Spark cut its full year underlying profit outlook and dividend payout by 9 percent yesterday. File photo. Photo: RNZ / Kim Baker Wilson
Spark has made it clear it is getting back to basics and considering the sale of non-core assets, as the telecommunications company looks to put itself on track for growth.
The company cut its full year underlying profit forecast, planned to cut operating and capital spending, and sell its 17 percent minority stake in the company which owned its cell phone towers.
It was also cutting overheads by $30 million and its wages bill by $50m, in addition to shaving 2 cents a share off the full year dividend.
During yesterday's investor call, UBS executive director Phil Campbell asked if Spark would become a much more focused company, given its intention to sell non-core assets.
"So almost like the business is transitioning into a kind of a mobile and data centre business over time is, is that the right way to kind of think about it," he said.
Spark chief executive Jolie Hodson responded in the affirmative.
"Yeah, I think that's a good summary," she said, adding the immediate focus was on repositioning its mobile services for growth and developing data centres in the medium-term.
She said the company was well positioned to attract a capital partner to support the development of data centres, with a strong land base, resource consents in place, and a strong customer base with multiple contracts with hyperscalers, who provided cloud computing and large infrastructure for data processing and storage.
"We have options around how we fund this, so our focus is on a capital partner and the opportunity to grow this business together and that's the approach that we're taking," Hodson said.
Forsyth Barr director Aaron Ibbotson said Spark's approach to partnering made sense, considering its financial position.
"They can't afford to build data centres and maintain their dividend from ongoing cash flows," he said.
"They seem at least committed to pay quite a high dividend in relation to how much cash they're generating. That leaves them with the only option of finding a partner.
"That can be very good, but we have very little detail at the moment."
He said the overall strategy to shed non-core assets also made sense.
"That's certainly the message that Spark wants to give - that they are going back to basics," Ibbotson said.
"I think that's a reasonable strategy, and I think it's probably something that investors want them to do."