Spark, formerly Telecom NZ, claims momentum

Summary:Rebranded telco says focus on the customer is delivering results in the second half of its financial year.

Telco Spark New Zealand, formerly known as Telecom, has reported total operating revenues from continuing operations down 2.6% from NZ$3.7 billion to $3.6 billion.

The company said much of this was attributable to the ongoing decline in legacy fixed line products. However, net earnings from continuing operations of NZ$323 million was up 19.6%.

Total mobile revenue was up 6.0%, helping offset the fixed revenue decline, and operating expenses from continuing operations were down 5.6%.

When the the impact of a one-off restructuring charge from the sale of its Australian subsidiary AAPT is removed, 2014 adjusted net earnings from continuing operations were down 7.7%. Net earnings including discontinued operations were NZ$460 million.

Telecom is undergoing a major transformation in its back-end technology and culture having gone successively through regulated operational separation and then full structural separation from its network arm, now known as Chorus.

"At the core of that change has been a focus on listening to our customers, understanding what drives them, what matters to them, what they value, and what digital services they need to help them do amazing things," Spark chairman Mark Verbiest said in a statement. 

“That is now showing through in our financial results, with an improving performance in the second half of the year indicating a potential to return to net earnings growth in FY15, driven by continued growth in mobile, data and IT services.”

Verbiest announced a second-half dividend increase to 9 cents per share.

Spark managing director Simon Moutter said customer experience is improving with lower prices and new digital services, citing growth in mobile as a standout. 

"In the second half of the year we added another 83,000 mobile connections," he said. "That means we’ve added around 280,000 mobile connections since the closure of the CDMA network in mid-2012, and now have over two million mobile connections."

Telecom also acquired more 700MHz spectrum for 4G mobile data than anyone else in the government's digital dividend spectrum auction at a cost of NZ$158 million.

“The tough calls we have made to become more competitive and more productive have allowed room, alongside the funds freed by our divestment of AAPT in Australia, for investment in the areas where our customers are telling us they want us to be. That means more online and digital customer services, Cloud capability, 4G mobile and value-added services, online entertainment and more." 

In the past year, Telecom has launched an internet TV service called Lightbox, Ultra Fibre broadband products across areas where fibre is available, a partnership with the Spotify for music, free WiFi through public hotspots and a Big Data business called Qrious, among others.

It is also expanding further into cloud services after the NZ$96.5 million buyout of data centre provider Revera last April, doubling down this financial year by acquiring Appserv. 

Spark's Home, Mobile and Business unit, formerly Telecom Retail, saw revenue growth for the first time in years, Moutter said. Mobile revenue was up 10.4% outweighing a "slowing" decline in fixed voice revenue.

Topics: Telcos, New Zealand


Rob O'Neill is a writer for CBS Interactive based in Auckland, New Zealand covering business and enterprise technology for ZDNet. He has previously worked for IDG, The Sydney Morning Herald and Melbourne's The Age as well as various business titles, most recently editing the Business Sunday section of New Zealand's weekly national news... Full Bio

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