Spark restructure separates digital services from connectivity
In this edition:
Two divisions, one may be sold
Spark is restructuring into two divisions. The company’s mobile and broadband operations will form the backbone of its Connectivity division, which will also include business connectivity, managed services, IoT and security. Spark’s Digital Services division covers the company’s cloud and IT services.
While organisationally distinct, the two divisions will continue to share centralised functions.
In an announcement posted to the NZX, Spark says the company’s board has begun a strategic review of the Digital Services division and is now assessing ‘how to maximise the value and returns generated by this division for shareholders’.
Spark says there is no certainty the review will lead to a transaction, commonly read as leaving the door open to a sale.
Alongside the restructure, Spark has changed its leadership team. Mark Beder, formerly the company’s chief commercial officer, is now the chief customer officer of the Connectivity division. Customer director Greg Clark will take on an interim chief customer officer, Digital Services role before departing in December 2026.
Tommy Bjorkberg will be the new chief operating officer from October 1, with responsibility for network operations, business technology services and cyber security. Leela Ashford’s role is now chief marketing and corporate affairs officer.
Analysis: Spark’s digital services journey comes full circle
When Telecom New Zealand demerged Chorus in late 2011 to take part in the Ultra-Fast Broadband (UFB) rollout, it separated out its physical fixed-line infrastructure.
Unshackled from physical copper lines, incoming CEO Simon Moutter plotted a brave new path: Telecom would no longer be a commoditised, regulated utility telco. Rebranded as Spark in 2014, the company explicitly set out to become a digital services business.
That journey lasted close to 15 years. Spark’s ambition to move ‘up the value stack’ into IT, streaming, consumer tech and heavy infrastructure ownership has effectively come full circle to the core economics of a disciplined telecommunications utility.
The rump of Spark’s digital services adventure remains in one of two divisions following the latest reorganisation. Spark’s announcement on Monday (27 July 2026) to the NZX makes it clear that the Connectivity division is the company’s core.
Beyond the core
Spark describes the Digital Services division as ‘beyond the core’. While it says there is no certainty the business is heading towards a transaction, the underlying message is clear: Spark may sell the Digital Services division.
The statement says the remaining Connectivity division will focus on ‘consumer mobile, broadband and business connectivity, including managed services, collaboration, IoT and security’.
Spark’s recent strategic moves, most notably selling down a 75 percent stake in its data centre division to Pacific Equity Partners (PEP) alongside ongoing cost reductions and refocusing on core connectivity, can all be seen in this context.
20 years of digital services
The Digital Services division can trace its ancestry back to Gen-i, which it acquired in 2004. At one time it was seen as a home-grown IT colossus that stood alongside Datacom.
Along the way Telecom or Spark acquired a series of cloud hosting, IT services and consultancy businesses including CCL. Spark paid $50 million for that business in 2015. There were names such as Revera, Appserv, Leaven and Qrious. They all became part of a billion-dollar operation.
Up to a point this strategy made sense: IT services and cloud hosting are strong growth sectors. At times Spark managed to find common ground with the telecommunications business.
Yet IT services are a people-heavy, low-margin business that doesn’t sit comfortably with telecoms and does not necessarily scale well.
While global hyperscalers were already active when Spark set out on its path, they had not yet achieved dominance and did not have much local presence. Spark may have been a sizeable operation in a New Zealand context, but it struggled to compete with AWS or Microsoft.
When hyperscalers like AWS and Microsoft Azure invested billions to build out massive local cloud regions in New Zealand, the market changed permanently. Spark found itself stuck in a middle ground: too small to compete with the endless balance sheets of global tech giants, but carrying a cost structure too heavy to act as a nimble, boutique IT consultancy.
Disconnect
There was a clear disconnect. A telecoms business generates a solid cash flow. Building infrastructure is expensive, but once the network is in place, carrying more traffic and lifting revenue comes at minimal additional cost.
Professional IT services, by contrast, scale with headcount. Every dollar of margin requires more engineers, more project managers and there is constant wage pressure.
There’s another mismatch. The connectivity business accounts for around 80 percent of Spark’s gross margin. Shareholders reasonably expected to see capital expenditures allocated to the higher-margin mobile operation than to the lower-margin IT business. Meanwhile the era of historically low interest rates was coming to an end.
These economic realities informed Spark’s SPK-30 strategy introduced by CEO Jolie Hodson. The priority shifted back to driving returns from mobile, 5G investment and core network efficiency.
Selling down a 75 percent stake in its data centre business to Pacific Equity Partners (PEP) was the first clear sign that Spark was willing to offload heavy capital requirements to private equity while retaining a minority share and an anchor customer relationship.
Carving off Digital Services into a standalone division with its own strategic review is an extension of that process. The lower-margin, higher-friction business unit is now neatly packaged. It gives Spark the flexibility to negotiate a joint venture, sell to a global IT integrator or package it for private equity.
Separation
The separation of Connectivity and Digital Services mirrors a process long-term Telecom shareholders will find familiar. Before the 2011 structural separation of Telecom and Chorus, the business went through a government-mandated operational separation that completed in 2008.
At that time it carved its business into three distinct units: Access (which became Chorus), Wholesale and Retail. Each operated at arm’s length.
In some respects, this week’s reorganisation announcement echoes that process. By formally ring-fencing Digital Services from core Connectivity, Spark is repeating its old playbook. It is creating clear, isolated financial boundaries around two operating models with fundamentally opposing capital demands, margin profiles and cost structures.
The strategic review could end in a full trade sale, a private equity joint venture or a staged exit. Either way, the circle is complete. The structural split that allowed Telecom to shed its identity as a utility and re-emerge as Spark led back to a more narrowly focused connectivity business.
ComCom proposes scaling back MBNZ programme
As flagged in March, the Commerce Commission is considering scaling back its Measuring Broadband New Zealand (MBNZ) programme. It proposes a ‘right-sized’ version that reduces reporting requirements while maintaining independent broadband performance information for consumers.
In its 2026 review of the MBNZ programme, the commission notes that the current programme has been successful but says it is costly and needs to reflect changes in technology and the market.
The commission plans to move from quarterly to six-monthly reports and reduce some provider-level comparisons. This makes sense for fibre, where performance has become highly consistent.
In recent reports, Fibre 500 peak download speeds ranged from 497 Mbps to 521 Mbps across providers, while Fibre Max speeds ranged from 869 Mbps to 923 Mbps.
The future programme would continue to measure fibre, fixed wireless and satellite services. The commission says LEO satellite performance has improved significantly, with peak download speeds rising from 196 Mbps to 234 Mbps over recent reports.
Submissions close on 18 August, with a decision on the future shape of MBNZ expected in September.
In other news...
- How Amazon Leo plans to connect mobile devices — Reuters
Aiming for 2028 launch using 5,105 satellites. - How did a Telstra outage stop trains from running? — The Conversation
Modern mobile networks carry more than voice and personal data traffic. - NZ parties watching Australia's new data centre rules — Interest
While the Greens want a data centre pause, other politicians are looking at tightening rules. - National’s social media ban labelled ’seriously big mistake’ by coalition partners — RNZ
NZ First and Act oppose the proposed legislation.
Drury to house first Chorus fibre-only exchange
Chorus brought its first purpose-built fibre-only exchange into service this week. The move marks a major digital infrastructure milestone for one of New Zealand’s largest and fastest-growing developments. It also signals fibre’s shift from a newer network layer added to legacy copper infrastructure to the foundation of the telecommunications network.
Fibre-only means the exchange offers more sustainable energy use and reduced carbon emissions. It also means better resilience in extreme weather and has the capacity to scale; a fibre exchange can serve a larger area than was practical with copper technology.
Chorus operates around another 600 exchanges across New Zealand. These were originally built to cope with copper-based telephone lines and updated first to handle copper-based broadband equipment before fibre technology was retrofitted.
Reannz joins global research cyber defence network
New Zealand’s research and education network provider Reannz has joined an international cyber threat-sharing agreement that aims to strengthen protection against attacks targeting universities and research institutions.
A renewed memorandum brings together national research and education networks from New Zealand, Australia, Canada, the United Kingdom and the United States. Members can share threat intelligence and coordinate responses to cyber incidents.
Reannz says joining the trusted network will help New Zealand researchers, educators and students benefit from faster access to global cyber security insights.
Stansfield new Tū Ātea Network Services chief executive
Tū Ātea Network Services has appointed Jo Stansfield as its new chief executive. The former Fortysouth chief operating officer will start her role at the Māori-owned telecommunications infrastructure group in November.
Stansfield played a key role in establishing and scaling Fortysouth, the mobile tower company. She will lead Tū Ātea’s Broadtech, JDA and Transworks businesses, which provide infrastructure services across telecommunications, broadcast, health and industrial sectors.
Current chief executive Merv Taylor will move into a strategic adviser role after leading the transition to Māori ownership.
2degrees becomes New Zealand Rugby’s telco partner
2degrees has signed a three-year deal to become New Zealand Rugby’s official telecommunications partner.
The partnership includes support for women’s rugby, with 2degrees backing the Black Ferns, Black Ferns XV, Black Ferns Sevens and New Zealand Under 18 Girls programmes. It is the first New Zealand Rugby commercial partnership to support the women’s pathway from development programmes to the international stage.
Environmental impact emerges as AI trust concern
Almost half of New Zealanders are concerned about the environmental impact of businesses using AI, according to a new One NZ report.
The research found concerns were highest among 18–24-year-olds, with 63 percent worried about AI’s environmental effects. Electricity use was the leading concern, followed by water consumption, electronic waste and carbon emissions.
One NZ says sustainability is emerging alongside privacy and transparency as a factor shaping public trust in AI, with businesses facing growing expectations to demonstrate responsible use in practice.
This time last year One NZ was talking MVNOs
One New Zealand signed a three-year MVNO packaging deal with Australia’s Fastter. The idea was to help brands get a new mobile operation up and running in weeks, not months.
Five years ago we looked back at the history of working from home. At the time New Zealand was between lockdowns, but working from home was a well-established and popular option for many employees.
The Download Weekly is a New Zealand telecommunications industry newsletter written by Bill Bennett. You are welcome to pass it on to your friends and colleagues. While the newsletter is free, reader support helps enormously. If you are reading this for work, donations are tax-free. A banner at the top of the page will take you to the support site.
Have your say. Sign up as a subscriber, it is free, to comment on any of the stories on this site. We don’t collect any personal data other than an email address.
Bill Bennett has covered New Zealand telecommunications for nearly 40 years and was named Tuanz Journalist of the Year 2025.
Member discussion