Spark NZ downgrades FY25 guidance, considers asset sales
Make us a preferred source
Make us a preferred source on Google
The news: Spark New Zealand has reduced its full-year guidance after the telco continued to grapple with weak consumer spending and business investment during the opening quarter.
The numbers: Auckland-based Spark, which failed to meet its downgraded earnings guidance in FY24, reduced its EBITDAI guidance from a range of NZD1.165 billion ($1.06 billion) to NZD1.22 billion, to between NZD1.12 billion and NZD1.18 billion.
Spark lowered its capital expenditure guidance from between NZD460 million and NZD480 million to between NZD415 million and NZD435 million.
It also downgraded its dividend guidance from 27.5 cents per share to 25 cents per share, 75% imputed.
Meanwhile, Spark's free cash flow ambition of NZD400 million to NZD440 million remains unchanged.
The context: Spark said that while inflation and the official cash rate have reduced since the conclusion of the last financial year, economic in New Zealand "remains subdued", with weak consumer spending and business investment.
The challenging conditions have primarily impacted Spark's mobile and IT markets, the company said.
Spark also said that it is reviewing "all non-core assets" to "determine if Spark remains the best owner, or if divestment or partnerships will deliver greater value to shareholders while further strengthening the balance sheet."
The company said it will divest its shareholding in mobile towers business Connexa, and will provide a further update on the review of non-core assets at its interim results in February.
What they said: "The board and management acknowledge that our current financial performance falls short of what is acceptable, and we understand the disappointment our shareholders will be feeling," said Spark chair Justine Smyth.
"The challenges we are facing are both cyclical and structural," she said.
"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."
The source: ASX announcement
