Spark stood by its recent cell tower sale at its annual shareholder meeting after criticism from the floor.
In July, the telco sold a 70 per cent stake in its cell site network to a Canadian investment fund for $911 million. Vodafone NZ closed a similar deal laterthe same month.
Today, in the lead-up to the vote for the board - where existing directors were standing for re-election - one investor said: “I’m astounded that you’ve given away 70 per cent of the cell tower network for short-term gain and long-term pain”.
He said, “I’d like to know who opposed it and who voted for it, because I’m not going to vote for a person who is going to sell our infrastructure to an overseas organisation.”
Spark chairwoman Justine Smyth said directors had voted unanimously for the sale.
“We looked at an efficient use of our capital. And the nature of what’s sold is the passive towers only. So none of the assets of the tower that give us a competitive advantage to our business - which is the mobile components on the tower - all of those are retained in our ownership,” Smyth said.
“We determined we could both return some capital to shareholders and recycle some of that capital for other investments we want to make in our business. We’ve retained $350 million to invest in newer technologies and other things that over the long term we think will generate better value for our shareholders.”
In the wake of the cell tower deal, Spark said it would return $350m to shareholders via an on-market share buyback. Today, there was no update on the timing.
A further $350m will be invested in growth areas such as the Internet of Things - which is central to various efforts to use digital technologies to enable faster emission reductions, Spark’s ongoing 5G mobile network upgrade, and Spark Health. The health operation’s revenue (which is undisclosed) rose by 46 per cent in the 2022 full-year, after it won national contracts through the newly-established Te Whatu Ora, or Health New Zealand, and launched its new cloud-based digital health platform, Kete Waiora.
The balance of the sale proceeds will be used for long-term lease access to existing cell sites, and new towers that will be built by “TowerCo”.
The cell tower sale - plus the strong 2022 full-year result that Spark reported in August - also underpins a pending rise in Spark’s dividend. The telco forecasts that its payout, long-stalled at 25 cents per share, will rise to 27cps for 2023. That figure, and Spark’s broader guidance for the 2023 full-year, was reaffirmed at today’s meeting.
Elsewhere at the meeting, Spark chief executive Jolie Holdson underlined her company’s focus on closing the “digital divide” - the gap between the broadband haves and have-nots.
“As businesses harness the power of technology to become more sustainable, we expect to see digitisation continue to accelerate, and this brings the issue of digital equity firmly into the spotlight,” the CEO said.
“With one in five New Zealanders digitally excluded in some way, we will not achieve a just transition unless we lift digital equity across our communities, and this remains a strategic focus for Spark.”
The Department of Internal Affairs has estimated that 20 per cent of Kiwis suffer some form of “digital exclusions” - either because they don’t have access to a computer or broadband, or have language or disability issues.
Photo / 123rf
Pre-Covid, Spark had around 4000 households on its Jump programme, which offers free or heavily subsidised broadband to struggling households.
By August 2021, that figure had jumped to 15,000, and by June this year to 22,000 - representing around $5m in donated data. Today, Spark said 23,000 households were on Jump.
Forsyth Barr maintained its “outperform” rating after Spark reported its full-year result in August, but bumped up its 12-month price target from $5.70 to $5.90
Spark shares were up 0.2 per cent to $5.07 in early afternoon trading, while the broader NZX50 was down 0.5 per cent.
