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Shares fall as Spark earnings disappoint

NZ Newswire logoNZ Newswire 16/02/2017 Sophie Boot

New Zealand shares dropped, led by Spark as company earnings show the telecommunications sector is experiencing stiff competition, while Sky Television fell as its merger continues to attract opposition. A2 Milk and Fletcher also declined.

The S&P/NZX50 Index fell 80.05 points, or 1.1 per cent, to 7,099.98. Within the index, 22 stocks dropped, 17 rose and 11 were unchanged. Turnover was $134.4 million.

Spark was the worst performer, down 4 per cent to $3.56. The country's biggest telecommunications company lifted first-half earnings 3.5 per cent to $178 million as the acquisition of Computer Concepts bolstered revenue from its IT services unit and got an early dividend from its stake in the Southern Cross trans-Pacific cable, and affirmed its annual earnings outlook.

"It probably, as a headline number, looked to be in line with expectations," said James Lindsay, senior portfolio manager at Nikko Asset Management. "The Southern Cross dividend was a bit higher than people's expectations, the manager suggested that shifted about $9 million from the second half into the first half, and they've lost a bit of share of the mobile market and broadband as well, which probably surprised the market a bit, and they upped their capex. A combination of that has led to a mild disappointment in the result.''

Sky TV dropped 2 per cent to $4.50. Sky says it won't delay a merger with Vodafone to give other telecommunications companies, including Spark, time to appeal it in court if the transaction is approved by the Commerce Commission.

A2 Milk dropped 3.9 per cent to $2.46, Fletcher Building fell 2.7 per cent to $10.11, and Meridian Energy declined 2.2 per cent to $2.64.

Ebos Group was the best performer, up 2.2 per cent to $18.44. Air New Zealand rose 1.9 per cent to $2.135 and Mainfreight advanced 1 per cent to $21.50.

Abano Healthcare was unchanged at $8.70. Healthcare Partners Holdings will consider mounting a full takeover bid for Abano provided it can get access to the medical investor's books, and has raised its bid for a controlling stake to $10.16 per share from $10 in the meantime.

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