This article first appeared on GuruFocus .
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Adjusted Revenue:Stable at $3.7 billion, with Mobile growth offset by declines in legacy Voice and digital services.
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Adjusted EBITDA:Declined 2.4% to $1.035 billion, reflecting mix shifts in revenue and part-year data-center contribution.
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Adjusted NPAT:Declined marginally to $225 million, reflecting lower EBITDA offset by a relative improvement in tax expense.
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Free Cash Flow:Increased 18.5% to $308 million, supported by lower cash interest and tax paid and improvements in working capital.
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Dividend:Final dividend of $0.08 per share, bringing total FY26 dividend to $0.16 per share, representing 100% of free cash flow.
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Mobile Revenue:Increased 4.4% to $1.5 billion, driven by strong device growth.
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Mobile Service Revenue:Returned to growth, increasing 1.1% to $998 million.
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Broadband Connections:Declined 4.9% in a highly competitive price-driven market.
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Business Connectivity Revenue:Declined 9.9% to $327 million, impacted by divestment and legacy product declines.
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Digital Services Revenue:Declined 3.4% to $372 million, reflecting shifts from private to public cloud.
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BAU CapEx:Flat at $401 million, representing 10.8% of adjusted operating revenues.
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Reported NPAT:Up 91.9% to $499 million, including the $278 million gain on sale of data-center business.
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Net Debt:Reduced 35% to $899 million, with net debt-to-EBITDA ratio at around 1.7 times.
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FY27 Guidance:Adjusted EBITDA expected in range of $1.010 billion to $1.08 billion; BAU CapEx expected between $350 million and $380 million; free cash flow expected between $303 million and $350 million.
Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Mobile service revenue returned to growth, increasing 1.1% to $998 million, driven by strong pay-monthly ARPU growth and stabilization in pre-paid connections.
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Free cash flow increased 18.5% to $308 million, supported by lower cash interest and tax paid and improvements in working capital.
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Productivity benefits of $40 million were delivered in FY26, with cumulative annualized savings of $101 million against the FY30 target of $150-180 million.
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Net debt reduced 35% to $899 million, returning the net debt-to-EBITDA ratio to around 1.7 times, consistent with the current credit rating.
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Customer satisfaction increased for the sixth consecutive year, and employee engagement rose 11 percentage points.
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The company maintained its number 1 position in mobile service revenue share, with the rate of market share decline improving from 1.8 percentage points to 0.5 percentage points.
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Satellite-to-mobile partnership with Starlink extends network reach to remote areas, complementing the terrestrial network that covers 99% of New Zealanders.
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FY27 guidance includes a target dividend range of $0.16 to $0.18 per share, providing greater clarity on shareholder returns.
Negative Points
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Adjusted EBITDA declined 2.4% to $1.035 billion, reflecting mix shifts in revenue and continued decline in higher-margin legacy Voice.
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Digital services revenue declined 3.4% to $372 million, impacted by the shift from private to public cloud and softer IT services demand.
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Broadband connections declined 4.9% in a highly competitive price-driven market, with fixed-line technologies accounting for 84% of the decline.
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Enterprise and government mobile service revenue remained under pressure from community pricing, with ARPU decline expected to continue in FY27.
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Pre-paid connections declined 3.6%, with a one-off impact from the 3G closure, though the rate of decline slowed from 5.2% in FY25.
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Business connectivity revenue declined 9.9% to $327 million, impacted by the divestment of Digital Island and legacy product migration.
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The strategic review of digital services introduces uncertainty, with no certainty that it will result in a transaction or favorable terms.
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FY27 adjusted EBITDA guidance of $1.010-1.080 million reflects ongoing margin pressure in services and legacy product declines.
Q & A Highlights
Q: Can we expect the rate of decline in enterprise and government mobile ARPU to further moderate in FY27, and how is the competitive environment looking in that segment? A: Jolie Hodson (CEO) noted that the rate of service revenue decline improved significantly, dropping from a 16% reduction between FY24 and FY25 to 7% in FY26. While most enterprise and government contracts are three-to-five-year terms, she expects a similar level of change in FY27. The competitive environment has stabilized, with the company winning customers and seeing connections broadly stable, while the rate of ARPU decline continues to improve.
Q: What are you seeing in terms of churn following the consumer mobile price increase rolled out at the end of July, and how should we think about revenue growth against potential lost starts? A: Jolie Hodson (CEO) stated that churn levels are sitting below what the company anticipated. The price increases averaged around $3 per month for most pay-monthly plans. She framed this as a fair exchange given the company's investments in network resilience and the importance of mobile connectivity for customers.
Q: Can you provide more rationale for turning the DRP on versus paying a lower dividend, given net debt is back to target levels? A: Stewart Taylor (CFO) explained that the decision was driven by strong feedback from the retail investor base, for whom the DRP has proved popular. Additionally, while the company is back at 1.7 times net debt-to-EBITDA, it aims to create sustainable headroom relative to the S&P metric. The DRP is one of several levers available, and it has been reinstated at a 0% discount.
Q: On fixed wireless, where have the connection losses beenare they rural losses to Starlink or urban losses? A: Jolie Hodson (CEO) indicated the losses (around 8,000 connections on a base of over 200,000) are a combination of both, reflecting a highly competitive market. She reiterated the company's belief in the growth opportunity for wireless broadband, particularly as the 5G rollout expands population coverage and capacity. Spark is relaunching new, more competitive plans in FY27 to support this shift.
Q: Regarding the 25% retained stake in the data-center business, are you still confident you can receive the earn-out? A: Stewart Taylor (CFO) confirmed there are two earn-out tranches. The first is based on metrics between December 31, 2026, and February 2027, and the second on metrics at December 31, 2027. He expressed confidence that the business will deliver on the first tranche's metrics, while noting the second tranche is further away and subject to change. He highlighted excellent sites and plenty of demand for capacity in the business.
Q: If enterprise and government contracts roll on three-to-five-year terms, does that mean we will continue to see a 5% to 7% decline in ARPU for the next three or four years? A: Jolie Hodson (CEO) clarified that the majority of the decline has already been seen. While she still expects some decline in FY27, she does not expect it to continue for another three to four years, stating the bulk of the decline should be complete by the end of FY27. She also noted there is opportunity for connection growth within the segment.
Q: Can you provide color on the cost allocation for labor and other operating costs for the digital services business, given you've disclosed revenue but not EBITDA? A: Jolie Hodson (CEO) stated the company does not provide that level of detail down to each business unit. She indicated that if there is more to share following the outcome of the strategic review, the company will provide it at that time, but had nothing more to say on the EBITDA breakdown currently.
Q: Will the investment into Mobile, as outlined on slide 15, have a margin impact as we go into FY27? A: Jolie Hodson (CEO) explained the investments are a combination of churn prevention and opportunities for customers to experience different offers. She confirmed that the FY27 guidance has factored in these investments and that the company views these initiatives as margin-accretive in terms of the opportunities available for 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
