Ann: ADDRESS: SPK: Spark Annual Meeting - Chairman's Address

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					SPK
07/11/2014 10:37
ADDRESS

REL: 1037 HRS Spark New Zealand Limited

ADDRESS: SPK: Spark Annual Meeting - Chairman's Address

MARKET ANNOUNCEMENT

7 November 2014

Spark New Zealand Limited

Chairman's Address delivered at the 2014 Annual Meeting, Spark City, Auckland
at 11.00am on 7 November 2014

Kia ora and good morning.

On behalf of the Board, management and staff of Spark New Zealand, thank you
for attending the 2014 Annual Meeting. My name is Mark Verbiest and I am
Spark New Zealand's Chairman.

This is the first annual meeting since changing our name. This move, while
significant, is just a single big step in the ongoing transformation of our
business. It's part of a journey that reflects enormous change for our
customers and our business.

Two and a half years ago we made the decision that we needed to become
significantly more relevant and competitive. We needed to do that in order to
win with customers, and do so in a way that meant good and growing returns
for shareholders. That's when Simon took up the challenge we set of leading
Telecom into a brave new future.

The Board appointed Simon because we knew this business needed to make
fundamental changes and make some tough choices.

We were clear that decisions needed to be made with a view to setting
ourselves up for a future based around digital services and new ventures
vastly different to the Telecom of old. This meant having to address our cost
structure, as the traditional margins were being competed away, whilst at the
same time ensuring we were at the forefront of delivering services and
executing faster, as expectations of customers and competitive intensity
continued to increase.

Our customers wanted and needed us to change. They wanted us to be a growing
New Zealand business that could help them unleash their potential in an
increasingly technology-dependent and fast-changing world.

Since then, we've been striving to deliver on that promise. We've made many
big bold moves to reposition ourselves for a digital future - a future
focused very much on the New Zealand market.

Changing our name to Spark New Zealand was just one of many big steps on that
journey. It was also, I think, an inevitable and essential move if we are to
fulfil the potential that our customers, our people, our owners, and indeed I
believe all New Zealanders, want to see from us.

More than a million New Zealanders have an ownership stake in Spark New
Zealand, either directly as a shareholder or indirectly through Kiwisaver
investments. That's a responsibility to investors that helps drive our
ambitions.

At the core of the change we are going through has been a focus on listening
to our customers, understanding what drives them, what matters to them, what
they value, and what digital services they need to help them do amazing
things.

At our last results announcement in August this year we were able to share
some results that demonstrate solid progress.

Here are some headlines from our FY14 financial performance:

Our profit was in line with expectations.  At the half year, we predicted a
better second half performance off the back of customer led initiatives and
our Turnaround programme and that is what we delivered.

A net 191,000 new mobile customers joined us during the year - taking us back
over 2 million connections and halving the gap that existed between ourselves
and Vodafone at the time of CDMA closure in mid-2012.

Our revenue share of the mobile market improved another two percentage points
to an estimated 39%.  Cool new services like the free music app Spotify
Premium are encouraging many people to take another look (or perhaps look for
the first time) at Spark.

Great new products such as Unlimited, Ultra Fibre and VDSL are helping
maintain our estimated share of fixed broadband customer connections at
around 47%.  And the launch of Lightbox (with the special deal for Spark
broadband customers) gives us potentially even greater appeal.

Spark Digital (formerly Gen-i) is continuing its rapid repositioning towards
Cloud infrastructure, mobility, managed ICT and platform-as-a-service. To
strengthen our position with business customers we purchased Revera and more
latterly Appserv, who have built well respected reputations in the cloud
arena. Our IT services EBITDA was up 38.5% on the back of our Cloud and data
centre investments.

Beyond the numbers, we had some huge operational achievements in FY14. This
includes; launching 4G mobile; delivering the first part of a major IT system
reengineering programme; building a new data transport network; greatly
expanding our digital self-service options for customers; acquiring more 700
MHz spectrum than anyone else ... and plenty more.

The tough calls we have made to become more competitive have allowed room,
alongside the funds freed by our divestment of AAPT in Australia, to invest
in the areas where our customers are telling us they want us to be.

At the core of all this is a determination to listen to our customers -
understanding what drives them, what matters to them, what they value, and
what digital services they need to help them in their lives and businesses.

We've announced a 1 cent increase in annual dividend, to 17 cents per share
for FY14. Combined with a healthy appreciation in the share price, this means
our shareholders achieved a total return for the FY14 year of 28%.

More recently our share price has climbed further. When considering the
performance to date since beginning the implementation of this strategy in
June 2013, Spark New Zealand's share price has risen by 38%. Taking into
account dividends, the total return to Spark New Zealand shareholders has
been 53% over this period. Comparatively, over the same period the NZX50
gross index (including dividends) was up 22%.

For this financial year, already one quarter in, we are striving for a return
to sustainable earnings growth. In August we announced a guidance of
targeting low single digit growth in EBITDA and low single digit decline in
total revenue.

It's only a few months into it, but the early signs are that the rebranding
has proved successful - we are seeing an increase in foot traffic into retail
stores, and an increase in online traffic to our websites.

When we outlined our core strategy to investors in May 2013, we said that we
realistically expected FY14 and FY15 to be years in which we stabilised the
business and reduced costs, targeting revenue and margin growth and
improvement in unit costs in FY16 and beyond.

If anything, we actually think we are slightly ahead of this plan, however we
know that the market is not standing still - competition remains intense,
particularly in the mobile and broadband markets.

The journey is far from finished, however we've put the business in the best
position for over a decade to return to genuine, sustainable growth. It's
time for us to capitalise on this opportunity and on all the hard work and
tough decisions we've made so far.

Before I hand over to Simon, I'd like to thank the management and staff of
Spark New Zealand for their ongoing commitment to shaping Spark New Zealand
into an original New Zealand business. I'd also like to acknowledge the
contribution made by Kevin Roberts who retired from the board during the
year.  Kevin made a great contribution, not only as a director, but also as a
coach in encouraging the senior leaders in the business to be bold, move
faster and be customer driven.

I'd also like to thank you, our shareholders, for your continued support of
Spark New Zealand. It's a privilege to serve as your Chairman. As
shareholders you are, in effect, brand ambassadors for this company. So I
would encourage you to tell your family and friends about the way in which
Spark New Zealand is continually changing and how competitive we have become.

If you aren't already a customer - give us a try. Become a Spark New Zealand
ambassador and never stop starting.

Thank you.

- ENDS -

For media queries, please contact:

Richard Llewellyn
Head of Corporate Communications
+64 (0) 27 523 2362

For investor relations queries, please contact:

Mark Laing
General Manager Corporate Finance
+64 (0) 27 227 5890
End CA:00257377 For:SPK    Type:ADDRESS    Time:2014-11-07 10:37:18