SPK- Spark NZ (TELCO)

[see weed]

My ASB watchlist is frozen on yesterdays closing prices and cannot get todays depth on anything, Anyone else having this problem?

[biker]

Yes. They’re working on it

[see weed]

Yes. They’re working on it

Thanks. That is what they told me to. It might have something to do with a lot of the bars opening at midnight down the Viaduct basin last night. At this rate, we might have to take the day off and knock off early and head for town.

[Bad_jelly]

Fixed now!

[enzed staffy]

Thanks. That is what they told me to. It might have something to do with a lot of the bars opening at midnight down the Viaduct basin last night. At this rate, we might have to take the day off and knock off early and head for town.

Seems theyre back - my watchlist has updated

[oldtech]

I was hoping SPK would expand more into offering cloud services and security services eg protection against DDOS attacks to NZX and Waikato DHB. There’s good money to be made in that field and it’s a less price sensitive service

Once upon a time I had a mobile and a landline.
Once upon a time I paid for toll calls.
Now with mobile technology changes and apps that allow phone calls I have only a mobile phone and I can’t remember the last time I paid for a toll call.

Surely Spark has lost toll revenue and landline revenue and will continue to do so. More companies are using VOIP instead of making toll calls through a toll provider

A few random thoughts:

• Re mobile, all telcos including Spark have lost a lot of income from roaming revenues, which are typically described as "lucrative", thanks of course to border closures. For Spark this was $38 million in FY21 according to their Annual Report. Despite this, mobile service revenue grew 0.5 per cent, or 4.3 per cent when adjusted for the impact of roaming.
• You mention cloud and security services - Spark's Cloud, security and service management revenue grew 5.5 per cent from FY20
• Spark has 16 datacentres around the country. In August they announced they would be adding capacity at their Takanini datacentre which will (apparently) make it the largest in New Zealand once completed. How much business they will lose to AWS is anybody's guess ...
• Spark also part-own the Southern Cross Cable, so there's another revenue stream.

Disc: Holder and employee

[Harrie]

You are right - smartphones are important to people and Spark is one of the service providers. This is the plus side.

On the other hand however ... there are strong competitors for the service provider position and they are growing in size. Main competition is over price (which is nice for the user, but not desirable for the service provider). And hey - The monthly bill for my cell phone contract these days is lower than the monthly rental for my land line 30 years ago (not even considering inflation) ... despite me getting much more out of the cell phone.

While I agree that the Telecom industry will keep growing, am I not sure that being a player in this industry is for the shareholders a one way ticket to wealth.

Some players will do better than others but all will need to work really hard to stay on top of the ongoing changes.

I guess time will tell where Spark will end up in this race - but they didn't really made a lot out of their once incumbent position over the last two decades, didn't they?

Yes BP, I certainly never ever suggested it was a one way ticket to wealth. What it is, is a stable dividend paying stock with some growth potential. This is an industry which is constantly subject to commerce commission scrutiny, so it will never monopolize the market in the communications industry, which is the reason why they have not been able to capitalise on their once dominant position. The govt allowed competition into the market purely to create competition, however they are growing against the competition albeit at a slower pace and that's a good thing.

[Snoopy]

The bare earnings numbers and history as a default necessary service provider lead to the impression of a 'steady as she goes' giant. But look at what has happened to the revenue break down over the five reporting years under review.

Product Category	Operating Revenue (FY2021)	Operating Revenue (FY2017)	Change	Change Percentage
Mobile	$1,311m	$1,197m	+$114m	+9.5%
Voice	$308m	$655m	-$347m	-47%
Broadband	$670m	$689m	-$19m	-2.8%
Cloud, Security & Service Management	$443m	$324m	+$119m	+36.7%
Procurement and partners	$414m	$345m	+$69m	+20.0%
Managed Data, Networks & Services	$282m	$207m	+$75m	+36.2%
Other Operating Revenues	$137m	$116m	+$21m	+18.1%
Total External Revenues	$3,565m	$3,533m[
Total Absolute Value of Changes			$764m

$764m/$3,565m = 21%

That is a measure of how much the business has changed in five years. Although overall revenue has barely changed, more than one in five dollars taken in has shifted to a different product category. I would suggest that is rather a large operational change. In fact I would struggle to think of any other NZ business that has transformed this much over the last five years (bar some start ups). Sometimes what you think you see, a boring steady dividend payer, is not a boring as you think it is.

Smartphones are important to people and Spark is one of the service providers. This is the plus side.

On the other hand however ... there are strong competitors for the service provider position and they are growing in size. Main competition is over price (which is nice for the user, but not desirable for the service provider). And hey - The monthly bill for my cell phone contract these days is lower than the monthly rental for my land line 30 years ago (not even considering inflation) ... despite me getting much more out of the cell phone.

Some players will do better than others but all will need to work really hard to stay on top of the ongoing changes.

You left out a couple of new revenue streams for Spark in the Smartphone space BP. Spark will now sell you a new cellphone on a monthly plan. So they now have a 'product income stream' added to the 'usage income stream', in a way they did not have back in the old landline day.

Furthermore, 'back in the day', all local call revenue was collected from the operator of each landline. But cellphones work on a 'caller pays' model. That means the local revenue associated with your cellphone number comes from all the calls you make PLUS all the calls that other people make to you. So although you are looking at your monthly phone bill, thinking how much money you have saved from the landline days (when you got unlimited minutes and numbers of local calls per month), in fact a large portion of this 'saving' is you transferring what used to be 'your' share of fixed local call costs onto other people.

Thus my thesis is that in the 'transition to mobile', the phone companies are not losing as much revenue as you think they are.

Once upon a time I had a mobile and a landline.
Once upon a time I paid for toll calls.
Now with mobile technology changes and apps that allow phone calls I have only a mobile phone and I can’t remember the last time I paid for a toll call.

You no longer have to pay for toll calls from landlines in the old 'per minutes' way. For example if you have a sick relative in another town who you want to ring every day you can get a 'My favourites' package that allows unlimited calls, (up to 2 hours per call) to a home phone or Spark mobile - any time, of day or night for a month. This costs $6 for one month. And if after a month the person has recovered, you can delete the package.

Surely Spark has lost toll revenue and landline revenue and will continue to do so. More companies are using VOIP instead of making toll calls through a toll provider

Yes. -47% over five years, as per the table I have quoted above.

I was hoping SPK would expand more into offering cloud services and security services eg protection against DDOS attacks to NZX and Waikato DHB. There’s good money to be made in that field and it’s a less price sensitive service

They have, +36.7% over five years.

SNOOPY

[BlackPeter]

You left out a couple of new revenue streams for Spark in the Smartphone space BP. Spark will now sell you a new cellphone on a monthly plan. So they now have a 'product income stream' added to the 'usage income stream', in a way they did not have back in the old landline day.

Not sure I understand. In the old days it was a (rather high) fixed fee for having the connection plus any toll calls you made.

Today it is (depending on your plan) some monthly payment including mainly free national calls plus some toll calls plus whatever data you use. The total however is for most users less than it used to be in the good old telecom days. So - sure, the Income streams for Telecom have changed, but the total didn't increase.

Furthermore, 'back in the day', all local call revenue was collected from the operator of each landline. But cellphones work on a 'caller pays' model. That means the local revenue associated with your cellphone number comes from all the calls you make PLUS all the calls that other people make to you. So although you are looking at your monthly phone bill, thinking how much money you have saved from the landline days (when you got unlimited minutes and numbers of local calls per month), in fact a large portion of this 'saving' is you transferring what used to be 'your' share of fixed local call costs onto other people.

Thus my thesis is that in the 'transition to mobile', the phone companies are not losing as much revenue as you think they are.

Not sure I can follow this argument either. In the good old days the subscriber of the landline paid a fixed fee plus tolls. If somebody else (from overseas) called you, than the overseas telecom typically would as well contribute to the cost of this call (unless they had some mutual agreement basically waving each others cost).

These days the owner of the plan pays a fixed monthly fee plus tolls (being data and toll calls). If somebody from a different provider calls you their provider may or may not (depending on the agreement between the respective providers) pay for parts of this call. Again - given that people receive calls as well as make calls, this is typically quite revenue neutral - the more the operator receives from other operators for incoming calls, the more they normally would have to pay these very operators for outgoing calls form their own network.

Packages for the user existed in the good old days (at least in the part of the world I am coming from) like today - this is just a way for the respective Telecom to maximise their revenue considering that running a telecommunication network costs exactly the same money whether it is in use or idle.

Check "Profit maximization for a monopoly" . However - these days telecom is not a monopoly anymore, which makes it more difficult to extract higher profits.

So - yes, I do see that some of the revenue streams have changed, but I don't see the total of all streams increasing.

[Panda-NZ-]

There are huge opportunities in the cloud.. running a "simplified" cloud could be a good option for spark.

Though there will be tough competition from big tech so that needs to be considered.