Spark has reported healthy first-half financials, but is keeping mum on key sports streaming numbers - bar the snippet that Spark Sport fell within a $19m "other" category (more on which below). That's not insubstantial revenue for a new subscriber service, if only 1 per cent of the telco's total revenue for the six-month period.

Shares were up 1.5 per cent to $4.82 as the market opened.

The telco's net profit jumped 9.2 percent to $167m in the six months to December 31.

Revenue increased 4.0 per cent to $1.82b, billed as the fastest revenue growth in three years.


Reported Ebitdai (earnings before interest, tax, depreciation, amortisation and investment income) grew 2.2% to $500m.

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The dividend was confirmed at 12.5 cents per share (the same level as the first half of 2019), with the full-year guidance of 25cps confirmed.

The result was largely in line with Forsyth Barr analyst Matt Henry's forecast for ebitdai of $506.9 million on revenue of $1.79 billion.

Spark Sport revenue: not more than $19m

Former CEO Simon Moutter's hint that Spark Sport financials would be reported with the first post-Rugby World Cup notwithstanding, a search through Spark's interim report for "Spark Sport" yielded zero results. Ditto for "rugby."

"Both subscriber numbers and financials for Spark Sport are commercially sensitive so not broken out separately in these results," a spokeswoman confirmed to the Herald, shortly after the first-half numbers where filed with the NZX.

During a conference call, CFO Stefan Knight did provide a little colour, however, saying Spark Sport fell within the "Other" revenue category, along with big-data unit Qrious and various IoT (internet of things) initiatives, which generated a total $19m.

The $19m figure (for June 1 to December 31) would not include the first wave of people who signed up for a Rugby World Cup early-bird special, which went on sale from May 9, or those who signed up for the regular $19.99/month Spark Sport service, which launched in March with Formula One, and added English Premier League football and other codes from mid-year - with domestic cricket on the way.


Spark said toward the end of the Rugby World Cup that its RWC Tournament Pass had 192,000 active users, but it declined to say how many had paid up to $90 for a pass and how many were on freebies by dint of being on a qualifying Spark broadband plan.

Mobile gains

The telco did credit Spark Sport as one of the factors in its revenue lift, along with an increase in its cloud, security and service management growth and a 5.5 per cent lift in "high margin mobile service revenue," as the telco added a net 62,000 contract customers.

Spark lifted its mobile market share 1.2 percentage points from the prior year to 40.1 per cent, its highest since 2012.

Average monthly revenue per user (arpu) arrested a three-year decline for contract customers, which Hodson pinned on arpu decline for business customers tailing off while consumers spent more.

Chief executive Jolie Hodson said the broadband market remained challenging, and Spark had scaled back its wireless sales activity in the run-up to the Rugby World Cup.

"We made a deliberate decision to limit wireless broadband sales in the lead up to the Rugby World Cup, as a conservative measure to ensure customers had a great viewing experience while we introduced our new streaming service," she said.

"Our capacity was more than sufficient, so we expect this to be a one-off and connection growth to return to trend in the second half."

Spark's broadband connections slipped 0.9 per cent to 692,000, as customers on copper lines dropped 28.7 per cent to 211,000. Fibre connections were up 24.5 percent at 340,000, while its wireless customers increased 9.3 percent to 141,000, the Rugby World Cup pause in wireless sales notwithstanding.

The company's broadband revenue edged up 0.3 percent to $345 million. Spark dialled back its forecast growth in wireless customers to 20,000 from a previous target of 30,000.

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Hodson had earlier warned that Spark would not receive its usual profit-share from the Southern Cross Cable ($61m in 2017, $50m in 2018 and $15m this year) as it gears up for the new trans-Pacific "Next" cable, which has been part-funded by Telstra taking a 25 per cent stake, diluting Spark's holding in Southern Cross from 50 per cent to 40 per cent. Hodson said profit-share from Southern Cross - which now faces competition from Hawaiki Cable - should resume in 2022.

The company stuck by its full-year guidance for ebitdai of $1.1b to $1.2b, up from $1.09b a year earlier.

Capital spending shrank 6.4 per cent to $247m in the first-half and full-year capex guidance of $370m was reaffirmed. That investment will be skewed to mobile as Spark builds its 5G network. With Huawei sidelined by the GCSB (and the pair's relationship only getting more rancorous), Spark has gone with Nokia Networks, Ericson and Cisco for its first wave of 5G deployment.

Spark offloaded its Lightbox entertainment streaming service to Sky in a deal that closed on January 1, the day its first-half books closed.

Neither party put a price tag on the deal at the time, but notes with Sky's interim results filing put the figure at "$6m cash plus the fair value of prepaid content rights, yet to be determined."

Wealth manager Jarden saw Spark's Lightbox sale as a precursor to the telco's exit from sport as well. The Herald will question Hodson on that point later today.

The big profit and revenue jumps did show that while rival Sky is under keen financial and share price pressure after its spend-up to retain Sanzaar rights, Spark is not hurting from its sports streaming efforts so far - or at the very least, any red ink from streaming pales into insignificance against overall earnings.

Spark shares closed Tuesday at $4.75 for a market cap of $8.7b. The stock is up 17.9 per cent over the past year.

Sky shares continued to scrape close to their all-time low yesterday, closing at 63c for a market cap of $275m.