Vodafone treads water as regulator circles
Vodafone New Zealand has reported a 16 per cent dip in its annual profit to $40 million for the year to the end of March.
The result comes as the Commerce Commission considers new regulations to boost competition in the $2.7 billion mobile market, and as Vodafone NZ chief executive Russell Stanners prepares to hand over the reins to new boss Jason Paris.
Paris – a former executive at Spark and Television New Zealand – will take over as chief executive next month.
Vodafone’s profit was achieved on revenues of about $2b, which were up just $5m on the previous year.
The tread-water result may aid Vodafone’s case that the mobile market is competitive in spite of the commission’s observation that mobile network resellers such as Vocus and The Warehouse have been unable to carve out a large piece of the pie.
Rival 2degrees grew its 2017 revenues by 6 per cent, recording revenues of US$518 million (NZ$715m), and upped its operating profit by 5 per cent to US$83m, but also ended its financial year on a flat note.
Spark last month reported an 8 per cent drop in its total annual profit to $385m.
Vodafone restated its results for 2017 to make small adjustments, which appear to have been prompted by its now-shelved plan to float the business on the NZX.
Spark appears to be in for a paper windfall of about $300m after Australian mobile company Vodafone Hutchison Australia (VHA) – in which it indirectly holds a stake – agreed last month to merge with fellow Australia telco TPG to create a new business with an enterprise value of A$15b (NZ$16.3b).
Spark attributed a book value of just $69m to its stake in VHA shareholder Hutchison Telecommunications Australia in its 2018 annual report. But there has been speculation it could reinvest its profit from the transaction to gain an edge in the New Zealand mobile market.
However, as part of the merger agreement, Hutchison will not be able to sell its stake in the new Australian business for two years – meaning Spark will not be able to get its money out before then.