“Jolie has driven the development of Spark 30 that has delivered the improved performance we’ve talked about today. I’m really looking forward to working closely with her.”
Spark 30, the telco’s five-year plan to 2030, has seen it refocus on mobile and broadband, with 70% of its data centre business sold, among other assets, and its IT services division now on the block.
Shareholders were told this morning that restructuring, layoffs, new partnerships and technology upgrades had yielded $40 million in productivity benefits.
“What do you have to say to your shareholders who’ve been impacted by the ongoing decline in the share price, and when do you think the share price will get back to where it once was, over $5?” another shareholder asked.
Spark’s shares hit $1.77 on June 23, an all-time low since Telecom was carved into retail and wholesale companies in 2011.
At the same time, Spark has “reset” its dividend at a lower payout (16 cents per share in FY2026, from 25cps in 2025). The stock was recently trading at $2.07.
“We recognise that returns have fallen short in recent years, and improving performance is our No 1 focus,” Hawksworth said. “In the first year of Spark 30, the growth in mobile service revenue and the growth in free cash flow, increased productivity, and balance sheet strengthening [are] an important first step, but there is more to do, particularly to restore earnings growth.”
Flat earnings are forecast for FY2027, with a dividend in the 16-18cps range.
“There are many factors that impact on our share price. Some are within our control, and some are a result of the macroeconomic environment.”
Cost-of-living crisis ‘headwind’
Asked about the economy immediately after the meeting, Hawksworth told the Herald: “I think it’s really mixed. Look, Spark benefits from population growth, and so the increase in tourist numbers and seeing people coming into the country always benefits us.
“We are really aware of the cost-of-living crisis that is affecting our customers. That has an impact on us. That’s a headwind.
“However, on the other side of the ledger, we’re seeing the rollout of new technology; new iPhones, for instance, and customers being really keen to upgrade. Our new Upgrader product that allows customers to spread that cost over time has proven to be far more popular than even we believed it would.”
Upgrader, which includes an optional trade-in element, includes 36-month interest-free payment plans for the latest Apple and Samsung phones.
Earlier in the morning, in the only nugget of new data, Hodson told shareholders, “We delivered a strong iPhone 18 season with handset volumes increasing 40% compared with the equivalent launch period last year”. (Apple launched its new iPhone 18 series on September 10.)
Could Starlink eat Spark’s lunch?
Another shareholder brought a challenge outside the sluggish economy.
“When do you expect your Starlink partnership to morph into something more like a ‘competitorship’, like in the US?” he asked.
Elon Musk recently confirmed that SpaceX planned to launch a mobile phone service in the US.
The “cell towers in the sky” offered by its Starlink satellite network will be complemented by cell towers on the ground in the US. SpaceX has already spent billions on terrestrial radio spectrum rights.
“Starlink is both a service to us and provides competition in rural sectors at the moment. We’ll continue to monitor that,” Hawksworth said.
Spark and One NZ both partner with Starlink for “satellite-to-mobile” services that help cover mobile blackspots, and both (along with 2degrees) act as resellers for Starlink’s dish-based business service.
Starlink sells the consumer version of its satellite dish-based broadband direct to customers via its website.
In June, in its annual telecommunications monitoring report, the Commerce Commission said Starlink had increased its New Zealand customer base from 58,000 to 72,000 over the past year.
In the process, Musk’s company moved ahead of Spark to become New Zealand’s largest rural internet service provider.
Hawksworth noted today, “At least in the current construct, satellite has some problems to overcome in urban dense areas and getting into buildings.”
Musk wants to launch up to 100,000 satellites – or even up to a million – to provide enough bandwidth capacity to offer full-blooded voice and internet services for cities. Radio spectrum will be a key part of his mobile push.
But as Hodson noted at today’s annual meeting: “If you think around spectrum, that is not allocated globally; it is done locally by each government and each regulatory entity within that country. So it’s not something that can be acquired on a global basis.”
Before the current Parliament rose, the Herald asked Communications Minister Paul Goldsmith whether the Government would consider allowing Starlink to participate in local spectrum auctions.
He did not rule it out.
“We want New Zealanders to have the best possible connectivity but, obviously, we want to see our local providers having a fair playing field, and so that’s a relevant factor,” Goldsmith said.
Foreign investment helped offer new telco services. Consumers liked more competition.
Hawksworth said today: “We’ve got a pretty competitive [telecommunications] environment in New Zealand already, if you compare it with electricity or supermarkets or any other sector.”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
