Spark, New Zealand’s leading telecom operator, reported an overall net earnings increase of 13 percent to $418 million, Spark Chairman Mark Verbiest announced on August 18. The results for the year ended 30 June 2017 were in line with expectations and mark further progress in Spark’s long-term digital transformation.
“It’s been another year of relentless focus on delivering for our customers in very competitive retail markets and on positioning Spark well for the digital future,” said Verbiest.
Spark’s revenue growth for FY17 was solid at 3.3 percent taking revenue to $3.614 billion, on the back of continued strong performances in IT services, up 19 percent, and mobile, up 5.6 percent. This performance, together with a continued focus on cost, helped to drive overall EBITDA growth of 3 percent, to $1.016 billion.
Despite the increased EBITDA, costs were up in 2017 compared to 2016, said Verbiest, reflecting higher short-term costs needed to successfully address customer service challenges experienced last year and to manage the workload arising from strong growth in Telecommunications-as-a-Service and IT service contract wins. In addition, there were costs related to the large-scale migration of customers off copper to wireless or fiber, and from Yahoo to SMX email.
“While we’re proud of what we have achieved so far, and we’ve continued to execute our long-term strategy well and deliver good financial results, there are signs that fresh impetus is needed for the next phase of our transformation,” said Verbiest.
Spark Managing Director Simon Moutter said, “Operationally, we have made some big moves. The successful launch of our ‘Upgrade New Zealand’ program saw wireless broadband connections grow to 84,000 (up 72,000), and fiber connections grow to 172,000 (up 73,000) –meaning around 37% of Spark’s broadband base is now off copper.”
Moutter added, “We also successfully migrated 800,000 customer email accounts safely to New Zealand-based provider SMX, and entered new partnerships with Netflix and Spark Arena to complement our Lightbox and Spotify value add-ons.”
The company has seen a strong take-up of Telecommunications-as-a-service offerings to Government with 100+ customers connected to solutions that contribute towards delivering more customer-centric public services, Moutter said. The company also made material improvements in key customer service metrics including call wait times.
“But we still have a long way to go,” Moutter claims. “In an exponentially evolving digital world, where change is the new normal, the complexity of fast-changing technology has customers grappling with the pace of change.
“Meanwhile, customer preference is shifting rapidly to wireless, enabled by high-speed mobile coverage. In mobile and broadband particularly, commoditization pressures mean more and more New Zealanders are buying their mobile or broadband services based primarily on price.
“Increasingly, the companies most likely to win are those that cut through complexity to deliver a highly automated and slick digital self-service customer experience, and who have a simpler proposition to sell, maintain and support than their competitors.”
Over the next few years, Spark plans to put more resources into digitizing and simplifying its products and services to materially lower its cost of operating and put more power into the hands of customers. Spark’s other focus will be to better leveraging its brands, meeting the needs of all parts of the market.
Spark’s third new area of focus will be to meet the growing customer appetite for wireless technologies. Moutter said the company will increase its emphasis on investment in this area to deliver improved mobile and wireless broadband services. “By 2020 we aim to have 85 percent of our broadband customers migrated away from copper onto fiber or wireless technologies,” he said.
Mr. Verbiest said the future looked bright for Spark. “Spark is in a great position to navigate the new digital era. We have a strong balance sheet. We have invested well in fiber and wireless data network leadership,” he said. “Our aim is to accelerate change at Spark, and work hardest where we can make the biggest difference for our customers.”