Chorus & Spark: How are 2 NZX telcos faring?

Highlights

• The Commerce Commission has instructed the telco industry to create a marketing code.
• Spark expects its EBITDA to be between $1.13 billion and $1.16 billion for FY22.
• Chorus released a presentation for UBS Australasia Conference last week.

On 8 November, the Commerce Commission instructed the telecom industry to create a marketing code that makes sure that consumers get all the information required from telco suppliers to choose options and plans as per their needs.

The NZ Telecom forum will get 60 working days to change marketing regulations released by the Commission into an industry retail service quality (RSQ) code that will be binding. The issue is of prime importance due to greater market activity connected to Chorus abandoning the old copper network and Spark eliminating public switched telephone network (PSTN) connections.

Amid this backdrop, let’s skim through how these 2 NZX companies are performing.

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Spark New Zealand Limited (NZX:SPK; ASX:SPK)

Spark’s FY21 results were impacted by roaming revenues and added to lower overall growth in the broadband and prepaid markets. The Group’s core business proved resistant to COVID-19 headwinds.

RELATED READ: 5 Popular NZX telcos to look at in October 2021

Spark was able to retain traction in major areas while also adapting to an evolving competitive environment. Cloud, security, and service management revenue witnessed a 5.5% growth, with demand rising from businesses looking to digitise and alter.

RELATED READ: Why are NZX telcos turning heads in 2021?

The Group reaffirmed an EBITDA of between $1.13 billion and $1.16 billion and a dividend of 25cps for FY22. It also plans to work on creating NZ a low-carbon economy.

On 17 November, at the time of writing, SPK was trading flat at $4.44.

Chorus Limited (NZX:CNU; ASX:CNU)

Chorus released a presentation for the UBS Australasia Conference on 12 November. Chorus revealed its market structure in NZ, where it structurally separated from Telecom NZ (retail) in 2011 for the fibre PPP rollout. The 10-year fibre rollout is 96% complete with less than 50K premises remaining to pass by December 2022.

CNU’s FY21 revenue reduced due to fixed wireless competition and a loss of copper lines in areas where the Company is not the selected fibre network provider by the Government. However, the loss in revenue was partially offset by a strong fibre uptake and consumers upgrading to high-speed plans.

RELATED READ: Chorus (NZX:CNU): What were highlights of recently held ASM?

The Group aims to reach 1 million links to Chorus fibre by 2022. It also plans to grow new revenues, optimise non-fibre assets and develop the long-term future of the business. CNU plans to provide a dividend outlook and expects a payout in February 2022.

On 17 November, at the time of writing, CNU was trading at $6.185, down 0.08%.

Bottom Line

The telecom sector is gaining more importance as the world goes deeper into the online mode with companies offering world-class services due to increased demand for such services.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)