H1 25 financial snapshot
$1,939m | $448m | $56m | ||
1.9% decrease vs. H1 24 | 15.5% decrease vs. H1 24 | 64.3% decrease vs. H1 24 | ||
REVENUE(1) | ADJUSTED EBITDAI(2)(3) | |||
ADJUSTED NPAT(2)(4) |
$252m | $77m | 12.5 cps | ||
11.9% decrease vs. H1 24 | 67.4% increase vs. H1 24 | 1.0 cps decrease vs. H1 24 | ||
CAPEX(3) | FREE CASH FLOW | INTERIM DIVIDEND |
$1,939m | $419m | $35m | ||
1.9% decrease vs. H1 24 | 20.9% decrease vs. H1 24 | 77.7% decrease vs. H1 24 | ||
REPORTED REVENUE(1) | REPORTED EBITDAI(3) | REPORTED NPAT |
- Operating revenues and other gains
- H1 25 EBITDAI is adjusted for the impact of $29 million of transformation costs incurred in the implementation of Spark's SPK-26 Operate Programme. There were no adjusting items in H1 24.
- Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) and capital expenditure (CAPEX) are non-Generally Accepted Accounting Principles (non-GAAP) performance measures that are defined in note 2.5 of Spark's Annual Report.
- H1 25 NPAT adjusted for the SPK-26 transformation costs net of tax as described in note 2 of the interim financial statements
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H1 25 results summary
Challenging conditions persist; decisive action being taken to improve performance, which is building momentum into H2
New Zealand | Copyright ©️ 2025
Tough operating
environment
impacted financial performance in H1
- Revenue of $1,939 million, down 1.9% YoY, driven by mobile services, IT services, and continued decline of legacy voice, and partially offset by growth in mobile devices, cloud, data centres, and IoT
- Adjusted EBITDAI1 of $448 million, down 15.5% YoY, driven by lower IT services project activity, the mix shift from private to public cloud, and supplier cost inflation, and offset by lower labour costs
- Adjusted NPAT2 of $56 million, down 64% YoY, driven by lower EBITDAI and higher depreciation and amortisation costs
Spark
Performance | • Focus on growing market leading position in telco core through new product development, campaign activity, and annual price reviews |
• Portfolio simplification and review of non-core assets on track, with sale of remaining stake in Connexa3 expected to realise ~$310 million in | |
improvement plan | proceeds and a gain on sale of ~$66 million in reported EBITDAI on completion in Q3 |
focussed on sustained | • Significantly expanded SPK-26 Operate Programme on track to deliver $80m-$100m reduction in net labour and opex costs in-year (funded by |
competitive advantage | non-recurring transformation charge of $45m-$50m, with $29m reported in H1 25 result) and $110m-$140m of annualised benefits by FY27 |
• Data centre build programme on track, progress made towards establishment of capital partnership to accelerate growth | |
Capital
management
- Free cash flow increased 67% to $77 million YoY (and when including working capital and growth capex improved by $163 million), through disciplined capital expenditure (down 11.9% to $252 million in H1 25)
- Net debt to EBITDAI 2.3x at 31 December 2024, will improve in the near term by ~0.3x with the completion of the Connexa and Digital Island transactions
- H1 25 dividend of 12.5 cents per share, consistent with FY25 total dividend guidance of 25 cents per share, 75% imputed4
- H1 25 EBITDAI is adjusted for the impact of $29 million of transformation costs incurred in the implementation of Spark's SPK-26 Operate Programme. There were no adjusting items in H1 24.
- H1 25 NPAT adjusted for the SPK-26 transformation costs net of tax as described in note 2 of the interim financial statements
3All regulatory approvals required for the sale of Connexa stake have now been received
4 Subject to no material adverse change in operating outlook
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Strategic priorities
Clear focus on four strategic priorities to drive improved underlying performance and sustained competitive advantage over the longer-term
1. | 2. | 3. | 4. | ||||
Market momentum | Simplified | Transformed | Long-term | ||||
in telco core | portfolio | cost base | value creation | ||||
• | Consumer mobile market | • | Review of non-core assets | • | Leaner operating model | • | Data centre growth |
leadership | • | Enterprise and | • | Transformation of | strategy | ||
• | |||||||
• | Enterprise and Government | Government product | technology delivery model | Capital partnerships | |||
transformation | portfolio simplification |
Spark New Zealand | Copyright ©️ 2025
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1. Market momentum in telco core
Mobile performance predominantly impacted by cessation of insurance product in consumer, and reducing mobile fleets and price competition in business
Zealand | Copyright ©️ 2025
$491m
3.7% decrease vs. H1 24
MOBILE SERVICE REVENUE
Consumer and SME | Enterprise and Government |
2.3% decrease vs. H1 24 | 17.7% decrease vs. H1 24 |
TOTAL MOBILE MARKET PERFORMANCE1
- Total market service revenues broadly flat
- Lower insurance revenue contributed 0.2 percentage points of share reduction for Spark
- Maintained #1 position in mobile market share by service revenue and total connections
Spark New
Pay monthly connection growth continues, revenue impacted by insurance product change
- Connection acquisitions up 1.1% YoY
- ARPU mainly impacted by removal of mobile insurance from Spark-owned solution to third party
Spark gained revenue share in a contracting prepaid market
- Prepaid service revenue across the total market declined, while Spark's revenue share increased1
- Spark connections declined while ARPU increased, with ~70% of connection loss attributable to casual users with low/no spend
- Of these casual users, over 80% of connection loss was due to inactivity vs. port-outs to competitors
Spark overweight in segments with shrinking mobile fleets
- Connections impacted in a market dominated by shrinking mobile fleets: ~80% of the 18k connection decline from H1 24 to H1 25 driven by Government and businesses reducing mobile fleets post headcount reductions or to deliver cost efficiencies
Aggressive competitor pricing
- ARPU and revenue share declined due to aggressive competitor pricing activity driving down value of contract re-signings and new business wins
MVNO
1.5%
(+0.3%)
2degrees
21.1%
(+0.3%)
Spark 42.0%
(-0.7%)
One NZ
35.5%
(+0.0%)
1 All comparisons are market share estimates sourced from IDC as at 31 December 2024, comparing H1 FY25 to H2 FY24. Note IDC restated historical market share data at 30 September 2024.
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1. Market momentum in telco core
Rolling calendar of new product development, campaign activity, and pricing driving consumer mobile momentum in H2
CONSUMER AND SME
- Pay monthly plan refresh (end Oct) introduced big data caps for customers, with positive impact on acquisition ARPU
- Strong customer response driving momentum into H2 - pay monthly acquisitions over November and December up 7% vs the same period in H1 24
- Prepaid plan refresh (Dec) improved competitive positioning, and early data shows uptick in acquisition
- Price increases across pay monthly and prepaid base in December offering more data for dollars, to deliver further benefits in H2
ENTERPRISE AND GOVERNMENT
- Mobile fleet shrinkage slowed during H1 to half the rate of H2 FY24
- New B2B brand campaign launched in January, targeting enterprise and government decision makers
- Focussed on retaining connection share through proactive re-signing and competitive bids, to enable future organic growth
- Mitigating ARPU impacts from aggressive competitor pricing through targeted bundling and enhanced service offerings
NETWORK LEADERSHIP
- Continue to allocate capital to areas of highest value return, with 45% of capex invested into mobile network, supporting network performance and product innovation
- Spark awarded #1 mobile network for coverage and reliability by Open Signal in September 2024
- Spark has entered a new partnership with another US-based satellite provider to offer customers satellite-to-mobile services from early 2026
Spark New Zealand | Copyright ©️ 2025
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1. Market momentum in telco core
Macro-economic conditions continue to impact broadband and IT, while IoT growth remains strong
Spark New Zealand | Copyright ©️ 2025
$302m
2.3% decrease vs. H1 24
BROADBAND REVENUE
Broadband market is mature and
commoditised, with consistent lower levels of
overall market growth
Spark strategy remains focussed on margin improvement as fibre company costs are passed through and WBB addressable base expands through 5G. WBB now ~32% of base
Cost of living pressures saw customers trade
down to lower priced plans and drove
intensified price-driven competition, resulting in connection share reduction of 0.7% points
$336m
1.5% decrease vs. H1 24
TOTAL IT REVENUE(1)
IT products revenue grew 1.1% to $264m, driven by cloud (up 8.3%). Mix shift from private to public drove a 10% margin reduction - private cloud price increase to support H2 improvement
Reduced project activity within government and business sectors continued to impact IT services demand, with revenues
down 10% to $72m
New strategic partnerships to support cloud economics as mix shifts from private to public(2)
$41m
17.1% increase vs. H1 24
HIGH-TECH REVENUE
IoT continues to see strong growth with
revenues up 25%
IoT connections increased 25%
to over 2.2 million
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- IT Products and Services revenue and costs have been restated in prior periods due to a product mapping change with the Data Centres business
- See page 11 for more details
2. Simplified portfolio
Review of non-core assets and portfolio simplification supporting focus on telco core, while further strengthening balance sheet
Spark New Zealand | Copyright ©️ 2025
Non-core
asset review
Product portfolio
simplification
- On 12 December 2024 Spark announced the sale of its remaining 17% stake of mobile towers business Connexa to CDPQ, with all regulatory approvals required now received
- Spark now expects proceeds of ~$310 million1 and an expected gain on sale of ~$66 million in reported EBITDAI on completion in Q3
- Continuing to progress broader asset portfolio review to identify further opportunities to realise value in the medium term
- Enterprise and Government (E&G) operating model transformation completed, with subsidiaries integrated into Spark
- Product portfolio rationalisation underway to simplify and improve customer experiences
- Focus on legacy migration in managed networks and data, voice, and collaboration, with ~30% of products in security service lines to be exited by end FY25
- Reviewing focus for service management based on evolving demand and margin profiles
- Sale of Digital Island (excluding mobile) will further support focus on telco core in E&G
PAGE 9
1 The final sale price is subject to an adjustment based on movements in working capital and capital expenditure
3. Transformed cost base
Significantly expanded SPK-26 Operate Programme to deliver a materially leaner, more competitive business
• Significant progress made to improve operating model effectiveness and efficiency across the business
• Enterprise and Government transformation complete, with subsidiary businesses integrated into Spark
Operating | • ~900 FTE reduction at 31 December 2024, including changes made during FY24 |
Model | |
• Broader operating model changes underway in H2 25 to focus resources on refreshed strategic priorities and | |
momentum in core |
Tech | • Significant transformation of technology and network operations underway, leveraging several strategic |
partnerships for global scale, capability, and accelerated AI and automation - delivering better customer | |
Delivery | |
Model | outcomes and material cost savings (see slide 11) |
- Investment in AI and automation supporting better customer outcomes and reduced cost to serve
Scale | • Spark developed 'Bravety', an AI capability for contact centres, which summarises customer calls within 5 |
AI | |
seconds - enabling frontline teams to focus on customer interactions and reducing call handling times and costs | |
Spark New Zealand | Copyright ©️ 2025
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