Spark's mobile revenue expected to exceed $1.1b

  • 22/06/2016

Spark New Zealand's mobile revenue will rise at least 7.9 percent in the 2016 financial year, which it says will make it the biggest player in the market.

Spark expects revenue from its mobile business will exceed $1.1 billion in the 12 months ending June 30, up from $1.02b a year earlier, it said on Wednesday.

The country's biggest telecommunications group, formerly called Telecom, had 2.21 million mobile customers in December last year, up 34,000 over six months.

Full details will be released when it reports earnings in August.

Spark claims it has now toppled Vodafone as the biggest player in the mobile market by revenue, with merger documents for the proposed tie-up between Vodafone and Sky Network Television showing Spark's rival will likely generate $1.07b of revenue in the year ending June 30. Both revenue forecasts exclude wholesale customers.

"We've rapidly closed the gap to Vodafone in terms of mobile customer numbers over the past few years," chief executive Simon Moutter said.

"Vodafone operates in many countries around the world and we think this is the first time that one of its operating companies has lost its market leadership position to a local competitor."

Investors are wary that a combined Sky TV/Vodafone entity would provide a formidable rival to Spark with an integrated content/telecommunications provider offering a quad play bundle of fixed-line voice, fixed-line broadband, pay-television services, and mobile.

While Sky TV has been grappling with increased competition from over-the-top content providers such as Netflix, Vodafone New Zealand has been losing mobile customers and bearing the cost of integrating its 2012 TelstraClear acquisition, which gave it a fixed-line network.

Spark has repositioned its primary business to mobile and data as increasingly obsolete fixed-line services continue to lose revenue, having shed its regulated network business Chorus in 2011.

The company's shares last traded at $3.38, and have increased 2.9 percent so far this year.