26 Aug 2020

Spark profits up 4%

12:37 pm on 26 August 2020

Spark has managed to shrug off the effects of Covid-19 to post a higher annual profit, but is warning the big hit may be felt this year.

Spark's headquarters in Auckland

Photo: RNZ / Kim Baker Wilson

The telecommunications company's net profit rose by 4.4 percent to $427 million for the year ended June, helped by the revenue gain, and a lower tax bill.

Revenue increased 2.5 percent to $3.6 billion as it reported growth in its mobile services and cloud, security and service management business.

The growth in these areas offset losses brought on by the pandemic in other parts of Spark's business, which were estimated at $25m, with falls in international mobile roaming, retail store sales and Spark Sport, which was offered to customers for free as live sport was cancelled globally.

"It is fair to say this will be a year remembered more for the last quarter than the first three... we were able to adapt quickly, support our customers and deliver what we said we would in a challenging environment," Spark chief executive Jolie Hodson said.

She said the business stepped up as data and internet usage increased during the first lockdown.

"Our customers were quick to take up our new Endless data mobile plans, which contributed to mobile service revenue growth that outperformed the market.

"We grew wireless broadband connections by 16,000, however, our aspirations are higher - and with the continued strong performance of our network during Covid-19 we have the confidence to accelerate this further."

Spark would focus its capital expenditure for the current year on its rollout of 5G mobile network and investment in rural connectivity, Hodson said.

She said she expected the impact of Covid-19 to be more material in the coming year.

Despite this, the company expects its underlying profit for the current financial year will be between $1.09bn and $1.13bn.

A dividend of 12.5 cents a share will paid out to shareholders.

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