What changed
Revenue fell NZ$136m (-3.5%) to NZ$3,725m, with declines spread across Voice (-NZ$30m), IT services (-NZ$21m), and Other products (-NZ$12m). Mobile, the largest segment, held relatively firm at NZ$1,453m, down only NZ$21m. EBITDAI dropped NZ$110m (-9.5%) to NZ$1,053m, meaning the margin contraction was sharper than the revenue decline — opex did not flex down fast enough to offset softer demand.
PBT is the cleaner operating read here: it fell NZ$167m (-32.5%) to NZ$347m. NPAT declined by a smaller NZ$56m (-17.7%) to NZ$260m, but that comparison is flattered by two distortions — the effective tax rate fell sharply from 38.5% to 27.4%, and FY25 includes an NZ$8m after-tax contribution from the discontinued Connexa tower operation, which had no equivalent in FY24.
Operating cash flow fell NZ$84m (-11%) to NZ$680m, though capex was cut from NZ$518m to NZ$429m. Adjusted free cash flow was flat at NZ$330m. Gross borrowings fell NZ$137m to NZ$1,482m via the Connexa proceeds, but with EBITDAI down, the net debt/EBITDAI ratio ticked up to approximately 1.4x from 1.3x. The full-year dividend was cut to NZ$0.25 per share from NZ$0.275, with the final component declared at NZ$0.125.
What matters
The EBITDAI margin compression is structural, not just cyclical. The gap between revenue decline (-3.5%) and EBITDAI decline (-9.5%) points to a cost base that remains too large for the current demand environment. The FY24 filing itself flagged that the SPK-26 Operate Programme could not adapt the cost base quickly enough, and FY25 delivered NZ$85m in H2 cost benefits — yet full-year EBITDAI still fell NZ$110m. The question of whether the cost programme is catching up with revenue deterioration, or merely partially offsetting it, is the central earnings quality issue.
The dividend is not covered by earnings or pre-lease free cash flow. The NZ$0.25 full-year dividend implies a payout ratio of approximately 179% against NPAT of NZ$260m. Against pre-lease FCF of NZ$251m, it is similarly uncovered. The dividend was maintained only by drawing on Connexa disposal proceeds and balance sheet flexibility. With gross borrowings already at NZ$1,482m and EBITDAI declining, the sustainability of even the reduced NZ$0.25 level depends on either earnings recovery or a further capital event such as the data centre partnership process flagged at the HY25 stage.
The second-half recovery in EBITDAI and NPAT is real but needs context. HY25 contributed only NZ$419m of the full-year EBITDAI NZ$1,053m, implying NZ$634m in H2 — a material step-up driven by cost programme benefits and the Connexa proceeds flowing through. The same pattern is starker at the NPAT line: NZ$35m in H1 versus NZ$225m in H2. While the H2 recovery partly reflects genuine cost action, a portion is asset-disposal timing rather than run-rate operating improvement.
Expectations
Spark delivered within its updated EBITDAI guidance range of NZ$1,040m–NZ$1,100m at NZ$1,053m, and met its capex guidance of approximately NZ$415m–NZ$435m at NZ$429m. The full-year dividend guidance of NZ$0.25 per share was also met. In that narrow sense the result was on target — but it is important to note the guidance itself was cut at the HY25 result, so the bar had already been lowered.
No explicit FY26 numerical guidance or long-term earnings target was disclosed in the supplied materials. The release refers to the data centre capital partner process and continued cost programme execution as forward drivers, but these do not constitute quantified targets. The FY25 H2-weighted shape — NZ$634m EBITDAI in H2 versus NZ$419m in H1 — creates a relatively high exit-rate comparison for FY26 H1, unless cost programme benefits are fully sustained.
The recessionary demand environment that pressured IT services and voice revenues throughout FY25 has not been described as resolved. Mobile service revenue remains the core stabiliser; the degree to which that continues to hold will heavily influence whether the NZ$1,053m EBITDAI level proves a floor or a step down in a continuing trend.
Quality of result
The EBITDAI result has a mixed quality profile. The NZ$85m cost reduction in H2 FY25 versus H2 FY24 looks programme-driven and largely real, and the capex reduction of NZ$89m year-on-year partly reflects the conclusion of major network investment rather than a discretionary squeeze. Adjusted free cash flow holding flat at NZ$330m supports the view that underlying cash generation, while under pressure, has not collapsed.
However, a meaningful portion of the H2 NPAT recovery is timing-driven: the Connexa disposal contributed NZ$8m after-tax from the discontinued operation, and the sharp fall in the effective tax rate from 38.5% to 27.4% adds a further buffer to NPAT that may not recur. Cash conversion deteriorated marginally — OCF/EBITDAI fell to 64.6% from 65.7% — modest in isolation but consistent with the broader squeeze. Working capital was not a material swing factor, with receivable days essentially flat at 41.4 days.
The dividend payout in excess of earnings and pre-lease FCF means capital is being returned partly from asset sales and debt capacity rather than recurring profit. That is a balance sheet-assisted outcome rather than an earnings-quality endorsement.
Unresolved
- The data centre capital partnership process was flagged at HY25 as a strategic priority, but no outcome, terms, or timeline have been disclosed. Until resolved, the funding backstop for data centre growth and the impact on consolidated leverage are unclear.
- The adjusted EBITDAI of NZ$1,060m versus reported EBITDAI of NZ$1,053m implies NZ$7m of adjustments, but the full reconciliation of non-GAAP metrics — adjusted revenue, adjusted EBITDAI, and adjusted free cash flow — was not provided in the extracted materials. The nature and recurrence of those adjustments cannot be independently assessed.
- The effective tax rate shift from 38.5% to 27.4% added meaningfully to NPAT. Whether this reflects a structural change in tax position, timing items, or deferred tax movements is not determinable from the supplied data.
- IT services revenue has now declined for at least two consecutive years against a backdrop of weak enterprise demand. Whether this is a cyclical trough or a structural share loss to competitors is not answered by the filing.
- No FY26 EBITDAI guidance or earnings target has been provided, making it impossible to assess whether management expects FY25 to represent a trough or a continuation of the downward trend.
This briefing cannot assess the terms, probability, or timing of the data centre capital partnership, nor the sensitivity of the NZ$0.25 dividend to a further EBITDAI decline.
Key metrics
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Revenue | $3725m | $3861m | -3.5% ↓ |
| Net profit after tax | $260m | $316m | -17.7% ↓ |
| Net cash inflow from operating activities | $680m | $764m | -11.0% ↓ |
| Final dividend per share | 12.5c | 14.0c | -10.7% ↓ |
| Profit before tax | $347m | $514m | -32.5% ↓ |
| Cash and cash equivalents | $34m | $59m | -42.4% ↓ |
| Total assets | $4525m | $4635m | -2.4% ↓ |
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Mobile | $1453m | $1474m | $996m | +0.8pp |
| Broadband | $608m | $613m | $277m | +0.4pp |
| IT products | $522m | $527m | $257m | +0.3pp |
| Voice | $150m | $180m | $82m | -0.7pp |
| IT services | $144m | $165m | $95m | -0.4pp |
| Procurement and partners | $538m | $548m | $65m | +0.2pp |
| High-tech | $84m | $79m | $45m | +0.3pp |
| Other products | $124m | $136m | $75m | -0.2pp |
| Data centres | — | $37m | — | n/a |
Analytical metrics
| Metric | FY25 | FY24 | Context |
|---|---|---|---|
| PBT growth | -32.5% | — | cleaner earnings measure |
| Effective tax rate | 27.4% | 38.5% | — |
| OCF / EBITDAI (cash conversion) | 64.6% | 65.7% | deteriorated |
| FCF pre-lease | $251.0m | $246.0m | +$5.0m |
| FCF post-lease | $330.0m | $330.0m | +$0.0m |
| FCF / NPAT | 126.9% | 104.4% | complementary conversion metric |
| Capex % revenue | 11.5% | 13.4% | — |
| Capex | $429.0m | $518.0m | −$89.0m |
| Free cash flow | $330.0m | $330.0m | +$0.0m |
| Debtor days | 41.4 | 40.8 | +0.6 days |
| Inventory days | 8.1 | 8.4 | -0.3 days |
| Operating working capital | $505.0m | $520.0m | −$15.0m absorbed |
| Trade debtors | $422.0m | $431.0m | −$9.0m |
| Net debt | $1448.0m | $1560.0m | −$112.0m |
| Net debt / EBITDAI | 1.40x | 1.30x | Weakening |
| Gross borrowings | $1482.0m | $1619.0m | −$137.0m |
| Payout ratio vs NPAT | 178.6% | — | — |
| Payout ratio vs FCF pre-lease | 184.8% | — | not covered |
| ROE (annualised) | 17.1% | 19.9% | Weakening |
| HY25 share of FY25 revenue | 52.1% | — | Other half was 47.9% |
| HY25 share of FY25 EBITDAI | 39.8% | — | Other half was 60.2% |
| HY25 share of FY25 NPAT | 13.5% | — | Other half was 86.5% |
| Profit from continuing operations | $252.0m | $316.0m | −$64.0m |
| Discontinued operation after tax | $8.0m | — | — |
This analysis was generated using Annolyse, an AI-powered tool that extracts and analyses NZX/ASX company announcements. The underlying data is extracted from official company filings and verified against source documents. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.