Spark says results 'on plan' - affirms guidance

Spark half year profits rose to $158 million from $145 million last year. Photo: Dean Purcell.

Spark New Zealand, the nation's biggest communications company, has confirmed earnings guidance and dividend expectations at its annual meeting in Auckland.

Around 180 shareholders attended the meeting in person with the company also streaming the meeting online in what is thought to be a first for Australasia.

Managing director Simon Moutter said the company was transitioning from a telco business to a digital business, with the next phase being focused on driving market revenue and margin growth.

He said Spark was already number one in data and cloud services, and was expected to overtake Vodafone New Zealand as the leading provider of mobile services in the current financial year as the company revives its fortunes following the rebranding of Telecom to Spark.

The company currently has around 2.2 million customers on its mobile network or 40 per cent, according to Moutter.

Chairman Mark Verbiest said the 2016 financial year was off to a "good start", with first quarter results "on plan" and no change to previous profit guidance.

"Particularly pleasing is the significant underlying improvement in free cash flow," said Verbiest.

"The board's intention is to pay annual dividends of 22 cents per share and special dividends of 3 cents per share (subject to there being no material changes in operating outlook) in the current financial year.

"Combined with the share buyback programme we commenced in June this year, these special dividends will also assist to return gearing to more appropriate levels".

He acknowledged that the demand for fibre-enabled broadband was leading to a "disappointing service experience for too many of our customers" and this was an area of focus.

Moutter told the meeting that the new brand had shown a strong up-tick among both retail and business customers' willingness to recommend Spark to others, which was also shown through its growth from a market capitalisation of $4 billion in 2013 to $6 billion this year.

Verbiest told shareholders Spark was highly focused on the potential for cyber-attacks and the board audit and risk committee is updated on the issue every six months.

The company sought the approval for the issue of up to 1.25 million shares and an interest-free loan for Moutter between now and December 2018.

Spark shares fell 0.6 percent to $3.42, and have gained 10 percent this year.

-Additional reporting from BusinessDesk