Spark New Zealand Stock Earnings Reports

FY25 was a reset year for Spark. Adjusted revenue fell 4.2% to NZD 3.7bn and adjusted EBITDAI fell 8.9% to NZD 1.06bn; adjusted NPAT declined 33.6% to NZD 227m. Free cash flow remained NZD 330m while management reduced FY25 CapEx by 17.2% to NZD 429m. The Board and management have launched a material transformation program and a renewed five‑year strategy (SPK‑30) that refocuses the company on core connectivity (mobile, broadband, managed networks, IoT and collaboration) and prioritises capital allocation to those areas. Spark realised proceeds from disposals (Connexa tower stake and HTAL stake) and agreed to sell 75% of its data centre business to Pacific Equity Partners (initial proceeds ~NZD 486m; up to NZD 583m including earn‑outs). Proceeds will reduce debt and fund a refocus on core investment. Management delivered NZD 85m of H2 FY25 cost reductions (NZD 61m labour, NZD 20m product, NZD 4m other OpEx) and targets NZD 110–140m annualised savings by end of FY27. New technology partnership model (network and IT partnerships, plus AI investments) is expected to improve efficiency and customer experience. Capital management was reset: new BAU vs strategic CapEx definitions, a new free cash flow definition (includes working capital and BAU CapEx; excludes spectrum and strategic CapEx), and a dividend payout policy of 70–100% of free cash flow (management guiding to a 100% payout for FY26). FY26 guidance (most likely scenario assuming data centre sale completes 31 Dec 2025): EBITDAI NZD 1,010–1,070m, BAU CapEx NZD 380–410m, data centre CapEx NZD 50–70m (cash committed pre‑completion), free cash flow NZD 290–330m, and a dividend reflecting a 100% payout of free cash flow. Key investor takeaways: 1) clear strategic refocus on connectivity with tighter capital allocation, 2) material short‑term earnings pressure but active cost and portfolio actions to restore margins and cash flow, 3) balance sheet to be considerably strengthened by data centre proceeds, enabling the FY26 100% payout but with dividend growth dependent on future free cash flow improvement, and 4) ongoing execution risk from a weak macro, legacy product declines and competitive pressure in mobile/broadband.