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Hamish Fletcher

Business reporter for the NZ Herald

Spark turnaround ahead of schedule, says Moutter

Spark chief executive Simon Moutter. Photo / Dean Purcell
Spark chief executive Simon Moutter. Photo / Dean Purcell

Spark's three-year plan to transform its business is ahead of schedule, managing director Simon Moutter says.

The company, formerly known as Telecom, reported full-year profit from ordinary activities, excluding discontinued operations, was up 19.8 per cent to $321 million for 12 months to June 30.

But when the impact of a one-off restructuring charge is removed from 2013 numbers, this year's net earnings from ongoing operations were down 7.7 per cent, the company said.

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Spark reported a statutory net profit of $458 million, up 94.1 per cent for the 12 months to June 30, when taking into account AAPT, the telco business it sold across the Tasman earlier this year.

Spark's operating revenue, from continuing operations, was down 2.6 per cent to $3.64 billion for the year.

Operating earnings (ebitda) were $936 million, up 7.1 per cent. Adjusted operating earnings was down 4 per cent.

Investors gave a muted response to the result, with Spark's shares trading at $2.88, down less than 2 per cent.

The company's mobile connections jumped by 191,000 over the year and Spark now has more than 2 million mobile customers.

Mobile revenue was "strongly up" with 6 per cent growth for the year.

Spark estimates it holds around 39 per cent of the mobile market by revenue, up 2 per cent in this over the 12 months to June 30. The company wants to grow its share by 1 to 1.5 per cent in the current financial year.

See the Spark financial results presentation here:

Broadband revenue growth was down 3.5 per cent and Spark was "hanging on" to its market share, holding around 47 per cent as at June 30.

Spark gained 20,000 broadband customers over the period, with 669,000 at the middle of this year.

IT services revenue grew by 5.8 per cent and Spark's share of this market segment grew slightly in the year, by the company's own estimates.

Spark raised its dividend per share by 1c for the 6 months to June 30 and anticipates delivering 18 cents per share in the present financial period.

Spark managing director Simon Moutter said the early impact of the name change from Telecom had been "very positive".

"There are positive signs that customers are receiving the new brand well," Moutter said.

Spark told investors in 2013 of its plans to transform the company from being a traditional telco to a "digital services" business.

This involved stabilising revenue and margin while reducing costs in the 2014 and 2015 financial years while driving revenue growth in the 2016 financial year.

Moutter today said the company was ahead of schedule with this plan:

"Today as we sit here, we're a little ahead of that plan and we're very confident we're pursuing a sound strategy and we're aiming to deliver improving results form here forward," he said.

Moutter said the company had achieved its big targets for the last financial year and in one case had "over-achieved" on a goal.

Total revenue is expected to slowly decline in the year in the present year. While the retail business would have modest revenue growth, this would be offset by declines in Spark Digital and the wholesale arm of the company.

Spark was expecting to record "low single digit growth" in operating earnings and the company also hopes to grow net earnings, Moutter said.

- NZ Herald

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