Slides
Page 2
PAGE 2 Spark New Zealand | Copyright ©️ 2025 Disclaimer This announcement may include forward-looking statements regarding future events and the future financial performance of Spark New Zealand. Such forward-looking statements are based on the beliefs of and assumptions made by management along with information currently available at the time such statements were made. These forward-looking statements may be identified by words such as ‘guidance’, ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘plan’, ‘may’, ‘could’, ‘ambition’, ‘aspiration’ and similar expressions. Any statements in this announcement that are not historical facts are forward-looking statements. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond Spark New Zealand’s control, and which may cause actual results to differ materially from those projected in the forward-looking statements contained in this announcement. Factors that could cause actual results or performance to differ materially from those expressed or implied in the forward-looking statements are discussed herein and also include Spark New Zealand's anticipated growth strategies, Spark New Zealand's future results of operations and financial condition, economic conditions and the regulatory environment in New Zealand, competition in the markets in which Spark New Zealand operates, risks related to the sharing arrangements with Chorus, any impacts or risks to Spark’s anticipated growth strategies, future financial condition and operations, economic conditions or the regulatory environment in New Zealand arising from or otherwise with Covid, other factors or trends affecting the telecommunications industry generally and Spark New Zealand’s financial condition in particular and risks detailed in Spark New Zealand's filings with NZX and ASX. Except as required by law or the listing rules of the stock exchanges on which Spark New Zealand is listed, Spark New Zealand undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Page 3
PAGE 3 Spark New Zealand | Copyright ©️ 2025 H1 25 financial snapshot $448m 15.5% decrease vs. H1 24 ADJUSTED EBITDAI(2)(3) $77m 67.4% increase vs. H1 24 FREE CASH FLOW $56m 64.3% decrease vs. H1 24 ADJUSTED NPAT(2)(4) 12.5 cps 1.0 cps decrease vs. H1 24 INTERIM DIVIDEND $1,939m 1.9% decrease vs. H1 24 REVENUE(1) $252m 11.9% decrease vs. H1 24 CAPEX(3) $419m 20.9% decrease vs. H1 24 REPORTED EBITDAI(3) $35m 77.7% decrease vs. H1 24 REPORTED NPAT (1) Operating revenues and other gains (2) H1 25 EBITDAI is adjusted for the impact of $29 million of transformation costs incurred in the implementation of Spark’s SPK-26 Operate Programme. There were no adjusting items in H1 24. (3) Earnings before finance income and expense, income tax, depreciation, amortisation and net investment income (EBITDAI) and capital expenditure (CAPEX) are non-Generally Accepted Accounting Principles (non-GAAP) performance measures that are defined in note 2.5 of Spark’s Annual Report. (4) H1 25 NPAT adjusted for the SPK-26 transformation costs net of tax as described in note 2 of the interim financial statements $1,939m 1.9% decrease vs. H1 24 REPORTED REVENUE(1)
Page 4
PAGE 4 Spark New Zealand | Copyright ©️ 2025 Challenging conditions persist; decisive action being taken to improve performance, which is building momentum into H2 H1 25 results summary Tough operating environment impacted financial performance in H1 Performance improvement plan focussed on sustained competitive advantage Capital management • Revenue of $1,939 million, down 1.9% YoY , driven by mobile services, IT services, and continued decline of legacy voice, and partially offset by growth in mobile devices, cloud, data centres, and IoT • Adjusted EBITDAI1 of $448 million, down 15.5% YoY , driven by lower IT services project activity, the mix shift from private to public cloud, and supplier cost inflation, and offset by lower labour costs • Adjusted NPAT2 of $56 million, down 64% YoY , driven by lower EBITDAI and higher depreciation and amortisation costs • Focus on growing market leading position in telco core through new product development, campaign activity, and annual price reviews • Portfolio simplification and review of non-core assets on track, with sale of remaining stake in Connexa3 expected to realise ~$310 million in proceeds and a gain on sale of ~$66 million in reported EBITDAI on completion in Q3 • Significantly expanded SPK-26 Operate Programme on track to deliver $80m-$100m reduction in net labour and opex costs in-year (funded by non-recurring transformation charge of $45m-$50m, with $29m reported in H1 25 result) and $110m-$140m of annualised benefits by FY27 • Data centre build programme on track, progress made towards establishment of capital partnership to accelerate growth • Free cash flow increased 67% to $77 million YoY (and when including working capital and growth capex improved by $163 million), through disciplined capital expenditure (down 11.9% to $252 million in H1 25) • Net debt to EBITDAI 2.3x at 31 December 2024, will improve in the near term by ~0.3x with the completion of the Connexa and Digital Island transactions • H1 25 dividend of 12.5 cents per share, consistent with FY25 total dividend guidance of 25 cents per share, 75% imputed4 1 H1 25 EBITDAI is adjusted for the impact of $29 million of transformation costs incurred in the implementation of Spark’s SPK-26 Operate Programme. There were no adjusting items in H1 24. 2 H1 25 NPAT adjusted for the SPK-26 transformation costs net of tax as described in note 2 of the interim financial statements 3All regulatory approvals required for the sale of Connexa stake have now been received 4 Subject to no material adverse change in operating outlook
Page 5
PAGE 5 Spark New Zealand | Copyright ©️ 2025 Clear focus on four strategic priorities to drive improved underlying performance and sustained competitive advantage over the longer-term Strategic priorities Market momentum in telco core Simplified portfolio Transformed cost base Long-term value creation 1. 2. 3. 4. • Consumer mobile market leadership • Enterprise and Government transformation • Review of non-core assets • Enterprise and Government product portfolio simplification • Leaner operating model • Transformation of technology delivery model • Data centre growth strategy • Capital partnerships
Page 6
PAGE 6 Spark New Zealand | Copyright ©️ 2025 Mobile performance predominantly impacted by cessation of insurance product in consumer, and reducing mobile fleets and price competition in business 1. Market momentum in telco core TOTAL MOBILE MARKET PERFORMANCE1 Spark 42.0% One NZ 35.4% 2degrees 21.1% MVNO 1.5% (+0.3%) (+0.3%) (+0.0%) (-0.7%) 1 All comparisons are market share estimates sourced from IDC as at 31 December 2024, comparing H1 FY25 to H2 FY24. Note IDC restated historical market share data at 30 September 2024. • Total market service revenues broadly flat • Lower insurance revenue contributed 0.2 percentage points of share reduction for Spark • Maintained #1 position in mobile market share by service revenue and total connections 35.5% $491m 3.7% decrease vs. H1 24 MOBILE SERVICE REVENUE Consumer and SME 2.3% decrease vs. H1 24 Enterprise and Government 17.7% decrease vs. H1 24 Pay monthly connection growth continues, revenue impacted by insurance product change • Connection acquisitions up 1.1% YoY • ARPU mainly impacted by removal of mobile insurance from Spark-owned solution to third party Spark gained revenue share in a contracting prepaid market • Prepaid service revenue across the total market declined, while Spark’s revenue share increased1 • Spark connections declined while ARPU increased, with ~70% of connection loss attributable to casual users with low/no spend • Of these casual users, over 80% of connection loss was due to inactivity vs. port-outs to competitors Spark overweight in segments with shrinking mobile fleets • Connections impacted in a market dominated by shrinking mobile fleets: ~80% of the 18k connection decline from H1 24 to H1 25 driven by Government and businesses reducing mobile fleets post headcount reductions or to deliver cost efficiencies Aggressive competitor pricing • ARPU and revenue share declined due to aggressive competitor pricing activity driving down value of contract re-signings and new business wins
Page 7
PAGE 7 Spark New Zealand | Copyright ©️ 2025 Rolling calendar of new product development, campaign activity, and pricing driving consumer mobile momentum in H2 1. Market momentum in telco core CONSUMER AND SME • Pay monthly plan refresh (end Oct) introduced big data caps for customers, with positive impact on acquisition ARPU • Strong customer response driving momentum into H2 – pay monthly acquisitions over November and December up 7% vs the same period in H1 24 • Prepaid plan refresh (Dec) improved competitive positioning, and early data shows uptick in acquisition • Price increases across pay monthly and prepaid base in December offering more data for dollars, to deliver further benefits in H2 NETWORK LEADERSHIP • Continue to allocate capital to areas of highest value return, with 45% of capex invested into mobile network, supporting network performance and product innovation • Spark awarded #1 mobile network for coverage and reliability by Open Signal in September 2024 • Spark has entered a new partnership with another US-based satellite provider to offer customers satellite-to-mobile services from early 2026 ENTERPRISE AND GOVERNMENT • Mobile fleet shrinkage slowed during H1 to half the rate of H2 FY24 • New B2B brand campaign launched in January, targeting enterprise and government decision makers • Focussed on retaining connection share through proactive re-signing and competitive bids, to enable future organic growth • Mitigating ARPU impacts from aggressive competitor pricing through targeted bundling and enhanced service offerings
Page 8
PAGE 8 Spark New Zealand | Copyright ©️ 2025 Macro-economic conditions continue to impact broadband and IT, while IoT growth remains strong 1. Market momentum in telco core $302m 2.3% decrease vs. H1 24 BROADBAND REVENUE Broadband market is mature and commoditised, with consistent lower levels of overall market growth Spark strategy remains focussed on margin improvement as fibre company costs are passed through and WBB addressable base expands through 5G. WBB now ~32% of base Cost of living pressures saw customers trade down to lower priced plans and drove intensified price-driven competition, resulting in connection share reduction of 0.7% points $336m 1.5% decrease vs. H1 24 TOTAL IT REVENUE(1) IT products revenue grew 1.1% to $264m, driven by cloud (up 8.3%). Mix shift from private to public drove a 10% margin reduction – private cloud price increase to support H2 improvement Reduced project activity within government and business sectors continued to impact IT services demand, with revenues down 10% to $72m New strategic partnerships to support cloud economics as mix shifts from private to public(2) $41m 17.1% increase vs. H1 24 HIGH-TECH REVENUE IoT continues to see strong growth with revenues up 25% IoT connections increased 25% to over 2.2 million 2 See page 11 for more details 1 IT Products and Services revenue and costs have been restated in prior periods due to a product mapping change with the Data Centres business
Page 9
PAGE 9 Spark New Zealand | Copyright ©️ 2025 2. Simplified portfolio Review of non-core assets and portfolio simplification supporting focus on telco core, while further strengthening balance sheet Non-core asset review Product portfolio simplification • On 12 December 2024 Spark announced the sale of its remaining 17% stake of mobile towers business Connexa to CDPQ, with all regulatory approvals required now received • Spark now expects proceeds of ~$310 million1 and an expected gain on sale of ~$66 million in reported EBITDAI on completion in Q3 • Continuing to progress broader asset portfolio review to identify further opportunities to realise value in the medium term • Enterprise and Government (E&G) operating model transformation completed, with subsidiaries integrated into Spark • Product portfolio rationalisation underway to simplify and improve customer experiences • Focus on legacy migration in managed networks and data, voice, and collaboration, with ~30% of products in security service lines to be exited by end FY25 • Reviewing focus for service management based on evolving demand and margin profiles • Sale of Digital Island (excluding mobile) will further support focus on telco core in E&G 1 The final sale price is subject to an adjustment based on movements in working capital and capital expenditure
Page 10
PAGE 10 Spark New Zealand | Copyright ©️ 2025 3. Transformed cost base Significantly expanded SPK-26 Operate Programme to deliver a materially leaner, more competitive business • Investment in AI and automation supporting better customer outcomes and reduced cost to serve • Spark developed ‘Bravety’, an AI capability for contact centres, which summarises customer calls within 5 seconds – enabling frontline teams to focus on customer interactions and reducing call handling times and costs • Significant progress made to improve operating model effectiveness and efficiency across the business • Enterprise and Government transformation complete, with subsidiary businesses integrated into Spark • ~900 FTE reduction at 31 December 2024, including changes made during FY24 • Broader operating model changes underway in H2 25 to focus resources on refreshed strategic priorities and momentum in core • Significant transformation of technology and network operations underway, leveraging several strategic partnerships for global scale, capability, and accelerated AI and automation – delivering better customer outcomes and material cost savings (see slide 11) Operating Model Tech Delivery Model Scale AI
Page 11
PAGE 11 Spark New Zealand | Copyright ©️ 2025 Significant transformation of technology and network operations, leveraging several strategic partnerships 3. Transformed cost base New technology delivery model • Moving to best-practice global model for technology delivery • Common structure utilised by telcos in offshore markets • Establishing several strategic partnerships across IT and networks Benefits Progress • Leveraging global investment o Access to partners’ global scale, capability, and innovation o Accelerated AI and automation benefits, delivering better customer outcomes at lower cost • Improved cost efficiency o ~20% overall average cost efficiency • Long-term sustainable benefits o Long-term contracts and competitive partner market supports longer-term cost control o Spark to retain overall strategic decision making and components of competitive advantage – i.e. critical operations, intellectual property, systems • IT infrastructure and services partnership o Finalising new partnership that will deliver accelerated automation and efficiencies and a significant reduction in annualised IT costs • Cloud partnership o Strategic partnership with Microsoft to further modernise Spark’s hybrid cloud environment and accelerate AI strategy, improving Spark’s overall cloud economics • Network partnership o Heads of Agreement signed to explore network operations partnership that accelerates AI and automation, delivers greater efficiency, and enables access to global capability and innovation. Further detail to be shared in coming months
Page 12
PAGE 12 Spark New Zealand | Copyright ©️ 2025 3. Transformed cost base Significantly expanded SPK-26 Operate Programme will deliver materially higher benefits over the next three years 1 Subject to no material adverse change in operating outlook 1. In-year benefits • Net labour and opex reduction expected to deliver $80m-$100m o $50m labour target exceeded o Cost benefits of the technology delivery model are heavily weighted to H2 and are expected to bring opex in line with FY24 2. Annualised net benefits • Additional annualised net labour and opex reduction benefits as a result of initiatives put in place in FY25 • Total annualised benefits exiting FY25 is $90m-$110m 3. Transformation costs • Non-recurring transformation charge of $45m-$50m to achieve these ongoing savings ($29m reported in H1 25 result) FY25 benefits FY26-27 benefits 4. Annualised benefits • Additional $20m-$30m annualised net labour and opex cost reduction anticipated from FY26-FY27 $110m-$140m of annualised benefits1 by FY27 Total benefits of expanded SPK-26 Operate Programme:
Page 13
PAGE 13 Spark New Zealand | Copyright ©️ 2025 4. Long term value creation H1 25 performance on track • Revenue and EBITDAI growth reflect increased billing of current capacity (22MW) and increased pass through of electricity costs • Expansion of additional 1MW at Aotea site on target, settlement of land for North Shore data centre targeted for FY26 Longer-term growth strategy progressing • Increased demand for data centre capacity continues to be driven by ongoing cloud adoption and acceleration of AI • Spark a significant player in the market, with existing international cloud / content provider contracts and local capability a compelling proposition to customers and complementary to core business • Remain committed to building out the 118+MW development pipeline, and continuing to target an IRR of c10-15%2 • Spark has commenced a process to explore interest from prospective partners in a preferred investment vehicle, to support future investment of $1bn+ and accelerate growth opportunity • Advanced progress establishing a dedicated data centre business in preparation for external investment • Intention remains to retain an ownership stake to create long-term shareholder value Data centre business continues to build momentum as capacity delivered in previous periods increases billing $25m1 13.6% increase vs. H1 24 DATA CENTRES REVENUE Gross margin of $23m up 9.5% vs. H1 24 continued the growth trend Capital expenditure of $14m in H1 25 – capex in FY26 expected to increase significantly as land purchases are settled and next stage capacity construction commences Despite subdued economic environment, contracted utilisation of dedicated data centres was 87%3 1 Data Centres revenue and costs have been restated in prior periods due to a product mapping change with IT Products and Services categories 2 Unlevered, post-tax IRR 3 Includes contracted and reserved racks at dedicated data centres and exchanges
Page 14
PAGE 14 Spark New Zealand | Copyright ©️ 2025 4. Long term value creation 1 Refers to total power load; 2 4.0 ha of development land under unconditional agreement with settlement expected in July 2025 3 2.4 ha of existing land owned and ~2.6 ha of development land under agreement with settlement expected in July 2025 Existing operational capacity (MW)1 Future potential capacity (MW)1 Existing sites All development land owned or under agreement Advanced plans with utility providers for initial power supply at Takanini and North Shore and strategy for long term scaled capacity North Shore Campus (~4 ha)2 40 MW development capacity ‒ New greenfield site. Part of a world first sustainable development ‒ Resource Consent granted 2024 under NZ Fast Track process Takanini Campus (~5 ha)3 63 MW development capacity ‒ New builds designed for sustainability ‒ Provisioned for high density AI Aotea Campus 1 MW under construction 15 MW development capacity ‒ Strategically sought after site due to customer ecosystem and location Potential for future development in other regional / metro locations (e.g. Wellington and Christchurch) Regional / metro sites Takanini Campus Aotea Campus Regional / metro Total planned capacity of ~140 MW with 118+ MW1 development pipeline in Auckland 7 MW 7 MW 3 MW 19 MW12 MW 75 MW 40 MW 22 MW ~140 MW Existing operational capacity Future potential capacity
Page 15
PAGE 15 Spark New Zealand | Copyright ©️ 2025 DIGITAL EQUITY Not-for-profit broadband product, Skinny Jump, now supporting over 33,000 households in need Tūrama Pathways internship programme launched – to grow participation and progression of under-represented communities in technology Continued focus on maturing ESG practices and maintained inclusion in Dow Jones Best-In-Class Index (Australasia) Toitū sustainability performance SUSTAINABLE SPARK Spark awarded the 2024 Deloitte Top 200 Sustainability Leadership award Renewable Energy Partnership with Genesis commenced on January 1, and will support future scope 2 emissions reductions ECONOMIC TRANSFORMATION 5G connectivity now live in 121 locations across New Zealand 70% increase in 5G traffic over the last 12 months, with 45% of devices on the Spark network now 5G capable
Page 16
Financial summary
Page 17
PAGE 17 Spark New Zealand | Copyright ©️ 2025 H1 25 financial summary REPORTED1 H1 24 $m REPORTED H1 25 $m CHANGE ADJUSTED H1 25 $m CHANGE Operating revenues and other gains 1,976 1,939 (1.9%) 1,939 (1.9%) Operating expenses (1,446) (1,520) (5.1%) (1,491) (3.1%) EBITDAI 530 419 (20.9%) 448 (15.5%) Finance income 14 15 7.1% 15 7.1% Finance expense (63) (75) (19.0%) (75) (19.0%) Depreciation and amortisation (251) (300) (19.5%) (300) (19.5%) Net investment income (3) - 100.0% - 100.0% Net earnings before tax expense 227 59 (74.0%) 88 (61.2%) Tax expense (70) (24) 65.7% (32) 54.3% Net earnings after tax expense 157 35 (77.7%) 56 (64.3%) Capital expenditure 286 252 (11.9%) 252 (11.9%) Free cash flow 46 77 67.4% 77 67.4% EBITDAI margin 26.8% 21.6% (5.2pp) 23.1% (3.7pp) Effective tax rate 30.8% 40.7% 9.9pp 36.4% 5.6pp Capital expenditure to operating revenues and other gains 14.5% 13.0% (1.5pp) 13.0% (1.5pp) Basic earnings per share (cents) 8.6 1.9 (77.9%) 3.1 (64.0%) Total dividend per share (cents) 13.5 12.5 (7.4%) 12.5 (7.4%) 1 Both the H1 25 reported and adjusted figures are compared to the H1 24 reported figures as there were no adjustments to the H1 24 financial results
Page 18
PAGE 18 Spark New Zealand | Copyright ©️ 2025 Revenue and opex performance summary Lower revenue driven by challenging market conditions, while higher operating costs driven by supplier cost inflation, with labour cost benefits to fall predominantly in H2 • Mobile service revenue decreased $19m (3.7%) predominantly due to the cessation of a Spark-owned mobile insurance product in consumer, and reducing mobile fleets and price competition in Enterprise and Government • Mobile non-service revenue increased $9m (3.8%) due to increased device spend in retail following new product releases • Broadband revenue decreased $7m (2.3%) due to connection decline as price competition intensified in a subdued spending environment • Legacy voice revenue declined $16m (17.0%) in line with long-term trend • IT product revenue growth continued, increasing $3m (1.1%), driven by growing public cloud adoption • IT services revenue decreased $8m (10.0%) due to reduced project activity within government and business sector • High tech revenues increased $6m (17.1%) driven mainly by IoT connection growth • Data centres revenues increased $3m (13.6%) driven mainly by billing increased capacity $1,939m 1.9% decrease vs. H1 24 REVENUE $1,491m 3.1% increase vs. H1 24 ADJUSTED OPERATING EXPENSES • Product costs increased $21m (2.2%), through a combination of cost inflation of sourced products and the mix of products sold • Higher IT product costs (+$17m) and IT services costs (+$9m) offset by lower voice product costs (-$7m) and procurement (-$8m) • Other operating expenses increased $32m (14.3%), driven by supplier cost inflation within computer and network cost lines1 • Net labour costs decreased $8m (2.9%) reflecting operating model changes, with significant further benefits to be realised in H2 25 1 Refer to page 12 for discussion on network partnership work and related benefits
Page 19
PAGE 19 Spark New Zealand | Copyright ©️ 2025 Capital expenditure Disciplined management of capital expenditure, focussed on telco core and data centre growth strategy • H1 25 capital investment of $252m, or 13.0% of revenue, reflects a reduction in spend across both maintenance and growth capex projects compared to H1 24 of $286m • Focus of spend continues to be on digital infrastructure and mobile network to support operational performance and data centre growth strategy • H2 maintenance capital expenditure is seasonally lower than H1 and underpins capex guidance of ~$415m-$435m1 190 158 197 157 200 159 235 124 215 1 21 35 50 106 51 108 37 51 23 0 50 100 150 200 250 300 350 H1 21 H2 21 H1 22 H2 22 H1 23 H2 23 H1 24 H2 24 H1 25 $m Spark NZ Capex Profile maintenance capex growth capex spectrum capex 1 Subject to no material adverse change in operating outlook
Page 20
PAGE 20 Spark New Zealand | Copyright ©️ 2025 Significant improvement in H1 25 FCF through disciplined capital expenditure and changes in working capital Free cash flow Free cash flow calculation H1 FY24 ($m) H1 FY25 ($m) Change ($m) Change % Reported EBITDAI 530 419 (111) (20.9%) Less adjusting items and non-cash gains 20 (6) (26) (130.0%) EBITDAI for free cash flow 510 425 (85) (16.7%) Less Cash paid on maintenance capital expenditure 261 169 (92) (35.2%) Cash paid on interest 45 58 13 28.9% Cash paid on tax payments 101 78 (23) (22.8%) Cash paid on leases 57 43 (14) (24.6%) Total cash payments on items above 464 348 (116) (25.0%) Free cash flow 46 77 31 67.4% Total change in working capital - increase/(decrease) 73 (24) (97) NM Cash paid on growth capital expenditure 92 57 (35) (38.0%) Free cash flow (including working capital and growth cash capex) (119) 44 163 NM • Free cash flow (FCF) increased 67% to $77 million in H1 25 versus H1 24 • FCF including working capital and growth capex increased by $163 million due to: o A $97 million release in cash from working capital – some of this is timing of payables around the half year end which will unwind in H2 25 o Discipline around capital expenditure on both maintenance and growth projects that led to a $127 million improvement in cash flows • There is still more work that can be done to further improve delivery of free cash flow outside of an improvement in EBITDAI • FY25 free cash flow aspiration now ~$300m-$340m1 due to change in EBITDAI guidance 1 Subject to no material adverse change in operating outlook
Page 21
PAGE 21 Spark New Zealand | Copyright ©️ 2025 Net debt will reduce with progress on sale of non-core assets and improvement in EBITDAI Debt and capital management 1Net debt at hedged rates and including lease liabilities. Prior historical periods restated for the additional leaseback liability on customer leases 2Leverage Ratio is calculated to be consistent with S&P Global Ratings analysis 3A Dividend Reinvestment Plan will operate for the H1 25 dividend with shares issued at a 2% discount Net Debt1 at 31 December increased by $297m to $2,735m • Net Debt/EBITDAI will improve in the near term by ~0.3x with the completion of the Connexa and Digital Island transactions • Further improvement in debt metrics expected with continued discipline around capital expenditure and progress on cost reduction programme • Key driver of increased net debt is the increase in lease liabilities H1 25 dividend of 12.5 cps3 1,953 1,723 1,892 2,408 2,438 2,735 1.6 1.3 1.4 1.8 2.1 2.3 0.0 0.5 1.0 1.5 2.0 2.5 0 500 1,000 1,500 2,000 2,500 3,000 H2 22 H1 23 H2 23 H1 24 H2 24 H1 25 Net Debt/EBITDA ratio $m Spark NZ Net Debt1 and Leverage Ratio2 Net debt at end of period ($m) Net debt/EBITDAI (x) - RHS
Page 22
Outlook
Page 23
PAGE 23 Spark New Zealand | Copyright ©️ 2025 An update to FY25 KPIs (to June 2025) presented earlier in FY25 FY25 indicators of success Measure August 2024 October 2024 Trading Update H1 25 Update1 Mobile service revenue growth ~3% ~0% • Total market mobile service revenues were flat in H1 25 vs IDC forecast of 3% growth in FY252 • In Enterprise and Government division, aggressive price competition continues, with business sector spending remaining subdued in H2 • In this context, now expect total mobile service revenue to decline ~1% YoY in FY25 (including a largely flat performance in Consumer and SME, and further declines in Enterprise and Government) Data centre revenue growth ~15% ~15% • Remains on track High-tech revenue growth ~20%-25% ~20%-25% • Remains on track SPK-26 Operate Programme: • On track to deliver net labour cost reduction target in year • Work continues towards net opex target • Intend to expand Operate Programme to deliver materially higher cost reductions over multiple years • Net labour and opex reduction expected to deliver $80m-$100m in- year • Total benefits of expanded SPK-26 Operate Programme forecast to deliver $110m-$140m of annualised benefits by FY27 Net labour reduction ~$50m Net opex reductions ~$30m Customer iNPS +3 points +3 points • Remains on track Lift in employee engagement +3 points +3 points • Expected impact from changes to operating model Reduce Scope 1 and Scope 2 GHG emissions in line with SBTi reduction target pathway At or under 28% below FY20 baseline At or under 28% below FY20 baseline • Winter energy crisis has driven grid emissions factor higher, meaning we are tracking above our emissions reduction pathway for FY25. Performance is expected to improve in FY26 as Spark benefits from the first full year of its renewable energy partnership 2 Revenue market share data is sourced from IDC as at 31 December 2024 1 Subject to no material adverse change in operating outlook
Page 24
PAGE 24 Spark New Zealand | Copyright ©️ 2025 FY25 guidance1 FY24 Actual FY25 Guidance October update New FY25 Guidance EBITDAI2 $1,163m $1,120m-$1,180m $1,040m-$1,100m Capital expenditure3 $518m ~$415m-$435m ~$415m-$435m Dividend per share Total 27.5 cps (100% imputed) Total 25.0 cps (75% imputed) Total 25.0 cps (75% imputed) 1 Subject to no material adverse change in operating outlook 2 EBITDAI is adjusted for the impact of transformation costs incurred in the implementation of Spark’s SPK-26 Operate Programme 3 Total capital expenditure including growth capex and excluding expenditure on mobile spectrum The primary driver of the change in EBITDAI guidance is the Enterprise and Government division, which has been impacted by: • IT spending cutsacross corporates and Government entities; • Changes in product mix; and • Aggressive price competition in mobile.
Page 25
Appendix
Page 26
PAGE 26 Spark New Zealand | Copyright ©️ 2025 FY25 net debt metrics Net debt H1 FY24 ($m) FY24 ($m) H1 FY25 ($m) Net debt at hedged rates $1,557 $1,636 $1,796 Net debt at hedged rates including lease liabilities1 $2,408 $2,438 $2,735 Debt ratios Borrowing costs (annualised) 5.9% 6.1% 5.7% Weighted average debt maturity (years) 3.2 years 3.7 years 3.1 years Debt servicing2 1.8x 2.1x 2.3x Gearing 59% 60% 66% Interest cover 10x 9x 7x 1 Prior historical periods restated for the additional leaseback liability on customer leases 2 Debt servicing is calculated as (Net debt at hedge rates including lease liabilities - captive finance adjustments)/(Adjusted EBITDAI - captive finance adjustments) which Spark estimates aligns to S&P’s credit rating calculation.