Spark 1H profit dips 5.6%

FIRST CUT: Spark 1H profit dips 5.6% as Southern Cross withholds dividend

By Paul McBeth

Feb. 20 (BusinessDesk) - Spark New Zealand's first-half profit dipped 5.6 percent due to Southern Cross Cables deciding not to pay a dividend while it mulled the investment needed for a new underwater cable.

However, underlying earnings rose 7.2 percent as the country's biggest telecommunications company fattened margins in its mobile, broadband and cloud, security and service management units.

Net profit fell to $153 million in the six months ended Dec. 31 from $162 million a year earlier when Southern Cross paid a $28 million dividend. Spark's stake in the trans-Pacific telecommunications cable was diluted in December when Telstra came on board as an anchor customer for the new NEXT underwater link which is expected to be built by the end of next year.

In December, Spark adopted a new earnings measure and adjusted its guidance to reflect new accounting standards and listing rules, and its own restructuring to adopt 'Agile' working methods - where management structures are flattened.

Earnings before interest, tax, depreciation, amortisation and investment income rose 7.2 percent to $489 million in the half, with the ebitda margin widening to 27.9 percent from 25.9 percent. Revenue edged down 0.4 percent to $1.75 billion, while operating costs shrank 3 percent to $1.27 billion. Spark's workforce shrank by 295 jobs from a year earlier, with 5,319 full-time equivalents at Dec. 31.

"Our transformation to a lower cost base, our improved and increasingly digitised customer experience, and the benefits already flowing from our Agile operating model have set Spark up with an enduring competitive advantage," chair Justine Smyth said in a statement.

The board declared an interim dividend of 12.5 cents per share, comprised of an 11 cent ordinary dividend and a 1.5 cent special dividend. It will be paid on April 5 with a March 15 record date.

Spark also announced the pricing plan for its foray into sports, at $19.99 a month, excluding the Rugby World Cup, with a one-month free trial when it's launched. A beta launch will occur in March.

Managing director Simon Moutter said the Rugby World Cup pricing will be announced when the Spark Sport platform is fully launched.

The shares last traded at $4.03, and have gained 17 percent over the past year.

(BusinessDesk)

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