Spark posts 1% EBITDAI growth in FY21, announces additional 5G investment

18 Aug 2021

New Zealand telco Spark has published its annual financial results for the year ended 30 June 2021, reporting a 0.8% drop in revenues to NZD3.593 billion (USD2.492 billion), with the loss of NZD38 million in roaming revenues resulting from the COVID-19 pandemic masking a strong underlying performance in its mobile, cloud, security and service management operations. The telco highlighted that resilient revenues and disciplined cost management delivered EBITDAI growth of 1% to NZD1.124 billion, towards the top end of its FY21 guidance range. Net profit declined by 8.6% to NZD384 million, total operating expenses were 1.6% lower at NZD2.469 billion and CAPEX excluding mobile spectrum fell by 5.3% to NZD354 million in FY21.

At 30 June 2021 Spark reported a total of 2.398 million mobile subscribers, a decline of 3.9% year-on-year driven by a 13.2% fall in pre-paid customers, although total monthly mobile ARPU was 2.9% higher at NZD29.08. Total broadband connections fell 1.1% y-o-y to 701,000, with 12.2% growth in fixed wireless plans and a 7.6% rise in fibre subscriptions failing to offset a 29.6% drop in copper connections, while voice connections declined 14.4% y-o-y to 261,000.

Spark New Zealand Chair Justine Smyth commented: ‘The New Zealand economic recovery has been stronger than expected, but with recent travel bubble pauses, uncertainty remains. Closed international borders continue to impact Spark through the loss of roaming revenues, lower overall growth in some markets, and talent scarcity within the technology sector. In this context, we’re pleased with the strong underlying growth we are experiencing in our core markets, and in Spark’s ability to adapt at pace and execute disciplined cost management to deliver EBITDAI growth.’

With the first phase of Spark’s infrastructure asset review now complete, the company announced further significant infrastructure investments are planned for FY22. ‘We have a clear view of the infrastructure assets that are currently critical to our competitive advantage and resilience, and that we want to invest in – including the ‘active’ components of our mobile network, multi-access edge compute, our critical network exchanges, and data centre capacity,’ stated CEO Jolie Hodson

To this end the telco announced plans to invest an additional NZD35 million to accelerate its 5G rollout, boosting total mobile connectivity investment to NZD125 million in FY22, and delivering 5G coverage to approximately 90% of the population by the end of calendar year 2023 – assuming the necessary spectrum is made available by the government. The accelerated rollout will introduce 5G to an additional ten to 15 locations across the country by the end of 2022, with more to follow in 2023. The accelerated rollout will see Spark upgrade approximately 50% of its sites nationally to 5G by the end of calendar year 2022, and 85% by the end of calendar year 2023.

The infrastructure review also identified assets that can be shared, such as the passive components of Spark’s mobile network and fibre. Although the company is actively exploring shared ownership models, it stressed discussions are ongoing and there is no certainty that any transaction will proceed.

New Zealand, Spark