Spark New Zealand (SPK) is positioning to exploit its key markets of mobile, broadband and communications technology to offset a decline in its legacy voice network. The company updated analysts at its recent strategy briefing, signalling that its formula may not have changed at the top line but better growth should come from mergers, investment in adjacent technology and market share gains.
UBS has surveyed investors, finding the biggest issue is competition in the NZ telco market. The broker suggests there is a low probability of a dividend reduction, as competition has been more rational in 2019.
The company will accelerate its cost reduction program, called Quantum, bringing forward an extra NZ$25-30m in implementation costs. This is not a complete surprise to Morgan Stanley and the broker notes no guidance is yet being issued for FY19.
Credit Suisse reviews forecasts and envisages the potential for revenue to grow modestly from FY16. It remains possible earnings will be back above NZ$1bn in the next three to five years on positive contributions from IT services.