Tech Insider: Spark CEO, chairwoman’s ‘cut-short’ jaunt across the Tasman sets tongues wagging

Spark chief executive Jolie Hodson (left) and chairwoman Justine Smyth.

Spark is the subject of more market chatter after its leadership team’s apparent transtasman jaunt.

An investment insider told the Herald that Spark chief executive Jolie Hodson and chair Justine Smyth were in Sydney and Melbourne last Wednesday and Thursday for meetings that included investment bank UBS - only for the visit to be cut short by a day as the pair abruptly departed a day early.

The telco is playing its cards close to its chest, with a spokeswoman offering only: “It is standard practice for our CEO and CFO to meet with investors across key markets following our full-year results. Our chair and other board members also meet with investors periodically across the year.”

Spark’s FY2023 result benefitted from a net $583 million in proceeds from the 70% sale of its celltower tower network passive assets (Forsyth Barr noted recently that most of the funds went to “unfunded dividends and share buybacks”).

The Australian speculates that Spark’s fibre assets could be next on the block, referencing the deal announced yesterday that will see Vocus buy TPG’s fibre and fixed assets for A$3.5 billion. There has also been on-again, off-again speculation about Telstra selling its InfraCo unit.

“We don’t comment on rumour or speculation,” the Spark spokeswoman said.

It wouldn’t be the first time a telco infrastructure trend had been copied on this side of the Tasman. A string of cell tower deals in Australia proceeded similar sell-offs involving Spark, One NZ and 2degrees mobile towers here.

And there are already moves afoot in that direction. Owner Infratil also recently said that One NZ would consolidate its fibre assets into an entity called EonFibre – sparking immediate speculation the business was being prepared for sale. But One NZ’s Nicky Preston told the Herald, “We currently have no plans to sell EonFibre, and instead plan to operate it as a dedicated business within our overall group to grow and expand our valuable fibre network.”

But although The Australian didn’t mention it, there was another possible - or even probable - reason for the Sydney-Melbourne trip: Exploring funding options for a $1 billion data centre push.

At Spark’s full-year result briefing on August 28, Smyth said the telco’s data centre development plans would require around $1b of capex over the next five to seven years. Smyth said a potential hybrid capital notes issuance would help fund its growth investments in the near term.

“We will also explore other equity funding options such as capital partnerships,” Smyth added.

Spark’s under-pressure shares fell again yesterday to close at $3.

The stock is now down 39.8% for the year and at its lowest level since 2015.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.