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Apple iPhones and Samsung Galaxy Prices Hiked for SingTel-Optus New Subscribers

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By Athena Yenko | April 28, 2014 3:49 PM EST

Apple iPhones and Samsung Galaxy smartphones will be pricier for new subscribers of SingTel-Optus contracts as the carrier increased the price both for Apple and Samsung, The Sydney Morning Herald reports.

In a research from Goldman Sachs, new contracts from Optus will require customers to pay $696 for a 32-gigabyte Apple iPhone on a $50-a-month plan.

Optus, like other carriers, had been rallying to increase prices for smartphones to augment the their profits.

''Optus has cut handset subsidies across its post-paid mobile plans [and] raised handset pricing in the past week. 'While Optus has stated its desire to stabilise/increase its market share, these moves are consistent with its goal of driving profitable growth. Optus handset subsidy cuts follow similar moves by Vodafone [Hutchison Australia] in February-March," Goldman Sachs analyst Raymond Tong said.

Optus' decision to increase its price puts the company in comparison with Telstra.

''[Telstra] may see this as an opportunity to raise handset pricing through its own subsidy cuts. [Optus' price increase] is another sign mobile industry pricing and competition remains rational [and that the] focus remains on driving  profitability," Mr Tong said.

Optus had been strategising to increase its profit by lowering the company's expenditures and charging subscribers more for services. The company is also strategising to increase market share versus Telstra and Vodafone.

Telstra reported a growing subscriber with 1.4 million to date; Vodafone lost 1.2 million.

''Telstra ... has captured the lion's share of the mobile market and we expect that this dynamic will exert downward pressure on Optus' margins and cash flow over time,'' Ian Lewis, Moody's senior vice-president, said.

Optus was given a downgraded rating by Moody - from Aa3 to A1 - in February.

Hence, the company, through SingTel Group Chief Executive Officer Chua Sock Koong, announced that it will be focusing to drive customer growth in Australia.

In February, the company reported decreased revenue of $1.4 billion for its December quarter from $1.5 billion during the same quarter in 2013.

Subscribers fell to 9.43 million to 9.6 million. Its overall revenue from mobile sales in Australia declined from 6.9 per cent year-on-year for the December quarter, totaling to only $1.33 billion.

According to the company's report, subscribers were declining in Australia due to "equipment sales decreasing by $52 million from lower shipment volumes as device subsidies were reduced; mobile incoming revenue falling by $19  million from teh mandated reduction in the mobile termination rate from 6 cents to 4.8 cents per minute from 1 January 2013; and higher service credits associated with the device repayment plans reducing outgoing service revenue by $17 million."

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