Spark NZ FY18 results: Strong performance in growth areas while transforming business for the future

Now one of the first large companies in the region to transition to Agile model at scale

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Spark New Zealand says its financial results for the year to 30 June 2018 show the business continued to deliver against key financial and operational targets, while undertaking one of the biggest change programmes in the company’s history.

Spark chair Justine Smyth says a year ago, the company set out a three-year vision of how the business would maintain growth in a highly competitive environment.

“Underpinning this vision were three strategic focus areas: an increased emphasis on wireless; leveraging multi brands; and being the lowest cost operator through simplification, digitisation and automation,” says Smyth.

“Spark has delivered against these focus areas, while simultaneously making the bold decision to transition the company to an Agile way of working – and this flowed through to its financial results.”

Spark reported year-on-year revenue growth of $35 million, aking revenue to $3,649 million. The company says this was driven by substantial revenue growth totalling $132 million across mobile (up 6.9 per cent) and cloud, security and service management (up 15.1 per cent).

This growth was partially offset by continuing declines in legacy voice, managed data and networks revenues; which were down, in total, $100 million..

Spark says Southern Cross dividends also declined by $11 million to $50 million during FY18.. Spark says it has anticipated the decrease in Southern Cross dividends for some time, with opportunities for the pre-sale of capacity for use by customers in future years declining as the remaining life of the existing Southern Cross cable network reduces.

Managing director Simon Moutter says Spark’s success in growth areas continued to offset decline in legacy areas of the business.

“We saw a continued growth story in cloud, security and service management products during FY18, with both revenues and margins improving over the year. Our business customers increasingly recognise the benefits and flexibility offered by ‘as a service’ cloud products, and we have launched new security products to capture growth in that market,” says Moutter, in a statement.

Simon Moutter, managing director of Spark.

Moutter says the company made substantial progress on its programme of simplification, automation and digitisation over the year.

Improvements to digital self-service channels and the introduction of artificial intelligence, through chatbots and other automation tools, reduced customer service voice calls by almost a quarter year-on-year.

Spark also rolled out 40 different “bots” to automate high-volume and sometimes very complex business processes and tasks.

“Customer satisfaction measures improved over the financial year, with net promoter scores (NPS) improving for both the Spark and Skinny brands,” says Moutter. “We achieved this off the back of our new and improved digital channels, as well as better performance in our more traditional channels.”

Spark’s multi brand strategy continued to help the company win customers across different market segments – particularly price-sensitive markets.

Low-cost brands Skinny and Bigpipe drove the majority of Spark’s FY18 total broadband customer growth of 13,000 net new connections.

Moutter says Spark began the transition to Agile towards the end of the financial year with the “engine room” of the business – which encompasses core functions such as network, IT, product development and marketing.

“These parts of the business have been completely reorganised into small, multifunctional teams, working on single customer propositions – and seeing these through from end-to-end. We also began applying Agile methodologies across the rest of the business to varying degrees depending on the nature of the business operation.

“We are one of the first large companies in Australasia to make the move to Agile at scale in such a short space of time. Our move has attracted a lot of interest from other companies – here and overseas – who are grappling with the same issues of uncertainty and technological and market disruption.”