Spark New Zealand Ltd (SPK) - Comprehensive analysis
Challenging economic conditions in New Zealand, along with structural headwinds affecting the mobile and IT sectors due to budget constraints from government and enterprise customers, have revealed Spark NZ’s inflated cost base. While earnings are currently cyclically weak, they are expected to recover as the New Zealand economy improves. Additionally, there is likely to be a renewed emphasis on cost management, with achievable cost-reduction targets. Based on our earnings and dividend forecasts, we believe the balance sheet will remain stable and may improve through asset sales. However, none of this is reflected in the current share price, nor in Spark’s competitive mobile business. This is underpinned by a stable and rational mobile industry structure, with Spark holding the leading market share.
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