Spark increases profitability as revenue flattens for FY19

Mobile, broadband, and cloud revenue replaces drops from legacy technologies.
Written by Chris Duckett, Contributor

New Zealand telco Spark has reported a sharp increase in its profits for the 2019 fiscal year, reporting that net profits increased 12% to NZ$409 million, and earnings before finance income and expense, income tax, depreciation, amortisation, and net investment income (EBITDAI) broke past the NZ$1 billion mark with an 11% jump to NZ$1.09 billion.

Compared to last year, revenue was absolutely flat at NZ$3.53 billion, made up of contributions of NZ$1.27 billion from its mobile business representing a 2.7% increase and NZ$486 million from voice which was a 15% fall. Spark's broadband business saw revenue increase by NZ$20 million to NZ$685 million, its cloud and security business grew revenue by 8.1% to NZ$400 million, while managed data and networks saw revenue drop 4.8% to NZ$197 million.

In terms of connections, Spark added 57,000 mobiles to record 2.5 million in total, while voice and broadband were mixed. Legacy technologies of copper broadband and POTS and ISDN connections dropped by 28% to 249,000 and 17.8% to 329,000 connections respectively, while fibre connections grew 28.6% to 306,000 and wireless jumped 20.7% to 140,000. VoIP connections now total 62,000, and voice over wireless recorded a 86% increase to 26,000 connections.

"We've grown our business in the highly competitive mobile and cloud services categories, held our broadband position, entered new markets like sports streaming, led on cost management and transformed our company culture," Spark chair Justine Smyth said.

"It's very pleasing to achieve these positive outcomes in a year during which we implemented and embedded massive organisational change with the move to agile ways of working."

Speaking to New Zealand's Government Communications Security Bureau (GCSB) ban of Huawei in Spark's 5G network, the company said it is was working through its vendor selection process and considering whether it should present any mitigations to GCSB. The telco said it expects an NZ spectrum auction to be held in late 2020.

"Spark is gearing up to launch 5G services as soon as relevant spectrum is available," CEO Jolie Hodson said.

"We are pleased the government signalled recently it is considering an early, temporary allocation of some spectrum within the 'C Band' earmarked for 5G -- as this would enable rapid delivery of 5G services while the details of the longer-term spectrum allocation process are sorted through."

Earlier this year, the NZ Commerce Commission made a decision to deregulate Spark's copper service, with consumers currently making the switch away from legacy copper-based voice services. 

Other providers offer wholesale voice services that compete with these services, meaning regulation is no longer necessary," Telecommunications Commissioner Dr Stephen Gale said at the time.

"We consider that competition has been established, is increasingly effective, and is no longer dependent on access to these services."

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