Spark reports rosy first half on back of mobile, cloud, and cybers

Telco crows about its highest market share since 2012.
Written by Chris Duckett, Contributor

New Zealand telco Spark has reported gains in its mobile as well as cloud, security, and service management arms for the first half of its financial year to December 31.

Overall, the company reported a 4% increase in revenue to NZ$1.82 billion, and earnings before interest, tax, depreciation, amortisation, and interest (EBITDA) grew 2.2% to NZ$489 million. This flowed through to net earnings after tax of NZ$153 million, up 9.2% on the first half of 2019.

Of the NZ$70 million revenue gain, NZ$22 million was due to increased mobile service revenue, while NZ$24 million was due to the cloud, security, and service management segment.

Spark said the increased mobile revenue was due to the doubling of its number of "unlimited" plan customers, however it reported a drop of 15,000 mobile customers over the first half to 2.5 million. At the same time, the telco claims it has 40.1% of the New Zealand market, it's highest share since 2012. While for cloud revenue, its revenue increase was due to contracts being brought onboard after they were delayed in the last financial year, with the telco expecting the segment to grow its revenue by 8-10% for the full year.

Those two segments of the business now account for 59% of Spark's margin, the company said, up by almost 10 percentage points since the first half of FY17.

While revenue in the broadband segment was steady, the company saw increased monthly revenue per user with 70% of its customer now signed up to "unlimited" and "unplan" services, up 10 percentage points in the past year. Spark now has 30% of its broadband customer base on copper connections, representing 211,000 customers, compared to 340,000 fibre and 141,000 fixed wireless customers.

For its voice business, Spark said it contributed NZ$26 million less than the first half of last year, a drop of 11.6% to NZ$199 million as it lost 68,000 telephone and ISDN customers year on year, while adding only 9,000 VoIP and 8,000 voice over wireless users.

Spark Chair Justine Smyth said the telco was entering the last six months of its three year strategy.

"Our move to agile ways-of-working continues, with ongoing incremental gains in our speed to market, customer understanding and focus, and in building a high performance and inclusive culture," she said.

"We have made significant investments in Spark's network infrastructure, which has improved our competitive advantage, and diversified our business beyond traditional telecommunications into growth segments like digital services and sports streaming."

The telco will unveil its next three-year plan on April 2.

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