Spark earnings beat expectations

The profit fall reflected one-off gains the previous year's sale of its Australian mobile business, AAPT. Photo / Dean Purcell.

Spark New Zealand, formerly known as Telecom Corp, posted a 19 per cent decline in annual profit, reflecting one-off gains the previous year's sale of its Australian mobile business, AAPT, while underlying earnings were up as the telecommunications company reshapes its business to become focused on data and mobile services.

The board flagged a special dividend in the 2016 financial year.

Net profit fell to $375 million, or 20 cents per share, in the 12 months ended June 30, from $460 million, or 25 cents, a year earlier when the company reaped a one-off gain from the sale of its AAPT unit, the Auckland-based company said in a statement.

Stripping out the year earlier gain, profit was up 19 per cent, and ahead of Forsyth Barr's forecast of $356.4 million.

Earnings before interest, tax, depreciation and amortisation 2.8 per cent to $962 million, in line with Spark's guidance for low single digit growth, while revenue fell 2.9 per cent to $3.53 billion, also in line with guidance.

Ebitda missed Forsyth Barr's estimate for growth of 4.6 per cent, while the revenue decline was more than the 1.9 per cent decline the broking and research house projected.

The company anticipates Ebitda to rise between 0 and 3 per cent in the 2016 financial year, and flagged a bigger annual dividend of 22 cents per share, plus a special dividend of 3 cents per share as a means of returning excess capital.

"We are generating positive market momentum, especially in mobile, despite a highly competitive market," chief executive Simon Moutter said.

"The financial results support the board's view that a return to long-term, sustainable growth in the free cash flow, revenue and earnings over the coming years is both realistic and achievable."

Mobile connections grew by 172,000 over the year.

"We have closed the connection number gap on our largest competitor, Vodafone, to just over 150,000, having been around 600,000 behind them just three years ago," said Moutter.

Over the past year, Spark has been at odds with Chorus, which was spun out of Telecom in 2011, over the regulated price charged to use the network operator's copper lines and which is the subject of a review by the Commerce Commission.

The regulator will make a final decision on the price Chorus can charge in December, and is currently of the view that it should be an average $38.43 per month over the next five years, but shouldn't be backdated to when an earlier ruling came into effect.

Spark's board declared a final dividend of 11 cents per share, payable on October 9 with a September 25 record date.

That takes the annual return to 20 cents per share, up from 17 cents a year earlier, and ahead of Forsyth Barr's forecast for an 18 cent dividend.

The shares last traded at $2.76, and have declined 11 per cent this year.

See Spark's latest financial result here: