No improvement for Spark in latest financials, as recession takes big bites out of earnings and profit

Telco incumbent Spark has posted grim figures, headlined by a steep 77.7 per cent fall in net profit after tax to $35 million for the first half of fiscal year 2025, as recessionary conditions continue to batter business performance.

Revenue declined 1.9 per cent to $1.939 billion, while earnings before tax fell 20.9 per cent to $419 million.

Spark's enterprise and government division was particularly hard hit, with customers cutting mobile fleets amid headcount reductions and aggressive price competition affecting margins.

"When we updated the market in October, we outlined that we were experiencing one of the longest and deepest recessionary periods in recent history. Since that time, we have seen no improvement in these conditions," Spark chairwoman Justine Smyth said.

Mobile service revenue dropped 3.7 per cent to $491 million, while broadband revenue fell 2.3 per cent to $302 million as customers switched to cheaper plans due to cost-of-living pressures.

In response, Spark announced a major transformation programme expected to deliver $80 million to $100 million in cost savings for full-year 2025, rising to $110 million to $140 million annually by full-year 2027.

While not spelt out, staff reductions at Spark could be on the cards as part of the cost savings programme.

“We are responding to the challenges we are experiencing in the short-term, in a way that also builds a stronger, more competitive business over the longer term. It is never easy to make changes that impact our people, and we do not do so lightly. I want to acknowledge our teams at Spark who have continued to support our customers during a time of change for our business,” Spark chief executive Jolie Hodson said.

The telco maintained its full-year dividend guidance of 25 cents per share but reduced its earnings before tax forecast to $1.04 billion to $1.1 billion, down from previous guidance of $1.12 billion to $1.18 billion.

A first-half dividend of 12.5 cents per share will be paid on April 4.

Spark expects to receive approximately $310 million from the sale of its stake in tower company Connexa in the third quarter and is seeking investment partners for its data centre growth strategy.