Spark New Zealand Limited · NZX:SPK
Spark New Zealand — Investor Day (June 2017)
42 slides from Spark New Zealand's investor day presentation, Jun 30, 2017
Slide 1: Market Release: Spark New Zealand Investor Day
MARKET RELEASE 30 June 2017 For personal use only Spark New Zealand Investor Day Update on strategy Attached is the first of three investor presentations to be delivered as part of Spark New Zealand’s investor update today. The first presentation focuses on Spark’s transformation to date, the market
Slide 2: Spark New Zealand Ltd Investor Update Session 1 of 3
For personal use only SPARK NEW ZEALAND LTD INVESTOR UPDATE SESSION 1 OF 3 30 JUNE 2017
Slide 3: Introduction
For personal use only INTRODUCTION SIMON MOUTTER MANAGING DIRECTOR
Slide 4: Session agenda and presenters
For personal use only INTRO Simon Moutter Overview of changes in emphasis to elements of the business strategy The Spark HMB market game-plan to use our brands and partnerships to compete Jason Paris 1 and win in a rapidly digitising world The Spark Digital market game-plan to compete and win by add
Slide 5: Strategic shift from Telco to Digital Services commenced in 2013
For personal use only Strategic shift from Telco to Digital Services commenced in 2013 has driven positive change • Business portfolio reset from International Telco to NZ Digital Services Company, through effective divestment, investment and acquisition • Dominant old-world brand replaced by portfo
Slide 6: Evolving strategy in line with market forces and digital technologies
For personal use only We are now evolving our strategy in line with market forces and rapid advances in digital technologies • Digital customer experience is new source of market power – and we’ve got a way to go • Customers want wireless everywhere and fixed broadband is nothing more than backhaul
Slide 7: Where we aspire to be by 2020
For personal use only Where we aspire to be by 2020 • Mostly ex-copper, enabled by pervasive 4G and 5G wireless coverage and capability, together with rapid adoption of fibre access in urban areas • Taking advantage of disruptive technologies like virtual assistants and machine learning at scale, to
Slide 8: Three key insights since 2013 motivating next moves
For personal use only Three key insights since 2013 are motivating our next moves 4G/5G Rapid advances in wireless A larger than expected portion Our work to reduce unit costs to capability and economics, of the market is buying primarily date has been good, but not together with scale uptake of on
Slide 9: The key threads for today
For personal use only The key threads for today We have set our sights on… Which means we will… +30NPS 1. Up-weight our emphasis on wireless services and investment Lowest cost Outstanding Top 10 Growing customer experience operator global key telco segments 2. Do better at serving price-sensitive c
Slide 10: Clear long term strategy with one change in emphasis
For personal use only Supporting a clear long term strategy with only one change in emphasis At Spark our ambition is to be a winning business, inspired by Ambition customers to unleash the potential in all New Zealanders To be New Zealand’s: • Benchmark for amazing customer experiences Goals • No 1
Slide 11: Executing plans via consistent strategic programmes
For personal use only Executing plans via our consistent strategic programmes • Three new areas of stronger focus At Spark our ambition is to be a winning business, inspired by Ambition customers to unleash the potential in all New Zealanders • Rebuilt leadership team Emphasis on wireless and struct
Slide 12: Session agenda and presenters
For personal use only INTRO Simon Moutter Overview of changes in emphasis to elements of the business strategy The Spark HMB market game-plan to use our brands and partnerships to compete Jason Paris 1 and win in a rapidly digitising world The Spark Digital market game-plan to compete and win by add
Slide 13: Spark Home, Mobile & Business
For personal use only SPARK HOME, MOBILE & BUSINESS JASON PARIS CEO SPARK HMB
Slide 14: Delivering the Spark of the future
For personal use only Delivering the Spark of the future Wireless and fibre migration +30NPS Mobile network investment Lowest cost Outstanding Top 10 Growing customer experience operator global key telco segments Skinny won’t be beaten on price Spark won’t be beaten on value Big calls on simplificat
Slide 15: Customers tell us they want…
For personal use only Customers tell us they want… Always on More At a Even more connectivity data cheaper price value-added services Less complicated Better Digitally Position for plans service enabled the future 14
Slide 16: Market forces are ever present
For personal use only Market forces are ever present • Broadband market commoditisation • The NZ mobile market remains • Chorus prices continue to increase • Long tail of broadband providers extremely competitive • Mobile access network economics • ~80 providers is not sustainable in the • However,
Slide 17: Delivering for customers
For personal use only Delivering for customers Customer insight Strategic programme What we’ve delivered • 35% of broadband customers migrated off copper to fibre Always on connectivity Wireless and fibre migration and wireless • >30% of pay-monthly mobile customers on plans with high More data Mobi
Slide 18: Strategic programmes will continue to deliver benefits
For personal use only Our strategic programmes will continue to deliver clear financial and operational benefits Customer insight What we’ve already delivered What we will deliver • 35% of broadband customers migrated off • >85% of broadband customers migrated off copper to Always on connectivity co
Slide 19: Providing quality entertainment options
For personal use only Provide New Zealanders with a unique set of quality entertainment options Long term goals Spark won’t be • New Zealand’s most trusted ‘over-the-top’ (OTT) content aggregator beaten on value • Tangible digital and physical entertainment value Achievements Focus areas • >250k Lig
Slide 20: Use data smarts to improve customer experiences
For personal use only Use data smarts to improve customer experiences Advanced analytics Long term goals and digital • Use smart data to have real time, seamless sales and service experiences experiences with customers across all products and channels Achievements Focus areas • Qrious mobile market
Slide 21: Revenue growth in mobile and broadband to offset commoditisation
For personal use only Revenue growth in mobile and broadband to help offset commoditisation pressure The prize How • Leading propositions and offers Mobile • Increasing role of Skinny in the market • Value-added services uptake to drive upsell and reduce churn $40m to $50m Resulting in: revenue per
Slide 22: Plan to improve efficiency and drive gross cost reductions
For personal use only This plan has the potential to improve efficiency and drive significant gross reductions in cost The prize How Wireless $45m • Reduced copper input costs through migration of 20% to 25% of copper and fibre per annum gross reduction in broadband customers to wireless migration a
Slide 23: Key risks are being actively managed
For personal use only Key risks are being actively managed As global brands begin to disrupt the market, Spark mitigations include: • Prioritising future projects alongside today Focus • More strongly leveraging partnering to move at the speed customers expect • Using smart analytics to grow and pro
Slide 24: Spark Digital
For personal use only SPARK DIGITAL JOLIE HODSON CEO – SPARK DIGITAL
Slide 25: Delivering the Spark of the future
For personal use only Delivering the Spark of the future Benchmark for amazing customer experiences All NPS measures above +30 +30NPS Lowest cost Outstanding Top 10 Growing No 1 provider of mobility, data and cloud solutions customer experience operator global key telco segments Hold market share NZ
Slide 26: Customers tell us they want…
For personal use only Customers tell us they want… Enabled business Mobility and cloud Security Data driven insights transformation Simplification Digital enablement Flexible service options 25
Slide 27: Market facing commoditisation pressure
For personal use only Our market is facing commoditisation pressure Competition is driving Businesses use entry-level consumer Hyper-scale cloud providers are re- commoditisation in core telco pricing as a reference point, but still setting price expectations and expect full service – broadening the
Slide 28: Programmes to improve customer experience and financial benefits
For personal use only These programmes will deliver improved customer experience and financial and operational benefits Voice of the Service One Spark Cloud Wise Digitisation Spark Talent customer differentiation Business Establish Become NZ’s Enhance value Become a Accelerate our ourselves as the B
Slide 29: Cloud Wise to lead as aggregator of cloud services
For personal use only Cloud Wise will position Spark Digital as the leading aggregator of cloud services Long term goals COMBINED CLOUD PORTFOLIO • Establish ourselves as the Cloud Wise custodian for NZ’s business hybrid cloud workloads Focus areas Customer outcomes • Launch a combined cloud portfol
Slide 30: Service differentiation to simplify the business
For personal use only Service differentiation will simplify the business and better meet customer needs Long term goals FROM 1000s TO 100s OF PRODUCT VARIATIONS Service • Enhance our value proposition differentiation through improved product and service offerings Focus areas Customer outcomes • Sign
Slide 31: Revenue growth from targeting the big prizes
For personal use only Revenue growth comes from targeting the big ‘prizes’ The prize How • Position Spark Digital as the aggregator for hybrid • ~80% of NZ market not yet utilising cloud services and cloud solutions Cloud will likely migrate over the coming 3-5 years • Targeting 10-15% revenue growt
Slide 32: Further opportunities for efficiency
For personal use only There are also further opportunities for efficiency The prize How • Increased sales productivity through better tools Automation • Efficiency gains through reduced • More effective service desks and improved administration and increased automation provisioning times through aut
Slide 33: Key risks are being actively managed
For personal use only Key risks are being actively managed Maintaining service levels and • Simplification to reduce customer calls to service desks customer satisfaction during • Automation to increase back office efficiency ongoing business change • Focus on supporting customers’ journey to hybrid
Slide 34: Spark Ventures
For personal use only SPARK VENTURES ED HYDE CEO SPARK VENTURES
Slide 35: Delivering the Spark of the future
For personal use only Delivering the Spark of the future Contribute to group objectives +30NPS Lowest cost Outstanding Top 10 Growing Help grow EBITDA from new sources of value customer experience operator global key telco segments One Spark Align to business unit strategies +30NPS Boost brand effor
Slide 36: Ventures has been delivering growth
For personal use only It’s been delivering growth Since the beginning of FY14, Venture’s businesses have delivered $125m in new revenue, along with significant strategic benefits to the wider Spark portfolio Revenue from Ventures ($m) 66 40 19 FY14 FY15 FY16 35
Slide 37: Data and analytics
For personal use only Data and analytics Aspiration • To be the number one big data and analytics software product company in New Zealand with global reach and annual turnover in excess of $100M. We aim to help customers “unleash intelligence” Achievements Focus areas • 260% YoY revenue growth • Adv
Slide 38: Ventures 2.0 strategy
For personal use only Ventures 2.0 strategy We have adopted a four-pronged strategy to creating growth Internal Differentiate our 1. 2. New core services core with innovative and infrastructure to digital partners Partner Build capture new markets Near term Long term Acquire mature, 3. 4. Invest in
Slide 39: Global corporates use venture capital operating models
For personal use only Leading global corporates use ‘venture capital’ operating models to boost innovation 2013 Capital committed to Venture Units 2017 + 130% Corporates with 2013 Venture Units 2017 BCG Consulting 38
Slide 40: Investment opportunities
For personal use only Investment opportunities Data and analytics Marketplaces • Marketing automation • Big data platforms • Home services • Customer experience • Retirement services • Artificial intelligence • Sharing economy Internet of things SME solutions • Precision agriculture • Business insig
Slide 41: Investments: our aspiration
For personal use only Investments: our aspiration Aspiration: Building out a portfolio of investments to deliver Revenue from New Ventures future revenue growth for Spark • Total investment envelope of $12m per year $80m • 5-7 new investments per year • Contributing $80m+ revenue per annum by $55m F
Slide 42: Disclaimer
For personal use only Disclaimer This announcement may include forward-looking statements regarding future events and the future financial performance of Spark New Zealand. Such forward-looking statements are based on the beliefs of and assumptions made by management along with information currently