sign up log in
Want to go ad-free? Find out how, here.

Spark grows mobile and data centre business, says it's largely resilient to economic downturns

Technology / news
Spark grows mobile and data centre business, says it's largely resilient to economic downturns

Telco incumbent Spark New Zealand says revenue and earnings grew in the first-half of its 2024 financial year, once adjusted for last year's sale of its mobile towers to TowerCo and its Spark Sport exit.

Thanks to price increases and connection growth, mobile service revenue increased 6.3% to $510 million, Spark said, with the telco keeping its number one provider position in New Zealand, as estimated by analyst firm IDC.

The telco also has 31% of customers on fixed wireless broadband service, and said it has maintained broadband revenues and margins, despite high levels of price competition in an inflationary environment.

A 10 megawatt capacity expansion of Spark's Takanini data centre was completed in August last year, which drove a 38.5% revenue increase to $18 million. Spark chief executive Jolie Hodson said the telco plans to invest in a new hyperscale data centre campus on Auckland's North Shore to meet demand for further capacity.

Spark expects rapid uptake in generative artificial intelligence, exponential growth in data, business digitisation and cloud adoption to drive growth for its data centre business.

Significant growth in IoT (internet of things) connections underpinned Spark's high-tech revenues that were up 12.9% in its first-half, being the six months to December 31, 2023, to $35 million.

Adjusted for the $584 million TowerCo and $52 million Spark Sport transactions in 2023, Spark said revenue increased by 1.3% to $1.976 billion, and earnings before tax by 3.9% to $530 million. Higher interest costs on debt and leases bit into the net after tax profit however, which after adjustment dropped by 4.8% to $157 million.

While the telco felt inflationary pressures, Spark chairperson Justine Smyth noted its products "are largely resilient to economic downturns" but they are not immune to them.

Some areas such as digital health saw a revenue drop of 8.7% thanks to subdued public sector activity. Lower public sector demand also meant IT (information technology) revenues were flat at $345 million, Spark said.

For its full 2024 financial year, Spark expects earnings before tax to be $1.215 billion to $1.260 billion, with capital expenditure of $510 million to $530 million. It's also forecasting fully imputed dividends of 27.5 cents per share for its full-year. The half-year dividend was 13.5c per share.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Data centre business is good business