Spark New Zealand Limited (SPK) Earnings Call Transcript & Summary

[Foreign Language]. Good morning. My name is Justine Smyth, and I am Chair of Spark New Zealand. On behalf of the Board, I'd like to welcome you to Spark's 2024 Annual Meeting of Shareholders. For those of you who will be joining virtually, you'll be able to vote and submit questions during the meeting. We will respond to the questions on the resolutions when we get to that part of proceedings. And we'll also have time to respond to general questions after the resolutions. Before we get started, just some housekeeping matters: Bathrooms are located in the atrium. In the unlikely event of an emergency, please leave the venue just using the nearest exit and follow the instructions of the Spark employees. With that taken care of, I'd now like to declare the meeting open. Based on the information conveyed to me, I confirm there is a quorum of shareholders; and the meeting is duly convened. Today you'll hear from me as Chair of the Board; and from our CEO, Jolie Hodson. We will then put forward the resolutions as described in the notice of meeting and respond to general questions put to us by shareholders. I would like to introduce my fellow directors and management who are on stage with me today: Gordon MacLeod; Sheridan Broadbent; Warwick Bray; Lisa Nelson; Jolie Hodson, director and CEO; David Havercroft; Alison Barrass; and Stefan Knight, our CFO. Also present today is our General Counsel, our Company Secretary, auditors from Deloitte, lawyers from Russell McVeagh and our share registrar. Turning now to our financial performance. FY '24 was a challenging year for Spark. And while some green shoots are emerging, these challenges have persisted into FY '25. This is why we announced to the market on Wednesday that we would be reducing FY '25 EBITDAI, CapEx and dividend guidance. I want to acknowledge that this falls short of expectations, and we understand the disappointment our shareholders will be feeling. You will rightly want to understand the drivers of that change and our plans to get performance back to where it needs to be, so I will start with the summary of FY '24 then outline the drivers of our updated FY '25 guidance and finally an overview of the actions that we are taking to reset performance, before moving on to the broader AGM program. So during FY '24, we saw the economic environment in New Zealand significantly deteriorate. And while our business is resilient to economic shocks, it is not immune. Our country entered a recession, which we are still yet to fully emerge from. We saw significant spending cuts across the public and private sectors. And high inflation resulted in lower consumer spending and weak business investment. The material reduction in demand across the public and private sectors had a significant impact on IT revenues. Lower household spending -- which saw a decline in sales of mobile devices and accessories. And we saw more price-driven competition in both the mobile and the broadband markets. To mitigate the impact of these challenging market conditions, we introduced the SPK-26 Operate Programme and delivered labor and OpEx efficiencies across the business. Despite the headwinds that we experienced, we actually did see strong growth in many areas of our business. In mobile, we saw service revenues exceed $1 billion for the first time. And data centers and IoT continued to grow. This was not enough, however, to offset the reduced demand in other areas of our business. As you will remember, Spark's FY '24 results are cycling a significant net profit declared in FY '23, primarily due to the tower company transaction, so as such, both reported and adjusted year-on-year comparisons are provided in our annual report and also on the screen. Makes it a little bit confusing, having the 2 sets, but I will speak to the adjusted numbers which strip out the impact of the one-off gain, so as to provide a like-for-like performance comparison. So on an adjusted basis, FY '24 revenue declined 1.2% to $3.8 billion. EBITDAI declined 2.5% to $1.1 billion, and net profit after tax declined 21% to $342 million. The reduction in net profit after tax includes a one-off $26 million adjustment due to the recent policy changes that government made to no longer allow building -- depreciation on buildings. So the impact to top line performance put pressure on our free cash flow, which reduced to $330 million. And our net debt-to-EBITDAI ratio increased to 2.1x. We remain committed to reducing net debt to targeted levels of 1.7x. We declared a FY '24 dividend of $0.275 per share. So let me turn now to our updated FY '25 guidance. Since the conclusion of FY '24, we have seen inflation reduced and multiple OCR movements, which is a welcome change that will put more money in the pockets of Kiwis and improve confidence over time, but the key words here are "over time." The rationale for the most recent 50 basis point OCR drop was telling, pointing to subdued economic activity, weak business investment, weak consumer spending and low productivity growth. That is the economic environment we are experiencing, and those challenging conditions have impacted our markets of mobile and IT. Mobile service revenue is now expected to be largely flat year-on-year compared to our original FY '25 ambition of around 3% growth, driven by lower anticipated growth in overall mobile connections and also pressure on ARPUs. In IT, our original FY '25 guidance assumed stabilization in the rate of decline of IT services in the second half. And based on the first quarter of trading, this remains on track. However, in the IT products, the mix shift between private and public cloud has accelerated, impacting on our margins. Finally, our original FY '25 guidance assumed we would deliver an $80 million net cost reduction across labor and OpEx. We are on track to deliver our net labor cost reduction target in year. Work continues towards the net OpEx target. And to support this, we intend to expand the SPK-26 Operate Programme to deliver materially higher cost reductions overall, but these will now be realized over FY '25 and FY '26 collectively. As a result of these changes, we reduced our EBITDAI guidance range by $45 million or 4% to $1.12 billion to $1.18 billion to reflect the softer trading conditions we have experienced. In accordance with our standard practice, this updated EBITDAI guidance excludes any gains on sale and transformation costs that are greater than $25 million. In line with this change, we rightsized our CapEx guidance to our new earnings profile, with a reduction in spend to be between $415 million and $435 million. As a result, our free cash aspiration remains unchanged at $400 million to $440 million. The Board then made the difficult but necessary decision to reduce the FY '25 guidance to $0.25 per share, 75% imputed. In making this decision, we considered updated EBITDAI guidance and our current performance context, balanced against a focus on shareholder returns. Looking forward, we are focused on resetting performance in 4 key ways. I'm going to summarize the actions we plan to take now, and Jolie will talk to them in more detail shortly. Firstly, we're focused on building momentum in our telco core. This includes a substantial pipeline of activity in our consumer business to stimulate demand over our 4 key sales period and beyond, as well as ongoing focus on our priority markets and portfolio simplification in enterprise and government. Secondly, we intend to expand the SPK-26 Operate Programme to further transform our cost base across the business. Thirdly, to support the focus on our telco core, we are undertaking a strategic review of our noncore assets. We will consider if Spark retains ownership of these assets or whether more value could be created for shareholders through the divestment or by bringing on new partners. As part of this review, we have made the decision to divest our remaining shareholding in the mobile towers business Connexa. While a transaction is not yet certain, we believe the strong interest -- levels of interest we have received is reflective of the high quality of the Connexa business. We will provide a further update on the review at our interim results in February; or earlier, in the case of any material developments. Finally is our data center growth strategy. As your Board, we are focused not only on resetting performance and returning Spark to its strong track record of consistent, stable returns in the short term but on ensuring we are also growing value over the longer term. And we have a significant opportunity to do this in data centers. So to illustrate this value opportunity. A telecommunications-focused business like Spark is generally valued at around 8x EBITDA. A data center business can achieve valuation as high -- valuations as high as 20 to 25x EBITDA at maturity. So this demonstrates the future value to shareholders of building on Spark's existing market share and capability in this area. To do that, we need the capital to fund our development pipeline, which we anticipate will be $1 billion over the next 5 to 7 years. We're currently exploring capital partnerships to achieve this. So turning now to our nonfinancial performance. We recognize the importance of maintaining our license to operate and the strength of our brand with our customers and communities for the long-term benefit of our shareholders. In FY '24, we continued to support economic transformation across the economy, with $350 million of our capital investments supporting improved network performance, resilience; and digital infrastructure. We were pleased to claim the top spot in Opensignal's research report as the country's most reliable network with the widest coverage experience. We are proud to see our not-for-profit broadband service Skinny Jump now supporting nearly 32,000 households in need across the country. Looking at our own sustainability performance. In FY '24, we saw our scope 1 and 2 emissions increase by 26.7%. Largely this was due to a one-off event, when an alarm triggered the release of a fire suppressant at one of our exchanges. This means we were above our science-based emissions target reduction for FY '24. We did, however, make strong progress on future emissions reductions when we signed a renewable energy deal with Genesis. This will meet around 60% of our current annual electricity requirements, making a significant contribution towards our scope 1 and 2 emissions reduction target in the years ahead. Overall, we're also pleased to maintain inclusion in the Dow Jones Sustainability Australia Index. Before I hand over to Jolie, I just want to acknowledge that our share price is not where any of us want it to be. Our clear priority is resetting performance in our telco core. We will simplify our portfolio to enable this focus and significantly reduce our cost base to offset market headwinds while investing prudently for longer-term growth. Our underlying drivers of growth are enduring as the demand for data and compute power and storage continues to grow with every year. We deliver a return on invested capital of around 15% for our shareholders, ranking ahead of our industry peers globally. While we are transitioning through a challenging period, Spark has market-leading positions in core segments and strong fundamentals that we have every intention of retaining. We believe in this business and the role it plays in Aotearoa and in the long-term value it will deliver to our shareholders. I'll now invite Jolie to provide the CEO review.

[Foreign Language]. Thank you, Justine. And good morning, everyone. I'd like to echo Justine's comments and personally acknowledge that we have work to do to win the confidence back of our shareholders, and we are committed to that work. This was a challenging year for Spark and not only for us but also for businesses across the country. And those economic challenges persist today. Justine has outlined a comprehensive performance reset, and I'm now going to provide more detail in key areas. So our absolute focus is in building momentum in our telco core. The heart of Spark's business is mobile. We are the #1 network operator by both connections and mobile service revenue. Our network is the most reliable, with the widest coverage, so while the market has been tough in recent times, our long-term value drivers remain. Demand for data continues to grow year-on-year. Our brand health across both our Spark and Skinny brands is strong and growing. And we are focused on stimulating growth in the second half through pricing, new campaigns, and an Endless plan lineup that will deliver our customers higher data allowances than ever before, so when combined with easing monetary policy, we are confident that these tailwinds will continue to support a strong and growing mobile business into the future. In enterprise and government, our #1 focus is also connectivity, which includes mobile, managed networks and the Internet of Things. Cloud also remains an important part of our business, but over time, we anticipate an ongoing structural shift from private to public cloud, so our focus is on ensuring our cost base aligns to that changing market and that we continue to deliver our customers the best hybrid cloud solutions available. So with clarity on our priority markets, we are undertaking a significant product portfolio rationalization across enterprise and government to simplify and further focus the business. Turning now to our cost program. At our FY '24 results, we outlined 3 key focus areas of that program: a $50 million net labor cost reduction through changes to our operating model, a $30 million net OpEx reduction and implementing scale AI across the business. So we're on track to deliver our net labor cost reduction target in year, which will be delivered primarily through the transformation of our enterprise and government division. We're undertaking extensive remodeling of this part of the business, integrating our subsidiaries into Spark to remove duplication and improve efficiency. Our introduction of new generative AI use cases across the business is progressing to plan. And we continue to work towards our net OpEx target. To support this, we intend to expand the scope of our Operate program to include a broader transformation of our technology delivery model. And to ensure considered execution, this transformation will be phased over FY '25 and FY '26. So our technology delivery model refers to how we manage and deliver our network and IT infrastructure; and includes the costs associated with this such as labor, support and maintenance, licensing and infrastructure. Our objective is to accelerate our current strategic focus on automation, simplification and resilience while delivering a significantly reduced cost base. And we will provide more details on the benefits and associated transformation costs at our interim results in February 2025. I now want to provide some more detail on our data center strategy. As Justine touched on earlier, this represents a significant growth opportunity for our shareholders. And we will be exploring capital partnerships to secure our long-term funding outside the free cash flow of our core business. This is not a market that is new to Spark. We've been operating a data center business for over a decade. Our own usage of data centers is significant. We have complementary digital infrastructure, existing relationships with hyperscalers; and we provide products and services such as cloud. As a result, we have the optimal mix of specialist skills and a deep understanding of New Zealand customers to compete effectively. What is new is the size of the prize in this market. The New Zealand data center market is predicted to grow from around 90 megawatts today to around 500 megawatts by 2030 as AI accelerates and as businesses continue to migrate to the cloud. We already have around 25% of the market, which is a strong position to build from. To succeed in this market, you need specialist skills; as well as the land, power and fiber in the right places to appeal to potential customers. Auckland is New Zealand's primary market for data centers, evidenced by the fact that the hyperscalers have established cloud regions here. In Auckland, we have 3 high-quality sites which are primed for development, including our existing sites in the CBD, in Takanini and a new site on the North Shore. Across these 3 sites, we have a significant pipeline of 118 megawatts available to develop. Data centers, much like any type of property development, scale over time as builds commence and complete and tenants occupy the buildings. The capital investments we make today are building long-term, stable annuity revenues for our shareholders. And as we invest in this growth opportunity, we're targeting returns of around 10% to 15%. So I would also like to touch briefly on our people at Spark. We know investment in our people and our culture is key to business success, and this remains a priority. Over the last year, we have had to make tough but necessary decisions to transform our cost base, which has impacted some of our people. We never make these decisions lightly, and we've done as much as possible to support our people who have been impacted during this transition. We have also continued to invest in the skills of our people, needing to adapt to new ways of working and new technologies to support our future growth. Our people's well-being continues to be a focus, particularly in the context of what has been a challenging year for many New Zealanders. We enhanced the Mahi Tahi well-being program with access to new support services. And in our last culture survey of FY '24, 88% of our people said they believe their well-being is supported by the leaders at Spark. So finally, I'll end by focusing on the people who underpin the success of our business: our customers. While it's been a challenging year, we have not wavered from our enduring focus on improving experiences by -- of our customers by making their interactions with us simple and effective. This work is showing up in customer feedback, with our measure of customer satisfaction, our interaction Net Promoter Score, increasing a significant 7 points to plus 38 in FY '24, so as we look to the year ahead and continue to transform our business to compete effectively in our markets, our customers will remain at the heart of what we do. In closing, I want to acknowledge the support of our shareholders and reaffirm my commitment and the commitment of my team to resetting performance and ensuring that Spark continues to deliver long-term sustainable value. [Foreign Language].

Thank you, Jolie. I will now move to Board changes during the year. We were pleased to appoint a new nonexecutive director in May 2020, welcoming Lisa Nelson to the Board. Lisa offers herself for reelection today. Lisa brings 25 years of global experience across the financial services, software and technology industries. Shareholders will also be voting on the reelection of Warwick Bray and David Havercroft today. Warwick joined the Board in 2019 and brings global experience in international telecommunications, technology and media sectors, most recently at Telstra in Australia. David joined the Board in 2021, bringing skills and experience from a career in the technology industry that has spanned more than 35 years. Lisa, Warwick and David will retire and offer themselves for reelection today. And finally, as we announced recently, Alison Barrass will be stepping down at the close of this annual meeting. The Board and I wish to thank Alison for her very significant contribution on the Spark Board during her last 8 years. And wish -- we wish you every success in the future. We now turn to matters requiring resolution as outlined in the notice of annual meeting, with a poll to be called on each resolution. The poll will be conducted at the end of the resolutions, and your ballot papers and online voting cards will be collated by our share registry. The resolutions set out in the notice of meeting are to be considered as ordinary resolutions. To be passed, each resolution requires the approval of a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. There will be an opportunity for shareholders to ask questions on each resolution and more generally at the end of the resolutions. When I call for questions, for those of you who are attending in person, can I please ask that you move to the microphone nearest to you and clearly state your name prior to asking your question? In the interest of fairness to all shareholders attending this meeting, anyone wishing to speak should be as concise as possible and be considerate to other shareholders. Shareholders are asked that they only speak once, to give the other shareholders a reasonable opportunity to raise questions that they might have. We will also be responding to questions from shareholders attending virtually via the online portal; and also those attending on phone, by phone. If there are any questions that relate to personal customer matters, these can be directed to the customer services support we have available at the rear of the room once the meeting has closed. For shareholders attending via the online portal, please submit your questions on the resolutions or general business now. [Operator Instructions] I would like to take this opportunity to remind everyone that this meeting is being webcast. So you will also be heard by an audience outside of this room. Our first resolution relates to the company's auditor, Deloitte. The Companies Act sets out the procedure for reappointment of auditors, and under that procedure, the auditors are automatically reappointed. Deloitte was first appointed as auditor in 2020, and Spark's policy requires that the lead audit partner is changed every 5 years. As part of this policy, FY '25 will be our lead audit partner's last year. The motion concerns the fixing of the auditor's remuneration and seeks the shareholders' approval that the directors be authorized to fix the remuneration for the ensuing year. I propose that the directors are authorized to fix the remuneration of the auditor, Deloitte, for the ensuing year. Are there any questions for the Board concerning this motion? Are there any questions online?

There are no questions online.

Are there any questions on the phone?

Chair, I confirm there are no questions on the phone.

Thank you. The second resolution concerns the reelection of David Havercroft as a director of Spark. David joined the Board as a nonexecutive director in October 2021. David is retiring in accordance with the NZX listing rules and offers himself for reelection. The Board recommends David to you as an independent director of Spark and unanimously supports his reelection. I invite David to address you.

Thank you. [Foreign Language]. Firstly, let me wish you, our shareholders, a very good morning. I've had the privilege of being a member of the Board of Directors of Spark since 2021, and I am seeking your support for reelection. I've had a long career in the telecommunications and technology industries and multiple markets. I held executive and management positions in IBM Asia Pacific and Cable & Wireless and British Telecom in the U.K. I then spent 9 years as Spark's Chief Technology Officer and then Chief Operating Officer. I've witnessed firsthand the huge and rapid transformations brought about by advances in computing power, optical networks and the many generations of mobile technology and standards, all of which have changed the ways we all live, learn and work. After leaving Spark in 2017, I turned my focus to a governance career, serving on the boards of Kordia, Southern Cross cables and Kiwi Wealth. And my current roles include a director of Westpac New Zealand, Tait Systems. And I act as a technology adviser to the board of Air New Zealand. During my time on Spark's Board, I believe I've been -- we've been at the forefront of technology advancements in New Zealand, from bringing the power of 5G, scaling IoT networks across the country, supporting businesses to become more productive and sustainable through these advanced technology solutions and now enabling these transformations through our data center strategy. I'm very proud of the work that Spark has done to provide the technology and infrastructure that underpins our digital economy. What I bring to the Board is a deep understanding of technology, major infrastructure investments and risk management, which means I can provide strong guidance as Spark invests for resilience and security both for its own business and that of our customers. For Spark, '24 was a challenging year, as was for many businesses in this country, but I believe our underlying strengths and opportunities are enduring. And I remain motivated to support Spark to realize its full potential for the benefits of our shareholders. I would like to finish by thanking you, our shareholders, for continuing to support us. I am honored to have served on Spark's Board and to support its ambition to help all of New Zealand win in this big digital world. [Foreign Language].

I now propose that David Havercroft be elected as a director of the company. Are there any questions concerning the motion relating to David's reelection?

I would also want to ask what director think -- David think about this matter. Several weeks ago, I sent an e-mail to a lady -- I think, a lady, Chante Mueller, about director question. And then several weeks later, I did not receive any reply back, so I'm not too sure what went wrong. And I even sent e-mail from the same e-mail as recognized by MUFG. So I think there's something going wrong, so I would like to ask what the director and other people who may want to think about this issue, yes.

Okay. I'm very sorry for that. Obviously that shouldn't happen. Chante was our investor relations director. She's actually moved to Melbourne in Australia. And that doesn't excuse your experience because the e-mail comes through to Spark. That should have been forwarded on, so we will absolutely look at that. The -- our portal, our website which says -- gives an e-mail in terms of how to contact us. And I very much hope that, that has been updated, but we will check that. And I apologize because that's not good enough. Are there any other questions relating to the motion? Are there any questions online?

We have one question online from Stephen Mayne. "Did any of the external proxy advisers such as Glass Lewis, ISS or NZSA recommend a vote against any of today's resolutions, including David Havercroft's reelection? If so, what reasons did they give? And will you disclose the proxy votes before the debate on each resolution so shareholders can ask questions about the reasons if there have been any votes -- any protest votes? Please don't say they're confidential. It is standard for companies to be across this detail on the voting recommendations and inform shareholders where relevant."

Thank you, Stephen. In fact, last year, we were asked about disclosing the proxy votes in the -- in advance of the meeting; and you will see we have actually put those on screen. So in relation to the motion that's before us, the proxy votings that we had before the meeting have voted over $1 billion -- 1 billion votes for David Havercroft. Against is 42 million. Discretionary is 10 million, and abstaining is 720,000. There were no -- in terms of the proxy advisers that you listed, CGI, ISS, the NZ shareholders' association, they voted -- all of those parties voted for all resolutions. Any other questions?

No more online questions.

Are there any questions on -- from the phone?

Chair, I confirm there are no questions on the phone.

Thank you. The third resolution concerns the reelection of Lisa Nelson as a director of Spark. Lisa joined the Board as a nonexecutive director in May 2024. Lisa is retiring in accordance with the New Zealand listing rules and offers herself for reelection. The Board recommends Lisa to you as an independent director of Spark and unanimously, I keep having trouble with that word, supports her reelection. I invite Lisa to address you.

Thank you, Justine. Good morning, shareholders. It's a pleasure to meet you and an honor to be here at my first Spark AGM, to be considered for reelection to the Spark Board. By way of background. I come here from my home in Seattle, Washington. I am Asian-American and Pacific Islander. And I have been lucky enough to work in many different places throughout my career, from the States to London, to Australia and now New Zealand. I've been coming to New Zealand frequently since 2019, when I joined the Edmund Hillary Fellowship. The work I have done with New Zealand organizations since that time has only fueled my admiration and passion for this country. I consider it a privilege to be able to spend time here, both personally and professionally. Before I moved into a governance career, I held several executive roles within the technology and financial services sector, most recently at Microsoft. There I worked in a variety of roles from finance to strategy, to M&A and business development. I also cofounded Microsoft's very first venture fund, M12, serving as its managing director until I left the business. Over my time there, I had a front-row seat to several technology revolutions and digital innovation at scale. I've played a role in the more basic transformations that we take for granted today like the move from floppy disk to cloud deployments; to more critical transformations like the one we are all talking about right now, artificial intelligence or AI. I turned my attention to governance in 2020, and today, I serve as a full-time board director and adviser. I sit on 5 corporate boards, including Destiny Tech100, a New York Stock Exchange listed company, where I also chair the Audit Committee; Brooks Running, which is owned by Berkshire Hathaway; Seattle Bank, a pre-IPO bank in the State of Washington; and Banqer, which is an early-stage tech start-ups here in New Zealand. I also advise several global venture funds and technology companies across a spectrum of industries. Why Spark? My motivation to be part of the Spark Board is because I believe this company is in a unique position to not only connect New Zealanders to each other but also to connect New Zealanders to the rest of the world. Spark is also uniquely positioned to bring the best technology the world has to offer to these shores and to help New Zealand businesses compete on the local and global stages. I believe I bring a unique perspective to the Board that will contribute to the diversity of our discussions. I have extensive executive financial experience. I've worked in major corporations. I've worked with start-ups that are just getting off the ground. And I've worked with Wall Street, so I have a deep understanding of what shareholders are looking for from their investments. I have worked with companies at the top of their game and those who are on a journey back to growth. Importantly, I have the real-world operating experience to provide sound counsel to Spark as it works to realize its full potential. I'm excited to have joined the Board of Spark and to be here in front of you today asking for your vote of confidence. Thank you.

Thanks, Lisa. I now propose that Lisa Nelson be elected as a director of the company. Are there any questions concerning the motion relating to Lisa's reelection?

Now regarding your speech, I'm not too sure why you said -- I think there needs to be a strong attention, the word competition; and not only the competition between Spark and other smaller ones, yes. Because besides Spark, there are also other provider that may be able to connect to the rest of the world. If they can do better and cheaper, then that means -- well, I mean, that means it's going to be a division of market share. And there's also the competition between free and open-source software. And with your relationship with Microsoft -- and I'm not too sure whether there is even friendliness, enough friendliness, to free and open-source software, like, for example, Linux users and so on, yes. So I think those concerns should be recognized by the Board and shareholders, competition, yes. That's -- yes.

Okay, thank you. Any other questions? Any questions online?

We have one online question from Stephen Mayne. Could New Director Lisa Nelson and the Chair comment on the recruitment process that led to her appointment to the Board? Which recruitment firm was involved? Did the full Board interview Lisa as a group? And did they interview any other candidates? Did Lisa know any of our directors before engaging with the recruitment process?

Well, there's a lot of questions in there, so I'll go through those. Yes, we always do a thorough process when we're looking for a new director. And I, we -- yes, we used a recruitment firm, but I don't need to disclose who that was. The Board did interview a candidate other than Lisa, so a proper process run. Did Lisa know any of the directors? The reason we were -- the reason we knew of Lisa was actually because she had provided consulting services to our subsidiary, MATTR. And so we did know of Lisa from that. Otherwise, if we hadn't have known her in that capacity, we probably wouldn't have been so lucky to find her and the skills that she brings to our Board. So I would also just add that having global experience in a world that is ever changing is really, really important to have on the Board. And I don't need to go back through Lisa's CV because it was very vast, and -- but the experience she brings to our Board is absolutely invaluable. We are very lucky to have found somebody of this caliber. Are there any other questions online?

There are no more online questions.

Any questions on the phone?

Chair, I confirm there are no questions on the phone.

Thank you very much. The fourth resolution concerns the reelection of Warwick Bray as a director of Spark. Warwick joined the Board as a nonexecutive director in September 2019. Warwick is retiring in accordance with the New Zealand listing rules and offers himself for reelection. The Board recommends Warwick to you as an independent director of Spark and unanimously supports his reelection. I invite Warwick to address you.

Good morning. It's a great honor to serve on the Spark Board and to be nominated for reelection. My background, during my executive career, it included technical roles at Hewlett-Packard; being a partner at McKinsey in Europe, around telecommunications; and as Managing Director of JPMorgan and Dresdner Kleinwort Wasserstein banks in London, again focused on telecommunications. Most recently, at Telstra Australia, I held roles as head of strategy, leading the mobile business as CFO. My Board experience includes CSL, the largest mobile phone company in Hong Kong; Foxtel, where I was Chairman of the Audit and Risk Committee; Woolworths, which is current, where I'm also Chairman of the Audit and Finance Committee; and previously Chairman of the Australian Mobile Telecommunications Association and being on the strategy committee of the GSMA. What I aim to bring to Spark is continued dedication to improving the customer experience, my background and experience in telecommunications and my experience in strategy and finance both in my roles on the main board and on the audit and finance and risk committees. In terms of how I get satisfaction from my role at Spark, firstly, Spark has a global reputation for innovation, agile leadership and customer service. I'm extremely proud of that; also believe that a telecommunications company helps the greater good, increases productivity for all New Zealanders and connects people. We also faced tougher times in Spark than in recent years, and I aim to continue to contribute to continue resolving those challenges. And finally, I'm very enthusiastic about working with the Board and management to develop the growth opportunities, including the data centers. So thank you to our shareholders for allowing me the privilege of serving on the Spark Board.

Where are you based?

Melbourne, but I attend all the Board meetings in person.

I now propose that Warwick Bray be elected as a director of the company. Are there any questions concerning the motion in relation to Warwick's reelection? Okay, are there any questions online?

We have one online question from Stephen Mayne. As the only Australian-based director, will Warwick Bray commit to pushing his colleagues to have a formal Board discussion about putting up the Spark remuneration report for a nonbinding advisory vote at next year's AGM, complying with the legal system in Australia? "Given we are listed on the ASX, shouldn't we embrace Australian governance standards? If not, don't we risk New Zealand being viewed by international investors as a governance backwater given that remuneration report voting has become standard in many countries?"

In relation to the remuneration report, as you have noted, Stephen, that is an ASX listing -- well, ASX requirement, but it is not a requirement of the NZX. It's not something that we are currently considering given all the other priorities we have on our plate at the moment and in the next year, and -- but I would note that we had -- this year was the first year we did a full rem report in our annual report and had much more disclosure, giving our shareholders more transparency around the remuneration at Spark. Are there any other questions online?

There are no more questions online.

Are there any questions on the phone?

Chair, I confirm there are no questions on the phone.

Okay, [ yes ]. Please now submit your vote for the resolutions on the electronic voting form. Or for shareholders attending in person, you should have a ballot paper which was given to you when you registered. Please select for, against or abstain. Representatives from our share register will now collect your voting cards. If you require further information and guidance on the voting process, please refer to the notice of meeting. Please note that the company's auditors will act as scrutineers for the polls. Thank you for your participation. Voting will be open until the conclusion of the meeting, and results will be released to the NZX and ASX following the meeting. Before we take general questions from shareholders, we'll just take a few short minutes to ensure we've captured all the questions relating to the resolutions submitted by shareholders participating via the telephone and online. [Voting]

Okay, I would now like to offer shareholders the opportunity to raise general questions. Any person wishing to speak should move to the microphone nearest to them and clearly state their name. [Operator Instructions] Remember to, please, make your questions succinct and concise so everyone that wants has an opportunity to ask their questions. And in the interest of time, questions dealing with similar topics may be combined into one question. I think, if you have a question -- I'll invite Jolie to join me on the stage too.

[ Michael Shroff ], shareholder. A question about these data centers. Now given that they are so -- their energy, their electricity requirements are so just mind boggling, isn't there going to come a point in time where governments, especially those that are trying to be green, are going to just say buster and sort of regulate you to bits? That's all the different telecoms.

[ I think, when you stand back ], data centers sit at the heart of a modern economy, in terms of the digital economy, and need to support the huge growth we're seeing both in compute [ but ] processing, so they're an important part of how we look at economies forward. In terms of the point you make around energy consumption and the growth in energy consumption, we very much focus on the design of our data centers to make sure they're as energy efficient as possible. We'll also -- you'll note that the Chair touched on the arrangement, the 10-year power purchasing agreement we've just signed with Genesis for 60% of our energy requirements in solar, so fully renewable energy, to help support not only the growth in the data center strategy but also growth that we see in our mobile core business as well. So we're constantly looking at how we can help support investment in New Zealand, in the energy sector, that is happening in renewables within the country and therefore make sure that we have an appropriate amount of energy to support the growth that we need to see in the data centers.

Okay. That's pretty comprehensive. And while I've got you here, can you confirm that -- your relationship, if any, with Huawei at the moment?

So we do have some components of Huawei equipment in our network. We don't have it in our 5G mobile network. We work with both Nokia and Samsung on that. So they are a supplier of ours, as they are with many communication companies around the country -- around the world, yes.

Thank you. [ Carly ]...

[ Carly Van Kamp ], shareholder. I'd like to ask more about the data centers too. There was a big concept drawing in the annual report about the proposed one for the North Shore. I gather you own the land already that you were talking about.

Yes, we [ have ].

And do you actually have a data center up and running in [ mural ] drive already?

We do -- we have in -- we've owned data centers for over a decade. So we have them both in Takanini. We have in CBD site. And then the North Shore is our new site that we...

Is a new site.

Yes.

And do you need capital partners to be able to complete the North Shore site?

Yes. So I mean we have not started building on the North Shore site. So that's part of the pipeline we talked about where we'd require $1 billion of investment to build out data centers over the next 5 to 10 years. In terms of funding that, currently we are looking at different funding options. At the moment, we're looking at capital partnership to fund that build and that expansion with data centers, making sure that we stick to investing the free cash flow we have in our core back into CapEx in our core but also to support the dividends to our shareholders.

Okay. So I believe I heard at the last Infratil AGM, which I attended virtually, that they're building a big data center in Australia. And someone asked the question, I can't remember if it was me or someone else, about did they have security of supply for the energy. And they showed us they did. Now I see you're putting solar panels or proposing to put solar panels on the North Shore site, and the sun doesn't always shine here. Will you have security of supply for your electricity if the solar panels are not providing?

Yes -- the solar -- so firstly, we can't -- obviously can't comment on what Infratil is doing, but the solar that we've contracted from Genesis, so far in that contract we have with them, is Genesis operating -- is operating that solar farm, building and operating that solar farm. We've got a contractual relationship with them to supply all of that solar to us, so obviously we will have other methods of electricity as well to make sure we have resilience.

And last question. I know you can't comment on what Infratil are doing, but I would imagine that they are also making sure they have enough data to supply One NZ capacity here. Is there any risk there is going to be an overcapacity of data between all of you competing networks?

I think, when you look at the data center growth and you look globally; or even look to Australia, substantially ahead of New Zealand, about 5 years ahead of that -- so the growth we are seeing in the marketplace is from something like 90 megawatts right now to, by 2030, around 500 megawatts. So within that, we've considered both the pipeline of capacity that might be needed to serve that pipeline, also who else might be in the market in relation to that, and therefore make investments in line with where we see demand and in some instances slightly ahead of that demand to make sure we have the capacity to meet it at the time. So that is something we're very focused in terms of -- and why the Chair also mentioned the investment profile over a period of years, to make sure that you don't get too far ahead of that.

Because I would just like to say that competition is great until you are shooting yourselves in the foot, like with the sports that you competed with Sky TV over. So all I'm saying is just make sure what you're doing is going to be financially viable.

Thank you for your question, [ Carly ]. And it was a good one, in the end, in terms of overall capacity. And we will be very careful. And as Jolie said, it's a build program over time. It's not like you commit all that money upfront. So it's a build program over time, but like Jolie also said with data centers, we have been in the data center business for 10 years. This is not a new thing we're going into. And we have 25% market share at the moment. Is there any -- sorry.

[ Janet Pwah ], shareholder. I have 3 questions in relation to data centers. The first one is similar to what [ Carly ] has just mentioned. Every major corporate in New Zealand is heading towards data centers, [ to name, Infratil, but there's 2 ]. What makes Spark different? What is your competitive advantage?

All right...

And second question is you talked about moving into core telco businesses. In what way does the data center fit into the core data -- core telco business? And the third one is the Chair talked about cost reductions a lot, and my question is about revenue growth. Other than data centers, what other areas is Spark looking at for revenue growth? All 3.

Okay, the first one was competitive advantage...

Yes. So on competitive advantage. So when you think about data centers, as we said, we already have the specialist skills that are required to both run those and build those. We have a significant customer base within New Zealand both from a government and an enterprise perspective. And also we have enduring relationships with the hyperscalers, so we already have contracts in relation to that. We have the land. We have the power to the sites. And we have fiber and a pipeline to be able to develop them. So we think, when you look across what's necessary to be able to build a data center business further but also the skills that are required to do that in a way that's cost effective but also meeting the requirements both from a security and resilience perspective for our customers, we have all of those capabilities and therefore feel that it is definitely a sector that we can be successful in. I think the second one, in terms of core telco business. So data centers is digital infrastructure, if you think around -- and a business we've already been in for a period of time. When we talk about growth in our core, that's really centered around our growth in our mobile business. We have -- we're #1 market leader both from connections and service revenue. We have the most reliable network with the broadest coverage. We just talked about that in terms of [ role there ]. And we're looking at growth also in our IoT business, the Internet of Things. Again it's a form of network infrastructure. And so those things complement the growth that we see in the overall organization. And then I think the third piece was on -- so revenue growth. I sort of -- maybe I merged 2 of those questions together.

Yes...

[ John ] here. I'm a shareholder. It's been shared a lot that we should be encouraging women to be directors and chairmen more. And we have 2 here who I think have been a disaster. You had an expensive court case trying to block Vodafone and Sky TV together -- to get together. And then you had the brain explosion to go into Spark Sport and ended up with egg on your face. We've had cheap interest rates for a while and it could only go up, so your cost of debt has gone up. You then sold the towers, and that money was burning a hole in your pocket. Now you're a tenant to those towers. And you wasted the money buying the shares on the share market. So you were the biggest buyer, so you created a higher price. And we've gone from nearly $5 to $3 or less, so what gives us confidence that you two can save this company from going further down? And also now you're trying to take costs out of the business. You should have been doing this a lot longer ago like a lot of other share companies have on the market. That's all I've got to say.

Well, thank you for your feedback. I don't think the investments that Spark has made over a period of time are attributable to us being females, especially when you talk about things like Spark sports and things like that. They were invested in a long time ago well before Jolie was CEO and before I was Chair, but in terms of that, we've had 5 years -- Jolie has been CEO of this business, running it very successfully for 5 years. Yes, this year in FY '24, we saw a downturn. And we have -- did not reset quickly enough in terms of the enterprise and government and the -- what we had -- what we saw there in terms of both IT and mobile plans repricing down. So in terms of taking cost out, we are embarking on a much bigger program to take costs out to kind of go against those headwinds we're seeing, but the reality is this business has taken costs out over many years. It's something that we have to do to remain efficient. You'll remember that this company had -- was a fixed voice business many years ago and earned a lot of revenues off that. We've had to transform ourselves over that 10-year period as those fixed voice revenues completely declined, so there's many things the business has done over a period of time. There's many things over the last 5 years under Jolie's leadership that have been done incredibly well, but thank you for your feedback. Is there any other questions?

This is actually related to the last one, regarding diversity and antidiscrimination and security measure. Now it's interesting that I see different reports include diversity, but when they talk about diversity, it's about male and female ratio. But then I'm sure there are different parameters or -- for example, ethnic backgrounds and age group and so on. And I mean I'm not too sure whether the company can also include those concept to help the company enrich more. And then another thing is that -- by the way, I mean, I'm not too sure what kinds of security measure. When I go to refreshment and then to -- what kinds of protection I can get from being assaulted and harassed by the shareholder, [ John ], that he talk about. Because it -- something happened in the Heartland Group before -- and by the way, my name is [ Saoyu Chan ]. And I'm a shareholder of different companies and including this one.

In terms of your question around diversity and inclusion and how we think about that as an organization, you're right. It's much broader than gender diversity. We look at both experience. We look at ethnic diversity. And we look to understand that within our organization because our desire is to have the best talent joining our organization and serving our customers. And so therefore, we want to create an environment that encourages that, so we look at all of those measures when we consider diversity within the organization.

Are there any other questions on the floor? Are there any questions online?

We have a few questions online. The first one is from [ Donald and Myra Fowler ]. What steps are the executive taking to restore the share price to what it should be?

We are incredibly disappointed with where the share price is sitting. And that's why our focus is on improving underlying business performance, which will in time support a return to a higher price. We have outlined the actions that we are taking, with a focus on reviewing noncore assets and significantly expanding our already -- our cost-out program, all the while continuing to drive momentum in key markets like mobile.

We have a question from [ Mark Randall ]. "May I ask, what has contributed to your 72.2% decline in reported net earnings? I have noticed in your annual Chairperson's report that intensified competition has contributed to earnings. What steps are needed to be stronger than the competition?"

I'll pass this to Jolie, but just the first point to note here is that remember FY '24 needs to be kind of reviewed in 2 parts because of the one-off benefit we saw in FY '23 resulting from the TowerCo transaction, which was an -- over a $500 million gain. So we had to report both figures to the market, so that 72% is comparing to the figures that included the tower company one-off gain that we separated out. So if you exclude that and look on a like-for-like performance basis excluding that one-off, then our NPAT dropped by 21%, not the 74%.

And just in relation to the competition question, if you break it into the different parts of our business. In mobile, we're very much focused on investing in the activity, new campaigns and plans to support our strength in mobile. We have 2 brands that are in the marketplace, both Spark and Skinny. And they serve different parts of that sector and making sure that we have a range of plans that are appropriate for customers. We're also investing heavily in our network to make sure that we provide and continue to provide that resilient and secure network that customers can get a great experience on. If we think about the IT services part of our business or the IT part: We've made choices around simplification of our portfolio and removing those parts of the business that are not adding the value that we need them to be. And that is where we've focused a lot of our work around the cost base as well in terms of making sure that we're aligning that to meet the requirements of the market that we now see.

We have a question from [ Michael Watson ]. The DRP was opened for the first time in a long while. Will this facility remain a fixture going forward for those shareholders keen to avail themselves of?

Thank you for the question. The Board will be providing an update on the DRP at the half year result briefing.

We have another question from [ Mark Randall ]. "I deeply appreciate the economic situation has been difficult for Spark over the past couple of years. Are you confident that, as a shareholder, for the long term, I can increase my capital gain? The share price has struggled in 2024. And what price is the company hoping to achieve in FY '25 to FY '26?"

I think we've outlined in the discussion we've had this morning in relation to the strategy focus that we have, in terms of resetting performance, making sure we are investing in the areas of core telco that will give us the best return and the ability to continue to improve that performance; at the same time, realizing value for shareholders in terms of looking at those noncore strategic assets and the ability to release value and recycle that back into the business for future investment; and in terms of the growth and the data centers as being a long-term value driver of that. We don't talk to share price, future prices. Our focus is on making sure we're resetting the business and therefore, in time, seeing it grow.

The next question is from Stephen Mayne. It must feel quite strange having the former CEO of a public company, Chris Luxon, suddenly become Prime Minister of the country. Did any of our directors or senior executives know Mr. Luxon before he went into politics? And are there early signs that the new government is more pro business than the previous government? If there is one policy change or investment the Luxon government could do to assist our business, what would it be?

There are many -- thank you for the question. Obviously there are many people in this room that knew Christopher Luxon before he became Prime Minister of the country. He was CEO of Air New Zealand, so whether it was contacting him in relation to Air New Zealand and its services, I knew him. I was -- co-chaired the Champions for Change group, which is a group of the top chairs and CEOs in the country, so of course, I came into connection with him in those conferences and business discussions that we had, so -- but also Air New Zealand is a key customer of Spark, one of those enterprise customers, so yes, we definitely knew Christopher before he went into politics. And I'm not going to comment on -- we work with both sides of government, so I'm really not going to comment on who's more pro business or not. One policy change or something -- it's probably not a policy change but something that we are -- correct me if I'm wrong, Jolie. That's something that we're always working towards with government, is making sure that we continue to have appropriate access to spectrum to running our business, so we are -- because obviously we have to buy access to that spectrum to run all our mobile networks, et cetera. So we are in constant -- not constant, but we're in conversations with government always about opening appropriate spectrum up when we need it as we build out. Is there anything you would add to that?

No. That's good.

We have another question from Stephen Mayne. Thank you to Alison Barrass for her 8 years of service. It is always helpful for investors to have access to some exit perspectives from retiring independent directors. In her final contribution as a Spark director, could Alison please comment on what she regards as the best 3 decisions Spark made during her time on the Board? And does she have any regrets?

Well, that's a big question to just -- no pressure, Alison. [ It's whether ] you've got those 3 best decisions Spark made.

Yes, yes. I haven't prepared anything, so I'll do my best to answer this. And thank you very much for the question. In terms of the 3 best decisions that Spark made during the time on the Board, I think one area would be Spark's management of network. Spark is always ahead of the curve looking forward in terms of network capacity and capability. And the decisions that the network teams make to ensure that we have reliable and future-focused infrastructure, I think, are some of the -- we've got some of the best people, I believe, in the world working in that area, so that would be one. Another great decision that we made is to get out of sport. So failing fast at things is really important, as much as making high-quality decisions to enter into things, so that would definitely be one. I think it's -- the Board made a good decision to exit. And the third best decision, look: I think we made an excellent decision when we appointed Jolie as the CEO. And I think it's really important that shareholders have faith in her ability to turn the company around. Do I have any regrets? I mean you always look back. Hindsight is a wonderful thing, right? It's very easy to look back and say we could have done things differently. I -- what I can say is I think the Board has always made the best decisions it could with the information it had at the time. And that -- so on that basis, no regrets, but it is hard to leave at a time when the business isn't performing. I do have great faith that the performance will be improved and fixed. And I think we have the right people here to do that. Thanks for the question.

That's why she'll be missed. Okay, are there any other questions online?

We have a question from [ Ankit Vaghela ]. What is Spark doing to match its offering comparing to its competitors in the mobile business? One NZ is offering $85 a month unlimited plan; and $10 a month, one upgrade to allow its customers to upgrade their phones whenever they want. Is Spark serious about competing with One NZ's lion market share?

I'll respond to that. Firstly, in terms of market share, Spark is the market leader both in connections and service by some margin to One, so from that perspective, we are very much focused on serving our customers' needs. And therefore, we have a range of plans that we offer, both from our Spark brand but also our Skinny brand, which addresses the different needs in terms of people looking for value-added services like Spotify and other things in relation to those plans; but also people who just want the basic mobile service that is regular, has a good experience and is at the best price. So we look to work at both parts of the market to make sure that we meet those needs. We continue to invest, as I said before, in networks but also in our brands, to make sure that they are continuing to build that relationship ongoing with our customers. And part of that, we just released a whole lot of new plans this week which increase the data that our customers can consume. And that is the one -- the biggest thing, when we do all of our customer research, that people are looking for, is the ability to be able to use data.

We have a question from [ Michael Stonely ]. In hindsight, does the Board believe that the use of a share buyback program last year was the best way to return funds to shareholders, as opposed to, say, paying a special dividend?

Well, hindsight is always a wonderful thing. Obviously, at the time, we considered -- when we considered -- we had the big gain from the tower transaction, and that gain was over $500 million. And what the Board decided to do, and we communicated, with that money -- we received over $1 billion. What we decided to do was basically invest, take a portion of it, of that -- the proceeds; and invest into growth CapEx. And we invested that into finishing some of our data center build at Takanini; and then take another big portion of that, basically split in half, and return that to shareholders in the form of a buyback. A special dividend obviously gives a one-off hit to shareholders. And our dividend is already a good dividend in terms of what we pay to shareholders, so a share buyback, what it does is -- over the long term, obviously, there's reduced number of shares, so dividends -- so basically you're returning that money to shareholders because over time there's reduced number of shares on which you're paying a dividend. And so you can lift dividend over time. So at the time, we considered all of those things about how we would return value to shareholders. And that was the decision we made at the time and probably don't need to say anything more on that. We have another question...

Next question is from [ Jillian Margaret King ]. It's good to see the contract for electricity supply will help Spark reduce its climate-damaging emissions. However, as Spark is building a data center and we're now experiencing the unfolding and accelerating consequences of damage to our climate, we must urgently step up efforts to stop the damage, acting in accordance with what science tells us we must do to return to a safe and stable climate. What are Spark's plans to improve its energy efficiency and shift to 100% renewable energy to power both its stationary and mobile operations?

So we have an ongoing program across our whole technology infrastructure, both our mobile business but also in terms of as we remove old, legacy technology which is often more energy consuming than more modern forms of technology. So that's an ongoing part of how we make sure we stay as efficient as possible. To the second part of the question: We have an ambition to reach that 100% renewable energy. And we continue to work with different energy partners to be able to achieve that, so that's a big part of making sure that we can then separate really business growth from emissions growth.

We have a question from [ Malcolm Thomas ]. "Will you secure long-term customers before you commit to large amounts of capital for the expansion of data centers? Is there a risk that you could build the data centers but fail to attract the customers, especially considering the other large players in this market, for example, Amazon and Infratil?

Okay, a couple of things to break apart on that. When you look at our current built capacity that we have for our data centers, we are 85% contracted and 100% committed. So what that means is we need to continue to build new data centers to be able to meet the customer demand we're seeing. When you think about the different competitors that you have within that sector, and I know [ obviously Amazon was listed ] one of those, hyperscalers tend to build in a region. They may build one of those data centers themselves, but they also partner with other local providers in terms of that capacity. And we have contracts with international hyperscalers as part of our data center strategy. So in terms of the balance, it sort of goes to the question we talked about before. It's about making sure that we're building in advance to have capacity but not so far in advance that outstretches demand.

We have a question from [ Edmond Good ]. Should the shareholders expect management and Board resignations if there is no improvement in company performance? This is about accountability.

Yes, it is about accountability. I think we have set out a clear plan in terms of we're -- what we're going to get too to get Spark back on track. And we are 100% committed to do that for our shareholders. Are there any other questions?

Yes. We have a question from [ Simon Ritchey ]. "With Chorus retiring their copper networks, what do you see the prospects are for those Spark customers currently relying exclusively on copper for telephone because there is no optical fiber and no cellular coverage in many rural areas?"

Well, Chorus will talk to the retirement of their networks, but as we stand back from that: There will always need to be a service provided to our customers. So there are a number of different ways in which that can be provided, including through satellite, so before any withdrawal, they would be ensuring that customers could actually have a service still existing beyond [ them ].

We have a question from Stephen Mayne. "Australia is currently in the midst of an unprecedented deluge of takeovers that has seen listed entities on the ASX fall by 7.4% after 20 straight months of declines. There have already been 27 major takeovers above $200 million completed, so far, this year, with few new floats to replenish the ranks. There is a clear mispricing between public markets and private markets. Why are public markets not valuing companies like ours more highly? And what are we doing to avoid being taken over? Do we have any takeover protections?"

It's not our place to comment on the reason public markets are valued differently to private markets. That's for people investing in those markets to understand that. In terms of what we are doing to avoid being taken over, obviously we need to run our business as best we can and have that value for shareholders. That is what we need to do; and all the actions that we've talked about that we are focused on, as I say, to get us back on track and continue to deliver shareholder value. Do we have any takeover protections? We don't have any protection specific to Spark. I'm not exactly sure what that question is about. Obviously any company listed on the New Zealand Stock Exchange has to abide by the takeovers code and all of those sorts of things, but there's nothing specific to Spark in that.

The last question online is from [ Ankit Vaghela ]. "Having worked with 5 large government agencies in the past 3 years, it is clearly visible that One NZ has an upper hand when it comes to providing SIM connections, with Spark being a secondary and backup provider. What plans does Spark have to increase its presence in the government sector?"

So Spark has a greater than 50% share, market share, of government and enterprise sector. So we already have very strong relationships across that part of the business. And you can see that, with the impact of some of the changes in the government sector over the last year, that has had an impact on our results. So we already have a strong presence across a range of services both in our IT business but also in our core telco, from both mobile, managed data, IoT, so we have ongoing relationships and are investing in building that further.

Mas I ask another? May I make a comment, please?

Yes.

At the start of this meeting, Madam Chair, you suggested that shareholders have 1 question each.

I think I said 2...

And you -- well, 2.

2, okay.

Now Stephen Mayne is, I believe, Australian-based. And at all the meetings I go to, he is starting to hijack them with numerous questions. And we have to sit and listen to it, so Madam Chair, please, will you stick to your rule of 2 questions per shareholder so we don't have to put up with it?

Fair comment. I did not stick to that. And we should have stopped some of those questions coming on. Thanks, [ Carly ]. Definitely take that feedback onboard. Is there any other questions?

There are no more online questions.

Thank you. Are there any questions on the phone? Have we been to the phone? Yes. We'll just go into the phone...

Chair, we do have a question from [ Dr. Neddy Gardau ].

I've been patiently listening to all of the questions. I'm calling from a Spark phone, so hopefully, you can hear me.

Loud and clear.

It's breaking up a bit here. Awesome, okay, cool, yes. So some of them were good questions. What I do want to ask is why don't you release any customer-based performance metrics such as churn rates, such as number of connections added or lost or anything like that. The reason why I ask this, I'm going to give you a little bit of context. The customer service that everybody talks about or everybody talked about is absolutely horrible. Hopefully, you're done patting yourselves on the back. I'm going to sell my shares Monday, so technically, whatever happens doesn't affect me at all, but just want to say that the share price isn't everything. When I take a position in a business, I like to evaluate that business. I just want to know why you don't release any metrics. And even if you do, how do you improve it? Like how do you, first, measure it? How do you improve it? Again this goes out to the larger shareholder community because it's just my two cents, yes. I'm going to sell it Monday, anyways.

So in relation to connections, we do release that information half yearly. We have extensive KPIs that go through all parts of our business, whether that's broadband, mobile; looks at the different parts of our revenues, so that is on our website and released with each of our half year and annual results. To the second question, around customer service or experience. We track that through our interaction Net Promoter Score, which [indiscernible] our customers, after interactions they have. And they are given the opportunity to provide feedback within that. And so we manage and look at all that feedback to understand what are the things that we should be most working on, whether that's in digital journeys, whether that's in relation to products or plans. And we've seen that score continue to grow over time. That's not to say that we have everything perfect. It's something that we're continuing to focus on because we understand it's very important, from a customer point of view, to make sure not only that you have the services that you need but that you can get the help you need when you need it.

Yes. I mean I was more akin to -- like I like data since I work in the AI space. I'm a PhD in deep learning, by the way, so I like data. When you say churn rates, you don't actually measure that, attrition rates. You don't actually specify those numbers.

No, we don't disclose our churn numbers to the market, but we do disclose connections, as you asked.

The question...

Exactly, yes, because you release numbers that look good for you. That's my whole point, but anyways, enjoy the rest of your day.

Thank you.

Thank you. Thank you for your question. On the floor here, number two.

I am [ Philip Fi ], shareholder since day 1 when Telecom New Zealand was listed on the New Zealand Stock Exchange. I've been wondering. Has the Board ever considered giving a forecast for next year's revenue? If not, why not?

We guide...

Our guidance focuses on our earnings. It focuses on the dividend, the CapEx, investment that we're making across. And we include also an ambition around our free cash flow. So we haven't specifically got a revenue guidance per se.

And I notice, for this year, the basic earnings per share has decreased by almost 300% from the previous year...

Yes. That's in relation to the fact that we had -- our reported earnings, remember, for the prior year had the significant towers gain, so it was -- that was elevated. And therefore, when you remove that out across it, it's a more consistent approach.

And thirdly, I've been wondering. Have the Board ever considered what the competitors have been doing that's taking the business out from Spark?

As you can imagine, looking at what our competitors are doing and focusing on what either we're doing to lead out or in responses is something that we, of course, do as a business. It's we're in a very competitive business in the retail mobile market, as you can imagine, so we are always keeping a watch of what's going on in the market. And we -- but we're very focused on our strategy to win. Okay, it looks like we've finished with the questions, so I want to thank you all for coming today; and also for those of you who have attended virtually. We value your input as shareholders. We will announce the results of the poll to the stock exchanges this afternoon. For those of you attending the meeting here at Spark, I invite you to enjoin us -- join us for morning tea in the function rooms, at the right, at the back of the room. The meeting will close on completion of voting procedures. I wish you all a good day. [Foreign Language]. Thank you.

Thank you.