Kiwi wrap: Spark DX hits profits, but Vocus revenue climbs; ComCom action for Vodafone NZ

By Heather Wright, Assistant Editor

 Agile costs Spark

Spark New Zealand’s profits have taken a hit, despite a reduction in labour costs, as the telco transitions to Agile as part of its digitisation programme.

The company has reported a net profit of $385 million, down 7.9% on last year’s $418 million. Revenue was up $35 million, or 1.0%, to $3,65 billion, with mobile revenue up 6.9% and cloud, security and service management revenue up 15.1%. Legacy voice, managed data and networks revenues were all down to the tune of $100 million, offsetting those gains.

In May Spark announced it was accelerating its Quantum business improvement programme. that action accounted for $49 million in costs, for the FY18 year, including $24 million which were brought forward.

Spark chair Justine Smyth says the decision to accelerate the Quantum programme was based on increasing confidence the telco could improve customer experience and operate under a lower cost structure in an Agile model.

Labour costs were down $82 million to $581 million on the back of the programme, which saw 1900 staff told to sign up to the new Agile work practice or be made redundant, in June.

Vodafone NZ joins Spark in court

Vodafone New Zealand has been charged with making false representations in customer invoices.

The 10 charges, laid by the New Zealand Commerce Commission, cover the five years from January 2012 to January 2017, when the Commission alleges Vodafone sent invoices billing customers after their contract had finished.

The Commission says Vodafone sent the invoices, for full month billing periods, after agreeing with customers to terminate their service pay way through the month.

The matter will have its first hearing in the Auckland District Court next month.

Last month Spark was also in the commission’s firing line, with 11 charges laid alleging false or misleading representations relating to its billing and a $100 offer for new customers.

Those charges arose from three separate alleged failings, including overcharging for broadband data when a fault in the broadband network misrecorded customer data usage; and an offer of $100 credit for new customers to a broadband plan which was sent to prospective customers but failed to mention the offer could only be redeemed by phoning Spark, not joining online. The Commission alleges the letters created the impression customers could sign up online.

The third alleged failing mirrors the action against Vodafone, with customer’s final bills including charges for entire month billing periods after customers had left Spark.

Vocus results vindicate abandoning NZ sale 

Vocus has reported growth across its entire Kiwi operations, with revenue up 4% and to account for N$363.5 million, or AU$335 million, of Vocus’ overall AU$1.9 billion group revenue for FY18.

The results, which Vocus says were negatively impacted by foreign exchange rates to the tune of AU$8.2 million, come just months after Vocus decided not to sell it’s Kiwi business after failing to receive an ‘appropriate’ offer.

The enterprise and wholesale business, was up 5% to AU$162.1 million, with consumers up 2% to AU$172.9 million. Underlying EBITDA was up 8% to $56.6 million.

Broadband consumer numbers were up 3%, with a 60% increase in ultrafast broadband customers offsetting a 15% decline in copper broadband numbers.

SMB customer numbers were up 5%, while mobile customer numbers increased 14% and the company’s move into energy retailing increased with a 240% increase in energy customers, something the company attributes to improved bundling in the consumer segment and additional sales investment in the SMB segment.

Vocus says it plans to double revenue from its core enterprise, government and wholesale markets in New Zealand within five years, leveraging its fibre and network assets.