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Spark to chase mobile, IT revenue

NZN 17/08/2016 By Paul McBeth

Spark is backing a plan to run different brands at the budget and premium ends of the market and offer extra service sweeteners to deliver increased revenue in the coming year.

The country's biggest telecommunications company is targeting sales growth of zero to 3 per cent in the year ending June 30, 2017 on top of the $1.5 billion it reported and a slightly smaller increase in earnings before interest, tax, depreciation and amortisation of zero to 2 per cent on $986 million.

Chief executive Simon Moutter told analysts that he expects recent gains in the mobile market - which Spark now claims to be the biggest by revenue - will be more muted in 2017, and is targeting 5 per cent growth after generating an 11 per cent gain this year.

"We're still in a tough industry - we do have a better business but we're realistic about some of the drivers of growth," Moutter said.

Spark plans to chase price-sensitive clients on its Skinny mobile and Big Pipe ISP brands, which came out of the company's ventures division and sees wireless broadband as an opportunity to grow the budget end of the market while reducing its reliance on network operator Chorus's copper network.

Spark's also targeting a 20 per cent increase in revenue from platform IT services, such as its data centre and cloud-based offerings, which it sees as a high growth segment.

Those products form part of Spark's $658 million of IT services revenue, which rose at an 11 per cent pace in 2016.

Moutter said the ventures division, which Spark used to nurture the likes of Skinny, Big Pipe and Lightbox, is entering a new phase with some of the bigger units moved into the core Spark business and is setting up for the next round of growth in big data and the Internet of Things under the new leadership of Ed Hyde.

Moutter is backing the multi-brand strategy and "digital service inclusions" to maintain market share and grow revenue.

"We do see an increasing trend to these full-service offerings including media," he said.

Spark shares rose 2.8 per cent to $3.86.

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