‘Trust is broken’: Optus braces for customer losses after fatal outage

2 weeks ago 5

Optus is bracing for a wave of customer losses and long-lasting reputational damage after the Triple Zero failure in which at least three Australians died and hundreds were unable to contact emergency services, with industry insiders warning the telco’s credibility has been shredded and its governance structures exposed.

Optus lost between 250,000 to 300,000 mobile customers in the aftermath of its nationwide outage in November 2023, according to analyst estimates, with Telstra and TPG gaining customer share in the immediate aftermath.

Optus chief executive Stephen Rue holds a press conference about the Triple Zero call failures.

The telco’s churn rates – the industry term for departing customers – remained elevated for several months, and executives can probably expect a similar outcome this time round. The company’s mobile market share stands at about 24 per cent, trailing well behind Telstra’s 57 per cent and ahead of TPG’s 13 per cent.

Veteran telecommunications analyst Mark Gregory said some Optus customers in the states and territories hardest hit by the latest outage – South Australia, Western Australia and the Northern Territory – were already pledging to abandon the company as soon as their contracts expired.

“The negative media related to this will make people think twice about using Optus,” Gregory said. “Those areas have always been Telstra heartlands, and Optus and Vodafone had been working to build market share. This type of event will really reverse that trend for a period of time.”

Social media sentiment around the latest scandal has been overwhelmingly negative, with some users even suggesting Optus’ name should be stripped from Optus Stadium in Perth.

The pain will probably extend beyond direct Optus customers. Angus Kidman, a tech expert at Finder, warned that Optus must also reassure the smaller telcos which lease access to its network, including the likes of AGL, Coles Mobile and Dodo.

“Optus has more of these partnerships than any other network, but its woes provide an opening for Vodafone in particular to target some of those brands,” Kidman said. “That will be an interesting one to watch.”

Kidman added that switching carriers has never been easier. “Mobile services are easy to switch, and Australians are increasingly happy to do so,” he said. “Our latest research shows 17 per cent of Australians have switched their mobile plan in the last six months … I wouldn’t be surprised if that trends further upwards.”

It points to a grim outlook for Australia’s second-largest carrier, whose brand was only beginning to recover after the previous nationwide blackout, which itself came after Optus suffered Australia’s worst cyberattack. Those incidents not only triggered the resignation of former chief executive Kelly Bayer Rosmarin, but led to a mass customer exodus and long-lasting brand damage.

Now her successor, Stephen Rue, is under siege after previously vowing such a failure would never happen again.

Former Optus chief executive Kelly Bayer Rosmarin during a Senate hearing on November 17, 2023. She resigned three days later.

Gregory believes Rue’s position is untenable given his public comments. Rue has faced growing calls to resign from the federal opposition and the Communication Workers Union, among others.

“He guaranteed this wouldn’t happen, and by his own words, he shouldn’t be there now,” Gregory said.

But governance expert Helen Bird, from Swinburne University, argues that focusing solely on the chief executive risks letting Optus off too easily.

“Knocking off the CEO isn’t going to do what people want it to do,” Bird said. “It just gives the impression something has been done when nothing has really changed. We should be calling Optus to account for its actions, which is a much harder thing to do but also more important.”

Bird said the deeper issue lies in Optus’ ownership and governance. As a wholly owned subsidiary of Singapore’s Singtel, key decisions around resourcing and risk management are often determined offshore. While Optus has added more independent directors – and under Rue’s leadership now has a local board – she said there was still an absence of responsibility on the ground in Australia.

Peter Roberts, a communications expert at UNSW, also cautions against seeing Rue’s removal as a fix. He argues Optus’ struggles stem as much from poor communication as technical failure.

Optus chief executive Stephen Rue has faced calls to resign.

“Rue’s removal may assuage some of the media frenzy, but ultimately the recent issues have been compounded by tardy communications,” Roberts said.

“This is probably down to the fact that the organisational paymasters are not here in Australia; they are in Singapore. And while there’s not a huge time difference between us, you tend to be immune to the criticism when you are a little away from the fire.”

Optus now faces an arduous path in trying to hold on to as many of its customers as possible, and restoring trust with those who do remain. Bird said that will require true transparency about what went wrong, a clear timetable for fixes, and a commitment to exceeding minimum requirements.

“It’s not enough to be just a regular private company when you’re running an essential service,” she said.

“Telstra has had outages too, but it handled them better. This is about resources, disclosure, and proper governance. Optus hasn’t shown Australians it can deliver that, and until it does, trust will remain broken.”

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