Craigs’ analyst, Wade Gardiner, said while core operating profit was down on last year, “earnings appear to have stabilised and so, in that regard, we view it as a strong result”.
The stronger-than-expected mobile result was a highlight. The reintroduction of the dividend reinvestment plan “could help provide some headroom” for future profit payouts, Gardiner said.
He maintained his “overweight” rating but chipped his 12-month price target down from $3.21 to $3.04.
The Craigs analyst said the positives were counterbalanced by cost-cutting being below his expectation (Spark said it had made $101m in cost savings under its “Spark-30″) and the impact of higher interest rates.
Goodbye ‘hotchpotch’
Morningstar’s Brian Han continued to be bullish on Spark, saying the telco would “shine without the distractions” of its jettisoned “non-core” business lines – which he saw as “a hotchpotch of digital services whose earnings have been erratic at best”.
However, he reduced his fair value estimate from $3.60 to $3.
Han liked accelerated cost-cutting, debt reduction, and the refocus on “core” mobile and broadband, and dividend certainty but added, “The continuing decline in fixed-line broadband connections, down another 5% in fiscal 2026, is a concern”.
Mobile worries
Forsyth Barr’s Ben Crozier said the result was in line with his expectations. He maintained his “neutral” rating but nudged his 12-month target up from $2.30 to $2.35 on the prospect of minor near-term dividend increases (Spark’s full-year dividend was 16 cents per share; it guided to 16-18cps for FY2027).
While the 4.4% growth in mobile revenue to $1.52b was a positive, Crozier qualified that: “We view connection trends across Spark’s mobile network as still worrying.”
Higher-yielding “post-paid” or contract plans declined by 5000 over the second half of FY2026 and are now down 9000 over the past 18 months – “a contrast to the steady growth delivered over the prior decade”.
Crozier also highlighted that “fixed wireless connections reported their worst sequential change on record in 2H26 and are now down 6% from their peak”.
Analysts like fixed-wireless (using mobile broadband to replace fixed-line broadband or fibre in a home or small business) because it literally and commercially cuts wholesaler Chorus out of the loop, allowing Spark to pocket close to 100% of the revenue from a broadband connection.
Mobile service revenue was up just 1.1% to $998m and the segment saw a 7% fall in enterprise and government revenue to $93m. It’s a sector where analysts see 2degrees has been making inroads. On a conference call with analysts, Hodson said the rate of decline had halved.
Hodson – not going anywhere
Shortly before its full-year result, Spark announced that former Mercury chief executive Vince Hawksworth would succeed the long-serving Justine Smyth as chairwoman from November 5.
Earlier, Salt Funds’ managing director, Matthew Goodson, said: “I’d expect that [a new chief executive] will be on the agenda for the next chair.
“Jolie Hodson has had over seven years as CEO and has had senior roles at Spark since 2013, so it would be a natural time to transition to a new leader.
NewstalkZB’s Heather Du Plessis-Allan said to Hodson after yesterday’s result,“All the talk is that the chair’s first job is going to be a new CEO.
“Does that mean that you’re at the end of your tenure, potentially?”
Hodson said, “At this point, no, I’m focused on delivering what I’ve been asked to do and what we’ve set out in terms of the organisation. At the end of the day, I work for the board and ultimately it will be their decision.”
Hodson addresses bonus
The board approved a 3.4% increase in Hodson’s remuneration, according to Spark’s 2026 annual report.
The pay bump will take her base salary from $1.27m to $1.31m.
In FY2026, Hodson also received a short-term bonus of $859,908 and a long-term incentive payment of $26,368, taking her total remuneration to $2.2m.
The board also approved a one-off bonus, equivalent to 20% of Hodson’s salary, if “transformation performance targets” are met in FY2027.
The telco has consultation underway on another restructure.
“We never make changes to our people lightly. We have to adapt our business to the environment,” Hodson told the Herald in an interview after the result.
It was common for senior executives in New Zealand to have a big part of their remuneration as “performance pay, which is at risk,” Hodson said.
“In FY2024 and FY2025, where we didn’t achieve our performance targets, I got zero [performance pay] in those two years.”
General economic outlook
“Different sectors are being affected differently. If you think about agriculture and what’s happening there, the South Island seems to be more buoyant,” Hodson said.
“I do think there are some promising signs as we look towards 2027, but I’d be far from saying we’re in a buoyant shift now and we’ve done our plan based on being able to deal with anything that happens, really.”
Starlink cutting lunch threat
In its full-year result Spark said its network competitiveness had been enhanced by its satellite-to-mobile partnership with SpaceX’s Starlink for connectivity in mobile blackspots.
But Harbour Asset Management’s Shane Solly said the possibility that Starlink will expand to offer its own fully fledged mobile service (now heading toward a reality in the US) has weighed on the stock price of telcos worldwide.
“If you think about terrestrial networks, which mobile operators like us run, the amount of customers we serve per square kilometre is far greater than satellites could ever serve,” Hodson told the Herald in her post-earnings interview.
“So if they [Starlink] are going to enter into owning a terrestrial mobile network, there’s huge capital investment with spectrum, all those other things.”
Gartner senior analyst Khurram Shahzad, a specialist in the satellite market, recently backed up that point, telling the Herald there were practical limitations, including rising space junk collision risk, that would prevent SpaceX from launching enough satellites to beat congestion issues in urban areas.
Govt bulwark
In the US, SpaceX has paid billions to acquire spectrum rights for Starlink, paving the way for it to deploy its own cellsites on the ground to complement its satellites or “celltowers in the sky”.
Only governments can own spectrum, which can be leased to telcos for fixed amounts of time.
“I think each government will have to consider their policy settings: how they think about that allocation of spectrum and national resilience,” Hodson said.
“We provide good national coverage, good resilience, and we’re here at the times where New Zealanders need it most. ”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.