Spark’s revenue and profits dip

CEO Simon Moutter said he was pleased with the results

Spark has reported a decline in after tax profit of 1.3 percent to $370 million on the back of revenues to $3.5 billion, down one percent. However EBITA and pre-tax profit were both up: EBITDA by 2.5 percent to $986 million and pre-tax profit by 6.2 percent to $512 million.

Spark had a much heftier income tax bill in FY16, up 33 percent to $142 million due, the company said to "a combination of the non-taxable gains on the sale of businesses for $10 million in FY15, the impact of increased earnings in FY16 of $8 million and the impact of prior period adjustments o f$7 million.”

CEO Simon Moutter said he was pleased with the results, pointing to significant gains in some areas. “We are clearly winning in the mobile market. Spark’s mobile revenues were up 11.3 percent to $1.134 billion for FY16, well ahead of Vodafone’s recently published estimate of $1.065 billion,” he said.

The company added 115,000 mobile services during the year, taking its total to 2.29 million. It said the revenue increase resulted from these as well as higher usage and increased handset sales. Mobile customer acquisition costs increased by $50 million, 12.6 percent. The company invested $77 million in its mobile network during the year.

Moutter said: “In broadband, our focus on higher-value plans and adding customer value through digital services, such as Lightbox and smart living solution Morepork, has helped a 5.4 percent growth in revenues [to $3.57 million] . There has also been excellent growth in business IT services revenue, up 11.1 percent.”

However the company’s results statement said: “IT services revenue grew by $38 million or 6.5 percent resulting from growth in platform IT services and procurement services partially offset by a slight decline in traditional IT service revenues.”

Voice revenue declined y 9.2 percent, $69 million, as customers abandoned landlines.Managed date revenues declined by 9.6 percent, $20 million, as business and wholesale customers migrated services from traditional data products.

Chairman Mark Verbiest delivered an upbeat forecast, saying Spark was well positioned for long-term success. “We’ve transformed Spark from the ground up. More customers are choosing us. We have a sound long-term strategy in place, a strong FY17 game plan and proven execution skills. The next phase of our strategy is concentrated on delivering market-leading customer experiences, which will underpin the development of a competitive, sustainable and well-led business with a strong financial performance and capital foundation.”

Spark added 300 contract centre staff during the year and said it was “committing more resources to our digital service roadmap and educating customers on digital customer service options available.”

Verbiest said the company expected to pay ordinary dividends of 22 cents per share, with a special dividend of three cents per share, subject to there being no material change in outlook.

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