Spark New Zealand (OTCPK:SPKK.Y) 2025 Investor Day Transcript

Summary of Spark New Zealand Investor Day - September 10, 2025 Company Overview - Company: Spark New Zealand (OTCPK:SPKK.Y) - Event: 2025 Investor Day Key Industry Insights - Economic Environment: Significant shifts in economic conditions in New Zealand have led to reduced consumer and government spending, impacting Spark's business operations [2][12] - Telecommunications Sector: The company operates in a highly competitive telecommunications market, focusing on core connectivity services, including mobile and broadband [21][22] Core Strategic Points - New Strategy: Spark has developed a new five-year strategy focusing on core connectivity, customer experience, and leveraging advanced technologies like AI and 5G [4][19] - Capital Management: The Board has reviewed capital management to prioritize investments in core business areas, aiming to deliver growing returns for shareholders [3][5] - Customer Experience: Spark aims to enhance customer satisfaction, with a notable increase in customer satisfaction scores from +33 to +41 in FY 2025 [8][79] Financial Performance - Revenue Contribution: Mobile services account for 40% of revenue and 52% of gross margin, with a strong market share in mobile service revenue [30] - Return on Investment: Return on Invested Capital (ROIC) reduced to 8.7%, but still outperforms many global peers [11] - Data Center Sale: Spark sold a 75% stake in its data center business for GBP $7,500,000, valuing the business at an FY '25 pro forma EBITDA multiple of 30.8x [23] Operational Highlights - Workforce Reduction: A significant transformation program led to a reduction of 1,300 roles, contributing to a labor and operational expense reduction of GBP 85,000,000 in FY 2025 [14] - 5G Network: Spark launched New Zealand's first standalone 5G network, enhancing connectivity and enabling new customer solutions [70][71] - Data Usage Growth: Data usage on the mobile network has averaged around 14% growth per annum over the last three years, driving demand for connectivity solutions [15] Customer Segments - Consumer and SME: The Consumer and SME segment accounts for over 85% of mobile service revenue, with a focus on retaining high-value customers [30][32] - Enterprise and Government: Spark holds around 50% market share in the enterprise and government sectors, with expectations for growth as economic conditions improve [33] Technology and Innovation - AI Integration: Spark is leveraging AI to enhance operational efficiency and customer experience, including a partnership with Nokia for network automation [66] - Network as a Service: The company is exploring new commercial models, including network APIs, to monetize its network investments [75] Sustainability and Social Responsibility - Sustainability Performance: Spark has been recognized in the Dow Jones best-in-class index for sustainability, with ongoing efforts to reduce the gender pay gap and improve employee engagement [11] Future Outlook - Market Positioning: Spark aims to strengthen its market position by focusing on core connectivity and optimizing beyond that core, with a clear ambition to improve customer experiences [19][21] - Growth Opportunities: The company anticipates significant growth in data center demand, driven by enterprise and government needs, as well as advancements in AI and cloud services [26][55] Conclusion - Strategic Focus: Spark's new strategy emphasizes enhancing core connectivity, improving customer experiences, and leveraging technology to adapt to changing market conditions, ensuring stable returns for shareholders over the next five years [27][28]