Investor presentation for intended retail bond offer

Spark Finance Limited
Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand



MARKET RELEASE
27 August 2018

Investor presentation in relation to intended retail bond offer
As announced on 22 August 2018, Spark Finance Limited (SFL) is considering making
an offer of unsubordinated, unsecured fixed rate bonds (Bonds) to institutional and
New Zealand retail investors. SFL is the company in the Spark New Zealand group
that carries out the borrowing activities for the group.
It is expected that full details of the offer will be released on 29 August 2018, when
the offer is expected to open. Attached to this announcement is a copy of an
investor presentation in relation to the intended offer.
Investors can register their interest in the offer by contacting the Joint Lead Managers
as detailed below, or their financial advisor. Indications of interest will not constitute
an obligation or commitment of any kind.
No money is currently being sought and applications for the Bonds cannot currently
be made. If SFL offers the Bonds, the offer will be made in accordance with the
Financial Markets Conduct Act 2013 as an offer of debt securities of the same class as
existing quoted debt securities. The Bonds are expected to be quoted on the NZX
Debt Market.
Joint Lead Managers


Phone: 0800 269 476 Phone: 0800 942 822

- ENDS –

Spark Finance Limited
Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand



For media queries, please contact:
Lucy Fullarton
Communications Partner
+64 (0) 21 070 6197

For investor relations queries, please contact:
Dean Werder
General Manager Finance and Business Performance
+64 (0) 27 259 7176

---

Intended Offer of Bonds
27August 2018
Spark Finance Limited
Arranger & Joint Lead Manager
Joint Lead Manager

Important Notice
This presentation contains the key terms of a proposed offer by Spark Finance Limited (“SFL”) for up to $100,000,000 (with
the ability to accept oversubscriptions of up to $25,000,000 at SFL’s discretion) bonds ("Bonds").
No money is currently being sought and applications for the Bonds cannot currently be made. If SFL offers the Bonds,
the offer will be made in accordance with the Financial Markets Conduct Act 2013 as an offer of debt securities of the
same class as existing quoted debt securities. The Bonds are expected to be quoted on the NZX Debt Market.
The proposed offer of Bonds by SFL, if made, will be made in reliance upon the exclusion in clause 19 of schedule 1 of the
Financial Markets Conduct Act 2013 (“FMCA”), and will be an offer of bonds that have identical rights, privileges, limitations
and conditions (except for the interest rate and maturity date) as SFL’s(1) bonds maturing on 10 March 2023 which are
currently quoted on the NZX Debt Market under the ticker code SPF560; and (2) bonds maturing on 7 September 2026 which
are currently quoted on the NZX Debt Market under the ticker code SPF570, (together the "Quoted Bonds").
Accordingly, the proposed Bonds will, if offered, be of the same class as the Quoted Bonds for the purposes of the FMCA and
the Financial Markets Conduct Regulations 2014.
SFL is subject to a disclosure obligation that requires it to notify certain material information to NZX Limited (“NZX”) for the
purpose of that information being made available to participants in the market. That information can be found by visiting
https://www.nzx.com/companies/SPF.
The Quoted Bonds are the only debt securities of SFL that are currently quoted and in the same class as the proposed Bonds.
Investors should look to the market price of the Quoted Bonds referred to above to find out how the market assesses the
returns and risk premium for those bonds.

Disclaimer
This presentation 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 presentation 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 causeactual
results to differ materially from those projected in the forward-looking statements contained in this presentation.
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, 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 Zealandundertakes
no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
The information in this presentation was prepared by Spark New Zealand with due care and attention. However, the informationissupplied
in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy, completeness or reliability of
the information. In addition, to the maximum extent permitted by the law, neither Spark New Zealand, SFL nor any of their directors,
employees, shareholders, agents, advisers nor any other person shall have liability whatsoever to any person for any loss (including, without
limitation, arising from any fault or negligence) arising from this presentation or any information supplied in connection with it.
The information contained in this presentation should be considered in conjunction with the company’s financial statements, which are included
in Spark New Zealand’s Annual Report and available at http://investors.sparknz.co.nz.
All currency amounts are in New Zealand dollars unless stated otherwise.

Agenda
Introduction
Spark Overview
FY18 Results
Capital Structure
Key Terms of the
Intended Offer

Spark Overview

6
Background
SparkOverview
Spark New Zealand Limited (“Spark”) is New Zealand’s largest telecommunications and IT
services provider:
•#1 in mobile
(1)
driven by value added services, network investment and multi-brand strategy
•#1 in data (including broadband) underpinned by share of high value customers, network
performance and value superiority
•#1 in cloud services, driven both by organic growth and business acquisitions
Spark (then Telecom) was formed in 1987 out of the telecommunications division of
the New Zealand Post Office, a government department
In 1990 Spark became one of the first telecommunications companies in the world to
be fully privatised
On 30 November 2011, Spark demerged
(2)
into two entirely separate, publicly
listed companies;
•Spark; a retail services provider that retained ownership of a nationwide mobile
network; and
•Chorus; a fixed network services operator
(1)
Based onindependentestimate of Spark’s market share of total mobile revenue
(2)
Structural separation of Spark's retail business from the business that owns and operates the Fibre-To-The-Premise
(FTTP) network was a pre-requisite for Chorus’ participation in the Government's Ultra-Fast Broadband scheme (UFB)
Spark Finance Limited is the company in the Spark group that carries out the borrowing
activities for the group

7
Background
SparkOverview
•Spark owns and operates key infrastructure assets that support mobile and data networks
across New Zealand
•Focussed on New Zealand operations, with no current plans for material offshore investment
•Customer connections at 30 June 2018:
•Mobile connections : 2,458k (2,392k Jun17)
•Broadband connections: 700k (687k Jun17)
•Voice connections: 466k (622k Jun17)
•Operates in the fixed line market where regulated inputs are purchased from Chorus or other
local fibre companies on equivalent terms as for all retail service providers
•Mobile and IT markets are largely unregulated
•Spark is listed on the NZX and ASX with a market capitalisation of ~$7.3 billion
(1)
. Spark is
a NZX10 and ASX200 company
•Spark has a long term credit rating from Standard & Poor’s of A-/(stable). Rating
reaffirmed in April 2018
(1)
As at 20 August 2018

FY18 Overall Performance

9
Overall Performance
Financials and Ratios
SparkGroup
Selectedfinancialinformationandratios
$m
As Reported
FY 2015
As Reported
FY 2016
As Reported
FY 2017
As Reported
FY 2018
Operatingrevenuesandothergains3,5313,4973,6143,649
EBITDA9629861,016989
Netearningsaftertaxfortheyear375370418385
Netcashflowsfromoperatingactivities630716717777
Cashandcashequivalents80525255
Totalassets3,2063,2373,3313,419
Totaldebt6928759871,197
Totalliabilities1,4281,5531,6801,878
Equity1,7781,6841,6511,541
Debt/EBITDA0.7 x0.9 x1.0x1.2 x
Debt/Debt+Equity28%34%37%44%
Financeexpense54464246
EBITDA/Financeexpense17.8 x21.4 x24.2x21.5 x
Standard&Poor’s(S&P)LongTermCreditRatingA-/stableA-/stableA-/stableA-/stable

Overall Performance
Financial Summary
•Reported EBITDA of $989m was at the upper end of guidance albeit down $27m (2.7%) on prior year due to Quantum
programme implementation costs of $49m. Adjusted EBITDA of $1,038m, excluding Quantum implementation costs, was up $22m
(2.2%) on prior year as a result of ongoing revenue growth across mobile, cloud, security and service management and reductions
in net labour costs.
•Ongoing implementation of Quantum programme
(1)
resulted in a $37m reduction in net labour costs during FY18. Annualised net
labour costs have subsequently reduced from $581m in June 2017 to $499m in June 2018 and are projected to decline further
to ~$470m during H1 FY19.
•Reported YoY revenue growth of $35m, or 1.0%, taking revenue to $3,649m; predominantly driven by substantial revenue
growth totalling $132m across mobile (up 6.9%) and cloud, security and service management (up 15.1%) partially offset by
continuing declines in voice, managed data and networks revenues; down $100m in total. Mobile, cloud, security and service
management now deliver over half of Spark’s gross margin at 53.4%, up from 50.0% in FY17.
•Reported NPAT down $33m (7.9%) to $385m due to Quantum programme implementation costs.Adjusted NPAT, excluding
Quantum implementation costs, was up $2m (0.5%) on prior year due to underlying EBITDA performance; partially offset by $4m
(0.9%) increase in depreciation and amortisation due to a shift in capital investment towards newer server based assets, including
cloud infrastructure, that have shorter asset lives and $4m (15.4%) increase in finance expenses on higher average net debt.
•Capital expenditure of $413m in line with prior year; achieving planned investment outcomes within targeted capital expenditure
of 11%-12% of operating revenues.
•Cash conversion ratio
(2)
improved to 97% in FY18, up from 88% in FY17,due to ongoing benefits of refreshed working capital
policies andfavourable timing of restructuring expenses.
•Net debt increased by$184m during FY18 due to business acquisitions, top-up of dividends, continued mobile device receivable
growth and timing of tax payments. Rate of net debt growth is expected to slow during FY19.
•H2 FY18 total dividend per share of12.5c will be made up of a 75% imputed ordinary dividend per share of 11.0c and a 75%
imputed special dividend per share of 1.5c.
(1)
Page 19 of this document provides further detail on Quantum implementation costs and associated benefits
(2)
Calculated as operating cash-flow (excluding tax and interest) divided by EBITDA (excluding impairments, net gains from divestments and
share of associate and joint venture net losses)
$35m
+1.0%
Reported Revenue
movement
vs. FY17
($27m)
-2.7%
Reported EBITDA
movement
vs. FY17
($33m)
-7.9%
Reported NPAT
movement
vs. FY17
Financial performance on plan with ongoing implementation of Quantum
programme driving significant underlying benefits
10

•Total mobile ARPU growth of 1.2%; driven by introduction of unlimited consumer mobile plan.
•More than 50% of broadband customers now on new broadband technologies with 116k customers connected to
wireless broadband; generating $29m of YoY access cost reductions in FY18 and $51m of associated annualised
benefits. Demonstrates solid progress towards our ambition to be mostly ex copper by 2020.
•4.5G already live in 31 locations, further expanding network speed and capacity and making wireless
broadband available to thousands more households.
•Skinny and Bigpipe sub-brands continue to resonate with price sensitive customers; delivering the majority of
Spark’s FY18 total broadband connection growth of 13k. Skinny and Bigpipe now account for 5% of Spark’s
total broadband base -up from 2% in June 2016.
•Skinny brand repositioned itself in the market with a new, more mature but still light-hearted brand campaign,
reflecting Skinny’s dual commitment to low prices and customer satisfaction.
•Quantum programme successfully accelerated to realise financial benefits earlier; finishing the year with
annualised net labour costs of $499m, down $82m (14.1%) from $581m in June 2017. Annualised net labour
costs projected to decline further during H1 FY19 to ~$470m as benefits from programme acceleration are
realised; bringing total expected annualised net labour benefits to ~$110m
•Ongoing implementation of simplification, automation and digitisation initiatives resulting in further improvement in
customer experience and service costs; delivering an unprecedented 24% decline in HMB customer care voice
interactions.
•To drive further service and cost improvement Quantum investment will continue into FY19 however associated
implementation costs are expected to be at more typical levels.
•During FY18 Spark became the first large New Zealand business to transition to Agile ways of working at scale
with around 40% of our people now transitioned to a full Agile operating model; further unlocking improved
customer centricity, speed to market, and more empowered, engaged and productive people.
Lowest cost operator
Better serving price sensitive customers
Emphasis on Wireless
~$110m
Quantum Programme
annualised net reduction in
labour costs
Overall Performance
Key Areas of Focus
Material progress made against our three key areas of focus; remain on track to achieve
aspirations outlined at June 2017 Investor Day
$51m
Wireless Broadband Migration
annualised gross reduction in
access costs
11
38.9%
+0.9 pp
Market Share of Mobile
Service Revenues
(1)
vs. FY17
41.5%
-0.7 pp
Market Share of Broadband
Connections
(1) (2)
vs. FY17
(1)
Independent market share estimate
(2)
Includes wireless broadband connections

FY18 Product Performance

30%
35%
40%
0%
50%
100%
FY16FY17FY18
HMB pay-monthly plan mix
less than $55$55 or greater
Product Performance
Mobile
Only New Zealand mobile provider to grow revenue market share, connections and ARPU
during FY18
Total mobile revenue, up $83m (6.9%), accounting for 35.1% of total operating revenues;
up 2.7pp on prior year. Growth driven by:
•Pay-monthly connection growth of 70k (6.3%); the highest in at least two years fuelled
by successful launch of unlimited consumer mobile plan and increased migration from
pre-paid to pay-monthly; and
•ARPU growth across both pre-paid and HMB pay-monthly. Renewed focus on growing
pre-paid ARPU, rather than lower value and higher churn connections, resulted in 7.6%
growth in pre-paid service revenues despite 12k decline in pre-paid connections
Mobile gross margin
(1)
up $40m (5.3%) on prior year due to:
•Mobile services revenue growth of $36m (4.6%) driven by both ARPU and connection
growth;
•Ongoing migration away from handset subsidies with 87% of HMB pay-monthly
customers now on open term plans -up 2pp on prior year; and
•Skinny ARPU and margin growth as a result of new pre-paid propositions and
improved channel performance; including successful withdrawal from The Warehouse
Group
Continuation of ARPU growth; up 1.2% on prior year driven by:
•Total HMB ARPU growth of 3.1% on customer migration to higher value $55+ plans, in
particular unlimited mobile; with 40% of HMB pay-monthly base now on a $55 plan or
above, up 5pp on prior year.
•Low-cost higher data cap Skinny prepaid offerings leading to significant Skinny
prepaid ARPU growth of 13.8% on prior year; partially offset by
•Ongoing Spark Digital ARPU declines due to competitive price pressure
4.5G now live in 31 locations with rollout continuing through FY19 to expand mobile
performance and prepare for a 5G future. First 5G production outdoor trial completed
and 18Gbps achieved on indoor speed tests; providing us with rich insights into the more
intensive data use-cases that will be made possible by this technology.
13
-20k
0k
20k
40k
60k
80k
FY16FY17FY18
Net connection movement
pay-monthlyprepaid
0
400
800
FY16FY17FY18
$m
Service revenue
pay-monthlyprepaid
(1)
Mobile gross margin calculated as total mobile revenue lessmobile cost of sales

Market approaching saturation
(1)
. Benefits of wireless broadband adoption driving 6.7% growth
in broadband gross margin
(2)
. However revenue and margin continue to be squeezed by
aggressive acquisition pricing and increases in input costs which are proving difficult to pass
through.
Product Performance
Broadband
Despite market reaching saturation total Spark connections grew for the third consecutive period
resulting in highest annual connection growth in two years; connections up 13k or 1.9% during FY18.
Skinny and Bigpipe sub-brands resonating with price-sensitive customers; securing majority of total
Spark connection growth.
Broadband revenue continues to decline despite connection growth; down $4m (0.6%) on prior year
due to:
•Persistent, acquisition focussed, competitive price pressure;
•Further reductions in broadband access revenue as a greater proportion of customers opt for
naked broadband services; and
•Migration of customers onto lower-priced, but higher-margin, wireless broadband services
Broadband gross margin up $17m (6.7%) driven by:
•116k wireless broadband connections, delivering $29m reduction in broadband access costs
during FY18 and associated annualised benefits of $51m; partially offset by
•Fibre-based modem expenses and increases in copper and fibre input costs
Rate of wireless broadband growth has slowed. Focus now shifting to retention of existing wireless
broadband connections and migration of copper voice connections to wireless voice alternative
Despite falling short of both our UFB share of growth and wireless broadband connection aspirations,
more than 50% of customers are now off copper and onto newer and more reliable wireless and
fibre broadband technologies; supporting our strategic aspiration to be mostly ex-copper by 2020.
Customer demand for data continues to increase; evidenced by:
•Unlimited broadband plans now accounting for 57% of base;
•Average monthly GB usage per customer up 33%
(3)
on prior year; and
•Customer demand for video content continuing to grow with Lightbox subscriptions up 37% and
adoption of other streaming services increasing in line with global trends
14
84%
63%
49%
0%
20%
40%
60%
80%
100%
FY16FY17FY18
Connection mix by input type
copperfibrewireless broadband
16%
37%
51%
(1)
Based on independent market growth estimates
(2)
Broadband gross margin calculated as broadband revenue less broadband cost of sales
(3)
Excludes Skinny, Bigpipe and Digital Island. Average monthly data usage per connection currently 138GB
12%
20%
26%
0%
20%
40%
60%
80%
100%
FY16FY17FY18
Naked Broadband as a % of total base
ClothedNaked

Product Performance
Cloud, security and service management
Growth in higher-margin products and improvement in service management continues to drive
increased gross margin
Toplinerevenue growth of $49m (15.1%) driven by:
•Customer demand for the benefits and flexibility that cloud-based
“as a service” products offer;
•Project workload associated with transition of new customers onto
Spark products; and
•Launch of new security products, to capture the growth potential in
this market
Gross margin
(1)
up $41m (15.6%) as a result of:
•Toplinerevenue growth; coupled with
•Ongoing change in mix, with growth in higher-margin cloud and
security products outpacing more labour intensive service
management offerings
Significant new customer wins and previous wins now moving into
transition creating the pipeline for FY19 revenue growth
Focus on effective and efficient service management to drive growth in
the profitability of our top clients continues
New self-service online capabilities added to Cloud Creator offering
customers multi-cloud management features
While security revenue growth of 12.8% was short of aspiration further
opportunities exist in FY19 through a focus on:
•Product development for new market segments,
•Attracting skilled resources; and
•Maturing our sales processes
15
257
324
373
FY16FY17FY18
$m
Cloud, security and service management revenue
+15.1%
(1)
Cloud, security and service management gross margin is provided in Spark’s FY18 Detailed Financials workbook; this excludes associated labour costs to maintain
consistency with the calculation of mobile and broadband gross margins.

Product Performance
Voice, Managed Data and Networks
Acceleration in rate of revenue and margin decline due to ongoing substitution of landline voice
to other technologies and proactive migration away from traditional managed data products in
support of simplification
Total voice, managed data and networks revenue declined by $100m
(11.6%) on prior year; versus a $95m (9.9%) decline in FY17
FY18 voice revenue
(1)
decline of $83m (12.7%) greater than prior period
due to:
•$48m (16.1%) decrease in landline only
(2)
revenues due to consistent
YoY declines in voice only connections across Spark HMB and Digital
and acceleration of connection declines in Spark Wholesale; with a
large wholesale customer migrating away from PSTN to an
alternative technology during the year; and
•$32m (11.6%) decrease in higher-margin calling revenues due to a
14% YoY decline in total calling minutes
Managed data and networks revenue continues to decline albeit at a
slower rate than prior periods. FY18 revenues down $17m (8.2%)
driven by:
•Proactive migration of customers off legacy data platforms onto new
lower-margin fibre based alternatives in support of core product
simplification; and
•Ongoing competitive pricing pressure
Recent launch of new customer support systems for managed data
product will create the foundation for improved customer experience and
better self-service
16
728
655
572
0
200
400
600
800
FY16FY17FY18
$m
Total voice revenue
HMBDigitalWholesaleOther
229
207
190
0
50
100
150
200
250
FY16FY17FY18
$m
Total managed data and networks revenue
HMBDigitalWholesale
(1)
Voice revenue includes connections delivered over the mobile network (Voice over LTE)
(2)
Landline only revenue includes revenue from ‘voice only’ access plans

FY18 Strategy Update

Strategy: Progress Update
Quantum
Bold programme of simplification, automation and digitisation delivering material
improvement in service experience, employee engagement and cost to serve
18
+9pts
Increase in employee NPS
in the year
+6pts
Increase in consumer and small
business market NPS in the
year
+15pts
Increase in Spark Digital
relationship NPS in the year
178,000
Customers migrated onto new
fit-for-purpose consumer plans
100’s
Successfully removed
hundreds of legacy products
1
One unified Cloud portfolio
established across Spark
40
Bots automating tasks across
the business and proactively
solving customer issues
75%
Simple cloud customer
requests now automated via
self-service portal
85%
Common Spark Digital
service requests now
automated (~3,300 requests
per month)
1,250,000
(24%)
YoY reduction of calls into
HMB contact centres
Spark App users completing
~340,000 self-service
interactions per month
77%
YoY Increase in HMB chat
interactions
6,000+
Business customers using
“walk me” self-service
tutorials
Simplification
Digitisation
Automation
20%
Increase in organisations
using MySparkDigital
NPS
840,000
108,000
HMB virtual assist chat
interactions since launch in
December 2017

581
499
20
25
(120)
(7)
440
480
520
560
600
June 2017Quantum
benefits
AcquisitionsCloud and data
analytics
OtherJune 2018
Strategy: Progress Update
Quantum
(1)
Includes insourcing of Spark retail stores and acquisitions of Ubiquity and Digital Island
(2)
Includes decline in Quantum implementation costs (reduction in size of programme office and completion of planned system
decommissioning) and removal of Connect8 labour expenses (following partial divestment in May 2018)
(3)
Equals 12 x actual monthly spend (after adjusting for timing of labour capitalisation and releases of holiday pay accruals)
During FY18 annualised net labour costs reduced by $82m to $499m; with benefits from acceleration of Quantum
programme projected to reduce annualised net labour costs by a further ~$30m to ~$470m during H1 FY19
(2)
19
Cloud and
data
analytics
(3)
(1)
550
513
16
22
(69)
(6)
460
480
500
520
540
560
FY17Quantum
benefits
AcquisitionsCloud and data
analytics
OtherFY18
Reported Net LabourCosts
FY17 vs FY18
AnnualisedNet LabourCosts
June 2017 vs June 2018
(1)
(1)
(2)
(2)
(3)
Total FY18 implementation costs of $49m, reported within other operating
expenses, are comprised of:
•$26m restructuring expenses;
•$12m external subject matter expertise;
•$4m relocation and property lease costs;
•$3m programmeoffice functions; and
•$4m product and system decommissioning costs
FY18 implementation costs were marginally below the range of $50m to
$55m communicated in May 2018 as part of updated FY18 guidance; due
to tight management of transition expenses
$m
$m
($37m)
($82m)
Quantum waveCost to
implement
Gross FY18
benefit
Gross
annualisedbenefit
asat
30Jun ‘18
asat
31Dec ‘18
1Implemented H2 FY17$8m$27m$30m$30m
2Implemented H1 FY18$13m$30m$44m$44m
3Implemented H2 FY18$12m$12m$46m$46m
4
AccelerationImplemented
H2 FY18
$24m--$42m
Total$57m$69m$120m$162m

Strategy: Progress Update
Media
Valuable differentiator as well as acquisition and retention
driver for Spark broadband and mobile –customers with
Lightbox more likely to recommend Spark and rate overall
value of Spark services more highly
(1)
Subscriber numbers continue to grow with Lightbox base
increasing by 37% during FY18; up from 260,000 to over
355,000
Migration to new, future-proofed platform successfully
completed in May 2018: migrated 350k customers
overnight; brand new billing system; 15 new apps with
newly designed interfaces
New revenue streams launched via new platform including
pay-per-view movie service and kids area:10% of
customers have redeemed a movie and gone on to buy at
least one more
20
Focused on standalone monetisation of sports content.
Targeting commercial returns, rather than retention or
acquisition benefits
Secured content rights including World Rugby tournaments
and English Premier League, from 2019 season
To be delivered via standalone world-class sports streaming
distribution platform and technology partnerships
More content announcements to come; expecting to launch
service in early 2019
Working with wider industry to ensure excellent 2019 Rugby
World Cup service across the country
(1)
Based on independent market research
(2)
For more information on Spark’s sports proposition see market release dated 14 August 2018 on our Investor Centre Website: investors.sparknz.co.nz
General entertainmentEmerging sports proposition
(2)

Strategy: Progress Update
Business Sustainability
(1)
21
Focusing on long-term business sustainability
Spark is committed to delivering consistent earnings growth, sustainable
business performance and dividends that in the long term are fully funded
through earnings
Minimising the environmental impacts of our business operations and
helping others be more sustainable
•Spark signed up to Climate Leaders Coalition: group of 60 New
Zealand business leaders committing to tackle climate change
•Although a low emitter due to nature of our business, we robustly
measure and are focused on reducing greenhouse gas emissions
•Continued to roll out more energy efficient technologies, for example
the shut-down of PSTN network -will be replaced with a more efficient
IP-based Converged Communication Network
Cultivating an inclusive workplace of diverse and engaged people
•Spark Board gender mix is now 50:50
•Appointed Spark’s first female Board Chair, Justine Smyth
•Spark Leadership Squad is now 1/3 female
•Introduced Flexible Leave Policy and improved Paid Parental Leave
Policy
•Launched Blue Heart Pledge to demonstrate our commitment to
promoting diversity and inclusion in the workplace with more than
2,700 staff participating to date
Supporting the Spark Foundation to encourage generosity and
unleash potential through digital learning
•Spark Jump: heavily subsidised broadband for families with school-
aged children who cannot afford commercial broadband
•1,049 families connected and we’re expanding the programme with
the support from 65 community partners in 82 locations
•Givealittle“powered by Spark” –New Zealand’s crowdfunding
platform for social good raised a total of $18m in donations in FY18
to help fellow New Zealanders in need
•Spark people donated 1,125 volunteer days in FY18, and donated
over $840k in FY18 via Spark Give –Spark’s payroll giving
programme
Putting in place best practice governance and risk management
procedures
•The Board and management are committed to ensuring that Spark
maintains a high standard of corporate governance and adheres to
high ethical standards.
•The Board also plays a pivotal role in overseeing the strategic
direction of Spark and ensuring the strategy is well executed
Throughout FY18 Spark has continued to focus on environmental, social and governance matters.
Spark is committed to doing the right thing by our shareholders, our people and our customers,
which means being absolutely focussed on the sustainability and wellbeing of our business, the
environment and the wider community
(1)
For more information on Spark’s environmental, social and governance efforts please see Sparks Annual Report and ESG report which can be found on our Investor Centre Website: investors.sparknz.co.nz

Capital Structure

23
$667m
60%
CapitalStructure
Spark
continues to
be committed
to maintaining
a single ‘A
Band’ credit
rating
Spark has
maintained an A-
/stable long term
credit rating from
Standard & Poor’s
since the Chorus
demerger in 2011
Internal capital
management policy of Net
Debt
(1)
to EBITDA to not
exceed 1.4 x on a long run
basis, which Spark
estimates is approximately
equivalent to Standard &
Poor’s 1.5 x adjusted debt
to EBITDA threshold for
Spark’s A-credit rating
Standard & Poor’s
now applying
captive finance
methodology for
interest free mobile
device offers, which
resulted in
approximately
0.1x reduction in
Spark’s adjusted
debt to EBITDA
ratio. Have since
adjusted internal
policy threshold
accordingly
Internal Policy
as at 30 June
2018:
Net
Debt
(1)
/EBITDA
= 1.17x
Preferred method of
shareholder distribution
remains to sustainably
grow total dividends over
time in line with earnings
growth
Spark’s current dividend aspiration:
To deliver a
sustainable total
dividend that is
fully funded by
earnings per
share of 25c or
above
Debt may be
used to
supplement
dividend
payments while
remain on track
to sustainably
grow earnings
per share to 25c
or above
(
1)
Reported net debt at hedged rates

24
$667m
60%
Debt Profile
As at 30 June 2018
•Reported Net Debt at
hedged rates is $1,158
million (30 June 2017:
$974 million)
•Committed bank facilities
of $425 million of which
$150 million was undrawn.
In addition, a committed
Standby of $200 million
which was undrawn
•Next long term debt
maturity is a $100 million
bank facility in October
2018
Treasury Policies include:
•Spreading maturities to
avoid material funding
requirements in any 12
month period
•Maintaining unutilised
committed funding facilities
of at least 110% of next
12 month’s peak net
funding requirements
Above excludes Standby of $200 million maturing in April 2021
(1)
At face value and includes undrawn facilities

Key Terms of the
Intended Offer

26
Key Terms of the Intended Offer
IssuerSpark Finance Limited
Descriptionof the
Debt Securities
Unsecuredunsubordinated fixed rate bonds
Guarantee
The Bonds will, if offered, be jointly and severally guaranteed by Spark New Zealand
Limited and the other Guaranteeing Group Members (as defined in the Trust Deed) on
an unsecured basis
PurposeGeneral corporate purposes
Issue AmountUp to $100,000,000 with the ability to accept oversubscriptions up to $25,000,000
MaturityDateThursday, 7 March 2024
InterestRateEqual to the sum of the Base Rate plus the Issue Margin, on the Rate Set Date
Indicative Issue
Margin
Expected to be announced via the NZX on Wednesday, 29 August 2018
Interest Payments
Quarterly in arrear in equal amounts on 7 March, 7 June, 7 September and 7
December in each year duringthe term of the Bonds, commencing 7 December 2018
Denominations
Minimum denomination of $5,000 with multiples of $1,000 thereafter
Listing
Applicationis expected to be made to NZX to quote the Bonds on the NZX Debt
Market under the code SPF580
Expected Issue Credit
Rating
A-(Standard & Poor’s)

27
Timetable
Key Transaction Dates
Monday, 27 August 2018 –Tuesday, 28 August 2018Roadshow
Wednesday, 29 August 2018Intended Offer launch
2pm, Friday 31 August 2018Offer closes
Friday, 31 August 2018Allocations and rate set
Friday, 7 September 2018Issue date
Monday, 10 September 2018Expected quotation date

Appendix

Overall Performance
Financials
FY18
$m
FY17
$m
CHANGE
Revenues3,6493,6141.0%
Operating expenses
(1)
(2,660)(2,598)2.4%
Reported EBITDA9891,016(2.7%)
Depreciation and amortisation(434)(430)0.9%
Net finance expenses(30)(26)15.4%
Reported net earnings before income tax525560(6.3%)
Income tax expense(140)(142)(1.4%)
Reported net earnings after income tax385418(7.9%)
Adjusted EBITDA
(2)
1,0381,0162.2%
Adjusted net earnings after income tax
(3)
4204180.5%
Capital expenditure413415(0.5%)
Reported notional free cash flow
(4)
576601(4.2%)
Reported EBITDA margin27.1%28.1%(1.0pp)
Adjusted EBITDA margin28.4%28.1%0.3pp
Reportedeffective tax rate26.7%25.4%1.3pp
Capital expenditure to operating revenues11.3%11.5%(0.2pp)
Reported Earnings per Share21.0c22.8c(7.9%)
Adjusted Earnings per Share22.9c22.8c0.4%
Total Dividend per Share25.0c25.0c-
(1)
FY17 and FY18 include share of associate and joint venture net losses. FY18 also includes Quantum implementation costs of $49m
(2)
Adjusted FY18 EBITDA calculated as: reported EBITDA of $989m adjusted to excludeQuantum implementation costs of $49m
(3)
Adjusted FY18 net earnings after tax calculated as: reported net earnings after tax adjusted to excludeQuantum implementation costs of $49m lesstax effect on implementation costs of $14m
(4)
Reported notional free cash flow calculated as: reported EBITDA less capital expenditure
29

Mobile, cloud, security and service management revenues now account for
45.3% of total revenues, an increase of 5.5pp over the past two years
Mobile revenue growth of $83m (6.9%) driven by:
•$36m (4.6%) increase in high margin service revenues on both ARPU and
connection growth; and
•$47m (11.3%) increase in other mobile revenue due to customer demand
for high-end mobile devices
Cloud, security and service management growth of $49m (15.1%) reflecting
customer demand for the flexibility and benefits that cloud based “as a
Service” products offer
Accelerated voice revenue decline of $83m (12.7%) driven by:
•Accelerated decline of Wholesale PSTN connections; and
•Reduced calling volumes
Managed data and networks revenue decline of $17m (8.2%) due to:
•Competitive pricing pressure; and
•Ongoing proactive customer migration off traditional managed data
products onto new lower priced fibre based alternatives
Consistent with commentary given as part of FY17 results, Southern Cross
dividend declined $11m (18.0%) to $50m:
•FY19 Southern Cross dividends are expected to decline significantly, to
between $10m and $20m, as the level of pre-purchased capacity from
large customers decreases
Other revenue growth includes:
•Ongoing Qriousrevenue growth including impact from July 2017
acquisition of Ubiquity;
•$10m gain from sale of 50% of Connect8; partially offset by
•Prior year $20m gain from sale of surplus Mayoral Drive carpark land
Overall Performance
Revenue
Mobile, cloud, security and service managementrevenue growth continues to more than offset
ongoing declines in voice, managed data and Southern Cross dividends
30
(1)
Includes $20m net gain from sale of surplus Mayoral Drive carpark land
3,614
3,649
83
49
8
10
(83)
(17)
(4)
(11)
3,500
3,540
3,580
3,620
3,660
3,700
FY 17VoiceManaged Data
& Networks
MobileCloud, Security
and Service
Management
Procurement
and Partners
BroadbandSouthern Cross
Dividend
OtherFY 18
Revenues
FY17 vs FY18
+1.0 %
(1)
$m

Overall Performance
Operating Expenses
(1)
31
$18m or 7.1% decline in voice, managed data and network
cost of sales due to further reductions in voice connections;
particularly in Wholesale
Broadband cost of sales down $21m (4.8%) on prior year
driven by:
•$29m YoY reduction in access costs due to adoption of
wireless broadband; partially offset by
•Increases in wholesale access charges for both fibre and
copper
Mobile costs of sales increased $43m (9.9%) reflecting:
•Customer demand for higher-end devices; and
•Adoption of value added services
IT services cost of sales increased $19m (4.5%) in support of
growth in both higher-margin cloud and security products and
low margin, customer demand driven, procurement revenues
Net labour reduction of $37m (6.7%) due to benefits of
Quantum programme
Other expenses increased $27m, or 5.4% driven by:
•Higher advertising costs in support of key marketing
campaigns and product launches;
•Increased Lightbox platform expenses due to customer base
and usage growth; and
•Increased electricity costs due to high spot prices
(3)
2,598
2,611
2,660
43
19
27
49
(18)
(21)
(37)
2,400
2,450
2,500
2,550
2,600
2,650
2,700
FY17Voice and
managed
data cost of
sales
Broadband
cost of sales
Mobile cost
of sales
IT services
cost of sales
LabourOther
operating
expenses
Quantum
costs
FY18
$m
Expenses
FY17 vs FY18
(1)
(2)
+2.4 %
+0.5 %
(1)
Includes share of associate and joint venture net losses of $4m in FY17 and $3m in FY18
(2)
Voice, managed data and network cost of sales include baseband and access charges, field services expenses and
other intercarrier costs
Cost increases in support of revenue growth and Quantum programme partially offset by
Quantum-led reductions in labour cost

Overall Performance
EBITDA
Reported EBITDA margin of 27.1% down 1.0% pp on prior
year due to:
•$49m of Quantum costs of change in FY18, delivering
$42m of gross benefit during FY18 and $132m of
annualised gross benefit;
•$11m (18.0%) reduction in Southern Cross dividends; and
•Expenditure in support of key marketing campaigns and
product launches and higher electricity costs
Excluding Quantum costs of change, adjusted EBITDA grew
$22m (2.2%) to $1,038m
Gross margin improved by $12m (0.6%) due to:
•5.3% increase in mobile gross margin on both connection
and ARPU growth;
•15.6% increase in cloud, security and service
management gross margin due to strong customer demand
for “as a Service” products;
•6.7% improvement in broadband gross margin, despite
lower revenues, due to uptake of higher-margin wireless
broadband; partially offset by
•Ongoing declines in voice and managed data; and
•Declining Southern Cross dividends
32
(1)
Includes share of associate and joint venture net losses of $4m in FY17 and $3m in FY18
(2)
Southern Cross dividends are externally reported within other operating revenue
(3)
Quantum implementation costs are externally reported within other operating expenses
1,016
1,038
989
46
(13)
(11)
(49)
900
950
1,000
1,050
1,100
Reported
FY17
Operating
revenue
Operating
expenses
Southern
Cross
dividend
Adjusted
FY18
Quantum
costs
Reported
FY18
$m
EBITDA
FY17 vs FY18
(2.7%)
+2.2%
(2)
(1)
Reported EBITDA down $27m (2.7%) due to implementation costs associated with Quantum
programme; partially offset by ongoing revenue growth across mobile, cloud, security and
service management and net reductions in labour costs
(3)

Capital Management
Capital Expenditure
Targeted capital expenditure, of 11%-12% of revenue, continues to provide sufficient capacity to
execute on our strategy
Plant, network and core sustain includes ongoing fibre build
programmes to support customer demand for services and
traffic growth across the network, along with investments in
Spark-owned properties
IT systems investment in support of simplification, automation
and digitisation across our products, customer journeys and
systems to remove manually intensive tasks and improve
customer experience. Also includescontinued build of
Telecommunications as-a-Service IT platforms to support
substantial take up of these services by eligible Government
agencies
In line with Spark’s changing revenue mix, the percentage of
capital expenditure (excluding spectrum) spent on mobile
increased to 28% in FY18; up from 25% in FY17. FY18 mobile
investmentfunded continued deployment of Spark’s single
radio access network (SRAN) and Long-Term Evolution (LTE)
sites, increased capacity and coverage for wireless broadband,
and lifecycle investment across the mobile core
Multi-year Converged Communications Network (CCN)
investment will replace the legacy PSTN network and enable
the delivery of future IP based voice services
Reduction in international cable and construction investment
following completion of Tasman Global Access (TGA) cable
build in H2 FY17
33
(1)
IT systems includes investments in core IT systems and Telecommunications-as-a-Service
(2)
Mobile includes investment in standalone mobile assets including capacity in support of wireless
broadband
(3)
Other includes store refits, Lightbox, Qrious and IoT
(4)
International cable includes capacity purchases on Southern Cross cable and investment in
Tasman Global Access cable
CapitalExpenditure ($m)FY16FY17FY18
Plant, network, core sustain and resiliency
79 67 62
IT systems
(1)
59 112 113
Mobile
(2)
77 102 115
Cloud
34 42 39
Other
(3)
35 43 38
Converged Communications Network
3 15 32
International cable construction and capacity
(4)
28 34 14
Re-engineering
66 --
CAPEX excl. mobile spectrum381 415 413
CAPEX excl. mobile spectrum to operating revenue 10.9%11.5%11.3%
Spectrum9 --
Total CAPEX390 415 413
Total CAPEX to operating revenue 11.2%11.5%11.3%

974
1,036
1,109
1,158
71
73
52
23
(9)
(26)
950
1,000
1,050
1,100
1,150
1,200
H2 FY17Business acquisitions and minority investmentsProceeds from asset salesTop-up of dividendsMovement in handset receivable balanceMovement in other working capitalMisc.H2 FY18
Movement in Net Debt between H2 FY17 and H2 FY18
Spark’s internal capital management policy is to ensure that on a long-run basis reported
net debt
(2)
to EBITDA does not exceed 1.4x; which Spark estimates is approximately
equivalent to Standards & Poor’s 1.5x
(4)
adjusted debt to EBITDA threshold under Spark’s
A-credit rating. Spark’s internal threshold of 1.4x accounts for Standard & Poor’s
adjustmentsin relation to Spark’s captive finance operations
(5)
.
Spark’s 30 June 2018 reported net debt
(2)
to EBITDA ratio of 1.17x is consistent with our
ongoing commitmentto maintaining an A-S&P credit rating, and continues to provide
sufficient funding for:
•Accretive business acquisitions and investments with focus remaining on transactions of
~$100m or less that are close to the core;
•Business as usual operations; and
•Withstanding normal business risks
Rate of net debt growth is expected to slow during FY19 as:
•Earnings growth provides additional funding headroom;and
•Application of refreshed working capital policies maintains cash conversion at ~95%
In the interim Sparkis considering making an offer of unsubordinated, unsecured fixed rate
bonds via its wholly owned subsidiary Spark Finance. If Spark Finance offersthese bondsit
is expected that full details of the offer will be released on 29 August 2018. No money is
currently being sought and applications for the bonds cannot currently be made however if
Spark Finance offers the bonds, the offer will be made in accordance with the Financial
Markets Conduct Act 2013.
(1)
Miscellaneous movements include adjustment for fair value estimate of debt and timing of interest and lease
payments
(2)
Reported net debt at hedged rates as reported in note 5.3 of Spark’s FY18 Annual Report
(3)
Calculated as total FY18 increase in working capital of $26m less FY18 increase in mobile device receivable
balance of $52m
(4)
Includes adjustments for operating leases, share based compensations, a 25% ‘haircut’ of reported cash and
captive finance operations
(5)
As at 30 June 2018 equates to approximately 0.1x reduction in Spark’s adjusted debt to EBITDA ratio
Capital Management
Net Debt
Current net debt to EBITDA ratiocontinues to provide sufficient debt headroom within our S&P A-credit rating; with
net debt increasing by $184m during FY18 due to business acquisitions, payment of dividendsandcontinued
growth in mobile device receivable balance
H2 FY18
(2)
$m
Business
acquisitions
and minority
investments
Top-up of
dividend
Movement in
device
receivable
balance
Timing of
tax and
other misc.
mvmts.
(1)
Movement in
other
working
capita
l(3)
Total movement
in working
capital
$26m
H2 FY17
(2)
Proceeds
from asset
sales
Minority investments, advances to Southern Cross and business acquisitions
including Digital Island, Spark retail stores and Ubiquity
Dividend top-up; $13m higher than FY17 due to suppression of FY18 net
earnings by Quantum implementation costs
Growth in mobile device receivable balance as HMB customers continue to
adopt premium devices
Improvement in other working capital
(3)
due to:
•Ongoing benefits of refreshed working capital policies; and
•Timing of redundancy payments associated with acceleration of
Quantum programme
$71m
$73m
$52m
($26m)
34

Strategy: Progress Update
Quantum: Agile Ways of Working
First large New Zealand business to transition to Agile ways of working at scale with around 40%
of our people now transitioned to a full Agile operating model
35
When
Planning and high level designCompleted
✓
Frontrunner tribes establishedFebruary
✓
Detailed structure design confirmedMarch
✓
Employee training and transition to squad
roles
April-June
✓
Agile at Scale implementedQ1 FY19
✓
Agile implementation across other areas of the
business “Agile Light”
H1 FY19WIP
Transitioned to scaled Agile operating
model whilst still maintaining
operational performance
18
Tribes
35
Chapter Types
114
Squads
It’s early days yet as Spark’s scale Agile operating model has only been fully
formed and active for several weeks, but we are seeing promising progress across
allthree areasof expected benefit
Customer Centricity
•All Agile squads trained in customer experience frameworks and tools
•Hundreds of customers have been hosted in our customer experience lab
sessions and have been directly engaged by tribes and included in sprints
where appropriate
Speed to Market
•Customer facing pilot of new services undertaken within 6 weeks. Prior to
adopting Agile a similar pilot took up to 6 months
•Development of automated testing capability delivered in half the time of
previous iterations
Employee Engagement
•98% acceptance rate by employees offered new Agile employment
agreements;with ~1,100 employees graduating from Agile bootcampsto give
them a jump start into Spark’s new ways of working
•Early results indicate a 10-15 point improvement in eNPSamong employees
within the Agile heavy part of the business, compared with employees working
in the traditional parts of the organisation
•Staff spend less time on email and in meetings and more time executing and
delivering for our customers

36
Further Information
Spark New Zealand investor website
http://investors.sparknz.co.nz
Investor inquiries
Dean Werder
General Manager Finance & Performance
Dean.werder@spark.co.nz
Natalie Bishop
Treasurer
Natalie.bishop@spark.co.nz