Spark: 85 percent of customers to be off copper by 2020

Spark is aiming to move the majority of its broadband customers away from copper-based services by 2020, over to higher-speed and more reliable wireless and fibre broadband options.
Written by Corinne Reichert, Contributor

New Zealand telecommunications carrier Spark has announced that it is aiming to have 85 percent of its broadband customer base off copper connections by 2020.

Under its "Upgrade New Zealand" program, through which Spark is shifting users onto higher-speed and more reliable wireless and fibre broadband, Spark said it has already moved 37 percent of its customer base off copper.

During FY17, wireless broadband connections grew by 72,000 and fibre broadband connections by 73,000, so that as of June 30, Spark had 431,000 copper broadband connections, 172,000 fibre broadband connections, and 84,000 wireless broadband connections.

"By 2020, we aim to have 85 percent of our broadband customers migrated away from copper onto fibre or wireless technologies," MD Simon Moutter said during Spark's full-year FY17 financial results on Friday morning.

Moutter said Spark is targeting three areas of focus over the next few years: Increasing investment in wireless and mobile broadband services; "radically" digitising its products and services; and better packaging its products to meet all ends of the market.

"There are signs that fresh impetus is needed for the next phase of our transformation," added Spark chair Mark Verbiest, who announced that he would be retiring later this year to be replaced by Justine Smyth.

In the mobile segment, Spark had 2.4 million mobile connections as of June 30, with 11,000 voice-only connections already on Spark's voice-over-LTE (VoLTE) service.

Spark said it also launched one of the first 4.5G mobile networks in APAC during the period, making use of 5x carrier aggregation, 4x4 Multiple-Input Multiple-Output (MIMO), and 256 Quadrature Amplitude Modulation (QAM).

For the year ended June 30, Spark announced overall net earnings of NZ$418 million, up 13 percent from NZ$370 million, on revenue of NZ$3.6 billion, up 3.3 percent from NZ$3.5 billion.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) was just over NZ$1 billion, up 3 percent from NZ$986 million, while capex for the year was NZ$415 million.

According to Spark, capex was up due to managing the workload arising from strong growth in its "telecommunications-as-a-service" offering, IT service contract wins, and the migration of customers from copper to wireless or fibre.

"We have seen a strong take-up of telecommunications-as-a-service offerings to government, with 100+ customers connected to solutions that contribute towards delivering more customer-centric public services," Moutter said.

Spark's Home, Mobile, and Business segment made almost NZ$2 billion in operating revenue, up by NZ$16 million thanks to an increase in customers and uptake of higher-end plans; Spark Ventures and Wholesale brought in NZ$223 million, down by NZ$17 million due to customers churning away from legacy wholesale services and reductions in regulated wholesale pricing; and Spark Connect and Platforms made NZ$48 million, NZ$9 million more than last year, due partially to its acquisition of Connect 8.

Lastly, Spark Digital brought in NZ$1.3 billion in operating revenue, up by NZ$97 million thanks to the growth of cloud services. However, Spark claimed that there is room for even more growth, as 80 percent of the New Zealand market is still not making use of cloud services.

Despite this, Spark's Platform IT revenue grew by NZ$25 million over the year to a total of NZ$131 million.

Verbiest hailed the company's "relentless focus" on digitisation for improving customer experience, saying the telco will continue its digital transformation program.

Spark also said it would continue improving its networks over the next few years, after announcing in June a three-year partnership with Nokia to upgrade its mobile and fixed-line network infrastructure, with Spark's core and backhaul networks to run on a Nokia IP/Multiprotocol Label Switching (MPLS) network using Nokia's 7250 Interconnect Router R6 (IXR-R6).

Nokia's 7250 IXR-R6 has terabit capacity, "high-port density", and connectivity options including Ethernet and legacy synchronous optical networking (SONET) and synchronous digital hierarchy (SDH).

Spark had previously used Nokia's PSS1830 Optical Transport Network to launch 200Gbps per wavelength fibre, and the telco also plans to improve the capacity of its transport network over the next two years.

Spark is also upgrading its network with Ericsson, announcing in February a deal to digitise its voice network by progressively upgrading its legacy copper Public Switched Telephone Network (PSTN) to an IP-based network named the Converged Communications Network (CCN) over the next five years.

Under this program, Ericsson will build the IP Multimedia Subsystem (IMS), which will form the core technology for the CCN.

The CCN will replace the PSTN to deliver new voice calling, landline, fibre, data, video conferencing, content, mobile, and Wi-Fi services enabling voice over LTE, voice over Wi-Fi, and VoIP.

The CCN will consist of three redundant core network nodes spread geographically across the nation, in order to ensure resilience during natural disasters or other outages.

Spark also announced beginning work on constructing a nationwide low-power, wide-area IoT network in July, partnering with Actility and Kordia to have a "significant proportion" operational as of June 2018.

The IoT network marks Spark's intent to "take a leadership position in IoT", IoT GM Michael Stribling said last month.

According to Stribling, Spark is also planning to deploy mobile-based IoT networks, including LTE-M1 and narrowband IoT (NB-IoT) networks.

Vodafone NZ will also be deploying a NB-IoT network in early 2018 across New Zealand.

Spark had announced first-half EBITDA of NZ$471 million, earnings after tax of NZ$178 million, and revenue of NZ$1.79 billion.

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