16 Feb 2017

Spark first half profit jumps due to IT services and mobile

1:05 pm on 16 February 2017

The telecommunications company, Spark, has reported a near 13 percent rise in its first half profit on the back of a lift in mobile earnings and IT services.

Spark New Zealand

Photo: RNZ / Kim Baker Wilson

The company's net profit for the six months ended December was $178 million compared with last year's $158m.

Group revenue was up 4 percent to nearly $1.8 billion, which matched the rise in its operating costs.

Spark said it added another 141,000 mobile connections and income from the mobile business rose 4 percent.

The biggest gain in revenue was IT services, such as data centres and cloud storage, which was up 19 percent as it benefited from its acquisition of the CCL Group last year.

Its broadband income was slightly higher, although the number of connections was flat. Its traditional fixed line phone income continued to decline, falling nearly 8 percent on a year ago.

The chairman Mark Verbiest said Spark faces a challenging market.

"While the revenue performance across mobile, broadband and IT services was good, it is clear the intense ongoing price competition, particularly at the lower end of the market, is driving margin pressure and reinforcing the need to increase our focus on our brand assets."

The company said it was also putting a lot of effort into moving as many customers as possible off older copper broadband onto newer and less fault-prone fibre or wireless broadband technologies.

Spark has also confirmed it was taking a detailed look into the finances and business of the small telecommunications company, TeamTalk, which it has offered to buy for $23m.

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