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CLIENT CASE STUDY


Optus: New revenue stream through innovative asset disposal strategy

Working closely with Accenture Strategy, Optus implemented the industry’s first-ever asset disposal program.

Overview

“Accenture’s outcome-oriented attitude and innovative methods to tap into the global market and generate competitive tension resulted in maximizing our benefits within a short span of time. This initiative has not only generated commercial benefits that were better than expected, but also set us up for the future.”
-George Gerovasilis, Director of Supply Chain for Optus Networks

Optus is a wholly owned subsidiary of SingTel Group and one of the largest telecommunications companies in Australia. Every year, Optus invests hundreds of millions of dollars to upgrade the network over which its services are delivered - as quickly as Optus was purchasing network-related equipment, it was decommissioning assets that had become obsolete. By the company’s own estimation, Optus could save up to 25 percent in storage costs and generate additional revenues by selling its decommissioned assets. Working closely with Accenture Strategy, Optus now has the industry’s first-ever asset disposal program in place. The program will help Optus generate additional revenues, save warehousing costs and better manage risk for years to come.

Opportunity

Every year, Optus invests hundreds of millions of dollars to upgrade the network over which its services are delivered. It is this commitment to continually upgrade its equipment that keeps the Optus network operational, meets consumer demands, and helps distinguish Optus in the highly competitive marketplace.

As quickly as Optus was purchasing network-related equipment, it was decommissioning assets that had become obsolete. By the company’s own estimation, Optus could save up to 25 percent in storage costs and generate additional revenues by selling its decommissioned assets. Given the potential revenue boost and cost savings, Optus launched an asset-disposal initiative – and realized that reaching full potential of this initiative required a structural change in managing assets, deep knowledge of the second-hand market and the ability to understand complexities in selling used telecom assets.

Outcome

Because the asset-disposal program Optus envisioned was a first for the telecommunications industry, Accenture developed a completely new vision and strategy for the program and the benefits that it could achieve. Therefore, the global Accenture team carried out a comprehensive due diligence exercise prior to a formal contractual relationship with Optus. The goal of this innovative and intensive four-week effort was to create a strategy based on a clearer understanding of Optus’s inventory and the potential resale and disposal markets, as well as to ensure that Accenture had the resources and expertise available to capitalize on those opportunities. At the end of the due-diligence phase, both Accenture and Optus were confident that the potential benefits were real and that Accenture was well positioned to lead the charge. Optus and Accenture formed a truly dynamic operation—one that was able to turn the insights gained in the due diligence phase into concrete actions to produce desired outcomes.

The program will help Optus generate additional revenues, save warehousing costs and better manage risk for years to come. The Optus and Accenture team generated in-year cash benefits of just under AUD$3 million through the resale of reusable assets and the recycling of obsolete equipment. Importantly, because the program relied on targeted and highly competitive negotiations with a select group of buyers, the sales outcomes were 300 percent higher than the original offer pricing. Additionally, by liquidating so much of its old inventory, Optus has been able to shut down one of its warehouses and expects to achieve storage cost savings of more than AUD$3 million over a three-year period.

Apart from the commercial benefits, this initiative is encouraging the reuse of assets, thus assisting with sustainability of the global telco supply chain.