Spark has reported across-the-board full-year growth despite the pandemic scare.
For the year to June 30, net profit increased 4.4 per cent to $427m, ebitdai up 2.1 per cent to $1.13b and revenue was up to 2.5 per cent to $3.62 billion.
The numbers were in line with guidance issued on April 22 and analyst expectations.
The company announced a second-half dividend of 12.5 cents per share, fully imputed, bringing the total FY20 dividend to 25c per share.
Covid has been a mixed bag for Spark, with increased demand for mobile, broadband and cloud services offset to a degree by the loss of global roaming revenue, and goodwill relief measures such as providing unlimited data for all fixed-line customers, extra helpdesk costs, retail store closures, Spark Sport being made free for a quarter due to the cancellation of live events, and suspending disconnections for late-payments.
Free cash flow increased $146m to $438m year-on-year, but fell short of spark’s $460m aspiration “due to a conscious decision to secure 5G mobile network equipment.” Spark began its 5G mobile rollout in Palmerston North last month, using gear from Nokia Networks and Samsung, given its 4G incumbent Huawei remains sidelined by the GCSB.
Spark received no dividend from its share in the Southern Cross Cable, vs the year-ago $15m payout.
The telco earlier flagged the temporary suspension of profit-payouts from the joint venture, which faces new competition from Hawaiki Cable and is gearing up for its new Southern Cross Next Cable.
Cautious 2021 guidance
Spark confirmed FY2021 ebitdai guidance of $1.09b to $1.13b and a FY2021 dividend of 23-25c per share, fully imputed.
CEO Jolie Hodson said, “We are now entering a more challenging period as a country and we expect the impact of Covid-19 to be more material in FY2021.”
The company was bracing for a possible tail-off in SME and retail business as employment subsidies rolled off, Hodson said on a conference call.
CFO Stefan Knight said the company was not banking on any roaming revenue in FY2021 as borders remained closed (earlier, analyst Peter Wise said the loss of roaming would cost Spark, Vodafone and 2degrees a collective $114m over the next 12 months).
Knight said Spark would lose around $40m in roaming revenue if borders remained closed for the current financial year. The total Covid-19 impact could reach $75m, but the CFO added that the unusually wide forecast range reflected the difficulty of picking numbers amid the pandemic.
Southen Cross dividends would now resume in FY2023 rather than FY2022 as originally flagged, Knight said.
He did see growth continuing in mobile, and cloud-based collaborative products as the working from home trend persisted. Spark’s 5G rollout would help boost fixed-wireless.
Spark was “assuming the NZ economy will remain subdued,” Knight said.
Spark shares closed at $5.03 yesterday. The stock is up 15.9 per cent for the year.