Spark New Zealand has split itself into two divisions and put one of them under review, a move that opens the door to selling off the cloud and IT services business the telco spent a decade buying and building.
In a release to the NZX at 8.30am on Monday, Spark said it would move to a new structure built around two divisions. Connectivity will hold the core of the company, covering consumer mobile, broadband, business connectivity, managed services, collaboration, internet of things and security. Digital Services will hold what sits beyond that core, which in practice means cloud, IT services and what Spark calls adjacent products.
At the same time, the Spark board started a strategic review of the whole Digital Services division. An external adviser has been appointed and the review is expected to be finished during the first half of the 2027 financial year, which for Spark ends on 31 December this year.
The company was careful not to promise anything. There is “no certainty that the review will result in a transaction, nor as to the terms or value of any outcome”, Spark told the market in its announcement. In listed company language, though, a formal review with an adviser attached is about as close as a board gets to hanging a sign on a business without naming a price.
Investors took it as good news. Spark shares were trading at $1.93 late on Monday afternoon, up 5.5 cents or 2.9 percent on the day, on a stock that is still sitting about 22 percent below its high of the past year.
Chief executive Jolie Hodson framed the restructure as the next stage of the five-year plan the company launched last spring. “This next step creates clear ownership of performance across Connectivity and Digital Services, strengthens execution, and enables us to allocate capital and resources appropriately,” she said.
That plan, badged SPK-30, was unveiled on 11 September 2025 and amounted to a retreat from a long-running ambition. For most of the past decade Spark had pushed to become a broad technology company rather than a phone and internet provider, buying its way into cloud hosting, data analytics and IT consulting. SPK-30 reversed that. It pointed capital back at connectivity, which Spark says generates roughly 80 percent of its gross margin, and set a target of lifting return on invested capital from 8.7 percent to between 11 and 13 percent over five years. “Connectivity is our core business, and our absolute focus in the years ahead,” Hodson said at the time.
Monday’s announcement takes that logic to its conclusion. Rather than simply spending less on the non-core businesses, Spark has now fenced them off in a single division with its own management line and asked an adviser what they might be worth to somebody else.
The leadership changes were announced in the same release. Mark Beder becomes Chief Customer Officer for Connectivity, taking charge of the core business. Greg Clark becomes interim Chief Customer Officer for Digital Services until December 2026, at which point he leaves the company after 13 years. Tommy Bjorkberg becomes Chief Operating Officer from 1 October and Leela Ashford becomes Chief Marketing and Corporate Affairs Officer.
Spark made no mention of job losses. RNZ reported that the company’s statement did not signal any, and that the review continues under the five-year strategy. That comes against two years of heavy cutting. The company set out in 2024 to strip $50 million, or about 10 percent, from its labour costs. Headcount has fallen from about 5,300 to roughly 3,800 over that period.
The cuts have shown up in the accounts. In its half-year result on 18 February, Spark reported net profit of $64 million for the six months to December, up 83 percent on the $35 million a year earlier, helped by $51 million of cost reductions. Underlying earnings rose to $448 million from $406 million. Revenue went the other way, slipping to $1.89 billion as legacy products kept shrinking, and the interim dividend was cut to 8 cents a share from 12.5 cents.
Chair Justine Smyth said at the time that “the first half of FY26 has delivered a clear step up in Spark’s performance, as we build momentum towards our SPK-30 strategy ambitions”. Hodson said the standout was mobile. “What I’ve been really pleased about in this first half is the growth we’ve seen in mobile, and that’s core and central to our strategy ahead,” she said.
Selling assets is not new territory either. On 30 January this year Spark completed the sale of 75 percent of its data centre business to Australian private equity firm Pacific Equity Partners, keeping a quarter share and putting the proceeds towards paying down debt. Data centres were the one non-core asset with an obvious buyer and an obvious price. Cloud and IT services are a harder sell, because they are people businesses competing against global operators with far deeper pockets.
Spark has not spelled out which of its subsidiaries fall inside Digital Services. Its business technology arm, Spark Business Group, brings together CCL, Leaven, Qrious and Digital Island alongside the main Spark brand. CCL is the largest of them, a Christchurch-founded IT infrastructure company Spark bought in December 2015 for $50 million, on top of earlier purchases of Revera and Appserv. Those acquisitions were the foundation of the strategy Spark is now unwinding.
For business customers, the practical question is who ends up owning their contracts. A sale to an offshore IT services group would change little day to day but a great deal over years, particularly for public sector clients who chose a New Zealand-owned supplier partly because it was New Zealand-owned. Nothing is settled. Spark has committed only to finishing the review.
FY26 guidance was left unchanged, with underlying earnings still expected between $1.01 billion and $1.07 billion. Spark reports its full-year result on 20 August, which is when investors will find out whether the second half held up and get a clearer read on how big the business now sitting under review actually is.
What do you think? Should Spark sell its cloud and IT services business, or does New Zealand need a locally owned option? Leave a comment below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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