Spark New Zealand (Spark) today [28 February 2024] announced its H1 FY24 result, with adjusted revenue and EBITDAI growth against the backdrop of a challenging economic environment.
Spark Chair Justine Smyth said, “The first half of FY24 was characterised by high inflation and cost of living pressures, which flowed through to lower levels of consumer and business confidence. While Spark’s products are largely resilient to economic downturns, they are not immune, and we saw weaker demand in some areas of the business.
“Despite these challenges Spark continued to deliver top-line growth [1] and has made solid progress implementing its new three-year strategy, with cornerstone digital infrastructure investments in data centres and 5G Standalone progressing to plan. With the ongoing exponential growth in data, businesses digitisation and cloud adoption, and the rapid uptake of generative AI, demand for data centre capacity is accelerating, and Spark is well positioned to capture its share of this growing
market.
“The Board is pleased to continue delivering returns to shareholders, with $305 million in TowerCo proceeds returned to date through our on-market share buy-back and a first half dividend of 13.5 cents per share declared, 100% imputed.”
Commenting on the half-year results, Spark CEO Jolie Hodson said, “Mobile remains central to our growth, with service revenues up over 6% and Spark capturing 47% of total mobile connection growth in the half [8]. We have maintained broadband revenues and margin despite high levels of price competition in an inflationary environment, and now have 31% of our customer base on wireless. We have also returned cloud to growth through the successful launch of our new hybrid cloud proposition CloudIQ, with margin benefits flowing through from our cost base reset.
“In an inflationary environment we must remain focussed on disciplined cost control, and as we implement our new strategy we are creating a more efficient, low-cost operating model to ensure we can continue to invest in our growth ambitions.
“Our digital infrastructure investments into data centres and 5G Standalone are progressing at pace. These investments underpin ongoing strength in our core business and new high-tech commercialisation opportunities that will build our growth engines of the future.
“We completed a 10MW expansion at our Takanini data centre site and we are now planning to invest in a new hyperscale data centre campus on Auckland’s North Shore, as demand for capacity continues to grow. High-tech revenues increased off the back of strong IoT connection growth, with our IoT networks now supporting over 1.8 million connections”.
The announcement noted also that in digital services, Spark stabilised its IT market performance, while driving new growth in data centres and high-tech solutions .
Interventions to improve IT product performance delivered 3.8% growth in cloud revenue, with increased private and public cloud workloads and the launch of a new hybrid cloud service, CloudIQ. Cloud gross margin grew 7.6% as the cost base was reset, with benefits to continue flowing through in the second half. Overall IT revenues held flat at $345 million, impacted by a slowdown in service management, primarily driven by lower public sector demand.
Spark’s 10MW expansion of its Takanini data centre completed in August 2023, with revenue coming online during the half and driving a revenue increase of 38.5% to $18 million. Spark has a strategic ambition to establish three large-scale data centre campuses in Auckland, supported by a network of regional data centres across the country. In line with this objective, Spark has reached conditional agreement to purchase land within a new development on Auckland’s North Shore, where it intends to develop an initial 10MW hyperscale data centre campus, with the option for further expansion.
High-tech revenues grew 12.9% to $35 million, driven by significant growth in IoT connections. Digital health revenues reduced 8.7% to $42 million, as public sector activity remains subdued.
Source: Spark