Spark hits a growth sweet-spot in first half of 2020

Spark hits a growth sweet-spot in first half of 2020

Four per cent growth attributed mainly to progress in higher value mobile segments

Justine Smyth and Jolie Hodson (Spark)

Justine Smyth and Jolie Hodson (Spark)

Credit: Spark NZ

Spark New Zealand achieved revenue growth of 4 per cent to $1.8 billion for the half year to 31 December 2019. 

The company told shareholders this morning the growth was due to particularly strong performance in mobile, with high-margin mobile service revenue up 5.5 per cent.

That translated to a market share increase of 1.2 percentage points to 40.1 per cent, the company's highest level since 2012.

Revenues were also buoyed by cloud, security and service management growth (up 12.3 per cent), the introduction of Spark Sport and a fall in the rate of legacy voice declines (down 11.6 per cent) as fixed-line voice services become a smaller part of its business.

Operating expenses increased as the benefit of cost-cutting activities were reinvested to partially fund current and future revenue growth. 

New initiatives included the launch of cloud and business transformation consultancy Leaven, the growth of Spark Sport, the acquisition of Now Consulting as part of data analytics business Qrious and the launch of emerging technology business Mattr.

Reported pre-tax earnings (EBITDA) grew 2.2 per cent to $500 million while net profit after tax grew 9.2 per cent to $167 million.

Spark Chair Justine Smyth said the company’s shift to Agile ways-of-working and its long-term investment in IT and network infrastructure was delivering better experiences for its customers and people and supporting robust performance. 

“We are heading into the final six months of a three-year strategy that has been transformative for Spark," she said. 

"Our move to Agile ways-of-working continues, with ongoing incremental gains in our speed to market, customer understanding and focus, and in building a high performance and inclusive culture."

Customer satisfaction scores were ahead of full-year targets and fewer customers are needing to contact Spark to troubleshoot issues, Smyth said. 

Total customer care interactions were down 15 per cent over the last 12 months.

CEO Jolie Hodson said Spark outperformed its growth targets in mobile, with a shift to unlimited and high value plans. 

"We made a deliberate decision to limit wireless broadband sales in the lead up to the Rugby World Cup, as a conservative measure to ensure customers had a great viewing experience while we introduced our new streaming service. 

"Our capacity was more than sufficient, so we expect this to be a one-off and connection growth to return to trend in the second half." 

Spark also finalised the divestment of Lightbox and CCL’s network assets and completing the merger of its cloud and ICT businesses Revera and CCL during the half.

“This groundwork stands us in good stead as we work to close out the financial year and look ahead to the next three years,” said Hodson.

Spark will release details of its next three-year strategy at an Investor Day on 2 April.

 Spark announced an half year dividend per share of 12.5 cents, 75 per cent imputed. 

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