Ann: Change of Director's Interest Notice, page-3

The chairman & CEO continue to inch in the right direction.

I suspect the market is in a bit of a quandary, after the FY20 annual report. It has become clear that the Lightbox and RugbyPass acquisitions have deliveredway more costs than they've delivered revenues. I suspect this has caused alittle disillusionment. I personally am somewhat unhappy with the way theLightBox customer numbers were presented as at June, as they were used todesignate progress in customer growth. This when they knew they were goingto be revised down after the Neon-LightBox merger. I'm unhappy about this- and may write to the board about it.

That said, I think the CEO strategy is correct, and that it's very early to bepassing judgement on it. SKT is the largest local distributor, and it holdsrights of key interest to NZers (C19 impact notwithstanding - a watching briefhere) that are unlikely to be of interest to the global giants (andhopefully not of paramount interest to Spark). So my point is that SKT'ssurvival depends on local scale (especially in sport), which it can then leverage to deliver entertainment (bundling). The current operating costs of RugbyPass and LightBox are currently dragging down consolidated margins - however, I suspect they are costs worth bearing(well worth).

Whilst I can't predict what's coming, and there is a high degree of uncertainty, I think the most likely scenario is that SKT has a very real future. Short of Spark making a concerted effort, it's hard to see anyone else taking too much away from SKT's sports relationships/rights. What's more, there are now many global challengers to Netflix. Why would these challengers want to take the slow-boat to market, when they can take the highwayvia someone like SKT? And then, why wouldn't customers take the convenience and choice that an SKT bundle can deliver? What's more, the Netflix free rider content honeymoon is over, and that means prices may be on the way up - which would also helpmake a bundle attractive.

It looks to me that SKT can probably manage a continuing levelling off of margins whilst still holding onto its current approximate level of content. It looks to me like this can probably happen with only modest amounts of further 'right sizing',as long as it can win a modest amount of new streaming customers and as long as a majority of 'cord cutters' become streaming customers. Additionally, further cost reductions may be achievable by addressing its satellite leasing costs (eg by using a broadband offering to subsidise this expense).

All of that said, I don't see any really compelling reason why SKT won't be able to achieve an eventual EBIT margin of at least 5% on roughly current revenues. I feel that this would make SKT attractively priced.