Spark says financial results on-track, outlines ongoing transformation strategy

'The next phase is concentrated on delivering market-leading customer experiences'

Comments

Spark New Zealand says its financial results for the year ended 30 June demonstrate the company is performing well in the market as it continues its digital transformation.

"We are now well into the next phase of our ongoing business transformation, shifting focus from building the solid foundation of digital capabilities needed for future growth, to delivering on the opportunity provided by that foundation," says Spark chairman Mark Verbiest, in a statement.

“Notably, the growing areas of our business, such as mobile and platform IT services, now outweigh the declining areas such as traditional fixed line voice and legacy data services, signalling a successful repositioning and a notable turning point.

"We signalled our intention to increase dividends last year and we’re pleased to confirm an ordinary dividend of 22 cents per share and a special dividend of 3 cents per share for FY16.”

While total operating revenues and other gains of $3.497 billion were down slightly, once re-based for prior year divestments, changes to regulated access charges in Wholesale and the acquisition of the Computer Concepts Limited Group (CCL Group) in the current year, the total operating revenues and other gains were up 2.5 per cent on the previous year. This increase was fuelled largely by solid growth in mobile and platform IT services, says Spark.

Verbiest says Spark is well positioned for long-term success. “We’ve transformed Spark from the ground up. More customers are choosing us. We have a sound long-term strategy in place, a strong FY17 game plan and proven execution skills.

"The next phase of our strategy is concentrated on delivering market-leading customer experiences, which will underpin the development of a competitive, sustainable and well-led business with a strong financial performance and capital foundation.

Spark managing director Simon Moutter was pleased with progress yet upfront about areas that need to improve.

“We are clearly winning in the mobile market," says Moutter. Spark’s mobile revenues were up 11.3 per cent to $1.134 billion for FY16, well ahead of Vodafone’s recently published estimate of $1.065 billion.

“In broadband, our focus on higher-value plans and adding customer value through digital services, such as Lightbox and smart living solution Morepork, has helped a 5.4 per cent growth in revenues. There has also been excellent growth in business IT services revenue, up 11.1 per cent.

“Our most immediate issue though is customers experiencing unacceptable delays when contacting our call centres. While supply constraints and visibility of fault restorations are beyond the control of ISPs like Spark, we do not shy away from the fact that, as their digital service provider, we are responsible for the experiences of our customers.

"This is our highest priority right now and we are moving fast on a number of fronts. While we still have a long way to go, wait time performance has been improving markedly in recent weeks as a result of the work we’ve done to date.”

In June this year, Spark completed a four-year, $238 million Re-engineering Programme. The programme saw 52 legacy IT systems retired, 41 systems consolidated and over 100 million customer inventory records migrated. Completed on time and on budget, it lays the platform for the delivery of excellent digital customer services.

Moutter says the company is investing in innovation through Spark Ventures and through its support of startup sector programmes.

He also cites the company's support for community initiatives, particularly in technology education for young New Zealanders.

“We have also continued to develop our people through a range of leadership and diversity initiatives. We now have significantly more diversity in our leadership ranks, from the Board level down. We’re promoting more from within, bringing more diversity through to senior roles, faster.”