Spark (NZX:SPK): How did it fare last month?

Highlights 

• Spark registered a lower growth in the broadband and prepaid markets in FY21 but stayed resilient in its core business.
• The Group struck a deal to buy back half of its shares in Connect 8 on 22 December.
• Spark has reaffirmed EBITDAI guidance in the range of $1.3 billion-$1.16 billion and a dividend guidance of 25cps for FY22.

Spark New Zealand Limited (NZX:SPK; ASX:SPK) is one of the most important telecom and digital services providers in New Zealand.

In FY21, Spark registered a lower growth in the broadband and prepaid markets with roaming revenues impacted by border closures amid COVID-19. The Group reported a loss of $38 million in roaming revenues, resulting in a revenue decrease of 0.8% to $3.6 billion.

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However, the Group’s core business stayed resilient and maintained momentum across its key markets. Spark’s mobile service revenue grew 0.5% and cloud, security, and service management revenue grew 5.5% with demand increasing further from firms looking for digitisation.

Spark inks a deal to fully own Connect 8

Spark struck a deal to buy back half of its shares in Connect 8 from electricity distributor Electra Group on 22 December 2021. Connect 8 is an infrastructure supplier to the water, telecom and power sectors.

The transaction would make Spark the owner of Connect 8 and will be completed early this year.

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Spark has got Connect 8 back to support the acceleration of its 5G rollout and a sharp rise in IoT connections. Moreover, Connect 8 has also developed into the water and power space over the past 3 years, aiding in Spark’s implementation of IoT networks and customer solutions in these sectors.

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Last month, Spark also hired Sylvia Ding as the future director under the Future Directors program. She will begin her tenure on 1 February 2022.

On 13 January, at the time of writing, SPK was trading at $4.45, up 0.23%.

Road Ahead

Spark’s approach, geared towards macro trends, would continue to support its future growth. The Group commenced a major programme of work to evaluate climate change risks and opportunities across its business in FY21.

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The Group has pledged to lower its absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 56% by 2030. Spark also wants to focus on supporting digital equity and also aims to achieve 40% women, 40% men, and 20% of any gender (40:40:20) as representation in SPK by FY23.

Spark has reaffirmed EBITDAI guidance in the range of $1.3 billion-$1.16 billion and dividend guidance of 25cps for FY22.

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