Highlights

• Adjusted EBITDAI of $1,035 million and free Cash Flow of $308 million (up 18.5%) delivered within FY26 guidance.

• Mobile service Revenue returned to growth at +1.1%, reaching $998 million, supported by ARPU gains in consumer and SME segments.

• Completion of the 75% data centre stake sale generated $462 million in net proceeds, returning net Debt to targeted levels.

• A total FY26 Dividend of 16 cents per share was declared, representing a 100% free cash flow payout ratio.

Spark New Zealand Limited (ASX:SPK, NZX:SPK) is New Zealand's largest telecommunications and digital services company, providing mobile, broadband, cloud, IT services, and digital solutions to consumers, small businesses, and enterprise and government customers. Listed on both the ASX and NZX, Spark operates the SPK-30 strategy — a multi-year program focused on building sustainable Competitive Advantage in mobile, structural productivity improvement, and portfolio simplification, targeting improved Shareholder returns through to 2030.

Recent Development

Released on 20 August 2026, Spark reported FY26 results with reported revenue of $3,949 million (up 6.0%) and adjusted revenue of $3,700 million, broadly flat on FY25. Reported EBITDAI was $1,295 million (up 23.0%), boosted by a $278 million gain on the data centre sale, while adjusted EBITDAI of $1,035 million declined 2.4%, reflecting the impact of the data centre Earnings included for only seven months and continued legacy product decline.

Mobile revenues grew 4.4% to $1,517 million, with mobile service revenue returning to growth at +1.1% to $998 million — a key SPK-30 milestone. Reported NPAT was $499 million (up 91.9%), while adjusted NPAT of $225 million was broadly flat. Free cash flow grew 18.5% to $308 million, supported by disciplined financial management and $40 million in productivity benefits. Spark completed the 75% data centre stake sale, generating $462 million in net proceeds, and also announced a strategic review of its Digital Services division (cloud and IT services) to assess how to maximise value. FY27 adjusted EBITDAI guidance of $1,010-$1,080 million and FCF guidance of $300-$350 million were issued. The Board declared a total FY26 dividend of 16 cents per share (50% imputed), representing a 100% FCF payout.

Sector Context

New Zealand telecommunications is a highly competitive, mature market characterised by broadband price pressure, declining legacy voice revenues, and mobile as the primary growth engine. Spark's return to mobile service revenue growth at +1.1% is a meaningful inflection after years of competitive headwinds. The completion of the 3G shutdown — freeing spectrum for 5G expansion — and Spark's retention of Leadership in 4G and 5G mobile coverage experience (as per Opensignal October 2025 rankings) strengthens its competitive position for the mobile-led strategy. The data centre monetisation also validates the infrastructure asset value embedded within the business, while the retained 25% stake preserves long-term upside participation.

Risks and Uncertainties

Adjusted EBITDAI declining 2.4% in FY26 and FY27 guidance of $1,010-$1,080 million (implying a further step-down at the midpoint) reflects ongoing headwinds from legacy product decline and the loss of data centre earnings post-sale. The Digital Services strategic review introduces uncertainty — cloud revenue was broadly flat as 20% public cloud growth was offset by private cloud decline, while IT services fell 10.3%. Broadband revenue declined 2.0% in an intensely competitive market, and broadband remains a volume-pressured, price-driven category. The 50% imputation rate on dividends is a consideration for Australian ASX investors seeking fully imputed yield.

Catalysts to Watch

The outcome of the Digital Services strategic review — expected in the first half of FY27 — is the single most significant near-term catalyst, as it could result in a divestment, partnership, or restructuring that reshapes the earnings profile. Continuation of mobile service revenue growth beyond the 1.1% achieved in FY26 — particularly in the enterprise and government segment — will be closely tracked. Progress toward the FY27 adjusted EBITDAI guidance range of $1,010-$1,080 million, and any acceleration in productivity benefits from the $40 million FY26 baseline, are key financial milestones. The FY27 dividend target range of 16-18 cents per share provides a clear Yield anchor for income investors.

Final Thoughts

Spark New Zealand (ASX:SPK) is executing a disciplined multi-year transformation, with the return of mobile service revenue growth marking a genuine strategic milestone. While adjusted EBITDAI headwinds and the Digital Services review create near-term uncertainty, the strengthened balance sheet, healthy free cash flow, and clear SPK-30 execution roadmap provide a credible pathway to improved shareholder returns.