Company Reports

Spark New Zealand delivered a 2% decline in fiscal 2026 EBITDA after investment income, or EBITDAI, to NZD 1.035 billion, meeting the midpoint of the guidance range. The board declared a final dividend per share of NZD 0.08, bringing the full-year total to NZD 0.16, 50% imputed.

Spark New Zealand generates steady cash flow, has a solid position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile.

Shares in Spark New Zealand continue to drift, down 11% dividend-adjusted since reporting its interim results on Feb. 18, 2026. They have underperformed Telstra (up 4%) and TPG Telecom (down 2%) in Australia over the period. We delve into potential catalysts to realize Spark's intrinsic value.

Spark New Zealand generates steady cash flow, has a solid position in the New Zealand telecommunications market, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile.

Spark reported a 5% lift in first-half fiscal 2026 adjusted EBITDAI to NZD 457 million, excluding the recently sold data center unit, on a revenue fall of 1% to NZD 1.9 billion. The interim dividend per share of NZD 0.08, 50% imputed, is down 36%. Fiscal 2026 guidance was reaffirmed on all metrics.

Spark New Zealand generates steady cash flow, has a solid position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile.

Spark’s fiscal 2026 first-half result will be the first since the launch of its SPK-30 strategy and revised capital management framework, initiated following a prolonged negative earnings downgrade cycle and balance sheet concerns.

Spark New Zealand produces steady cash flow, has a solid position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile.

Spark New Zealand dividends are imputed for New Zealand resident shareholders. However, the imputation credits are not available to non-New Zealand residents. As such, we issue this analyst note to correct our data, to now show zero franking for the Australia-listed Spark share class.

Spark New Zealand generates steady cash flow, has a solid position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile.

Spark New Zealand reported a 9% fall in fiscal 2025 adjusted EBITDAI to NZD 1.06 billion, albeit in line with management's guidance. Adjusted net profit dropped 34% to NZD 227 million. The group declared a final DPS of NZD 0.125, bringing the total for the year to NZD 0.25, down 9% as guided.

Spark New Zealand has agreed to sell a 75% interest in its data center portfolio to Pacific Equity Partners. The deal values the asset at a base enterprise value of NZD 575 million (22.9 times pro forma EBITDA), increasing to NZD 705 million on achieving earn-out targets (30.8 times EBITDA).

Reserve Bank of Australia modelling suggests US tariffs could wipe around one percentage point from Australian GDP growth over the next few years. While the chance of a recession is higher, its impact and duration may be mitigated by monetary and/or fiscal responses deployed.

Spark New Zealand generates steady cash flow, has a solid position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile.

Spark's fiscal 2025 first-half adjusted EBITDAI slumped 16% to NZD 448 million, with higher depreciation and interest costs pushing earnings per share down 64% to NZD 3.1 cents. Causes of the poor result are highly concerning, leading management to cut full-year earnings guidance by around 7%.

We cut our fair value estimate for Spark by 7% to NZD 4.30 per share, or AUD 3.90 at current exchange rates. This follows the 6% reduction just two months ago, which reflected structural cost issues in the group's IT units. This time around, the cause for our downgrade is more sinister: deteriorating revenue trends in the core mobile unit—the engine that drives earnings and cash flow for the whole group.

Spark New Zealand generates steady cash flow, has a solid position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile. Construction of an ultrafast broadband network has lowered barriers to entry in fixed-line and broadband, and represents a risk to Spark's broadband business. Successful execution of product bundling that leverages the mobile network could help defend broadband market share, as will continuing growth in fixed wireless broadband.

Spark New Zealand generates steady cash flow, has a strong position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile. Construction of an ultrafast broadband network has lowered barriers to entry in fixed-line and broadband, and represents a risk to Spark's broadband business. Successful execution of product bundling that leverages the mobile network could help defend broadband market share, as will continuing growth in fixed wireless broadband.

We cut our fair value estimate for Spark by 6% to NZD 4.60 per share, or AUD 4.20 at current exchange rates. The culprits behind the 3% fall in fiscal 2024 underlying EBITDAI to NZD 1.163 billion and the abrupt 7% decline in the second half are not just cyclical. Management attributed much of the "disappointing outcome" to challenging economic conditions, especially on enterprise and government spending. However, the outsize earnings impact exposed structural cost issues in the group's IT units that we previously overlooked.

Spark New Zealand generates steady cash flow, has a strong position in the New Zealand telecommunications industry, and has the infrastructure to offer a diverse range of products. Although competition is intense in the New Zealand market, we believe Spark's scale provides a competitive advantage. Furthermore, private equity ownership of Vodafone New Zealand has heralded in a new age of rational competitive behavior in mobile. Construction of an ultrafast broadband network has lowered barriers to entry in fixed-line and broadband, and represents a risk to Spark's broadband business. Successful execution of product bundling that leverages the mobile network could help defend broadband market share, as will continuing growth in fixed wireless broadband.