Spark to transfer tower assets to new subsidiary as revenues rise

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Spark to transfer tower assets to new subsidiary as revenues rise

Spark has announced a new infrastructure subsidiary, TowerCo, as its B2B dealings continue to grow, driving revenue growth for the ISP.

The company’s total revenue for the first half of FY22 reached NZ$1.89 billion, an increase of 5.2 percent over the same period in the previous year. This saw the company’s profit rise by 21.8 percent to $179 million.

While its broadband revenue took a 3.9 percent dip due to a “highly competitive market”, according to Spark, it gained 5 percent revenue for mobile services, which, it said, made it the “fastest growing NZ mobile provider by connections and revenues year-on-year”.

Spark’s trilogy of “future market” areas all saw growth—Spark IoT connections increased 31 percent to 623,000, Spark Health won a national contract for digital services with Health New Zealand and saw a 25 percent increase in revenue, and even the sports streaming service Spark Sport’s revenue grew, despite the impact of the pandemic on the sporting world. 

Cloud, security and service management revenues grew by 3.2 percent to $224 million, while procurement and partner derived revenue shot up 27.6 percent to $301 million.

“We are pleased to see the strategic ambition Spark set back in 2020 coming to fruition, with future markets now making a significant contribution to revenue growth, and targeted investments in simple, digital customer experiences, data and artificial intelligence, and critical infrastructure differentiating Spark in the market,” said Spark NZ chair Justine Smyth. “The Board and I are particularly pleased to see this growth driven by highly engaged people – with Spark achieving its highest employee engagement to date during the half.”

TowerCo 

The decision to create a new subsidiary dedicated to its network infrastructure came about after a review of its infrastructure portfolio in FY21. 

Spark will transfer its passive mobile tower assets, its 1500 mobile sites that support its active network assets including the core network and radio equipment. 

“We can see globally that shared ownership models are an effective way of improving returns from infrastructure assets that are not critical to competitive advantage. In mobile, our active assets are what drives our competitiveness – including our core network and radio equipment. These assets leverage our spectrum holdings, provide differentiated customer experiences, and support our wireless aspirations,” explained Spark CEO Jolie Hodson.

“Our passive mobile assets, on the other hand, are the physical towers that support this active equipment. By separating these assets into a subsidiary model, we can improve utilisation through coverage expansion, future service innovation, and increased tenancy, while delivering efficiencies in build, maintenance, technology, and lease costs as we expand mobile coverage across Aotearoa.” 

At this point, the company has no plans to bring on any third-party capital for the new business. The process is expected to take several months.

Last year, Aussie telco giant Telstra sold 49 percent of its telecommunications towers business, InfraCo Towers, to a consortium for $2.8 billion.

The stake was sold to a consortium comprising Australia's sovereign wealth fund Future Fund and super funds Commonwealth Superannuation Corporation and Sunsuper.

CRN NZ is set to launch in the coming weeks. Contact NZ bureau chief Ben Moore for more information.

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© CRN New Zealand
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