response, would heap pressure on its chief executive, Kelly Bayer Rosmarin, with the timing also unfortunate given Singtel is preparing to release financial results in Singapore on Thursday.
“Companies like to control the narrative around their financial results; this is a distraction Singtel doesn’t want,” one Australian-based investment analyst said.
The hashtag #Optusdown has been trending on social media, replacing the ignominious #Floptus moniker that stuck to the telco after its disastrous attempt to stream the 2018 World Cup.
Anna Milne, a Wilson Asset Management equity analyst, said the outage and the cyber-attack could cause a “churn event”, whereby customers cancel or don’t renew their Optus subscriptions.
“This outage is actually a bit more widespread because it’s across fixed, broadband and mobile,” said Milne.
She said Telstra naturally picks up a portion of customers leaving Optus, which she said helped explain the lift in Telstra’s share price on Wednesday.
Telstra shares were up by as much as 2% in early trading.
Telstra has a 36.5% share of the market, based on its share of revenue generated across the industry, according to IBISWorld data. The Singtel-owned Optus is the second biggest player, with an 18% share.
Optus has apologised for the issue and has said it would look at providing compensation.
“We know how much everybody relies on our connectivity. We’re very, very sorry for this outage. We’re doing everything we can to bring it back up as quickly as we can,” Bayer Rosmarin told Sydney radio station 2GB.
By late afternoon on Wednesday, Optus said they had restored services, but had not explained the cause.
The telecommunications industry ombudsman has advised customers it can help with refunds, compensation claims and contract disputes.
Complaints about Optus were already surging before the outage, according to data released by the ombudsman, with complaints against the telco increasing 29.5% last financial year, due mostly to the cyber breach.
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Along with any immediate compensation, analysts expect Optus will need to drop its prices to entice customers to stay, or return.
It also faces increasing competition from TPG, which has been involved in a series of mergers and acquisitions to become a significant competitor.
Social media pictures on Wednesday showed long queues at Telstra and Vodafone stores, as customers scrambled to secure sim cards.
The Communications Workers Union described the outage as “disgraceful”, after linking the outage to job cuts.
“Australians deserve better than to have one of the major national carriers leave them in the dark for hours, with no answers,” the union’s national assistant secretary, James Perkins, said.
“We are very concerned about vulnerable members of the community and their ability to access help and emergency services on their landlines.”
Businesses also reported widespread disruptions on Wednesday as payments systems froze. Any applications requiring phone verifications, such as banking apps, were also affected.
The outage caused major service disruptions to the Melbourne train network, and affected phone lines at hospitals across the country.
Brian Han, a senior equity analyst at Morningstar, said the damage to Optus’s business and reputation could prove substantial.
“We could have a wave of customers flying to safety,” Han said, referring to customers switching to rival providers.
“There’s definitely damage and we may see the consequences of the damage very soon.”