Spark takes hit, slashes staff spend
Spark’s profits have been hit by the cost of introducing a controversial new type of employment contract, as the telecommunications company slashes its labour costs.
Yesterday Spark reported an annual profit of $385 million after tax for the year to June 30, down
8 per cent from a year earlier. The results showed Spark spent $49m during the period as it brought forward a ‘‘performance improvement programme’’ that will organise staff into a group of new structures called Agile.
Spark chairwoman Justine Smyth said the company was increasingly confident that the new structure could ‘‘improve customer experience and operate under a lower cost structure’’.
The results show Spark is on track to deliver its target of cutting staff costs by about a fifth.
Spark said its annualised labour costs had fallen $82m to just under $500m a year as a result of the restructure.
It expected to deliver a further
$30m of annualised cost savings by the end of the year.
In June the company gave 1900 staff members an ultimatum: Sign new employment contracts for Agile working or leave.
Agile tends to place staff into more informal groups, rather than work being organised into larger, hierarchical projects.
The move to Agile was called "a recipe for disaster’’ by employment law expert Barbara Buckett, who thought it seemed rushed and said Agile was ‘‘generally untested’’ in New Zealand.
The move appears to have resulted in the number of staff at the company having reduced by more than 100 since the start of
2018, to 5507.
Spark’s financial results showed year-on-year revenue growth of $35m, taking total revenue to $3.65 billion.
The growth in revenue from new services was partially offset by declines in legacy voice, data and networks revenues.
Spark’s broadband customers rose slightly in number to 700,000, with more than half of those customers now on either fibre or wireless services.
Spark said that although the
116,000 customers on wireless services was behind target, a
12,000 increase saw its gross margins on broadband increase by 6.7 per cent.
In a blow to Sky Television, Spark announced earlier this month that it saw an opportunity to create a ‘‘standalone sports media business’’.
The company has made some serious strides into the world of sports streaming on the back of its rights for the Rugby World Cup 2019, and the Women’s Rugby World Cup 2021.
Yesterday, Spark managing director Simon Moutter said the company saw sports content as ‘‘crucial to our media strategy’’.
‘‘However, we are also disciplined when it comes to our investments in this area and are only looking to secure content that can give us a commercial return. We believe we’ve achieved that with the highquality content we’ve secured to date,’’ he said.
Moutter has talked about going head to head with Sky for sports rights generally, despite a deal the company struck in April where Spark began reselling Sky’s Fan Pass online sports service for $30 a month.
In recent months, Spark has secured the rights to three seasons of the Premier League from 2019 and it also gained exclusive New Zealand rights to Manchester United TV from later this year.