Spark braced for earnings slowdown - Mobile World Live

Spark braced for earnings slowdown

26 AUG 2020

Spark New Zealand recorded profit and mobile revenue rises in the fiscal year to 30 June, but warned of difficult times ahead after beginning to feel the impact of Covid-19 (coronavirus) in its final quarter.

In a statement, CEO Jolie Hodson said the country is now entering a more challenging period with a recession expected and unemployment rising.

“We expect the impact of Covid-19 to be more material in fiscal year 2021,” she said, adding it will continue to take a disciplined approach to cost management, ensuring it has the flexibility to respond to changing economic conditions.

Its guidance assumes roaming revenue will be near zero and prepaid user numbers to be hit by a lack of travellers buying SIMs.

Reduced consumer spending will hinder handset sales, but the operator was optimistic about government efforts to stimulate the economy. However, it expects profitability to dip as much as 2 per cent.

Hodson noted a recent increase in pandemic alert levels is a reminder the situation “is not behind us”, with the operator lifting “broadband data caps for our customers once again”.

She said fiscal 2021 capex plans are focused on “supporting New Zealand’s economic recovery” with 5G and rural connectivity key targets. It expects to spend NZD350 million ($229.7 million).

Fiscal 2020
Net profit increased 4.4 per cent year-on-year to NZD427 million, boosted by lower tax expenses. Operating revenue rose 2.5 per cent to NZD3.6 billion.

The gains came despite lower revenue from international roaming and retail, a decline in data overage charges and higher bad debt provisioning.

Mobile service revenue increased 3.9 per cent to NZD848 million, with cloud, security and service management sales up 10.8 per cent to NZD443 million.

Prepaid monthly ARPU increased 6.8 per cent to NZD13.33 and post-paid dipped 1.5 per cent to NZD42. A 6.3 per cent rise in post-paid subscribers offset a 5.8 per cent drop in prepaid users, with the total flat at 2.5 million.

Capex fell 10.3 per cent to NZD374 million.

Spark chair Justine Smyth said fiscal 2020 marked the completion of its three-year plan to transform Spark from a traditional operator to an end-to-end digital services company and delivered compound annual growth in shareholder returns of 13 per cent.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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