Spark announces special dividend on lift in post-AAPT earnings

UPDATED: Spark shares jump on its return to operating profit growth and Spark full year announces special dividend on lift in post-AAPT earnings

EARLIER: Spark New Zealand [NZX: SPK] posted a 19% decline in annual profit, reflecting one-off gains the previous year's sale of its Australian mobile business, AAPT.

Underlying earnings were up as the telecommunications company reshapes its business to become focused on data and mobile services.

The board flagged a special dividend in the 2016 financial year.

Net profit fell to $375 million, or 20c per share, in the 12 months ended June 30, from $460 million, or 25c, a year earlier when the company reaped a one-off gain from the sale of its AAPT unit.

Stripping out the year earlier gain, profit was up 19%, and ahead of Forsyth Barr's forecast of $356.4 million.

Earnings before interest, tax, depreciation and amortisation were up 2.8 % to $962 million, in line with Spark's guidance for low single digit growth, while revenue fell 2.9% to $3.53 billion, also in line with guidance.

Ebitda missed Forsyth Barr's estimate for growth of 4.6%, while the revenue decline was more than the 1.9% decline the broking and research house projected.

The company anticipates Ebitda to rise between 0-3% in the 2016 financial year, and flagged a bigger annual dividend of 22c per share, plus a special dividend of 3c per share as a means of returning excess capital.

"We are generating positive market momentum, especially in mobile, despite a highly competitive market," chief executive Simon Moutter says.

"The financial results support the board's view that a return to long-term, sustainable growth in the free cashflow, revenue and earnings over the coming years is both realistic and achievable."

Mobile connections grew by 172,000 over the year.

"We have closed the connection number gap on our largest competitor, Vodafone, to just over 150,000, having been about 600,000 behind them just three years ago," Mr Moutter says.

Over the past year, Spark has been at odds with Chorus, which was spun out of Telecom in 2011, over the regulated price charged to use the network operator's copper lines. 

It is the subject of a review by the Commerce Commission. The regulator will make a final decision on the price Chorus can charge in December, and is currently of the view that it should be an average $38.43 per month over the next five years, but shouldn't be backdated to when an earlier ruling came into effect.

Spark's board declared a final dividend of 11c per share, payable on October 9 with a September 25 record date. That takes the annual return to 20c per share, up from 17c a year earlier, and ahead of Forsyth Barr's forecast for an 18c dividend.

The shares last traded at $2.76, and have declined 11% this year.

(BusinessDesk)