Cost-of-living pressures take toll on Spark
Telecommunications giant Spark has reported an unremarkable result for the six months to the end of December, attributing this to the state of the economy.
Its overall profit for the half-year slumped 82% to $157 million, and revenues fell 22% to just under $2 billion, when compared to the same period last year.
However, that drop is not very meaningful as a measure of its performance, as its result last year was hugely boosted by a $584m gain on the sale of a majority stake in its cellphone towers to a Canadian investment fund.
Once adjusted for that, Spark’s interim profit fell 4.8%, and it eked out a 1.3% rise in its revenues – which was also a decline in real terms after taking into account the 4.7% inflation rate.
It made no change to its guidance for the full year.
Spark chairperson Justine Smyth said the half-year was characterised by high inflation and cost-of-living pressures, which flowed through to lower levels of consumer and business confidence.
“While Spark’s products are largely resilient to economic downturns, they are not immune, and we saw weaker demand in some areas of the business,” she said.
“Strong cost control” saw Spark’s operating expenses remain broadly flat, but its profit fell due to higher interest rates, which increased its debt repayments.
Smyth said Spark had made solid progress implementing its new three-year strategy, with its investments in data centres and a new iteration of its 5G network going to plan.
“With the ongoing exponential growth in data, businesses digitisation and cloud adoption, and the rapid uptake of generative AI, demand for data centre capacity is accelerating, and Spark is well positioned to capture its share of this growing market,” she said.
Mobile service revenues increased 6.3% to $510m, but broadband revenues were little changed at $309m.
Revenues from its IT business were flat overall at $345m, which it partly attributed to lower demand from the public sector.
Spark chief executive Jolie Hodson said it captured 47% of the growth in mobile connections over the period.
“In an inflationary environment, we must remain focused on disciplined cost control, and as we implement our new strategy, we are creating a more efficient, low-cost operating model to ensure we can continue to invest in our growth ambitions,” she said.