Spark operating profit falls 2.7% in FY18

24 Aug 2018

New Zealand's Spark has reported a 2.7% decrease in operating profit to NZ$989 million ($660.5 million) for the financial year ending in June as the operator only partly offset declines in legacy telecoms revenues.

The operator reported revenue growth for the year of 1% to NZ$3.65 billion, with mobile revenue growing 6.9% and cloud, security and service revenue management up 15.9%.

But this was offset by a NZ$100 million decline in legacy voice, managed data and networks revenues due to ongoing substitution.

Spark's earnings for the year were also impacted by an NZ$11 million decline in dividends from its share of the Southern Cross Cable system linking Australia and New Zealand with Hawaii and the continental US, due to decreases in the level of pre-purchased capacity from large customers.

The operator warned that dividends from the cable system, which was launched in 2000, are expected to continue to decline over the cable's remaining lifespan.

But Spark managing director Simon Moutter said the operator is making progress finding new growth areas to offset the declines in legacy areas of the business.

“We saw a continued growth story in cloud, security and service management products during FY18, with both revenues and margins improving over the year. Our business customers increasingly recognize the benefits and flexibility offered by “as a service” cloud products, and we have launched new security products to capture growth in that market,” he said.

“We’re also very pleased to see our strategic emphasis on wireless technologies flow through to further growth in mobile market share, revenue and margins – with Spark the only New Zealand mobile operator to achieve this over the period. Our mobile revenue growth is now fully offsetting traditional voice revenue decline.”

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