Forsyth Barr, which has an “underperform” rating and a $2.40 12-month price target (Spark shares were recently trading at $2.19), says it will have a keen eye on mobile services, which deliver nearly half of Spark’s gross profit.
What to watch: Mobile
Analysts Ben Crozier and Aaron Ibbotson expect Spark to report 1% mobile service revenue growth as price increases to monthly plans outweigh modest market-share losses. The pair say TelcoWatch and App Store data point to 2degrees gaining share, with One NZ stable.
They say non-service mobile revenue could be up around 3%, thanks to the strong iPhone 17 launch, which buoyed all of the mobile players.
The ForBarr pair caution there are possible pain points in fixed-mobile broadband and in pre-paid mobile, where they say a tech upgrade has allowed One NZ to offer new features. The rival has also moved from 28-day to one-month plans, effectively lowering its prices.
What to watch: The top end of town
Big enterprise and government (“E&G”) is another area they will be watching closely. Channel checks “indicate competitive pressures remain high, with price discounting particularly prominent in larger contracts” as 2degrees continues to expand from its traditional consumer and small business base to the top end of town.
What to watch: Spark’s take on the economy
As one of our largest companies, Spark also remains one of the most affected by the state of the economy.
Recession-hit punters downgrading plans, and government departments and big businesses delaying or cancelling upgrades, were a key factor in Spark’s disastrous H12025.
Will the telco’s outlook remain muted? So far (in contrast to last year’s frenetic schedule of updates), it’s yet to revise its FY2026 (financial year 2026) full-year guidance, which includes a full-year dividend of 15 to 17 cents per share (cps), well below FY2025’s full-year payout of 25cps as the telco resets its profit payout.
The analyst consensus is for Spark’s underlying net profit to recover to $96m for the first half while revenue dips slightly to $1.92b from the year-ago $1.94b.
Ebitdai (earnings before interest, tax, depreciation, amortisation and investment income) is seen as increasing 8% to $493m.
Big moves already made
Delivering Spark’s full-year result in August last year, chairwoman Justine Smyth said: “The past year has been one of the most challenging periods in Spark’s history, as we navigated economic headwinds, materially lower customer spending and ongoing structural change in some of our markets.”
While the economy remains muted, Spark is much-changed. The telco has made a series of moves to slice costs and pay down debt by selling infrastructure and position itself for the future.
Those include over the past 12 months:
- Slicing 23% of its staff to save more than $50m in labour costs (its 2025 annual report put the telco’s headcount at 4043, a reduction of “approximately 1300 fulltime employees” over 2024).
- Outsourcing more IT and mobile network work to Nokia and Indian giant Infosys. Tech upgrades, including those involving artificial intelligence (AI), also helped to cut costs.
- Selling 75% of its data centre business to Private Equity Partners in a deal worth up to $705m (the deal closed on January 30, a month after the first half closed). Spark says the proceeds will allow $2b in upgrades to the data centre operation, in which it now owns a 25% stake.
- Selling 100% of its celltower passive assets (the physical towers plus land and leases) across two deals.
- Selling its minority stake in Hutchison Telecommunications Australia for $47m.
- Announcing a satellite-to-mobile service will launch this year with a US player, widely expected to be Starlink. Elon Musk’s firm is a double-edged sword, given it also competes for home and small business broadband connections. A June 2025 Commerce Commission report said Starlink customers had increased 57% from 37,000 to 58,000 over the past year, accounting for 19% of the rural market and 2% overall. Musk’s firm drew $110m from the New Zealand market last year.
Spark has also indicated it’s looking for an investor for its Mattr data business – for which so far the financials have not been material enough to report. Ibbotson and Crozier said there is potential for an update. “Any meaningful valuation would likely be a net positive,” they said.
Earlier, Spark sold down its stake in transpacific fibre network operator Southern Cross Cables from 50% to 38%. It also shuttered Spark Sport and various side projects.
Regime change
What’s left? Spark says its new five-year plan focuses on “communications”. Analysts call it sticking to its knitting.
While there are no obvious big strategic moves to make, boardroom leadership change is on the way.
Long-time chair Smyth has said her current term (expiring in November 2026) will be her last.
Three new independent directors were named last October, one of whom could succeed Smyth: former Mercury chief executive Vince Hawksworth, ex-New Zealand Superannuation Fund and current Milford Asset Management director Lindsay Wright and Tarek Robbiati (a former Telstra and Hewlett Packard Enterprise chief financial officer who is now based in San Francisco as chief financial officer of NYSE-listed Pure Storage).
Spark shares closed on Friday at $2.15.
The stock is down 24.8% over the past year.
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.
