Sunday 16 December 2012

NBN: Historical Financial Performance of Telcos: O.T.C.

OTC, the Overseas Telecommunications Commission, later Corporation (Australia), was formed in 1946 and merged into Telstra in 1992 as part of the Telco duopoly, granting the OPTUS consortium the second Telco license in exchange for taking over Aussat and its debts.

From the available Annual Reports, I've extracted some of the financial data. The Gross Margin and Return on Equity since the mid-1970's when IDD (International Direct Dialing) was introduced and telephony came to dominate the business. In the 1991 Annual Report, the directors noted that OTC(A) had reduced telephony rates in real terms every year since 1976. At the time it cost around $1/minute to call either Perth or London from Sydney. Telstra STD rates had not tracked the OTC(A) rates.

OTC(A) not only won a series of Advertising and Marketing awards with campaigns over many years, it was one of the cheapest International Telcos, comparing well to the USA and much lower Traditional State Owned "PTT's" like Japan and Germany. This showed up in both Net Traffic Flows (many times more calls originated inside Australia) and in paid-minutes per head of population.

The Gross Margin was generally 20-40% and Return on Assets ended well over 60% [Mislabeled as ROE & RoI below, not RoA.]

There was an accounting anomaly in 1987 figures. Reports from two different years reported the same Operating Profit and Net Assets, but very different Revenue and Expenses.
The final 1992 figure is from a Telstra report and may reflect changes in accounting practices and aligning the End of Financial years (OTC(A) was 31-March, PMG/Telecom Australia/Telstra 30-June).


OTC(A) was converted to a Government owned Corporation ("GBE" now, Govt. Business Enterprise) in the 1970's, IIRC.
It paid Company Tax on Profits, a Dividend to the shareholder, the Australian Government and raised all its own capital on the Open Market.

Summary figures are tabulated, with a conversion to constant dollars (1992). CPI Inflation data was obtained from the Reserve Bank of Australia Inflation Calculator, whom use the ABS series.






Dollar figures are Millions A$.



YearSales-RevRevenueExpensesDepcrOp-ProfitInvestAssetsNett-AssetsROE1992-Inflat-FacRev_92Exp_92Prof_92Net_Asts_92Gross MarginRoE
1970-$38.20$27.60-$10.60-$72.70$56.17-6.12532$233.99$169.06$64.93$344.0627.75%18.87%
1971-$43.70$30.30-$13.30-$78$60-5.77108$252.20$174.86$77.33$346.2630.66%22.33%
1972-$48.90$34.50-$14.40-$84$64.90-5.44318$266.17$187.79$78.38$353.2629.45%22.19%
1973-$53.90$38.20-$15.80-$91$70.25-4.98958$268.94$190.60$78.34$350.5229.13%22.35%
1974-$66.10$40.30-$25.70-$106$78.90-4.3231$285.76$174.22$111.54$341.0939.03%32.70%
1975-$77.60$56-$21.70-$127$86.15-3.75392$291.30$210.22$81.08$323.4027.84%25.07%
1976-$83$70.80-$12.25-$129$90.60-3.31259$274.94$234.53$40.41$300.1214.70%13.47%
1977-$99.80$80-$20.80-$135$91.80-2.94951$294.36$235.96$58.40$270.7719.84%21.57%
1978-$121$94-$26.70-$135$82.70-2.7309$330.44$256.70$73.73$225.8522.31%32.65%
1979-$143$109.80-$33-$143$75.30-2.50261$357.87$274.79$83.09$188.4523.22%44.09%
1980-$176$125-$51-$171.50$82.20-2.2723$399.92$284.04$115.89$186.7828.98%62.04%
1981-$212$162$10$50.10-$195$98.40-2.07539$439.98$336.21$103.77$204.2223.58%50.81%
1982-$260$216$19$43.70-$307$176-1.86381$484.59$402.58$82.01$328.0316.92%25.00%
1983-$300$257$20$42-$411$180-1.69378$508.13$435.30$72.83$304.8814.33%23.89%
1984-$339$275$27$64-$510$148-1.62925$552.32$448.04$104.27$241.1318.88%43.24%
1985-$411$319$29$92-$653$238-1.52645$627.37$486.94$140.43$363.3022.38%38.66%
1986$447$473$372$37$100$116$764$265-1.39977$662.09$520.71$141.38$370.9421.35%38.11%
1987$507$540$416$43.50$125$169$885$307.7043.70%1.28971$696.44$536.52$159.92$396.8422.96%40.30%
1987$971$1,000$836$43.50$125$169$885$307.7057.40%1.28971$1,289.71$1,078.20$211.51$396.84
1988$1,142$1,170$921$53$193$211$952$365.7065.10%1.20291$1,407.40$1,107.88$299.52$439.9021.28%68.09%
1989$1,244$1,280$907$77$294$367$1,140$54263.50%1.11864$1,431.86$1,014.61$417.25$606.3029.14%68.82%
1990$1,459$1,520$1,047$84$385$384$1,310$67560.00%1.04221$1,584.16$1,091.19$492.97$703.4931.12%70.07%
1991$1,627$1,690$1,139$98$453$584$1,500$803-1.01012$1,707.10$1,150.53$556.58$811.1332.60%68.62%
1992-$1,442$1,019-$423-$1,540$1,065-1$1,442$1,019$423$1,06529.33%39.72%





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