Craigs\u2019 analyst, Wade Gardiner, said while core operating profit was down on last year, \u201cearnings appear to have stabilised and so, in that regard, we view it as a strong result\u201d. <\/p>\n
The stronger-than-expected mobile result was a highlight. The reintroduction of the dividend reinvestment plan \u201ccould help provide some headroom\u201d for future profit payouts, Gardiner said.<\/p>\n
He maintained his \u201coverweight\u201d rating but chipped his 12-month price target down from $3.21 to $3.04. <\/p>\n
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 \u201cSpark-30\u2033) and the impact of higher interest rates.<\/p>\n
Goodbye \u2018hotchpotch\u2019<\/p>\n
Morningstar\u2019s Brian Han continued to be bullish on Spark, saying the telco would \u201cshine without the distractions\u201d of its jettisoned \u201cnon-core\u201d business lines \u2013 which he saw as \u201ca hotchpotch of digital services whose earnings have been erratic at best\u201d.<\/p>\n
However, he reduced his fair value estimate from $3.60 to $3. <\/p>\n
Han liked accelerated cost-cutting, debt reduction, and the refocus on \u201ccore\u201d mobile and broadband, and dividend certainty but added, \u201cThe continuing decline in fixed-line broadband connections, down another 5% in fiscal 2026, is a concern\u201d.<\/p>\n
Mobile worries<\/p>\n
Forsyth Barr\u2019s Ben Crozier said the result was in line with his expectations. He maintained his \u201cneutral\u201d rating but nudged his 12-month target up from $2.30 to $2.35 on the prospect of minor near-term dividend increases (Spark\u2019s full-year dividend was 16 cents per share; it guided to 16-18cps for FY2027).<\/p>\n
While the 4.4% growth in mobile revenue to $1.52b was a positive, Crozier qualified that: \u201cWe view connection trends across Spark\u2019s mobile network as still worrying.\u201d <\/p>\n
Higher-yielding \u201cpost-paid\u201d or contract plans declined by 5000 over the second half of FY2026 and are now down 9000 over the past 18 months \u2013 \u201ca contrast to the steady growth delivered over the prior decade\u201d.<\/p>\n
Crozier also highlighted that \u201cfixed wireless connections reported their worst sequential change on record in 2H26 and are now down 6% from their peak\u201d. <\/p>\n
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.<\/p>\n
<\/p>\n
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\u2019s a sector where analysts see 2degrees has been making inroads. On a conference call with analysts, Hodson said the rate of decline had halved.<\/p>\n
Hodson \u2013 not going anywhere<\/p>\n
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.<\/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.<\/p>\n
NewstalkZB\u2019s Heather Du Plessis-Allan said to Hodson after yesterday\u2019s result,\u201cAll the talk is that the chair\u2019s first job is going to be a new CEO.<\/p>\n
\u201cDoes that mean that you\u2019re at the end of your tenure, potentially?\u201d <\/p>\n
Hodson said, \u201cAt this point, no, I\u2019m focused on delivering what I\u2019ve been asked to do and what we\u2019ve 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.\u201d <\/p>\n
Hodson addresses bonus<\/p>\n
The board approved a 3.4% increase in Hodson\u2019s remuneration, according to Spark\u2019s 2026 annual report.<\/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
The telco has consultation underway on another restructure.<\/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 [performance pay] in those two years.\u201d<\/p>\n
General economic outlook<\/p>\n
\u201cDifferent sectors are being affected differently. If you think about agriculture and what\u2019s happening there, the South Island seems to be more buoyant,\u201d Hodson said.<\/p>\n
\u201cI do think there are some promising signs as we look towards 2027, but I\u2019d be far from saying we\u2019re in a buoyant shift now and we\u2019ve done our plan based on being able to deal with anything that happens, really.\u201d<\/p>\n
Starlink cutting lunch threat<\/p>\n
In its full-year result Spark said its network competitiveness had been enhanced by its satellite-to-mobile partnership with SpaceX\u2019s Starlink for connectivity in mobile blackspots.<\/p>\n
But Harbour Asset Management\u2019s 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<\/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 satellites could ever serve,\u201d Hodson told the Herald in her post-earnings interview.<\/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