Spark reaffirms FY20 guidance and outlines Covid19 response

Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand


MARKET RELEASE
22 April 2020

Spark reaffirms FY20 guidance and outlines Covid-19 response

FY20 Guidance
1

EBITDAI $1,100m - $1,120m
Capital expenditure
2
~$370m
Dividend per share Ordinary 25.0c at least 75% imputed

Telecommunications and digital services play a critical role in the lives of New
Zealanders and in businesses across the country, and this has never been more
evident than it is today, during the Covid-19 pandemic.

While Spark’s services have become more important than ever before, this does not
mean it is immune from the impacts of Covid-19.

Spark delivered a strong first half and most Covid-19 impacts have only materialised
in the final quarter of FY20, which moderates the impact of the pandemic during this
financial year. With the information that is known today, Spark reaffirms FY20
guidance.

Travel restrictions and border closures have significantly reduced higher-margin
mobile roaming revenues, which on an annual basis account for approximately 5% of
Spark’s total mobile revenues.

Spark’s network of retail stores is currently closed, with the exception of a small
number that are operating as Emergency Distribution Centres for the provision of
essential hardware only. As a result, retail revenues have also declined due to lower
device and accessory sales.

While broadband usage has increased significantly, the majority of Spark’s customers
are on unlimited plans and those on data capped plans are not being charged overage
fees as part of Spark’s financial support package. Late payment fees and
disconnections as a result of financial hardship have also been waived
3
.

While there has also been an uplift in voice calling, the majority of Spark’s mobile
customers are on unlimited minute plans and it is uncertain if the increase in calls to
0800 numbers will be sustained as New Zealand moves through Alert Levels.

Proactive moves to manage and reduce costs will partially offset these revenue
impacts in FY20.

Chair Justine Smyth said: “This is an incredibly challenging time for New Zealand and
we take our role as an essential services provider very seriously in this context. It is
heartening to see that after many years of network investment we have been able to

1
Subject to no adverse change in operating outlook
2
Includes purchase of property, plant and equipment, intangible assets and capacity (including Southern Cross) but excludes spectrum
purchases and leased customer equipment assets
3
Implemented on March 23 2020 for a period of 60 days.

Spark New Zealand Limited
ARBN 050 611 277 Spark City, 167 Victoria Street West, Private Bag 92028, Auckland, New Zealand


manage a dramatic increase in usage across our networks at a time when
connectivity is of such critical importance.

“Like all businesses we are preparing for a different set of economic conditions in the
coming financial year and we need to take sensible steps now to ensure the business
is equipped to respond.”
To offset against both current and anticipated impacts from Covid-19 Spark will
implement a Company-wide cost review and a reprioritisation of FY21 capital
expenditure that will support New Zealand’s economic recovery, such as the rollout of
5G.

CEO Jolie Hodson said: “We expect to experience flow-on impacts from the broader
economic downturn, as our customers reduce usage or find it difficult to pay for our
services, and with the indefinite closure of international borders we also expect the
loss of all mobile roaming revenues.

“As an essential services provider we must ensure we are sustainable over the long-
term so we can keep New Zealand connected, help to close the digital divide, and
support the transition to new ways of working.”

Spark remains committed to its S&P A- credit rating and continues to have sufficient
access to funding.

Authorised by:
Alastair White
GM Capital Markets
-ENDS-

Media queries: Investor relations queries:
Leela Gantman Alastair White
Corporate Relations Director GM Capital Markets
+64 (0) 27 541 6338 +64 (0) 21 228 3855