Full Year 2026 Spark New Zealand Ltd Earnings Call Transcript
Key Points
- Mobile service revenue returned to growth, increasing 1.1% to $998 million, driven by strong pay-monthly ARPU growth and stabilization in pre-paid connections.
- Free cash flow increased 18.5% to $308 million, supported by lower cash interest and tax paid and improvements in working capital.
- Productivity benefits of $40 million were delivered in FY26, with cumulative annualized savings of $101 million against the FY30 target of $150-180 million.
- Net debt reduced 35% to $899 million, returning the net debt-to-EBITDA ratio to around 1.7 times, consistent with the current credit rating.
- Customer satisfaction increased for the sixth consecutive year, and employee engagement rose 11 percentage points.
- The company maintained its number 1 position in mobile service revenue share, with the rate of market share decline improving from 1.8 percentage points to 0.5 percentage points.
- Satellite-to-mobile partnership with Starlink extends network reach to remote areas, complementing the terrestrial network that covers 99% of New Zealanders.
- FY27 guidance includes a target dividend range of $0.16 to $0.18 per share, providing greater clarity on shareholder returns.
- Adjusted EBITDA declined 2.4% to $1.035 billion, reflecting mix shifts in revenue and continued decline in higher-margin legacy Voice.
- Digital services revenue declined 3.4% to $372 million, impacted by the shift from private to public cloud and softer IT services demand.
- Broadband connections declined 4.9% in a highly competitive price-driven market, with fixed-line technologies accounting for 84% of the decline.
- Enterprise and government mobile service revenue remained under pressure from community pricing, with ARPU decline expected to continue in FY27.
- Pre-paid connections declined 3.6%, with a one-off impact from the 3G closure, though the rate of decline slowed from 5.2% in FY25.
- Business connectivity revenue declined 9.9% to $327 million, impacted by the divestment of Digital Island and legacy product migration.
- The strategic review of digital services introduces uncertainty, with no certainty that it will result in a transaction or favorable terms.
- FY27 adjusted EBITDA guidance of $1.010-1.080 million reflects ongoing margin pressure in services and legacy product declines.
(audio in progress) -- progress we've made against our strategy. And our CFO, Stewart will then take you through our financial performance in more detail, before we move to Q&A.
So FY26 was the first year of execution under [SPK-30]. And we're building momentum, in line with strategic choices that we've made.
So while the economic environment remains subdued, we refocused on core connectivity, returned mobile service revenue to growth, and continue to simplify beyond the core.
We strengthened the fundamentals of our business with further structural-productivity improvements, improved free cash flow and net debt returning to targeted levels, following completion of the data-center transaction.
Overall, we finished FY26 within guidance and with a stronger platform from which to deliver improved shareholder returns in the years ahead.
So if I turn now to slide 4 and an overview of the results -- to clarify our reported and adjusted results:
Our reported results
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