\u201cWe\u2019re one of the biggest data centre operators in New Zealand,\u201d Smyth replied. <\/p>\n
\u201cBut the investment required to grow those sites and put in new capacity is probably about $2 billion over the next five to 10 years. By selling 75%, that growth will be funded by the partnership [with PEP] and we won\u2019t be taking money away from our core connectivity business, which is where we make 80% of our margins.\u201d<\/p>\n
Smyth added, \u201cWe realised a very attractive multiple on the transaction.\u201d <\/p>\n
Within Spark, its data centres were worth eight times their operating earnings. The PEP deal was done at a multiple of more than 30x, she said. <\/p>\n
\u201cThat\u2019s a significant value uplift for shareholders.\u201d<\/p>\n
The chairwoman did not address dividends in her reply, but analysts had seen a potential multibillion-dollar data centre construction capex bulge, undermining the telco\u2019s already under-pressure profit payout.<\/p>\n
\u201cHow will Elon Musk\u2019s Starlink affect Spark in the long term, and what\u2019s the strategy for that?\u201d another shareholder asked.<\/p>\n
\u201cStarlink has a role to play in New Zealand in terms of rural connectivity where fibre or copper or sometimes even mobile is unavailable,\u201d Smyth replied. <\/p>\n
\u201cIf you think about the progress it\u2019s made in [New Zealand] over the last three years with broadband, it\u2019s about 53,000 connections, in the context of maybe 1.7 million households; we have around 660,000. Starlink has a complementary role.\u201d<\/p>\n
Spark chief executive and executive director Jolie Hodson (left) with chairwoman Justine Smyth. Photo \/ Supplied<\/p>\n
Spark, One NZ and 2degrees are all resellers of Starlink\u2019s business-grade product, which delivers broadband by satellite via a high-gain, usually rooftop-mounted dish. <\/p>\n
All three telcos position it as a rural solution, which is the sector where the latest Commerce Commission market monitoring report says Starlink is generating the overwhelming majority of its sales. <\/p>\n
But Starlink\u2019s direct sales campaign and general advertising have also targeted urban areas.<\/p>\n
Another shareholder said, \u201cYou previously mentioned satellite capability for mobile-phone users. Compared with your key competitors, you seem to have a bit of a product gap there. How is the company addressing this gap?\u201d<\/p>\n
\u201cWe are testing a satellite proposition and that will be in the market at the beginning of next year,\u201d Hodson replied.<\/p>\n
Spark has previously said it will launch a service in the new year, through an unnamed American-based partner, that will allow texting \u2013 and later voice calls and data \u2013 via satellite, using a standard mobile phone, providing coverage anywhere in New Zealand with line-of-sight to the sky.<\/p>\n
Market scuttlebutt holds that Spark will join One NZ as a Starlink Direct to Cell partner. <\/p>\n