Tuesday, 26 September 2017

Spark NZ chairman quits as profits rise

By Mary Lennighan, Total Telecom
Monday 21 August 17

New Zealand telco outlines three-point plan for the future, including a reduction in operating costs and migration away from copper.

Spark New Zealand posted solid earnings growth in its full year 2017 and named a new chairman as the current holder of the post announced his intention to retire. The Spark board appointed director Justine Smyth as its new chair, effective in early November. Smyth will succeed Mark Verbiest, Spark chairman for six years…

Spark New Zealand posted solid earnings growth in its full year 2017 and named a new chairman as the current holder of the post announced his intention to retire.

The Spark board appointed director Justine Smyth as its new chair, effective in early November.

Smyth will succeed Mark Verbiest, Spark chairman for six years. Verbiest said he is stepping down now to avoid a situation that could see multiple directors retire in quick succession.

"[Verbiest] has set an outstanding governance example and helped drive the transformation of Spark as a business and as a driver of New Zealand's economy," Smyth said.

Spark's latest full-year numbers appear to back up that statement.

The telco reported 3.3% revenue growth in the 12 month to the end of June to NZ$3.61 billion (€2.2 billion), driven by its IT services and mobile businesses. Revenue growth helped to drive a 3% EBITDA uplift to NZ$1.02 billion

"The increased EBITDA, combined with a reduction in depreciation, resulted in overall net earnings increasing a pleasing 13.0% to $418 million," Verbiest said.

"That said, costs were up on last year, reflecting higher short-term costs needed to successfully address customer service challenges experienced last winter and to manage the workload arising from strong growth in telecommunications-as-a-service and IT service contract wins," the outgoing chairman explained.

"In addition, there were costs related to the large-scale migration of customers off copper to wireless or fibre, and from Yahoo to SMX email," he said.

Meanwhile, Spark CEO Simon Moutter talked up the telco's performance, referring specifically to mobile broadband, fibre and cloud services, "but we still have a long way to go," he admitted.

The shift in customer preference to mobile, the commoditisation of broadband, and the need for slick and automated customer service characterise the current telecoms landscape, he said.

"These are the forces and trends driving Spark to target three new focus areas in its strategy," Moutter said.

Firstly, the telco plans to digitise and simplify its products and services in order to lower operating costs. It also aims to use its various brands to meet customer requirements across the market, from high-end – and spend – users to the value sector.

Finally, it committed to investing in mobile broadband technologies. 

"By 2020 we aim to have 85% of our broadband customers migrated away from copper onto fibre or wireless technologies," Moutter said.
 

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