Spark cuts earnings, dividend guidance, to sell Connexa stake

Spark has lowered its earnings and dividend forecasts. Photo / NZME

Spark has reduced its earnings and dividend guidance for the 2025 year, saying its financial performance “falls short of what is acceptable”.

The company said its operating earnings (Ebitdai) were expected to fall to around $1.12-$1.18 billion in 2025, down 4% from a previous forecast of $1.165-$1.22b.

Capital expenditure had been lowered to $415m-$435 million from a previous forecast of $460-$480m.

The company has reduced its dividend forecast from 27.5 cents to 25c, 75% imputed.

A review of non-core assets is under way, with a decision made to divest Spark’s 17% shareholding in mobile phone tower company Connexa.

Spark said although inflation and the official cash rate have fallen since the end of its 2024 financial year, economic activity in New Zealand was subdued, with weak consumer spending and business investment.

These challenging conditions affected Spark’s markets of mobile and IT.

“The board and management acknowledge that our current financial performance falls short of what is acceptable, and we understand the disappointment our shareholders will be feeling,” Spark chair Justine Smyth said.

“The challenges we are facing are both cyclical and structural.

“Weak business investment and consumer spending continue to curtail growth and squeeze margins.

“At the same time, we are undertaking a significant transformation of our enterprise and government division to address structural segment challenges.”

Spark was “right sizing” its capex guidance to reflect its new earnings profile.

“With this context, the board has made the difficult but necessary decision to reduce full-year 2025 dividend guidance to 25 cents per share,” Smyth said.

Spark was still committed to bringing net debt back to targeted levels, she said.

“Looking forward, we are resolutely focused on resetting performance in our core, expanding the SPK-26 Operate Programme to significantly reduce our cost base and offset market headwinds, and simplifying our portfolio.

“We are reviewing all non-core assets to determine if Spark remains the best owner, or if divestment or partnerships will deliver greater value to shareholders while further strengthening the balance sheet.”

“We have made the decision to divest our shareholding in mobile towers business Connexa, and while a transaction is not yet certain, the strong levels of interest we have received is reflective of the high quality of the Connexa business.”

Spark will provide a further update on the review of non-core assets at its interim results in February.

“As we reset performance in the short term, we are also focused on ensuring we are growing shareholder value over the longer term through our data centre strategy,” Smyth said.

Spark’s share price has been weak in recent months, reflecting in part concerns about the dividend.

The company’s stock last traded at $2.96 - well down from $5.32 in January this year.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.