Spark New Zealand reported strong financials for its fiscal year ending 30 June, with lower depreciation costs boosting its bottom line, and strength in mobile and IT services driving steady revenue growth.

The operator’s net profit increased 13 per cent to NZD418 million ($306 million), which the company said was improved by a reduction in depreciation. Total revenue for the year increased 3.3 per cent year-on-year to NZD3.6 billion, driven by a 5.6 per cent rise in mobile turnover to NZD1.2 billion and a 19 per cent jump in its IT services business to NZD783 million.

Spark MD Simon Moutter said: “Operationally, we have made some big moves. The successful launch of our ‘Upgrade New Zealand’ programme saw wireless broadband connections grow to 84,000 (up 72,000), and fibre connections grow to 172,000 (up 73,000) – meaning around 37 per cent of Spark’s broadband base is now off copper.”

He said by 2020, Spark aims to have 85 per cent of its broadband customers migrated off copper onto fibre or wireless technologies.

Mobile strength
Mobile revenue gained on a 4.3 per cent increase in subscribers to 2.39 million and 4.1 per cent growth in high margin service revenue. Mobile service revenue rose 4.1 per cent to NZD781 million.

Post paid users increased 5.1 per cent to 1.14 million, while prepaid subs were up 4.1 per cent to 1.25 million at end-June. Total ARPU was down slightly to NZD27.27 from NZD27.47 a year ago.

Operating expenses rose 3.5 per cent to NZD2.6 billion, which Moutter said reflected higher short-term costs needed to address customer service challenges experienced last winter, and to manage the workload arising from strong growth in telecoms-as-a-service and IT service contract wins. In addition, he said there were costs related to the large-scale migration of customers off copper to wireless or fibre, and from Yahoo to SMX email.

Capex for FY17 rose 6.4 per cent to NZD415 million, or 11.5 per cent of revenue.

Spark’s outlook for fiscal 2018 forecasts flat to 2 per cent growth in revenue, and capex of about NZD410 million, down slightly from FY2017.