Spark lowers FY2025 forecast, plans Connexa stake sale
Spark has downgraded its 2025 guidance and plans to sell its remaining 17 percent stake in Connexa, saying the mobile tower business is ‘non-core’.
A sale may be challenging as according to a report in The Australian Financial Review, the Ontario Teachers’ Pension Plan, holding 83 percent, may also offload its stake. This could affect Spark’s sale value.
In a statement the company says New Zealand’s ongoing economic challenges are responsible for the revised guidance:
“While inflation and the Official Cash Rate have reduced since the conclusion of FY24, economic activity in New Zealand remains subdued, with weak consumer spending and business investment. These challenging conditions have impacted Spark’s markets of mobile and IT.”
Addressing cyclical and structural challenges
Spark Chair Justine Smyth says:
“The challenges we are facing are both cyclical and structural. Weak business investment and consumer spending continue to curtail growth and squeeze margins. At the same time, we are undertaking a significant transformation of our Enterprise and Government division to address structural segment challenges.”
Spark reduced its EBITDAI (that unusual last ‘I’ refers to net investment income) guidance by around four percent from the $1,165-$1,220 million range to $1,120-$1,180 million. The company’s capex guidance falls from around $460-$480 million to around $415-$435 million. The dividend guidance was set at 27.5 cents per share and is now 25 cents per share, 75 percent imputed.
Mobile growth missing
Digging into the details of the guidance update, Spark says it was previously forecasting 3 percent growth in mobile service revenue, but that is expected to be flat. Again this is linked to the wider New Zealand economy.
The company puts mobile’s disappointing performance down to a slower-than expected rise in consumer and business postpaid connections along with a decline in prepay connections. There has also been a faster than expected decline in the average revenue per user (ARPU) for enterprise and government accounts.
Smyth’s comments suggest more job losses and reduced investment are on the way at Spark. The company's share price is currently at a 10-year low.
Australia’s 3G shutdown may surprise roaming NZers
Australia has switched off its two remaining 3G networks. Telstra and Optus flipped the switch on Monday, TPG had already closed its 3G service.
Paul Brislen who heads the New Zealand Telecommunications Forum warns New Zealanders travelling across the Tasman that older phones and devices will no longer connect to Australian networks. He says the changes will certainly affect voice calling but can also impact data or SMS services.
He says people with older phones should contact their service provider before heading to Australia.
Australia rushes in where NZ fears to tread
Australia has traditionally been much quicker to drop old telecommunications services and move on than New Zealand. When Australia’s NBN network was rolled out, existing copper networks were immediately closed. In New Zealand copper is still operating in some areas more than a decade after fibre was installed, although Chorus is now retiring copper networks.
New Zealand is not as tardy when it comes to 3G. At present the three mobile carriers plan to shut down their 3G networks over the next year or so after earlier plans were pushed back. When that happens, people with older devices will need to upgrade.
Carriers will recycle the spectrum used by 3G for use with 4 and 5G networks which should improve performance on those networks.
One NZ gets behind Technology Queenstown
One New Zealand says it has signed up as a Technology Queenstown foundation partner. It’s a project that aims to give the southern town a billion dollar tech sector by 2043. Other foundation partners include Otago University, Accenture, NZTE, Russell McVeagh and Genesis Energy.
Technology Queenstown founder Roger Sharp says the organisation has identified cybersecurity as a target market and is looking to set up a training centre to build skills before building an industry cluster.
Tony Baird resurfaces at Optus
A report in CommsDay says former One New Zealand executive Tony Baird will be moving to a role as managing director, network at Optus by the end of the year.
Baird worked as CTO at One New Zealand and was Vodafone’s wholesale and infrastructure director where he rebooted the company’s wholesale operation which signed MyRepublic as a MVNO two years ago. Early Baird was chief executive at Farmside, which was later acquired by Vodafone.
Dick Smith subscription ratbaggery
Australian tech sales company Kogan has a reputation for playing fast and loose. This week the Commerce Commission issued Kogan Australia, which now trades as Dick Smith, for ‘likely’ misleading customers as the company’s online sales operation automatically signs them up for a $149 membership subscription.
The word ‘likely’ is overcautious. Kogan knows people are focused on the purchase in front of them at the point of sale and unlikely to check the fine print. The website doesn’t make what is going on obvious.
As Commerce Commission general manager Vanessa Horne points out: “To avoid automatically subscribing, a customer would have to first recognise the tick box had been selected, which meant they were signed up, and then actively de-select the option”.
In other news...
3G shutdown travel warning: Older phones, some newer gadgets won’t work in Australia soon
Chris Keall reports on Australia’s 3G network shutdown in the NZ Herald.
3G roaming demise, AI lawsuits and Apple aids hearing
You can catch me discussing The Australian 3G shutdown with Paul Spain at the top of this week’s New Zealand Tech Podcast. It’s a reminder than New Zealand’s telcos don’t plan to close local 3G networks late next year so laggards still have a year to shop for a new handset.
With new big LinkedIn fine for Microsoft in Ireland, the EU puts the squeeze on tech giants
If you haven’t already bookmarked Juha Saarinen’s excellent technology news department at Interest.co.nz now would be a good time to fix that. There’s wide ranging coverage including deep dives into telecommunications related stories.
Five Eyes nations tell tech startups to take infosec seriously. Again
The Register’s Simon Sharwood is sceptical about tech companies’ listening skills. Spooks in New Zealand and our intelligence partners want startups to lift their security game, but as Sharwood notes: “Whether this advice will break through the "move fast and break things" culture that many startups nurture is anyone's guess.”
Research dying by a thousand cuts in NZ
Alan Emerson is not happy about the government cutting funding to AgResearch. At Farmer’s Weekly he writes:
News that AgResearch is cutting jobs is just plain crazy. Here we have an organisation that is there to support food production both now and far into the future, being squeezed for funding.
AgResearch has had meagre funding of $44.9 million since 2002 and that is an indictment on all political parties. The government contribution is just half that figure, which is about the same amount it has committed to Gumboot Friday.
We know what we need to do to be more innovative
Peter Griffin’s story behind Businessdesk's paywall says New Zealand climbed two places in the latest Global Innovation Index from the United Nations’ World Intellectual Property Office. That’s good, but how long will that improvement last if our government can’t adequately fund the basic agricultural research that keeps our key export sector ahead of the game?
TVNZ abandons plan to axe its 1News website
There’s no byline on this story at RNZ which says “a TVNZ spokesperson confirmed it would retain a reduced version of the 1News website”. That’s good news. While one less local news website is not going to trouble anyone in the broadband business, it would be sad if the industry’s efforts were all about piping in material from the US, UK and Australia.
Samsung leads global smartphone market in Q3 2024 as total shipments jump 5 percent to 310 million
Canalys says phone shipments grew five percent year on year in Q3 2024, reaching 309.9 million units. That’s the strongest Q3 performance since 2021.
Gartner Forecasts Worldwide IT Spending to Grow 9.3 percent in 2025
Gartner says worldwide IT spending is expected to total US$5.74 trillion in 2025, an increase of 9.3 percent from 2024. You don’t need a crystal ball to tell you that much of that new spending will be driven by AI projects.
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