22 Apr 2020

Spark on target for $1.1b profit despite pandemic challenges

11:43 am on 22 April 2020

Spark is on track to meet its full-year profit expectations, despite the closure of its retail stores and a significant drop in mobile roaming services as a result of Covid-19 lockdown restrictions.

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Data roaming fees have dried up, Spark says, with worldwide travel restrictions. Photo: 123RF

The telecommunications and digital services company said underlying profit was expected to be between $1.1 billion and $1.12 billion, with a dividend of 25 cents for the year ending in June.

"We expect to experience flow-on impacts from the broader economic downturn, as our customers reduce usage or find it difficult to pay for our services, and with the indefinite closure of international borders we also expect the loss of all mobile roaming revenues," chief executive Jolie Hodson said.

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Jolie Hodson Photo: Spark

Data roaming, which accounted for about 5 percent of its annual mobile revenues, had evaporated and was expected to remain below expectations for some time with travel restrictions in place.

Voice calling and broadband usage had increased significantly, but most of Spark's customers were on unlimited plans and those on data capped plans were not being charged overage fees as part of a financial support package.

Late payment fees and disconnections, as a result of financial hardship, had also been waived.

Spark was undertaking a company-wide cost review and was reviewing its $370 million capital spending programme, which included the rollout of a 5G mobile network.

"As an essential services provider we must ensure we are sustainable over the long-term so we can keep New Zealand connected, help to close the digital divide, and support the transition to new ways of working," Hodson said.

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