Spark chief executive Jolie Hodson. Photo / Jason Oxenham
Spark has reported an 11.4 per cent fall in net profit after tax to $148 million for the six months to December 30, while revenue fell 1.5 per cent to $1.77 billion.
The telco blamed Covid-19 for the revenue fall. Border closures and tightening have choked off an estimated $114 million in annual roaming revenue for Spark, Vodafone and 2degrees from Kiwis travelling overseas, and incoming tourists.
In an NZX filing, Spark said it lost around $26m in “high-margin mobile roaming revenue due to ongoing travel restrictions and border closures.”
Stripped of the Covid hit on roaming revenue, mobile roaming revenue increased 3.8 per cent in the first half, Spark said.
The profit dip was blamed on a $29 million increase in depreciation and amortisation charges resulting from the shorter asset lives of new digital technologies, and an increase in depreciation related to customer and property leases.”
Cost-cutting saw ebitdai increase 0.4% to $502 million.
The telco said it now anticipated the total FY2021 costs of Covid would be $50m, versus its previous estimate of $75m.
The full-year 2021 operating earnings guidance has been nudged up slightly to a range of $1.1b to $1.13b from the earlier $1.09b to $1.13b.
Full-year dividend guidance was also increased today to 25 cents per share, from the earlier 23cps to 25cps. A first-half dividend of 12.5cps was declared.
Covid has been a mixed bag for Spark, with increased demand for mobile, voice-calling, broadband and cloud services balanced by the loss of global roaming revenue, and goodwill relief measures such as providing unlimited data for all fixed-line customers, extra helpdesk costs, retail store closures, Spark Sport being made free for a quarter due to the cancellation of live events, and suspending disconnections for late-payments.
Spark earlier offered FY2021 ebitdai guidance of $1.09b to $1.13b and a FY2021 dividend of 23-25c per share, fully imputed.
Spark was first to 5G wireless broadband as it piloted the technology in five small South Island towns in late 2019 (Westport, Clyde, Alexandra, Twizel, Tekapo and Hokitika).
The telco has since added 5G mobile and wireless to five towns and cities over the past year: Palmerston North, New Plymouth, Te Awamutu, and parts of central Auckland and Dunedin CBDs
Spark has committed to launching 5G in five to seven locations by the end of its financial year (June 30).
With Huawei still sidelined by the GCSB, the telco has turned to Nokia Networks and Samsung for the edge of its 5G network, while sticking with Cisco and Ericsson for its core.
“We have already launched five and we are due to announce another major city very soon.” a Spark spokeswoman said. The telco is due to release its first-half results on Wednesday.
Spark shares closed yesterday at $4.68. The stock is down 1.27 per cent over the past 12 months.