Reported net profit jumped 91.9% to $499m.<\/p>\n
But on an adjusted basis, it fell 0.9% to $225m.<\/p>\n
Adjusted ebitdai (earnings before interest, taxes, depreciation and amortisation) fell 2.4% to $1.04 billion.<\/p>\n
Adjusted revenue was flat at $3.7b.<\/p>\n
Spark paid out 100% of its free cashflow in an 8c dividend, taking the full-year dividend to 16c, at the midpoint of 15-17cps guidance.<\/p>\n
It is lower than the 25cps for FY2025 and 27.5cps for FY2024, in line with expectations following the telco\u2019s \u201cdividend reset\u201d.<\/p>\n
Debt down, labour and other costs cut<\/p>\n
Asset sales helped return the telco\u2019s debt-to-operating earnings ratio from 2.2x to 1.7x or $899m, again in line with expectations.<\/p>\n
Ongoing cost savings from labour, product and \u201cother\u201d operational costs reached $101m in FY2026.<\/p>\n
Spark aims to expand that to a cumulative $110m to $140m during FY2027.<\/p>\n
Some of the costs will be saved through the use of new technologies, some of which could also involve related staff cuts.<\/p>\n
Spark received $462m in proceeds from the sale of its data centre business to Australia’s Private Equity Partners. Render \/ Spark<\/p>\n
Flat forecast<\/p>\n
Spark forecast flat operating earnings for FY27 and a full-year dividend of 16-18cps.<\/p>\n
As Spark reaffirmed its FY2026 forecast a fortnight ago, Harbour Asset Management\u2019s Shane Solly said it was an achievement to hold the line and meet guidance and the market\u2019s \u201clow\u201d expectation, given the persistent economic slowdown.<\/p>\n
Mobile growth, but more losses at the top end of town<\/p>\n
As expected by analysts, there was growth in mobile (a key component of the \u201ccore\u201d business set to stay with the company in its current restructure \u2013 more on which below).<\/p>\n
Total mobile revenue increased 4.4% to $1.52b.<\/p>\n
But service revenue was up just 1.1% to $998m and the segment saw a 7% fall in enterprise and government revenue to $93m. It\u2019s a sector where analysts see 2degrees has been making inroads. <\/p>\n
Spark blamed the fall in its government and big company business on \u201ccompetitive pricing pressure\u201d. <\/p>\n
Year-on-year mobile market share by revenue. Source \/ Spark investor presentation, drawing on IDC data<\/p>\n
It added, \u201cThe rate of decline has more than halved with the prior year and connections broadly flat\u201d.<\/p>\n
On a conference call, chief executive Jolie Hodson said consumer mobile plans had been increased by an average $3 per month from July with \u201clow churn\u201d.<\/p>\n
The telco said its network competitiveness had been enhanced by its satellite-to-mobile partnership with SpaceX\u2019s Starlink for connectivity in mobile blackspots.<\/p>\n
Starlink’s share of New Zealand’s rural broadband market increased from 19% in the year to June 30, 2024 to a market-leading 27% in the year to June 30, 2025. Source \/ Commerce Commission 2025 Telecommunications Monitoring report.<\/p>\n
Solly said the possibility that Starlink will expand to offer its own fully fledged mobile service (now heading toward a reality in the US<\/a>) has weighed on the stock price of telcos worldwide.<\/p>\n \u201cIf you think about terrestrial networks, which mobile operators like us run, the amount of customers we serve per square kilometre is far greater than satellite could ever serve,\u201d Hodson told the Herald. Gartner senior analyst Khurram Shahzad \u2013 a specialist in the satellite market, recently backed up that point, telling<\/a> 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.<\/p>\n \u201cSo if they [Starlink] are going to enter into owning a terrestrial mobile network, there\u2019s huge capital investment with spectrum, all those other things.\u201d<\/p>\n 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 \u201ccelltowers in the sky.\u201d<\/p>\n Only Governments can own spectrum, which can be leased to telcos for fixed amounts of time. <\/p>\n \u201cI think each government will have to consider their policy settings; how they think about that allocation of spectrum and national resilience,\u201d Hodson said.<\/p>\n \u201cWe provide good national coverage, good resilience, and we\u2019re here at the times where New Zealanders need it most. \u201d<\/p>\n How other divisions fared<\/p>\n Broadband revenue fell 2% to $596m. According to the Commerce Commission, Starlink has moved ahead of Spark<\/a> to become number one in rural broadband market share.<\/p>\n Voice revenue fell 16% to $126m.<\/p>\n \u201cBusiness connectivity\u201d revenue (including managed data networks, IoT or internet of things and security) fell 10% to $327m.<\/p>\n In \u201cDigital Services\u201d (now judged non-core and potentially to be sold by the end of the calendar year):<\/p>\n Cloud revenue fell 1% to $233m.IT service management revenue fell 10% to $104m.\u201cOther Digital Services\u201d, including \u201cdigital identity\u201d (presumably the \u201cMATTR\u201d unit) increased 2.9% to $35m.Total Digital Services revenue fell 3% to $372m.<\/p>\n Splitting in two<\/p>\n The FY2026 result is being delivered against the backdrop of the telco\u2019s recent announcement that it is restructuring into two business units: \u201cConnectivity\u201d (including voice and broadband services for fixed and mobile and other \u201ccore\u201d services) and \u201cDigital Services\u201d (cloud, IT services and other \u201cnon-core\u201d products). The latter could be sold.<\/p>\n Some staff fear substantial layoffs after an email was sent to all staff late last week on another restructure. The telco confirmed<\/a> to the Herald that consultation is underway but also that the \u201cdesign is still underway\u201d. The final shape of the new workforce will depend, in part, on whether a buyer is found for Digital Services.<\/p>\n On Tuesday, Spark said ex-Mercury chief executive Vince Hawksworth would succeed the long-serving Justine Smyth as chair from November 5.<\/p>\n Earlier, Salt Funds\u2019 managing director Matthew Goodson said: \u201cI\u2019d expect that [a new chief executive] will be on the agenda for the next chair.<\/p>\n \u201cJolie 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.\u201d<\/p>\n There was no immediate news on further leadership changes this morning.<\/p>\n Bonus for CEO<\/p>\n The board approved a 3.4% increase in Hodson\u2019s remuneration, according to Spark\u2019s 2026 annual report, also released this morning.<\/p>\n The pay bump will take her base salary from $1.27m to $1.31m.<\/p>\n 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.<\/p>\n The board also approved a one-off bonus, equivalent to 20% of Hodson\u2019s salary, if \u201ctransformation performance targets\u201d are met in FY2027.<\/p>\n \u201cWe never make changes to our people lightly. We have to adapt our business to the environment,\u201d Hodson told the Herald in an interview after the result. <\/p>\n It was common for senior executives in New Zealand to have a big part of their remuneration as \u201cperformance pay, which is at risk,\u201d Hodson said.<\/p>\n \u201cIn FY2024 and FY2025, where we didn\u2019t achieve our performance targets, I got zero in those two years.\u201d<\/p>\n Oversold?<\/p>\n Spark shares closed Wednesday at $2.02. Shares are down 21.4% over the past year.<\/p>\n Going into today\u2019s result, Forsyth Barr\u2019s Ben Crozier had a neutral rating and a $2.30 12-month target.<\/p>\n Crozier saw the Digital Services unit selling for around $500m, counterbalanced by the need to spend around $300m on renewing spectrum rights as the Government returns<\/a> to commercial auctions.<\/p>\n Morningstar\u2019s Brian Han reiterated his $3.60 valuation earlier this week.<\/p>\n Investors had materially undervalued the stock, in his view.<\/p>\n How peers are faring<\/p>\n Rival One NZ, 100%-owned by NZX-listed Infratil, chipped in<\/a> $607.4m ebitdaf to its parent\u2019s earnings for FY2026, from its year-ago $604m. Infratil forecasts One NZ ebitdaf of between $600m and $640m for FY27.<\/p>\nSpark shares have recently hit their lowest point since the Chorus split on profit misses, the prolonged economic slowdown and a “reset” to lower dividends. <\/p>\n