Spark New Zealand is to start a company-wide cost review and reprioritise capex for fiscal 2021 in response to the anticipated impact of Covid-19 (coronavirus) and support the country’s economic recovery.
Justine Smyth, the operator’s chair, said: “Like all businesses, we are preparing for a different set of economic conditions in the coming financial year and we need to take sensible steps now to ensure the business is equipped to respond.”
The operator reaffirmed its guidance for fiscal 2020 ending 30 June, noting most Covid-19 impacts materialised only in the final quarter. EBITDA was previously forecast at NZD1.1 billion ($657 million) to NZD1.12 billion and capex at NZD370 million.
After recording robust financials [1] in the first half of fiscal 2020, in February the operator increased its full-year target for mobile service revenue growth to 4 per cent to 5 per cent from 2 per cent to 3 per cent.
Roaming loss
CEO Jolie Hodson said it expects to be impacted by the broader economic downturn, as customers reduce usage or find it difficult to pay for services, and with the indefinite closure of international borders, it also expects the loss of all mobile roaming revenue.
Roaming accounts for about 5 per cent of Spark’s total mobile revenue.
The company explained that while broadband usage has increased, the majority of customers are on unlimited plans and those on data capped plans are not being charged overage fees as part of its financial support package. Late payment fees and disconnections have also been waived.
It noted moves to reduce costs will partially offset these revenue impacts.
The closure of its retail stores, with the exception of a small number that are operating as emergency distribution centres, resulted in lower device and accessory sales.
Smyth noted: “This is an incredibly challenging time for New Zealand. It is heartening to see that after many years of network investment we have been able to manage a dramatic increase in usage across our networks at a time when connectivity is of such critical importance.”
[1] https://www.mobileworldlive.com/asia/asia-news/spark-boosts-full-year-earnings-target-following-gains/
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