Spark invests in its ICT units: cloud, security and service management

Spark invests in its ICT units: cloud, security and service management

Spark reports growth in the company's Leaven digital transformation business

Credit: Supplied

While the COVID-19 pandemic damaged telco Spark's overall performance in the half year to 31 December, 2020, cloud revenues provided some upside.

Cloud, security and service management revenue increased by $10 million to $229 million, up 4.6 per cent compared with the same period of the 2020 financial year.

Spark also reported $10 million of labour investment in support of revenue growth in Leaven, digital health and service operations during the half year.

New Zealand's largest telco was targeting 5 per cent to 8 per cent revenue growth in the segment and said it was on-track to achieve that.

Activity was driven by higher annuity revenues and growth in the company's Leaven digital transformation unit.

Spark said that highlighted the benefits of having business transformation service management offerings, particularly in a COVID-19 context

"Demand for collaboration tools to enable flexible working and business continuity with flexible cloud-based “as a service” offerings [was] increasing, but at a slower rate due to economic uncertainty," Spark reported.

Collaboration revenue was up 4.2 per cent year on year as COVID-19 increased demand for products to support flexible working, the company said.

Annuity revenue accounting for around 84 per cent of revenues in the cloud, security and service management category.

Spark said there was strong revenue momentum in service management with completed transitions successfully converting into ongoing programmes of work.

Cloud capital expenditure, however, fell from $16 million to $9 million compared with the comparable period the year before. This was due to the sale of the CCL networks business and a shift towards leasing.

Mark Jurgeleit, CCL’s former general manager of network services, bought the operation and set it up as a new business called Octave in December 2019.

Spark did not disclose the value of that transaction, but it did reclassify two assets as held for sale in the first half of the 2020 financial year: the former CCL networks business and its streaming media business Lightbox, which was sold to Sky.

Together these were valued at $28 million. Liabilities classified as held for sale totaled $3 million.

In the second half of the 2020 year the company recorded $23 million from the sale of the businesses.

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