Stock Spotlight: Spark New Zealand Limited (ASX:SPK)

This week's Stock Spotlight is ASX-listed Spark New Zealand Limited.


About Spark New Zealand Limited.


Spark New Zealand Limited, together with its subsidiaries, provides telecommunications and digital services in New Zealand. The company offers telecommunications, information technology, media, and other digital products and services, including mobile services; IT products; broadband, IT, voice, and procurement and partner services; and high-tech and data centres. It also provides IT infrastructure, business cloud, business and outsourced telecommunications, software, data analytics, data center, and international wholesale telecommunications services. In addition, the company offers group insurance products; and retails telecommunications products and services. It serves individuals, households, small businesses, not-for-profit organization, government, and large enterprises. The company was formerly known as Telecom Corporation of New Zealand Limited and changed its name to Spark New Zealand Limited in August 2014. Spark New Zealand Limited was incorporated in 1987 and is headquartered in Auckland, New Zealand.



Source: Yahoo Finance



Key Stats

Source: Yahoo Finance, ASX, Market Index. Data as of 29/11/24.


Price Performance

Growth Potential

  • After the recent share price decline, SPK is trading on an attractive dividend yield of approx. 9.0% if dividend guidance for FY25 is maintained.
  • Cost out strategy to support earnings whilst the macro environment remains challenging – SPK is targeting net cost reductions of approx. $80m in FY25.
  • Data centres present a material growth opportunity over the long term.
  • Market-leading position in New Zealand. Dominant market share in Mobile, Broadband and is the leader in IT Services.
  • Potential acceleration in mobile & broadband sector growth and SPK picks up market share.
  • Increasing customer demand for higher-margin cloud-based services.
  • Increases in ARPU growth and connections despite weak industry conditions.

Key Risks


  • Management cuts the dividend or adverse change in capital management policy.
  • More competition in its Mobile and Broadband segments leading to aggressive margin contraction, especially as products become commoditised.
  • Risk of cost blowout (for instance in network upgrades or maintenance).
  • Data centre rollout risk (including funding risks).
  • Balance sheet risk (including credit ratings risk) should earnings decline due competitive and structural risks.
  • Changes to the regulatory environment.

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Disclaimer: This article does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.

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