Roaming loss weighs on Spark mobile numbers

Spark New Zealand argued a drop in mobile revenue in the six months to end-December 2020 masked a strong underlying performance, as executives explained cost control would remain a key strategic element in its current fiscal year.

In its fiscal H1 2021 earnings statement, the operator explained a loss of roaming revenue caused by Covid-19 (coronavirus) weighed on mobile services, which otherwise would have grown.

CEO Jolie Hodson acknowledged the pandemic meant a strong focus on cost control would remain crucial in the second half of its year, to “ensure we have the ability to respond to changing conditions if we need to”.

Chair Justine Smyth said Covid-19 “continued to challenge us as a nation, but it is encouraging to see New Zealand’s economy bouncing back more quickly than expected”.

Smyth added the operator slightly narrowed its EBITDA guidance for the fiscal year once the impact of the pandemic on its business became clear: it offered a range from a 1.2 per cent drop to a 1.5 per cent gain versus fiscal 2020.

Numbers
Net profit dropped 11.4 per cent year-on-year to NZD148 million ($109.2 million) in H1, attributed to a NZD29 million increase in depreciation and amortisation costs from network equipment purchases.

Revenue declined 1.5 per cent to NZD1.8 billion, with the mobile service figure down 1.4 per cent to NZD415 million due to the loss of NZD21 million in higher-margin outbound roaming.

Handset and interconnect revenue increased 3.2 per cent to NZD223 million.

Blended ARPU was flat at NZD28.51. Post-paid subscribers increased 5.3 per cent to 1.36 million, while prepaid fell 11.3 per cent to 1.05 million.

Broadband revenue decreased 2.3 per cent to NZD337 million.

Cloud, security and service management turnover rose 4.6 per cent to NZD229 million, credited to business transformation service management offerings.

Capex dropped 22 per cent to NZD192 million, with spending on mobile down 37 per cent to NZD58 million: it expects the full year figure to fall from NZD370 million to NZD350 million.

Hodson said 5G is available in five locations and it is testing in Christchurch, with mobile and wireless broadband offers launching next month.

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