Telecommunications company Spark released what was called a disappointing result for the six months ended December, complicated by multiple divestments and restatements.
Like-for-like comparisons were hard to work out.
The company, formerly known as Telecom, listed two lots of revenue and operating expenses, one of them called "re-based''.
On a straight comparison basis, Spark reported earnings before depreciation, interest, tax and amortisation of $455million for the period under review, up 4.4% on the previous corresponding period.
Revenue and other gains were down 4.1% to $1.72billion from $1.79billion.
Operating expenses were down 7% to $1.27billion from $1.36billion and net earnings were up 7.5% to $158million.
A dividend of 11c per share, plus a 1.5cps special dividend, was declared.
Spark also indicated its policy of a 75%-imputed 3cps special dividend would likely extend to the 2017 financial year.
Forsyth Barr broker Peter Young said the result was behind expectations and highlighted the impact of falling high-margin fixed revenues being offset by increasing low-margin IT and mobile handset sales.
Some average revenue per user (ARPU) uplift was seen in mobile but even after the Spark results broker call, everyone was still struggling to determine how the company would achieve its full-year guidance, he said.
"It relies upon a lot going its way. In terms of the key lines we were looking for, it was as expected - increased earnings from monthly mobile charges but continued declines in high-margin fixed line and calling revenues.''
Overall, it was a disappointing result, complicated by multiple divestments and restatements, Mr Young said.
The key point was Spark admitted it would be challenging to achieve its guidance.
Spark had seen some uplift in monthly mobile earnings but it had been on the back of weaker-than-expected activity by both Vodafone and 2Degrees.
"We still struggle to gain confidence around where long-term growth will come from for Spark. As an aside, it appears Spark is pulling back on its focus on Lightbox and instead looking to partner with others. Any savings in this area are likely to move to other parts of its digital ventures group,'' he said.
In his release to the NZX, Spark managing director Simon Moutter said for the first time in many years, mobile and IT services revenue growth had more than offset the ongoing decline in landline voice and legacy data products, excluding divestments and changes to regulated wholesale copper network access charges.
"This demonstrates a successful rebalancing of the company's portfolio.''
Spark was already well into the next phase of its strategy aimed at becoming a brand more customers loved and valued, at creating sustainable financial growth and at making a bigger difference to New Zealand's future success in an increasingly digital world.
Mobile connections grew 4.6% in the period and mobile revenue grew by $59million, or 11.7%.
IT services revenue grew by $23million, or 7.8%.
Broadband revenue grew by $15million, or 4.6%, as Spark continued to focus on higher-value plans.
The broadband market had ongoing consolidation, most notably with Australian-listed company M2 acquiring Callplus and merging with Vocus, Mr Moutter said.
However, the market remained crowded with, at last count, more than 80 broadband retail brands competing hard for New Zealand customers.
Spark held its market share at the higher-value end of the market and was outperforming the competition in new fibre orders, he said.
"Work is needed to shore up a decline in share at the lower-value end of the market with aggressive price-based competition fuelling high rates of churn across the industry.''
Major steps had also been taken to address the process for fibre installations, which was driving a trend towards longer and more complex customer calls and putting additional pressure on other aspects of customer service operations, Mr Moutter said.
An overhaul of the industry-wide process to streamline fibre installation was well under way.
Spark had employed an additional 140 customer service agents to help bring wait times for fibre down, taking the total number of customer service agents at Spark to about 1200 people.
Looking ahead, Spark remained pleased with the continued underlying improvement in free cash flow and the improving financial performance of the business, he said.
The board's intention was to pay annual dividends of 22cps and special dividends of 3cps, subject to no material change in the outlook.
