SPK- Spark NZ (TELCO)

[dobby41]

High CIR's can also be provisioned on the copper network in an uncontended fashion. Indeed, we had at one time a Chorus provisioned private point-to-point copper link between two offices, as well as a high CIR ADSL service for general internet access.

Expensive though!

[Mickey]

The PSTN is slowly being shut down and Chorus is reducing (and removing) the maintenance of the copper network (it is expensive to maintain and riddled with faults).
At some point, you will probably have to go to fibre or Wireless.
I prefer fibre because it suffers less from capacity contention - it is far easier (and cheaper) to remove contention in a fibre network than a wireless network.

That's right. There are two large initiatives underway. The PSTN is a 30+ year old NEAX based switching technology that is owned by Spark that is gradually being shut down. The PSTN allows Spark to provide services over the copper network that is owned by Chorus. Spark is migrating its customers who are in fibre and wireless coverage areas off the PSTN to its Converged Communication Network (CCN), which is a more modern IP network. Chorus are undertaking a copper withdrawal programme whereby they are gradually removing copper cabinets in areas that are served by their fibre network.

[mikelee]

I lost my copper landline years ago..it's good that Spark gave me all the hardware for wireless for free but am still not comfortable with no connect in an outage. The battery for backup they supplied turns out to be faulty and it was never replaced.

[dobby41]

I lost my copper landline years ago..it's good that Spark gave me all the hardware for wireless for free but am still not comfortable with no connect in an outage. The battery for backup they supplied turns out to be faulty and it was never replaced.

Most people have cordless phones and they stop during a power outage also.

[Zaphod]

Expensive though!

Yes, I think the PON link was around $2k a month for a fraction of the speed mentioned above "back in the day" which wasn't all that long ago. It predates the UFB rollout though.

[kiwitrev]

Not sure if anyone can answer my question regarding divvies and imputation credits. Any insight as to how long the status quo can be maintained for both. Sorry if this is a naive query.

[BlackPeter]

Not sure if anyone can answer my question regarding divvies and imputation credits. Any insight as to how long the status quo can be maintained for both. Sorry if this is a naive query.

Good question.

I assume you are referring to the fact that their dividend (this year 25 cents) is higher than their earnings (avg. 20 cts), and I think it often is. Their NTA (34cts) is not a lot either.

Just pulling this from open databases .... somebody scrutinizing the balance sheet (Snoopy?) might be able to shed more light into this issue.

From memory - Telecom / Spark always operated with a "lean" balance sheet, and so far it worked thanks to their quite strong and reliable cash flow. On the other hand - I don't see as much secretly hidden value in Spark as e.g. the Gentailers would have (they tend to pay as well dividends above earnings thanks to their ability to reduce earnings by writing off assets they don't lose ). I'd say a reduction of dividends at some stage might well be on the menu ...

However - take this with a grain of salt, it is a long time since I did some sort of analysis on Spark. Would be interesting to get Snoopy's view on your question.

[Snoopy]

Not sure if anyone can answer my question regarding divvies and imputation credits. Any insight as to how long the status quo can be maintained for both. Sorry if this is a naive query.

No nothing naive, about your question. It is probably the thing that all Spark shareholders most want to know!

My take on things, FWIW, some 'growth' will be required to maintain dividends and imputation credits at 12.5c (interim) + 12.5 (final) with 'full imputation'. IMO, from easiest to hardest, is that the keys to growth going forwards into FY2022 are:

1/ Restoration of Mobile Roaming Revenue: This has largely dried up during the pandemic and yet from p2 AR2021

"Mobile revenue grew $23M despite the loss of roaming revenues. Pay monthly mobile connections grew by 56,000."

That shows to me that Spark are doing 'something right' in the mobile space. I know regular tripping over the Australia looks a world away again now. But I feel it will be back sooner than some think. 5G could also inspire some growth in the mobile space.

2/ Spark seem very determined to leverage their mobile network further into the fixed wireless broadband space. Yes technically it will never be as good as fibre. But 'never as good' might well translate to 'more than good enough' for a lot of people. And if Spark can hit the right price point with a broadband package that is cheaper to supply than via Chorus, this may be a way that Spark can extricate more profit from that broadband market.

3/ 'Data storage in the cloud' plus any associated security enhancements looks like a solid way to meet demand and lift profits in the near term.

4/ This is a little further out but I feel a more widespread use of 'the Internet of Things' (IoT) which covers everything from public rubbish bins pinging their owners as to when they should be emptied, to weather monitoring tools feeding back to the farmer any moisture deficits in their paddocks.

I was tempted to add in 'Spark Health' too, which has been billed as an IoT prospect. But so far I am a little shy on exactly how Spark plans to pursue this in terms of a 'plan of implementation'.

SNOOPY

[percy]

From Craigs' research.
...................................2021 actual....2022 forecast........2023.............2024
Dividend per share.........25 cents...........25cents.............25.5 cents........26cenys.

[Biscuit]

......the keys to growth going forwards into FY20222 are....

SNOOPY

Wow, I admire your long term foresight!!