Telco incumbent Spark has posted grim figures, headlined by a steep 77.7 per cent fall in net profit after tax to $35 million for the first half of fiscal year 2025, as recessionary conditions continue to batter business performance.
Revenue declined 1.9 per cent to $1.939 billion, while earnings before tax fell 20.9 per cent to $419 million.
Spark's enterprise and government division was particularly hard hit, with customers cutting mobile fleets amid headcount reductions and aggressive price competition affecting margins.
"When we updated the market in October, we outlined that we were experiencing one of the longest and deepest recessionary periods in recent history. Since that time, we have seen no improvement in these conditions," Spark chairwoman Justine Smyth said.
Mobile service revenue dropped 3.7 per cent to $491 million, while broadband revenue fell 2.3 per cent to $302 million as customers switched to cheaper plans due to cost-of-living pressures.
In response, Spark announced a major transformation programme expected to deliver $80 million to $100 million in cost savings for full-year 2025, rising to $110 million to $140 million annually by full-year 2027.
While not spelt out, staff reductions at Spark could be on the cards as part of the cost savings programme.
“We are responding to the challenges we are experiencing in the short-term, in a way that also builds a stronger, more competitive business over the longer term. It is never easy to make changes that impact our people, and we do not do so lightly. I want to acknowledge our teams at Spark who have continued to support our customers during a time of change for our business,” Spark chief executive Jolie Hodson said.
The telco maintained its full-year dividend guidance of 25 cents per share but reduced its earnings before tax forecast to $1.04 billion to $1.1 billion, down from previous guidance of $1.12 billion to $1.18 billion.
A first-half dividend of 12.5 cents per share will be paid on April 4.
Spark expects to receive approximately $310 million from the sale of its stake in tower company Connexa in the third quarter and is seeking investment partners for its data centre growth strategy.
17 Comments
Utter utter leadership failure. Sure there is a recession, but the lack of vision, true innovation has relegated this company to a death spiral. Like them of hate them, we all need Telco and these guys are the backbone.
I am surprised there hasn’t been a motion of no confidence put forward.
Innovation is hard to come by when most businesses here simply treat their workforces and contractors as cost centres to be minimised in order to maximise profits.
Spark, like many other large corporates in NZ Inc, is notorious for cycling most of its professional staff (IT, engineering, accounting/finance) from cheaper locations on temporary visas. It also uses market power to create a race-to-the-bottom on procurement forcing contractors to adopt the very same approach to recruitment.
Now everyone is panicking when the squeezed middle-income workers are either jumping across the ditch or shutting their wallets tight. The go-to solution as always will be to lobby the government to fix these issues with taxpayer money.
It was asked at the AGM if performance doesn't improve should the shareholders expect resignations - non committal reply. Spark management have shown no leadership for years - it was clearly signaled by the incoming government that the government department headcounts were to be cut yet they continued as normal. I would argue that the management became complacent and believed their own BS.
One major company told Spark management some years ago that Spark are not as good as they think they are.
Don't even mention Spark Sport or Lightbox - both vanity projects by the management at the time.
Got to be on the cards as if they keep this performance up there won't be a company left. You can see why people go into property in NZ, most NZ companies are underperformers with weak if not inept management. NZ is not going to get a lot of growth when NZX companies keep recording poor performances.
To much focus on Govt funded junket, which is in all engines stop mode. Throw in a culture that's machine guns workers to maintain shareholder dividend. Crazy in a recession - they should just under perform, and be ready to power out the other side. I guess they will just purchase another success business and then destroy it, as is their way.
While not spelt out, staff reductions at Spark could be on the cards as part of the cost savings programme.
So, the board, CEO and all C suite exec then? The dismissal with no recourse for employees earning over 180k has it's perfect use case here, hell, if any ordinary worker delivered such a result, they'd be on a PIP the next day.
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