While Telstra is criticised by everyone from the Prime Minister down for its perceived and actual faults, fellow telco Optus has been able to escape any press and consumer criticism despite running possibly the worst customer service operation in the country.

Have a problem with your internet due to an Optus fault? Based on my own experiences, expect to wait twenty minutes to speak to a technical assistant (in some cases the wait is even longer). Problem with your Optus blackberry bill? The wait may be thirty minutes and even then, chances are the person answering the call will be ill-equipped to deal with your question.

While making current customers wait is one thing. Optus even makes potential customers wait. Interested in buying a new Optus mobile and you will probably have to wait fifteen minutes just to speak to a salesperson.

Despite the improving market sentiment to telcos (Optus’s parent, Singapore Telecom saw its dual-listed shares increase 40% last year) Optus is struggling with reduced fixed line earnings and stiff competition in its mobile business – EBITDA was 3.2% lower for September quarter in 2006 (compared with the corresponding period in 2005) while after-tax profit slumped 12%. In a bid to stem the flow of red ink, Optus boss, Paul O’Sullivan, claimed last November that the company will “continue to implement cost management and productivity initiatives across the company including lower commission rates, reduced head count and call centre offshoring”.

While creating long-term value isn’t generally a high priority for modern-day CEOs (“long term” is generally considered to be “until your options are in the money”), O’Sullivan would be well served looking at the computer retailer Dell as an example of how bad customer service may give the share price a short term kick, but can be detrimental in the long run.

Fortune reported in August 2006 that Dell suffered a 51% drop in profit after drastically reducing customer service and starting to use temporary workers. Whereas previously Dell was known for its superb after-sale service, Fortune noted that “after-sale service degraded abysmally in the past couple of years” after Dell shifted a large portion of its call centres to India and South East Asia. According to Nick Donatiello, CEO of Odyssey, a San Francisco consulting firm, Dell’s moves “put a knife in their own heart”.

It took the profit (and a corresponding share price) slump for Dell to act. In recent months Dell’s share price has edged up from a low of $20 per share to just over $25 per share, but remains well below its 2005 level of around $40 per share.

While O’Sullivan’s cost-cutting may earn him plaudits in the short term, if the Dell precedent applies, he is most likely doing not only his customers, but also his Singaporean masters a great disservice.