Spark gains sparkle as profits rise and costs fall

Spark has delighted investors by delivering a better-than-expected 12 per cent rise in its profit to $409 million for the June year.

The result sent its shares up more than 5 per cent yesterday to $4.22 in early trading on the NZX and they retained most of that gain into the early afternoon when they were up 4 per cent at $4.17. Spark’s revenues were virtually unchanged at just over $3.5 billion and on an ‘‘adjusted basis’’ its profit was up 2.2 per cent, or $9m.

The improved profit was largely driven by a drop in costs, including a $38m reduction in labour costs, and has allowed the company to maintain its total annual dividend at 25 cents.

The company cut its staff headcount by the equivalent of 231 fulltime jobs over the course of the year, finishing up with 5276 fulltime positions.

Rival Vodafone looks set to beat Spark to the next generation of mobile technology, 5G, by launching a commercial service in December. But Spark chief executive Jolie Hodson said Spark had led the transition to a ‘‘wireless future’’ with the number of customers on its fixedwireless broadband and voice products growing by 36,000 over the year to 166,000.

The Commerce Commission said in July it had received three complaints from customers who believed they had been pressured by Spark into switching to wireless connections. But the commission decided not to formally investigate – a decision that prompted a query from coppernetwork owner Chorus.

Spark estimated it had won more than 60 per cent of the growth in the mobile market during the year, both in dollar-terms and in terms of new customer connections.

Spark did not provide customer numbers for the take-up of Spark Sport or its streaming coverage of the Rugby World Cup but said it had so far streamed 800 sports events.