Spark is now a 'one stop shop' digital services company, says chair

Spark is now a 'one stop shop' digital services company, says chair

Spark has presented its three year strategy through to 2023

Justine Smyth (Spark)

Justine Smyth (Spark)

Credit: Supplied

Major New Zealand telco Spark is planning to to focus on three future markets where it believes it has a clear competitive edge and there is significant potential for growth.

These are the internet of things (IoT); digital health; and sport," CEO Jolie Hodson told shareholders at the company's annual meeting today.

"Our ambition is to become New Zealand’s Internet of Things platform partner of choice.

"Our rollout of 5G and extensive B2B relationships nationally make this a logical extension to our current suite of products and services."

Spark also spied a clear opportunity to support the digital transformation of the New Zealand healthcare sector.

"This is a $20 billion industry that needs digital enablement, and through our existing Spark Health vertical we already have relationships across health, biotech, pharma and health insurance. 

We are now the largest provider of cloud services to the New Zealand health sector."

The Spark Sport entertainment platform was the third.

Spark chair Justine Smyth told shareholders this morning the telco had transformed from a traditional telco to an end to end digital service company after three years of effort.

Smyth said 2020 was the final year of Spark's three-year strategy and the company was now providing everything from basic connectivity, through to data analytics and cloud transformation.

In 2017, Spark said it would do three things by 2020, she said: "upweight" its emphasis on wireless services and investment, better serve price-sensitive customers through our multi-brand strategy, and become the lowest-cost operator, through radically simplified and digitised processes, products and services.

All three had been delivered, she said.

"We have significantly improved our customer experience by shifting towards digital and self-service care options, freeing up our people to focus on more complex and meaningful customer care work," she said.

"We have grown mobile service revenues and market share and continued to grow our wireless broadband product. This growth was underpinned by sustained investment in our network and technology, including beginning the rollout of 5G wireless broadband services and more recently 5G mobile services." 

5G will boost the number of customers Spark could support on fixed wireless broadband, which is broadly seen as the strongest current business case for 5G investment. 

Shifting or recruiting customers to wireless broadband would also improve telco margins by eliminating wholesale fibre costs paid to Chorus.

Smyth said the Skinny brand, which offers mobile and broadband to more price conscious customers, had grown by 17 per cent over the three-year period and received awards for its customer experience.

"We flipped to Agile ways of working across the business – improving our speed to market, our customer experience, and our employee engagement," she said. "And we have maintained cost discipline through simplification, digitisation and automation across the business."

These achievements translated into "industry-leading" returns for shareholders. 

"We have paid consistent dividends and are ranked the highest of our international peers for total shareholder returns, with a compound annual growth rate of 13 per cent," Smyth said.

Hodson said the successful launch of Spark's endless data mobile plans and strong pay monthly connection growth helped drive growth in mobile service revenue of 3.9 per cent, despite the loss of roaming revenues in the last quarter due to COVID-19.

"The launch of our cloud and business transformation consultancy Leaven and the continued strong performance of CCL helped us grow cloud, security and service management revenue by 10.8 per cent," she said.

"We grew wireless broadband connections by 16,000 over the year. This is fewer connections than we had aimed for, and the result of self-imposed limits on sales — both in the lead up to the Rugby World Cup, and when we first entered lockdown."

However, the "excellent" performance of Spark's mobile network during alert Levels 3 and 4 had given confidence to accelerate wireless broadband growth again.

"We have continued to improve our customer experience, which was a big goal for us as we transitioned to Agile," Hodson said. "This improvement is largely the result of better digital self-service options, which allow customers to solve issues quickly and without the need to call us."

In 2020 monthly customer care volumes reduced by 28 per cent.

"We also saw an 18 per cent increase in online chat interactions, and our chatbot Ivy is now resolving more than half of these chat interactions – which further improves resolution times."

In September, Spark presented its strategy through to 2023 to the market.

"Spark’s strategic direction to ensure investment is going towards the things that will deliver the best outcomes for the company and you, our shareholders," Smyth said.

"At its heart, this strategy is about accelerating the things we know will give Spark a competitive edge, because they respond to the trends that are shaping our market and the evolving needs of our customers."

Hodson said core to that strategy were four capabilities: simple, intuitive customer experiences, a deep understanding of customers and showing up in a way that was timely and relevant, smart, automated networks, with a focus on resilience and technology evolution, and a growth mindset where our "people lean into challenges, champion the customer and adapt at pace". 

At board and management level, achieving diversity was a priority.

Spark's target for board and leadership gender diversity is a 40:40:20 ratio: 40 per cent men, 40 per cent women and 20 per cent of any gender. 

The current composition of the board and leadership was 50 per cent female and 50 per cent male. Women make up 39 per cent of other senior roles. 

"We are pleased with our progress on gender diversity and representation, but we still have some way to go," Smyth said.

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