Spark New Zealand (SPK) H1 2025 earnings summary

Executive summary

• Revenue declined 1.9% year-over-year to NZD 1.93 billion in H1 FY25, mainly due to lower mobile, IT services, and legacy voice revenues, partially offset by growth in mobile devices, cloud, data centers, and IoT.

• Reported EBITDAI fell 20.9% to NZD 419 million, with adjusted EBITDAI down 15.5% to NZD 448 million after normalizing for NZD 29 million in transformation costs.

• Net profit dropped 77.7% to NZD 35 million, with adjusted NPAT down 64.3% to NZD 56 million, impacted by lower EBITDAI and higher depreciation/amortization.

• Free cash flow increased 67.4% to NZD 77 million, driven by disciplined CapEx and working capital management.

• Interim dividend of NZD 0.125 per share (75% imputed) declared, in line with full-year guidance, supported by expected Connexa sale proceeds.

Financial highlights

• Mobile service revenue declined 3.7% to NZD 491 million, with enterprise/government down 17.7% and consumer/SME down 2.3%.

• Broadband revenue fell 2.3% to NZD 302 million; IT revenues declined 1.5% to NZD 336 million, with IT services down 10% and high-tech revenues up 17.1%.

• Data center revenue grew 13.6% to NZD 25 million; IoT connections increased 25% to over 2.2 million.

• Operating expenses rose 3.1% year-on-year, with network support costs up 30% and other OpEx up 14%.

• Depreciation and amortization increased 20% to NZD 300 million due to recent capital investments.

Outlook and guidance

• FY25 adjusted EBITDAI guidance reduced to NZD 1.04–1.1 billion, reflecting IT spending cuts and price competition.

• CapEx guidance maintained at NZD 415–435 million; free cash flow aspiration set at NZD 300–340 million, excluding Connexa proceeds and transformation costs.

• Dividend guidance of NZD 0.25 per share (75% imputed) maintained, with a review of capital management strategy planned for FY26.

• Mobile service revenue expected to decline ~1% for FY25; data center and high-tech revenue growth targets remain on track.

• Dividend Reinvestment Plan offers shares at a 2% discount.