New Zealand’s Spark has announced plans to accelerate its transition to an agile operating model, announced in August 2017, and has downgraded guidance for its full year EBITDA in light of the expected costs of this acceleration.
Sparks current FY18 guidance is for EBITDA of zero to two percent. This has been downgraded to negative 2.5 percent to 0.5 percent in light of expected costs of between NZ$50 million and $55 million resulting from acceleration of the program, dubbed Quantum. Spark originally envisaged incurring $25 million costs of change during FY18.
Spark managing director Simon Moutter said opportunities identified as part of Spark’s transition to an ‘Agile at scale’ operating model had encouraged the company to move faster with the programme.
He said Spark had now decided to implement, prior to the end of FY18, some Quantum changes that were originally envisaged to occur during FY19.
Spark said that the planned acceleration would further improve customer experience and strengthen earnings in FY19 and beyond.
“These costs of change will include external subject matter expertise, relocation and property lease costs, restructuring expenses, and programme office functions,” it said.
Moutter said the decision to accelerate the Quantum programme was the result of Spark’s increasing confidence in its ability to both improve customer experience and operate under a lower cost structure as key parts of the company – especially the ‘engine room’ core functions such as network, IT, product development and segment marketing – adopted agile ways of working.
“We set up three frontrunner agile ‘tribes’ in February and these tribes are already demonstrating impressive improvements in terms of deeply embedded customer centricity; dramatically increased speed to market; and empowered and engaged employees with greater productivity,” he said. “This has given us confidence to go faster in our agile transformation.”
Spark unveiled plans for Quantum in its Investor Day on 30 June 2017, saying it aimed to make Spark the industry’s lowest cost operator by radically simplifying and digitising processes, products and services.
Spark announced in March 2018 plans to rejig its senior leadership team as part of its move to agile and at the same time flagged the possibility of accelerating its move to agile and thus impacting its EBITDA.