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Spark's half-year earnings up 3.5pc

NZ Newswire logoNZ Newswire 15/02/2017 Paul McBeth

Spark has lifted first-half its earnings 3.5 per cent as the acquisition of Computer Concepts bolstered revenue from its IT services unit and got an earlier dividend from its stake in the Southern Cross trans-Pacific cable.

Earnings before interest, tax, depreciation and amortisation rose to $471 million in the six months ended December 31, from $455m a year earlier, with revenue up 4.1 per cent to $1.79 billion, it said on Thursday.

Net profit increased to $178m from $158m.

Spark had previously given guidance for annual ebitda to rise 2 per cent in 2017, but on Thursday scaled that back to zero-to-2 per cent growth.

It also increased its annual capital expenditure guidance to $415m due to unplanned work around Kaikoura after November's earthquake from a previous forecast of $400m.

"Despite vigorous price competition, top-line revenue growth has been pleasing," chairman Mark Verbiest said.

"While the revenue performance across mobile, broadband and IT services was good, it is clear the intense ongoing price competition, particularly at the lower end of the market, is driving margin pressure."

This month Spark embarked on a hostile takeover of network minnow TeamTalk, which would hand the country's biggest telecommunications company fibre lines in the capital city of Wellington, a wireless rural internet service provider, and a mobile radio business.

Spark has previously signalled plans to cut its reliance on network operator Chorus's regulated copper lines.

The board declared an interim dividend of 11 cents per share and a special dividend of 1.5 cents per share.

It still plans to pay shareholders 22 cents in ordinary dividends and a 3 cent special dividend for the 2017 financial year.

The shares last traded at $3.71 and have gained 22 per cent over the past 12 months.

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