18 Aug 2021

Spark's full-year profit falls

11:35 am on 18 August 2021

Closed borders, higher depreciation costs and a bigger tax bill have dented Spark's full year earnings.

Exterior shots of Sparks Christchurch office

Photo: RNZ / Nate McKinnon

Spark chairperson Justine Smyth said despite facing a number of headwinds the telecommunications company recorded strong underlying growth in core markets.

Key numbers:

  • Net profit down 8.6 percent from $427 million to $384m.
  • Revenue down 0.8 percent $3.59 billion
  • Full year dividend of 25 cents per share

"Closed international borders continue to impact Spark through the loss of roaming revenues, lower overall growth in some markets, and talent scarcity within the technology sector," Smyth said.

The company recorded a $38m loss in its high-margin data roaming plans as closed borders resulted in fewer New Zealanders travelling overseas.

It also recorded a $35m increase in depreciation costs and its tax bill rose by $21m.

This contributed to the 0.8 percent decline in total revenue, and masked the strong performance in the company's mobile and cloud services divisions.

"In this context, we're pleased with the strong underlying growth we are experiencing in our core markets, and in Spark's ability to adapt at pace and execute disciplined cost management to deliver EBITDAI growth," Smyth said.

The company had fallen short of its goal to add a further 40,000 wireless broad connections for the year, only hitting 19,000.

Spark had completed the first part of a review of its infrastructure assets and announced a $35 million plan to accelerate its 5G rollout.

Chief executive Jolie Hodson said this would bring its total investment in the area to $125 in the current financial year and help it provide 5G coverage for 90 percent of the population by 2023.

"We will be upgrading our Mayoral Drive exchange and intend to invest in approximately 10MW additional capacity at our Takanini datacentre - which will make it the largest in New Zealand once completed."

Its review signalled outs its mobile and fibre network as possible assets that could be split with rivals in a share ownership model.

However, discussions with potential partners are ongoing and there is no certainty any transaction would proceed.

Spark had taken steps in its new strategy to digitise the healthcare sector, recording sales growth of nearly 11 percent in the sector.

Spark Sport delivered its first season of cricket but no details were disclosed on the performance of the streaming platform.

The company was forecasting an underlying profit of between $1.13bn and 1.16bn for the current financial year, compared with $1.12 for FY21.