Spark New Zealand Stock

Thank you for standing by, and welcome to the Spark New Zealand FY '26 results. [Operator Instructions]

I'd now like to hand the conference over to Jolie Hodson, CEO. Please go ahead.

[Foreign Language] Good morning, everyone. Thanks for joining us today for Spark's full year results for the period ending 30 June '26. I'm going to provide an overview of our results and the progress we've made against our strategy. And our CFO, Stewart, will then take you through our financial performance in more detail before we move to Q&A.

So FY '26 was the first year of execution under SPK-30, and we're building momentum in line with strategic choices that we've made. So while the economic environment remains subdued, we refocused on core connectivity, returned mobile service revenue to growth and continue to simplify beyond the core. We strengthened the fundamentals of our business with further structural productivity improvements, improved free cash flow and net debt returning to targeted levels following completion of the data center transaction. Overall, we finished FY '26 within guidance and with a stronger platform from which to deliver improved shareholder returns in the years ahead.

So if I turn now to Slide 4 and an overview of the results to clarify our reported and adjusted results. Our reported results exclude the data center business, which is classified as a discontinued operation in the financial statements. FY '26 adjusted results include the earnings of the data center business up until the point of sale, while excluding the $278 million gain on sale and in FY '25 removes the $71 million gain on sale from the Connexa stake and the $53 million in transformation costs.

So I'm now just going to speak to our adjusted numbers as these provide the best year-on-year comparisons. So adjusted revenue was stable at $3.7 billion with mobile growth offset by declines in legacy voice and digital services as well as 5 fewer months of data center contribution following the sales partway through the year.

Adjusted EBITDA declined 2.4% to $1.035 billion, primarily reflecting some mix shifts in revenue with continued decline in higher-margin legacy voice, which now represents only about 3.2% of our overall revenue and the part-year data center contribution. This was partially offset by mobile growth and $40 million in productivity benefits.

Adjusted NPAT declined marginally to $225 million, reflecting the lower EBITDA result and offset by a relative improvement in tax expense. Free cash flow increased 18.5% to $308 million, supported by lower cash interest and tax paid and improvements in working capital. The Board declared a final dividend of $0.08 per share, bringing the total FY '26 dividend to $0.16 per share and representing a payout of 100% of free cash flow in line with guidance.

So before I get into further detail on our performance, I'll first provide an overview of our progress against SPK-30 during the first year. We set the strategy to refocus Spark on our core connectivity while simplifying and optimizing beyond the core, with the ultimate ambition of delivering annuity-like returns and growing dividends for shareholders over time.

Slide 7 shows how SPK-30 is starting to translate into results. First, we have focused resources and investment where returns are highest with mobile central to the strategy. Active portfolio management delivered $462 million in proceeds from the data center transaction, returning net debt to targeted levels, while our 25% retained stake provides shareholders with the ability to participate in future value growth. This focus on maximizing the value of our portfolio continues with the strategic review of digital services.

Second, we're investing to differentiate and grow. In a highly competitive telco market, we are focusing investment on the areas that matter most to our customers: network leadership, better customer experiences and stronger propositions that give customers more reasons to join and stay.

Third, we're strengthening the fundamentals of the business. We're delivering structural productivity improvements, growing free cash flow, building employee engagement and maintaining our strong license to operate. This progress supports the overall premise of SPK-30, capital and resources aligned to the areas of highest return, investment behind what customers value and stronger fundamentals to support growing shareholder returns over time.

Slide 8 focuses on one of the ways we've invested to further improve our network experience during the year with our satellite-to-mobile partnership with Starlink. Our terrestrial network gives 99 -- sorry, reaches 99% of New Zealanders across 4G and 5G. Satellite enables us to extend that reach to the edge into remote areas, black spots, maritime corridors and places where traditional mobile coverage is limited or unavailable. There's been a lot of interest in satellite and its role within the telco category.

For Spark, satellite plays a complementary role while our mobile network continuing to offer capability and functionality beyond what's possible with satellite alone. The mobile network provides the customer density, indoor performance and throughput required for everyday use, while satellite adds an additional layer of coverage and resilience. Spectrum is the key enabler of all types of network technology, with Spark holding management rights to 350 megahertz of mobile spectrum, including the largest holding of the sub-1 gigahertz spectrum.

So on Slide 9, we overview our sustainability performance, which remains an important part of our license to operate. Our Scope 1 and 2 emissions are tracking 59% below our FY '20 baseline and ahead of our FY '30 science-based target of a 56% reduction. And that's supported by our renewable energy partnership, a lower grid emissions factor and improved energy efficiency within the business. We've also achieved our Scope 3 supplier engagement target with 71% of spend now with the suppliers that have science-based targets. Skinny Jump now reaches more than 38,000 households and Spark Foundation continues to support more New Zealanders to participate in the digital world.

Slide 10 summarizes the progress we've made against our SPK-30 ambitions in the first year. On productivity, we've delivered $101 million in annualized savings at the end of FY '26 against our FY '30 ambition of $150 million to $180 million from the FY '24 baseline. Free cash flow growth is on track as is CapEx as a percentage of revenue, and Stewart is going to provide some more detail on that shortly. We still have more work to do to achieve our EBITDA ambition. FY '26 adjusted EBITDA is in line with guidance and where we anticipated it to be in year 1 based on the current operating environment.

EBITDA growth in future years will be underpinned by our ongoing focus on mobile growth, diminishing legacy products, portfolio simplification and further sustainable cost reduction that will support further progress towards our ROIC ambition of 11% to 13% with a reported ROIC of 13.8% in FY '26 and adjusted ROIC of 8.4%, which was flat on FY '25.

Finally, we made strong progress on our nonfinancial ambitions. Customer satisfaction increased for the sixth consecutive year to 42. Employee engagement was up 11 percentage points. We maintained leadership in network coverage experience, and we're tracking ahead of our science-based target requirements.

So I'm now going to turn to our mobile performance starting on Slide 12. Overall, mobile revenue increased 4.4% to $1.5 billion. That was driven by strong device growth. Mobile service revenue returned to growth, increasing 1.1% to $998 million as consumer and SME mobile service revenue increased 1.4%, supported by strong pay monthly ARPU growth and further stabilization in prepaid connections.

Enterprise and government mobile service revenue remained under pressure from competitive pricing, but the rate of ARPU decline slowed compared with the prior year and connections were broadly flat. Wholesale revenue continued to grow through Spark's owned messaging products and MVNO partnerships.

So to understand the drivers of this performance, it's useful to break down mobile into its component parts. So I've outlined that on Slide 13. In consumer and SME pay monthly, connections were broadly flat and the small decline that we see was attributable to the 3G closure, while ARPU increased 3.6%, supported by plan and pricing changes and a stronger product innovation pipeline. That pipeline included New Zealand's first Kids Plan, roaming and satellite and IFP acquisitions were up around 15%, supporting higher ARPU acquisition and retention.

In prepaid, overall connections were down 3.6%, with the rate of decline slowing from 5.2% in FY '25. Around 1/4 of that decline was driven by the one-off impact of the 3G closure. ARPU proved resilient, holding flat -- broadly flat despite intense price competition. And importantly, our New Zealand base, which accounts for around 89% of our revenue was up 1.1%. Skinny also grew around 2%, supported by the launch of the 52-week plans that offer greater value for customers who commit for a year.

And in enterprise and government, we saw further stabilization with connections broadly flat and a small decline that we saw attributable to a low-value 3G connections. Positively, the rate of ARPU decline also slowed from $3.26 in FY '25 to $1.92 in FY '26. And we are pleased with the customer wins and re-wins achieved during the half.

So if I now move to overall mobile market performance and market share as outlined on Slide 14. The mobile market grew an estimated 1.9% in FY '26 compared with about 1.3% in FY '25. Within this context, we materially improved our market share trajectory in a growing market. So while our ultimate goal is to get back into share growth, we are flattening the rate of decline, moving from a 1.8 percentage point decline between FY '24 and '25 to a 0.5 percentage points decline between FY '25 and FY '26. We also saw stabilization through the year. Our mobile service revenue share broadly flat from H1 to H2, which gives us confidence that the actions we are taking are having an impact. Overall, we maintained our #1 position in mobile service revenue share.

Slide 15 brings together the FY '26 activity that is supporting this momentum and the pipeline that we're building for FY '27. In FY '26, we launched satellite-to-mobile. We refreshed roaming and long-term plans. We launched the Kids Plans. We introduced 5G+ use cases that leverage our investment in stand-alone. We improved digital journeys and increased customer satisfaction for the sixth year running.

Looking ahead, our FY '27 pipeline includes new pay monthly and device upgrade propositions, new reward and recognition initiatives, a refreshed wireless broadband lineup, a new MySpark app and the continued rollout of new store fit outs across New Zealand. The common thread across this activity is the same, putting more value into mobile, leading in network and delivering a great customer experience.

So if I turn now to broadband and business connectivity on Slide 16. Broadband connections declined 4.9% in a highly competitive price-driven market. The decline was predominantly driven by fixed line technologies with fiber and copper accounting for around 84% of that decline and wireless about 16%. This mitigated the impact on the broadband gross margin. And when combined with the product cost management, margins increased by $1 million. We have a strong pipeline of activity planned for wireless broadband in FY '27, including a refreshed lineup to improve competitiveness and bundling with mobile.

Business connectivity revenue declined 9.9% to $327 million, impacted by the divestment of Digital Island in FY '25, the decline of legacy managed data and network products as customers migrate to modern alternatives and the phasing of hardware sales in IoT. Pleasingly, the rate of decline in managed data and networks was half that of FY '25. We saw some large-scale collaboration migrations completed and IoT connections grew 5.1% to 2.5 million devices.

So I'm now going to turn to digital services, which we've identified as an area of the business under strategic review. And as such, it's useful to start with a summary of the business and the products and services included within it before moving to FY '26 performance.

Slide 18 sets out the key characteristics of the Digital Services business. This division includes cloud, IT services and smaller adjacent products such as data and AI consulting and digital identity. Digital Services is a leading provider to New Zealand's B2B market. It has a majority recurring revenue mix, differentiated intellectual property and cloud, IT services and data and AI and exposure to long-term positive tailwinds as businesses adopt cloud and broader digitization.

It also remains uniquely positioned to support data sovereign storage in New Zealand as well as offering access to all hyperscalers and benefiting from global partnerships with Microsoft, Infosys and HPE to support efficiency and access to global innovation. This business continues to have a leading market position, significant scale and a strong customer base. It has helped New Zealand business and government customers transition from traditional technology environments to modern cloud environments over many years.

At the same time, as outlined on Slide 19, this part of the business has faced both cyclical and structural challenges. Within Spark, it's been the hardest hit by weaker business and government spending in New Zealand, and it continues to navigate structural change as cloud volumes migrate from private to public and IT services from legacy to modern alternatives. It was this context that contributed to digital services being identified as beyond the core in SPK-30 with a strategic review the next logical step to assess how we maximize shareholder value from this part of Spark in the future.

An external adviser has been appointed, and that review is expected to be completed in the first half of FY '27. I will note that there is no certainty that the review will result in a transaction nor as to the terms or value of any outcome, and we'll provide an update at our half 1 results in February.

So on Slide 20, we provide more detail on the performance of Digital Services during FY '26. So overall revenue declined 3.4% to $372 million, reflecting the ongoing shift from private to public cloud, some softer IT services demand and continued migration from legacy services to modern alternatives. Within that, public cloud revenue continues to grow strongly at 20%, benefiting from long-term demand tailwinds. Private cloud revenue declined 12% due in part to the impact of a $9 million reclassification of services due to the integration of CCL. The remaining underlying decline was due to the industry-wide shift to public cloud.

IT service management revenue declined 10.3% to $104 million, reflecting continued migration from legacy services to Spark's modern ServiceFlex platform and some subdued project work. We've been actively managing the cost base with labor costs reducing faster than revenue and CapEx needs remain small and steady, reflecting the capital-light nature of the services business. Other Digital Services revenue was $35 million, up 2.9% on FY '25, with improvement in gross margin driven by product cost reductions.

So I'm now going to hand over to Stewart, who's going to talk you through our detailed financial performance, capital management and guidance.

Thank you very much, Charlie, and good morning to everyone on the call. So I'm going to pick up on Slides 22 and 23, and I'll talk to them collectively and talk through those key financial outcomes. I just did want to pick up on explaining the differences between our reported and adjusted earnings again. So if I look at Slide 22, the FY '26 reported EBITDA of $1,295 million, which is up 23% year-on-year, includes the $278 million gain on the sale of the 75% stake in the data center business. However, it does exclude the net earnings of that business up until the date of that sale. It was classified as a discontinued operation.

So if you drop down, you'll see a number of $13 million against net earnings from discontinuing operation there. So that obviously sits outside of the EBITDA number and just above NPAT. So the FY '26 result -- adjusted result is effectively the opposite. It excludes the $278 million gain on sale. But this time, it does include the earnings from the data center business up until the date of the sale. And if you just -- if you do the same drop down, you'll see that there is nothing against that net earnings from discontinuing operation there in the adjusted because that's included in EBITDA for the purpose of the adjusted earnings.

Now looking at the comparatives for FY '25. So FY '25 adjusted earnings does remove the $71 million gain on sale -- from the sale of the Connexa stake, and it also excludes the $53 million of transformation costs that we took in that year. So adjusted -- the comparison of FY '26 to FY '25 adjusted earnings, therefore, provides the best like-for-like year-on-year performance comparison.

Now if I go back to reported earnings, our tax expense was marginally lower in FY '26 as the gain on sale itself was substantially nontaxable. Just dropping down business as usual CapEx was flat at $401 million year-on-year, and it's 10.8% of our adjusted operating revenues. The -- and reported NPAT was up 91.9% to $499 million.

Just moving across to adjusted EBITDA, that declined 2.4%. And this primarily, and Jolie just talked about this, it primarily reflects the decline in digital services, the decline in legacy voice, which now represents only 3.2% of our overall revenue, and we had 5 fewer months of data center earnings following the sale of that business partway through the year. Adjusted net profit after tax was down only $2 million as the tax expense was proportionately lower. So those are Slides 22 and 23.

I'm going to move on now, and I'm going to talk to Slide 24, which is the first of 2 slides covering our cost reduction program and the progress that we have made on that. So if I go back to our first half results when we talked to our first half results in February, FY '26 productivity benefits were weighted to H1, and that's primarily due to the timing of labor benefits falling within H2 FY '25 and expected OpEx increases, which were going to come through in H2 FY '26.

Now what I can confirm is, overall, we have ended the year with $40 million in productivity benefits year-on-year. Now this includes $35 million of sustainable product cost reductions and a net labor OpEx benefit of $5 million. And so when aggregated, this is in line with our narrowed target of $40 million to $50 million in the year.

Now starting with our product costs. So that's the bar chart on the left -- the first bar chart there. Our product costs were over $1.7 billion, and we saw a $65 million net increase connected with product volumes sold. And that's primarily driven by higher sales of mobile devices and plans and partially offset by lower sales of declining legacy products. Over and above that, we then delivered $35 million of sustainable product cost savings. And this is -- this came through a combination of better buying terms with major suppliers and also the benefit of exiting some legacy products as well as ongoing simplification across the group.

So then if I go to the second chart on the right-hand side. In labor and OpEx, we've called out the net benefit of the introduction of our new technology delivery model, and that net benefit is $23 million. So it included $58 million worth of labor savings, offset by a $35 million increase in other OpEx, which is the cost of our newly established global partnerships.

Now across OpEx, some of this net benefit was offset by general inflationary pressures. We also put additional money into market to support the brand and the growth of our mobile business during the year. We've incurred some additional -- we've incurred severance costs, and we have some one-off shutdown costs in relation to legacy products such as 3G. Now these cost increases would not be expected to occur at the same rate in future years. Look, I'll also note that data center costs were $6 million less due to the timing of the transaction.

I'll now go to Slide 25. And this really summarizes how the FY '26 result places us relative to our FY '27 productivity target of $110 million to $140 million of annualized savings, which was based on our FY '24 baseline. Now at the end of FY '26, we've now delivered $101 million of cumulative cost reductions. This includes $46 million in labor and other OpEx and $55 million in product costs.

So we're confident we remain on track to meet that FY '27 ambition, and we expect to deliver that through 3 main levers. The first is additional labor benefits through business simplification and the implementation of some of the organizational structure changes, which we announced last month. The second is managing other OpEx to be broadly flat year-on-year. This means that we do continue to have inflationary pressure, but we will offset that with our cost reduction program. And I think similar to the savings achieved in FY '26, we will continue to deliver further sustainable product cost savings across that $1.7 billion cost base.

If I just -- I'll move on now to our capital management framework. So this is Slide 26. So you may remember when we talked to you a year ago, we set out a new capital management framework, and we wanted to provide a timely reminder of the objectives of that framework and what we've actually done to deliver against that during the year. So the first one is the proceeds of the data center transaction have enabled us to reduce net debt to that -- to targeted levels. And so they've returned net debt to net debt -- our net debt-to-EBITDA ratio to around 1.7x, which is consistent with the metric for our current credit rating.

Our BAU CapEx of $401 million is flat on last year, represents 10.8% of revenue and it's sort of marginally sort of very close to the midpoint of that sort of targeted CapEx to revenue ratio of 10% to 12%. In '26, we did have strategic CapEx of $66 million, but this purely represented CapEx that was committed as part of the data center transaction and was in itself reflected in the sale price of that business.

And then objective 3 around sustainable shareholder returns. So in line with guidance, the Board has declared a final dividend of $0.08 per share, which gives a total dividend of $0.16 per share, which is 100% payout of free cash flow. This final dividend will be 50% imputed. The Board has also determined that the dividend reinvestment plan will be reinstated for this final dividend with the shares issued at a 0% discount to those who elect to participate in the plan.

And finally, reported return on invested capital was 13.8%, and that's versus 8.7% in FY '25. Again, this was mainly due to the gain on sale of the data center business. When this is adjusted from the result, return on invested capital was 8.4%, and which is broadly similar with the FY '25 ROIC when calculated on a similar basis.

Now on Slide 26, we have outlined our CapEx in more detail. And this really shows how this investment is aligned to support our SPK-30 strategy through network leadership and resilience, better customer experience and, of course, efficiency through tech and AI. Again, BAU CapEx of $401 million was the same as it was in FY '25.

Now if I start from the top, our investment in fixed network and international cables increased 40% to $88 million. So what was this doing? Well, this was delivering increased capacity for fiber, transport and IP networks to meet the growth in forecasted demand for data as well as ensuring that we're making ongoing resilience improvements, which absolutely underpin our network reliability.

The second part of this is investing in our mobile network, which remains critical to our success. We spent $140 million delivering increased capacity across 236 4G and 5G sites for our customers and a further 81 sites built across the country. This spend itself was actually 18% lower than FY '25, but that was largely due to the completion of the build of our 5G stand-alone mobile core.

Now spend on IT systems and AI increased $5 million -- sorry, 5% to $155 million. Now this spend really enables us to sustain and license core business systems that underpin our operations. It also captures our investment in enabling automation and efficiency and expanding the use of AI across the business. And ultimately, this is to support our strategic objectives of better customer experiences and delivering greater productivity across Spark.

Finally, there was about $18 million of other CapEx, mainly made up of property and cloud investment, and this was down slightly in previous years. I did talk before, strategic CapEx in the year is at $66 million versus previous guidance of $55 million. And this was due to additional committed CapEx on the data center business being brought forward, but under the terms of the sale agreement was paid for by Spark, but then reflected in the final amount received by PEP in the wash-up of the transaction.

So next slide I'm going to talk to is just -- is on free cash flow. And so we've reported 18.5% growth in free cash flow, and that is supporting the payment of the $0.16 per share dividend. If I look through the key drivers, so there's a $75 million increase year-on-year -- sorry, the key drivers of $75 million increase are lower cash paid on interest and tax plus the release of cash from changes in working capital. The cash paid on tax was lower as we utilize the prepaid tax asset, which will continue to provide further benefit to free cash flows that unwound in future years.

Now cash paid on leases did increase by $37 million. This was due to a combination of more mobile sites being built and also the fact that FY '25 included a $12 million one-off benefit from moving into the new corporate office. We would expect the cash paid for leases in FY '27 to be similar to that in FY '26. We also have a $56 million benefit from working capital changes in FY '26. This was due to a reduction in receivables and an increase in the tight management of payables. We did, during the period, undertake the transaction with Challenger for the sale of our IFP receivables. And so the $219 million impact of the sale of IFP receivables has been completely excluded from this outcome given it's the first year of the transaction.

I'll now turn to the debt slide. And the risk of repeating myself, but the proceeds of 75% of -- the sale of the 75% of the data center business has reduced our core net debt 35% to $899 million (sic) [ $898 million ] and net debt-to-EBITDA ratio has returned to around 1.7x as at 30 June 2026 based on the S&P methodology. As we've said before, we remain focused on maintaining a strong balance sheet and targeting metrics consistent with our current credit rating.

You'll also note that our overall borrowing costs reduced in FY '26 on a like-for-like basis to 5.5%. And that reflects the mix of debt we've drawn down versus trends in market where I know rates are generally trending up. The FY '26 rate in this case excludes the initial loss on the sale of the IFP receivables book to improve comparability. Of course, levels of gearing and interest cover, I consider remain very healthy.

And so turning to the last of my slides. The one that I'm sure there's a lot of interest in is around our FY '27 guidance. So I'll just run through this very quickly. So we're guiding to adjusted EBITDA within the range of $1,010 million to $1,080 million. And this really reflects ongoing mobile service revenue growth and productivity benefits, and we do expect that to be partially offset by the exit of the data center business during '26 and continued margin across the digital services business and some ongoing decline of diminishing legacy products, noting my previous comments that those are now a smaller share of our revenue.

BAU CapEx is expected to be in the range of $350 million to $380 million. That's down on FY '26 as we benefit from the maturing 5G rollout lower licensing investment in core systems and really taking a disciplined approach to where we invest our capital as we simplify the business. For free cash flow, we expect this to be between $300 million and $350 million. The growth there primarily driven by an improvement in EBITDA, the reduction in cash CapEx and the ongoing unwind of our prepaid tax asset.

And then finally, in line with our capital management framework, it's expected that the dividend in FY '27 would represent 90% to 100% of the free cash flow. Now what we've also done here is we've included a target FY '27 dividend range of $0.16 to $0.18 per share. And really, that is in the interest of providing investors with greater clarity on the expected range of the dividend based on both the range -- the free cash flow guidance range and also the fact that we have a 90% to 100% range payout ratio on that free cash flow.

So on that, I will hand back to you, Jolie. Thank you.

Thanks, Stewart. So to summarize FY '26, we delivered our results in line with guidance. We grew free cash flow. We returned net debt to targeted levels and delivered the first year of SPK-30 with tangible progress against the areas we said matters most. We move into FY '27 with strengthened fundamentals, a clearer strategic focus and a strong pipeline of activity designed to build value in mobile to lead in network and to deliver great customer experiences.

Future EBITDA growth will be supported by continued mobile momentum, further sustainable cost reduction, diminishing legacy products and an ongoing portfolio management. Our ambition remains simple, It's better with Spark. We're determined to deliver more for our customers, our people and our shareholders.

So with that, I'm going to hand now back to the moderator to facilitate the Q&A session now. Thank you.

[Operator Instructions] Your first question today comes from [ Leo Pan ] from E&P (sic) [ Edmonton Partners ].

This is Leo from Edmonton Partners. I think just to start with -- I've got 2 questions here. First one, on mobile, enterprise and gov, you guys noted the rate of decline in ARPU has slowed this year. Can we expect that to further moderate in FY '27? And how is that environment looking in E&G broadly?

Okay. I'll take your first question, and then we'll come back to your second one. In terms of enterprise and government, we have seen that rate slowing. If you think back to between '24 and '25, we saw around a 16% reduction in service revenue that has -- 16%, sorry, that dropped to 7% this year. What I would say, though, is most of the enterprise and government contracts are 3- to 5-year type contracts. So there's a natural portfolio renewal, but our expectation is it will be similar levels of change in FY '27.

Cool. And just maybe broadly, how is that competitive environment looking?

From a competitive environment, we're really pleased with the customers that we're winning and really winning within that. I think we've seen a stabilization on that overall pricing competition component. So really more what you're seeing is the flow-through of some of those impacts across the portfolio. But you can see from the connections, we're broadly stable in that base and the ARPU reduction is improving as well.

Great. And if I could squeeze in just one more, please. In terms of the price increase you guys rolled out for consumer mobile at the end of July, what are you guys seeing in terms of churn? And like how should we be thinking about ARPU revenue growth against maybe some lost subs?

So I think from a point of view of the July price increase effectively on the bill because obviously, we do have 2 points where we notify the price increase and then when it comes through. We've been pleased to see the levels of churn being below what we would have anticipated within that. The price increases on average were around $3, if you were to look at it per month for most of those pay monthly plans. And I think if you compare that to the investments we're making in networks and the resilience and importance of mobile connectivity for our customers, I think it's a fair exchange.

Your next question comes from Ben Crozier from Forsyth Barr.

Just first one for me, just on the DRP. Can you just give us a bit more rationale of turning the DRP on versus, say, paying out a lower dividend? Presumably, the DRP -- you get a bit of share count creep and the dividend growth going forward will be slightly lower. And you sort of alluded to our net debt back to target range. Why do you need a DRP on at this stage?

Yes, Ben, I can answer that. I mean so there's a couple of drivers there. The first one is we've had -- we had quite a lot of feedback from our retail investor base on the DRP. And so it has proved popular with our retail investors. So it's something we considered we wanted to switch back on. There's also the point around -- I mean, we -- whilst we're back at 1.7x, we're looking to create sustainable headroom relative to the S&P metric and that -- we've got a number of levers available to us.

It includes the dividend payout ratio and it also includes the DRP as well. So it does have some value there. And that's the balance we are trying to strike. Now I would note that the DRP as at a 0% discount as well. So there is -- it does not come at a discount this time around.

And maybe just on fixed wireless. I think if we go back to the Strategy Day, I think you're sort of targeting that fixed wireless still has more growth. And, I guess, over the last year, it has slipped back. Can you just sort of give a little more color on where those sort of losses have been? Are they just in rural to Starlink or is there urban losses as well?

It'd be a combination. We're talking about 8,000 connections across over 200,000 base in that wireless broadband. So it will be a combination. It is a highly competitive market. And I think as when we talk about Strategy Day, we talked about the opportunity for 5G. And of course, as that rollout continues across the country and we have greater population coverage, then you've got the opportunity to add more capacity for customers to use, and therefore, open up more addresses and you also open up the coverage component through that. So we still believe that wireless broadband has opportunity to grow. We're relaunching new plans in FY '27, which will be -- have -- well, I won't say too much on the call because it's obviously open to public, but effectively more competitive. And so we think that will also help with that shift forward.

Yes. Maybe just last one quickly on the data center business. You still have 25% of it, and there's still that earn-out to come. I think in the '28, like, is that business tracking? Are you still confident you can receive that earn-out?

Yes. I mean there are 2 tranches to the earn-out, Ben, and that's -- if you pick through the annual report, I think it's in Note 1.4 and the first of those is based on meeting some performance metrics between 31 December this year and February of next. And then the second earn-out tranche is based on hitting some metrics on 31 December 2027.

And so yes, look, we -- if you look across the sort of the entire -- if you look across the earn-out, we're confident that the business, particularly on that first tranche is going to deliver on the metrics that it needs to. Obviously, on the second tranche, that's a little bit further away and things can change there. But I mean, what we do know is that there is plenty of -- we've got some excellent sites, and there is plenty of demand for capacity in that business.

[Operator Instructions] Your next question comes from Wade Gardiner from Craigs Investment Partners.

A few questions from me. Can we just go back to just expand on Leo's question earlier. You say that, yes, the decline in enterprise and government ARPU has -- it's slowed, but you're expecting a similar level for this year. If we assume, therefore, that contracts are rolling in 3 to 5 years, does that, therefore, say that we're going to, call it, for the next 3 or 4 years, we're going to continue to see that sort of 7 -- call it, 5% to 7% decline in ARPU as everything rebases?

No, I think, Wade, I think we've seen the majority of that. I still expect some decline in FY '27. Equally, there's opportunity for connection growth as well within that. So I don't think it continues on for another 3 to 4 years. I think you see the bulk of it complete by the end of FY '27.

Okay. Thank you for the disclosure around digital services. Are you able to provide a bit of color around -- you've given that disclosure at the GM level, but not at an EBITDA level. What sort of cost allocation for labor and other operating costs are we likely to see?

We don't provide that down by each of the units for that. Clearly, as we go through the strategic review, if we have more to share in relation to the decisions out of the back of that, we will provide that as part of that. But I've got nothing more to say in terms of that at the moment in relation to the EBITDA strip.

Okay. And just one more for me. Just on Slide 15, you talked about investment into mobile. There's a number of areas there. What's the -- is that going to have a margin impact as we go into FY '27?

I think in terms of what we're doing there, there will be a combination of what we're looking to do is attract and retain more customers. And so we'd see it both as churn prevention, but also as opportunities for customers to experience different offers within that. So without, again, getting into too much of the detail, overall, when we set our guidance for FY '27, we thought about what we will be doing and investing within that. So I think these are all margin accretive in terms of how we think about the opportunities that we've got there for FY '27.

Okay. That's all for me.

Thanks.

Thank you. There are no further questions at this time. And that does conclude our conference for today. Thank you for participating. You may now disconnect.

Thank you for standing by, and welcome to the Spark New Zealand H1 '26 results. [Operator Instructions] I would now like to hand the conference over to Ms. Jolie Hodson, CEO. Please go ahead.

Thank you. [Foreign Language] Good morning, and thank you for joining us today for Spark's half year results for the period ending 31 December 2025. This morning, I'll provide an overview of our performance and progress we've made under our new SPK-30 strategy. I'll then hand over to our CFO, Stewart Taylor, who will take you through the financials in more detail before we open for questions.

Before turning to the results, a brief word on the broader operating environment. Through the first half, the New Zealand economy showed signs of finding its footings, while conditions are still -- were still mixed. Consumer activity improved, and there was a growing sense of stability as the period progressed. That backdrop supports the progress we're seeing in our business, particularly in consumer and gives us confidence as we move into the second half.

With that context, I'll now turn to Slides 3 and 4 to summarize our financial performance. So in terms of the difference between our reported and adjusted results, adjusted revenue and EBITDAI include the data center business for both H1 FY '26 and H1 FY '25. Adjusted EBITDAI excludes $9 million of DC sale transaction costs in H1 '26, which will form part of the gain on sale calculation to be reported in FY '26 and the SPK-30 transformation costs incurred in half 1 FY '25.

I'm now going to speak to our adjusted numbers as these provide the best like-for-like year-on-year performance comparison. In a mixed demand environment, Spark delivered a clear step-up in profitability in the first half. Adjusted revenue of $1.917 billion was down 1.1% or $22 million Around half or $10 million of this decline was driven by the divestment of Digital Island in FY '25, the remaining decline driven by muted business project spending and service management and legacy voice. This was more than offset by improving mobile service revenue and disciplined execution of our cost-out program, delivering a 5.1% increase in adjusted EBITDAI to $471 million.

Adjusted NPAT of $73 million was up 30.4% driven mainly by higher EBITDAI. Free cash flow strengthened to $107 million, up 84%, reflecting the operating leverage in the business as performance improved driven by higher EBITDAI and the reduction of cash tax payments. Stewart will provide more detail on the free cash flow for the half and full year shortly.

Capital expenditure for the half was $271 million, including $54 million of strategic CapEx used to secure the data center land, in line with guidance. BAU CapEx of $217 million was down 8.8% on the prior year as our 5G rollout matured.

The Board has declared an interim dividend of $0.08 per share, 50% imputed.

Turning now to mobile on Slides 5 to 7. Spark's total mobile service revenue grew 1.6% as performance continued to improve, and we saw positive momentum across the key underlying drivers of value. In consumer and SME pay monthly, connections were broadly flat, while ARPU grew 5% driven by product innovation, plan refreshes and increased competitiveness of high-value brands and improved mix. We also saw a 15% uplift in pay monthly mobile acquisitions with interest repayments, consistent with attracting high-value customers and supporting stronger retention.

In consumer prepaid, connections stabilized in our highest value segment of New Zealand packs, which accounts for around 90% of our revenue, following recent plan refreshes and targeted promotional activity. Prepaid ARPU was down slightly, reflecting the competitive dynamics of this segment. However, with the stabilizing base, we have a strong platform to grow ARPU over time, both through cross and upsell as further products and offers are launched. The Skinny prepaid New Zealand base grew 2%, driven by a strong uptake of long-term plans launched during the half.

In enterprise and government, connections and ARPU further stabilized since the close of FY '25. We won more business than we lost during the half with a small connection decline driven by fleet shrinkage and the 3G shutdown. Pressure on ARPU remains. However, the rate of decline continued to moderate with H1 FY '26 ARPU down 7.8% year-on-year compared to a 13.4% decline at the end of FY '25.

In the context of the broader market, Spark's mobile service revenue grew at a slower rate than the market, resulting in a small contraction of 0.5 percentage point of share. The highest growth during the 6 months was in the MVNO segment, of which Spark accounts for around 40% of connections. Our revenue growth in this segment was consistent with the MVNO market growth. Overall, we remain market leader by some distance, and our focus is on growing this leadership ahead.

On that note, as we look ahead to the second half, we have a strong pipeline of activity that will support continued momentum in mobile, and that's outlined on Slide 8. A few notable examples include the rollout of text and data satellite to mobile capability in H2, including calling over satellite-enabled apps like WhatsApp; a refreshed international roaming product set designed to compete more effectively in an increasingly competitive Eastern market and deliver better experiences for our customers; and a new MySpark app experience to further cement our CX leadership with clearer usage information, easier self-service and enhanced support.

If I move now to Slide 9 across our broader connectivity and IT portfolio, performance reflected a tough market alongside areas of resilience and progress. While broadband connections were down in a competitive market, revenues remained stable at $303 million as increasing fiber costs were passed through. Wireless broadband remains a clear opportunity as 5G continues to mature and we explore bundling with mobile.

Voice revenue was down 16.7%, and that's consistent with the long-term decline of this legacy product. Other connectivity products was down 10.4%. About 1/3 of this reduction was driven by the divestment of Digital Island and the balance primarily driven by managed data and networks as customers continue to transition away from legacy products to lower ARPU alternatives.

In IT, cloud revenue grew 1.7%, reflecting the continued customer migration from private cloud and expansion by existing public cloud customers. Service management remained challenging, with revenue declining 19.7% as businesses continue to defer or scale back larger projects.

Our cost program continued to deliver material benefits in the first half as outlined on Slide 10. The program underpinned the improvement we saw in EBITDAI and free cash flow during the half. New network and technology partnerships have been effectively embedded into our operations during the half and are on track to achieve their forecast benefits. Overall, we achieved $51 million in net cost savings, reflecting $55 million of net labor cost reductions from the changes made in calendar 2025; $12 million in product cost reductions, which were originally envisioned to fall in other OpEx, partially offset by a $16 million net increase in other OpEx, primarily driven by $11 million of increased marketing spend to support business growth and costs associated with our new technology delivery model.

So looking to the second half, the mix of savings shifted the majority of FY '25. Labor reductions have now been realized, while product cost savings continue and we absorbed the full year impact of our technology delivery model and inflationary cost pressures. Overall, we remain on track to deliver the multiyear productivity benefits previously outlined with the FY '26 cost-out target narrowed to $40 million to $50 million supporting EBITDAI growth and enabling reinvestment in network and customer experience.

As outlined on Slide 7, our network and customer experiences are a strategic priority in line with the SPK-30 strategy. During the half, we extended our 4G coverage leadership position to also include 5G as independently rated by Opensignal. This was supported by more than 100 site builds and upgrades and the transition of network traffic to our 5G stand-alone core, delivering improvements in peak speeds of around 75%. We also introduced new network safety features, including automated blocking of malicious websites while working with Aduna to explore further use cases in the space for the future.

Our measure of customer satisfaction, iNPS, rose 5 points year-on-year, driven by simplified journeys, faster support and improved digital experiences within our app. Our AI program is accelerating our network in CX ambitions, delivering improved network efficiency, faster speed to market for new products and quicker resolution of complex challenges for our customers.

Sustainability remains embedded in the way we operate, and we continue to make progress towards our ambitions as outlined in Slide 12. Our Scope 1 and 2 emissions are 32% lower than the path required in H1 to meet our 2030 emissions reduction target, and that reflects the benefits of our solar energy partnership and the improved grid mix. Our focus on ethical supply chain management continued to mature, and digital inclusion remains a priority with Skinny Jump now supporting more than 34,500 households nationwide.

Shortly after the close of the half, we completed our data center transaction, which is summarized on Slide 13. As you'll be aware, Spark has retained a 25% stake in the new stand-alone entity, now named TenPeaks Data Centres. This provides Spark with ongoing exposure to significant long-term growth opportunities in the market with strong structural tailwinds. Spark received initial cash proceeds of approximately $453 million, with up to $98 million in deferred proceeds contingent on performance milestones through 2027. The proceeds strengthen our balance sheet and provide additional financial flexibility as we execute our strategy.

Slide 14, we provided an update on how we're tracking against our FY '30 ambitions. At the half year, our SPK-30 ambitions remain on track. Financially, we delivered growth in EBITDAI, NPAT and free cash flow, supported by cost discipline and improving mobile performance.

Looking at nonfinancial ambitions, we strengthened the foundations of long-term value, including network coverage leadership, a 5 point lift in iNPS, rising employee engagement and continued progress on our sustainability commitments.

I'm now going to hand over to Stewart to speak to the financial results in more detail.

Thanks very much, Jolie, and good morning, everyone. I'm going to start with Slide 16 and 17, which summarize the result, probably focusing more on Slide 16. We've got our reported results on the left-hand side of Slide 16. Now this excludes our data center business from the headline EBITDAI and top line P&L numbers; the net earnings contribution booked as a one-liner and that discontinuing operation line, which you'll see there called out as a separate line, just above total net earnings after tax expense.

So for the adjusted results, the data center contribution is actually included in the applicable P&L lines rather than being classified as a discontinued operation, hence, why you don't see any numbers in that line for the adjusted numbers. So looking at growth rates, reported EBITDAI was up 10% in H1 '26 versus H1 '25, the equivalent growth rate of 5% for adjusted EBITDAI growth over the same period here, the difference here largely due to the lower H1 '25 reported earnings base given the data center adjustments and the transformation costs, which were booked in H1 of '25. Just for clarity, so the discontinued earnings of $10 million showed a significant increase on the previous comparable period. This was because the data assets held for sale were no longer being depreciated in H1 '26.

I'll now move over to Slide 18, and I'll talk to capital expenditure. So you'll see in H1 '26, on the right-hand side there, so the right-hand column there, total CapEx was $271 million, and that excludes spend on spectrum. This was $19 million or 8% higher than the prior comparable period. And the key driver of that increase has been the $54 million in strategic CapEx associated with the data center business. This is something we outlined in our guidance at the beginning of this year.

So if I exclude that strategic CapEx, Spark's BAU CapEx was 9% or $21 million lower than in H1 '25. Now this reflects lower network spend, so our 5G rollouts matured. We've had been through a period of accelerated spend there, and our spend on IT systems, fixed networks and international cable capacity has been broadly consistent with that in 1H '25.

Now in the first half of this year, we've also reported $7 million spend on new spectrum. This is the net present value of 18-year rights we acquired from Tu Atea for 20 megahertz of 5G spectrum.

Now looking forward, with the exception of $1 million spent on the data center business in January before that transaction completed, we are not expecting any further strategic CapEx going into H2. So looking forward to H2, the focus of capital expenditure and beyond will be on projects that align with our SPK-30 strategy and drive our core connectivity business.

We'll also be taking the discipline we've employed in H1 forward, and we remain on track to deliver to FY '26 BAU CapEx within our guidance range of $380 million to $410 million. So this implies that H2 '26 BAU CapEx will be in the range of $163 million to $193 million.

So moving to the free cash flow page, this is Slide 19. Again, we remain focused on the conversions of earnings to free cash flow given the importance this plays in determining our dividend. So overall free cash flow in H1 '26 was $107 million. This was 84% higher than H1 '25. And this was impacted predominantly by 2 lines in the table that you can see on the right-hand side there. The first is the 10% increase in reported EBITDAI between periods. The second is a significant reduction in cash tax paid, which is largely related to timing and would normalize in the second half of the year.

Just running through this note that, year-on-year, there was an increase in cash paid on leases. This is because the H1 '25 payment was lower than we'd have expected due to a one-off cash benefit from the corporate office move to 50 Albert Street at the end of calendar '24.

Now near the end of December, we announced the sale of our interest-free payments or our IFP receivable book for $240 million. The positive impact of the sale has been adjusted from the free cash flow number, and this has been done net of growth in the IFP book since the start of the year, which was around $27 million. And having entered into a finance agreement with Challenger on the IFP book, we will undertake regular sales of that book going forward, which means we can continue to grow this book without impacting our working capital balance.

Again, importantly, remain on track to meet our FY '26 free cash flow guidance of $290 million to $330 million. And this does imply in H2 weighting of free cash flow, which will be driven by our EBITDAI profile in the second half, lower CapEx in the second half, an improvement to our working capital balance, and this will be partially offset in the second half by higher cash tax payments.

So if I go to Slide 20, debt and dividends, what we've seen is an overall reduction -- a further reduction in the overall level of net debt in the last 6 months. This has been supported by the sale of the IFP book and offset in part by higher strategic CapEx. So if I exclude leases, net debt now sits at $1.39 billion, 5% lower than at 30 June '25. The net debt-to-EBITDAI ratio's steady at 2.2. This isn't materially impacted by the sale of the IFP book.

Now you'll see in the chart on this slide that we've put a bar over on the far right there, indicating what we consider to be our pro forma debt position as at the end of January 2026 based on the completion of the data center transaction. Now as a result of that, net debt ex leases reduces by $453 million to around $940 million. But more importantly, our net debt-to-EBITDAI ratio would be reduced to around that 1.7 level, which is consistent with that required for our targeted credit rating.

The final point to note here is our interim dividend of $0.08 per share, and this is based off our full year free cash flow guidance. The interim dividend has been imputed at 50% as we seek to bring that imputation credit balance back to a sustainable level and manage our balance sheet as efficiently as possible.

Slide 21, we've outlined our key debt metrics. I'll note 2 things briefly here. Firstly, the absolute amount of debt we carry forward will lead to lower interest costs. However, some of this benefit will be moderated by our residual debt profile. And secondly, interest cover based on our EBITDAI over financing cost remains very healthy at 8x.

Now finally from me, the Slide 22, which is reaffirming our FY '26 guidance and given the completion of the data center transaction, we've obviously focused our guidance on excluding DC earnings from the last 5 months of the financial year. In all cases, the guidance has not changed since we supplied it to the market in August last year.

One thing we have done is we've updated the strategic CapEx to $55 million, having completed the sale of DCs. Again, this reflects the $54 million we spent in H1 '26 and an extra $1 million we spent in the month of January. Importantly, we retain our EBITDAI guidance of $1,010 million to $1,070 million, which is -- which, if I took the midpoint at $1,040 million, would imply a more normal first half to second half earnings split of 45%, 55%.

On that, I will hand back to Jolie to provide a final summary.

Thanks, Stewart. So to summarize, despite soft market conditions persisting in parts of the portfolio, Spark delivered a clear step-up in performance during the half. Our strategic focus on core connectivity is gaining traction. Mobile showed clear signs of momentum with ARPU strengthening and connection stabilizing. While broadband remains -- revenue remains stable. Our cost reduction program delivered material benefits and when combined with mobile, supported a return to EBITDAI, NPAT and free cash flow growth.

The drivers of our market competitors, our network and customer experiences continue to strengthen and differentiate Spark. And the completion of our data center transaction in January has reduced net debt back to targeted levels for H2. There's more work to do, but this progress reinforces our confidence in the strategic direction we set under SPK-30 strategy. And Spark's becoming a more focused, efficient and resilient business, well positioned for the second half and beyond.

We're now going to open the floor to questions. So I'll hand back to the operator.

[Operator Instructions] Your first question comes from Entcho Raykovski with E&P.

My first question is just around the cost out target for the full year. I guess, given that you've effectively delivered the cost out target in the first half but the top end of the full year cost out guidance is unchanged, can you talk about the expected uplift in other OpEx in the second half, which offsets any further cost savings? And if you can sort of -- as part of that question, if you can talk to whether that then trends into FY '27 because I presume that there will be some carryover.

Okay. Thanks, Entcho. Maybe I'll kick off and then if Stewart's got anything he wants to add. So if you look at the overall savings reductions you saw in the first half, we obviously saw a number of labor changes in the back half of FY '25. So we had the benefits flow through in '26. While there's still some simplification work, we also have costs like severances and other things that will sit within our existing cost for this year.

So what we've done is delivered upfront the labor savings, the product cost savings and other OpEx. So if you look forward then, what are some of the things that are impacting the second half, we've cycled, as I said, quite a bit of that labor savings. We had a lower H2 last year off the back of that. Our new network technology delivery model, that always had reduction in labor but increase in some of the other OpEx costs and then like every business has some inflationary costs within it. So really what we're saying is, over the year, we'd expect to deliver in that $40 million to $50 million range around our cost program. We have achieved most of that in that first half.

Yes. Sorry, the other thing I just would call out is marketing would normalize in the second half as well. So we had an upweighted investment of around $11 million in the first half, but we'd already lifted that in the second half of '25. So we don't have that same flow-through in the second half of '26.

And if I think -- maybe just to the second part around '27, like any business, we'll continue to have simplification that we will be looking at that looks at both use of technology, what we're doing around both our product and our business overall. So that doesn't sort of indicate that we've run out of cost to focus on. It's really more, if we think about what's happened in the year, we've already delivered most of the costs that we needed to within that.

Okay. Great. And my second question is just around wireless broadband. Subs were marginally down in the half -- half-on-half. I guess, is that a reflection of the fixed wireless market as a whole? Or are you perhaps seeing some share losses in wireless broadband? And I think you've talked about a plan refresh in the second half. Are you able to give us any more color around what you're planning?

Yes. So I think if you look at the overall position of wireless broadband, we do have very strong, way above our ambient share of our market share, so -- and it's a competitive marketplace. So as others look to compete in that space, we would expect that you would see potentially some movement on that. With the plans, we have looked at refreshing both price and the products that we bundle that with as well. So that's what we would expect to see in the second half. The other thing also, of course, is as 5G rollout continues, you have a broader addressable market to consider within that and therefore, the ability to lift up those wireless broadband connections as well within that.

Okay. And my final question is around mobile. The recovery you're reporting, particularly in consumer and SME, are you seeing some of the competitive intensity coming out of the mobile market? Or is it perhaps driven by that economy stabilizing that you've talked about? I suppose if you can sort of expand on what you're seeing on the competitive front from the other operators.

I think if you think about the broader economy, obviously, as that stabilizes and starts to improve, that has a flow on a peak. There's a range of things from that -- that impact that. If we think about competition, I don't think we're in any less competitive marketplace. But what we have seen with some of the plan changes we've done, the overall value offering we've got, we've seen people stepping up in terms of -- and the plans, the mix over $65 plans growing within that reporting period. We also saw quite a strong IFP sale. And the work we've done around our IFP as well in terms of -- sorry, when I say IFP sale, the Apple launch, the new handset launch and linked to that, the step-up in IFP within that. We're seeing customers generally just looking for more value but also the opportunity to spend around that. So that's where the improvement has been in SME and consumer.

I think in enterprise, what we have seen probably is while it's still a competitive market, much of that change that particularly was ARPU led has been reflected in the base during 2025. And then we have seen -- we did expect to see some in '26, and we have done, but that is stabilizing as well and connections have within that.

Your next question comes from Phil Campbell with UBS.

Just 3 quick questions for me. I just wanted to maybe ask a question, Jolie, just kind of standing back a little bit. Obviously, there's been quite a lot of change going on in Spark in the last kind of 12 to 18 months, a lot of head count reduction and obviously the new focus on connectivity and the new rebranding. And just kind of from your perspective, like, how are you feeling internally like in terms of the morale of the business? You're feeling as though you're getting some momentum back after that period of kind of change and disruption?

Yes. I mean we have come through a period of significant change, both in the marketplace but in our organization. The new strategy, I think, has given us a very clear focus on core connectivity, which is really at the heart of what we're doing within that mobile. I think people's excitement around the opportunity to continue to invest and see that grow and we're seeing it in those early results within that, is lifting both engagement and the overall, I guess, feeling within the organization, you can see that, too, and some of the nonfinancial metrics that we put up in terms of increase we've had in engagement over the last half. So yes, we feel like we are focused on the right things. We are seeing progress in marketplace and our people who engage with that.

Okay. Awesome. Just a quick question for Stewart just on the data center final payment. Obviously, that was about $33 million lower than what was announced in middle of last year. I'm assuming that was due to the fact that the CapEx was a bit slower. But then when I look at the CapEx numbers being reported today, it doesn't really feel as though the CapEx was much lower. So I just wanted to get an explanation as to what's driving -- what am I missing there in terms of that $33 million difference in the proceeds?

Yes. No, I think broadly, Phil, you're spot on. So we -- I think when we guided in August, we guided to a range on that CapEx, and so the initial purchase price was based at the -- based on the top end of that strategic CapEx range. And those were -- I mean much of that money was spent on always commitments that we've made on land purchases, so form part of that transaction perimeter. I mean there will be other small adjustments there in terms of various working capital balances, employee liabilities and other things as we sort of work our way through what that final -- I guess what that final price is and what the final asset base is that gets transferred.

So just so I think the original guidance was CapEx of $50 million to $70 million. You're obviously coming in at like $55 million. So is the kind of balance for that $33 million, is that just working capital and other stuff that's...

Yes. I mean there will be a series of other purchase price adjustments that we make in there as well, and you've also -- we probably need to consider the fact that we also have transaction costs as well.

Right. Got you. Just the last question for me is just wanted to get a sense, when I speak to industry context within IT services, what they're saying to me at the moment is you are seeing a number of New Zealand corporates really kind of starting to get on the AI train and starting to wanting to deploy AI workloads and stuff like that. And then also, I think following that, Manage My Health cyber incident, there seems to be a number of customers increasingly concerned about cyber, and that was potentially generating some work. I just wondered if you guys are seeing any of that in the market kind of the side of Christmas.

I think prior -- there is more business activity than there was. But if you think about some of the bigger programs and those sorts of things, we have not seen as much prevalence of it. As we look to the second half, I think some of that activity starts to come through because also when you think about the larger sort of IT projects or things we might be involved in, there's a reasonable amount of time to contracting to then delivery to -- and that's really wherein, say, service management, we're seeing the most impact of some project work, not the annuity type of work that we have within that place. So I think there are some green shoots, but we are way off being back anywhere close to where it was previously.

Next question comes from Arie Dekker with Jarden.

First question just in relation to a couple of areas of guidance in terms of what's possible in 2027, particularly given 100% payout of free cash flow for the dividend this year means that the sustainability of it, there is a bit of a tightrope. So the first one, I guess, is you've sort of signaled that the 5G rollout is maturing. Can you give a bit of color as to how much of the FY '26 BAU CapEx can be removed in FY '27 associated with that 5G spend coming off and any other areas?

I think if you think about it maturing, Arie, in the 2 years prior, we invested heavily ahead of that. We'd accelerated that. So we'd put quite a lot more capital investment into both building a stand-alone core, which we now have stood up and then also acceleration. So as we look at '26, we've already bought that back from where it was, and so both '25 and '24. And I think that broadly reflects what I'd say as an ongoing normal level of mobile investment. We'll still have work to do, and I touched on, we've got about 100 more sites that we will upgrade or build out in the second half, and that will continue in '27. So I don't think mobile will be a significant reduction ahead. All we're saying is that, in this year, it has slowed a bit from where it was because we'd over -- we'd upweighted that investment.

Any other areas then?

I think across other areas, we'll continue to manage. We've set out the 10% to 12% is really a focus for us in terms of the CapEx to revenue, and there's nothing that we're stepping off in relation to that. And I guess, in any given year, you can be at one end or the other of that. But given we're not out yet providing sort of '27 guidance yet, I think probably more that just focus of -- on '26 of delivering within what we have set out.

And then in terms of the process for Meta, which is well underway, I mean I don't know if you want to give an update on that, sort of talked to it in the materials. But in terms of the cash burn there, have you set a drop-dead date, for example, at the end of FY '26 where you'll commit to just closing it down if you can't bring in a party to sort of help fund that going forward?

I think what we've shared is that we have a process underway. We are focused on it. We will have an update at August to provide on that. I don't have a drop-dead date for that, but clearly, we will be considering all areas of investment we make in the business, and we'll make an informed decision.

Okay. Just moving to the reorganization of the revenue segments and security and high tech ex health moving into other connectivity. I mean can I read into that, that sort of further refining what sits in and out of the perimeter of core versus noncore business and then, I guess, ask if you are progressing towards a strategic review of the noncore IT businesses comprising, I guess, what's left, cloud security and procurement?

I think, Arie, Stewart here. I think probably it's more just me looking to simplify some of the disclosures. So in particular, those areas where we'd probably get, we see less questions on and less significant in the total picture. So I wouldn't read much more into it than that.

Perhaps to you, Jolie, like is there a consideration being given to strategic review of the IT businesses?

I think we indicated when we did the strategy at the end of last year, our first focus is really on simplification of those businesses. We've already made quite a lot of adjustment to operating models that support those, particularly in the labor cost, which you can see flowing through. We will always continue to review all parts of our portfolio to determine whether we are the best owner at any point in time, and that will continue to be the case, whether it's IT services or another component.

Yes, just a quick one. Just announced in mid-September that a COO was to be appointed, obviously, sort of 5 months on from there. Can you just give any update on the status as to that vacancy, which is obviously quite an important one [ in the process ].

We are in the process of that recruitment. We have very competent acting COO at the moment within the business. And when I have something more to share on the process, I'll -- we'll, no doubt, update the market.

And then last one for me, just returning to broadband. Just interested in what you see happening in urban versus rural with regards, I guess, churn and also in particular, fixed wireless. So I guess one of the questions I have is what are you seeing happening on the conversion of your copper disconnections and rural to fixed wireless over customers going to Starlink. And for fixed wireless, is it more competitive now in rural than it is in urban for you because of satellite's growing penetration?

I think it would be reasonable to assume that there is more competition as satellite, particularly on that copper removal process or the loss of copper connections within that, and therefore, satellite plays a role in solving it. So yes, there's definitely some component of that, that is more competitive in that space. Overall churn rates for wireless are pretty consistent, and they're consistent with our fiber as well. So it's not that we've got a load of customers coming off that. And sequentially, if you look, we -- broadly kind of the base has been stable.

There's still opportunity out there. But I think as we've talked about, that's linked to further rollout of the 5G. We are looking at some plan changes within that as well, and we have already made some at the higher end of that around pricing as well. So we will look to continue to compete in that area, but there is no doubt that in rural, there would be a little bit more competition than there has been historically.

Your next question comes from Wade Gardiner with Craigs Investment Partners.

I've got a couple of questions. I'll start with the guidance, small print on Slide 22. You say that the data centers were accounted for as an associate for the remainder of FY '26. But what about for the first half? Does this guidance include the data centers in there for the first half in EBITDAI? Because my understanding was the old guidance before this guidance that you gave back in August excluded the data centers.

The -- so the guidance we provided, so the -- so adjusted EBITDAI includes the first 7 months of the data center business on a consolidated basis. And then going forward, as we're a 25% owner of that, we'll obviously account for it based on our share of associate earnings.

Now we provide -- the guidance we provided at -- in August had -- we had an excluding data centers set of guidance there and what that did, Wade, is that included 6 months' worth of the results, i.e. fully consolidated and based on the fact that we were then going to deconsolidate for the remaining 6 months. So it's pretty much on a like-for-like basis to that.

Right, by the 1 month.

Correct. Yes, which in the big scheme of things, we don't consider to be material.

Okay. No, no. So my understanding was that the guidance in August excludes the data centers, but...

Exclude, yes.

We provided both, so you can see, excluding and including, but the numbers are consistent to what we provided folks leading -- yes.

What about asset sale gains, which were $24 million in the half? And previously, they've sort of run -- I mean I know they jump around a bit, but I'd say, typically, they run an annual rate of sort of 25 to 30. So what have you gotten there in the guidance for those sale gains this year?

Yes. So on the full year guidance, so the other gains, and this excludes any gain on the data -- on the sale of the data center business, we'd expect that to run at about $30 million this year as well, Wade. So that's what -- that has been more heavily weighted towards 1H.

As it was last year. So you had $23 million last year. You got $24 million this year. There's no real change and neither is near around the end point of about $30 million. It's very consistent.

Okay. The enterprise and government connections, can you just sort of -- you talked about you've added 7 with some losses in the half. What should we assume that happens to ARPU as a result of that?

So ARPU doesn't really change that much as a result of that because, basically, we see the losses as more so from low connection, a bit of 3G closure and a little bit of fleet shrinkage. So where we've won new customers, they've come on, that's sort of been reflected in our overall forecast of where we thought those ARPU declines would be. So they have -- so if you think about the end of FY '25, that ARPU decline was sitting at around 13%. Now it's about 7.8%. So it's moderating because a lot of -- our book has already experienced some of that change, and we continue to win new customers in marketplace as well.

Okay. So another way to put it. I mean, you went from sort of 13% to 7.8%. What -- are you willing to put a number around or a range around what we were likely to see in the second half for ARPU in the segment?

One thing, you'll still have customers that will renew under new rates over that time. I think keeping it at around about a rate of that sort of 7% across the year is probably about right because we think about it. Contracts last for multiyears, so they don't all come up at the same time. But we feel like a large component, the government shift happened last year, not this year.

Okay. And just on Slide 8, you talked about strong pipeline of market activity. How much of that would you argue is chargeable where we should see a positive ARPU impact versus the impact really and retentions and connections rather than ARPU?

Well, I think in terms of -- well, from an ARPU perspective, we've taken pricing. We've seen mix improvements. And I think if you think about what some of this helps support, it does help support the higher value plans. You've got more to offer in there if you think about satellite, for example.

In terms of stand-alone capabilities, you're looking more at new forms of enterprise charging for in relation to those private networks because they're generally around distribution-type businesses or where logistics are involved. Roaming, again, that's about making sure we remain -- we're competitive in the marketplace and things like the customer experience.

So there'll be a range that will be -- attract new customers and allow you to support a shift up into higher plans. And there will be a range of things that is about just maintaining that sort of retention of customers, which when you think about our base and we've got -- we're about 6% -- up to about 5% to 6% market share higher than our sort of competitor set, then that's a really important part of what we do as well in terms of retaining the customers we already have.

Your next question comes from Ben Crozier with Forsyth Barr.

Just a quick question on guidance. If we look at rolling 12-month, EBITDAI is sort of sitting at $1.08 billion. And there's no DC contribution of that EBITDAI line in that second half. But if we look at what the guidance is implying for the second half. At the midpoint, I get sort of minus 5% year-on-year if we take out DCs. Can you just sort of step through what are the moving parts in the second half, sort of costs and gross profit and maybe in a few of the key revenue items?

I think -- so I mean, the way I look at it, Ben, is that we're going to deliver about 45% of our EBITDAI at 1H and about 55% in 2H.

So if I look at some of the drivers -- I mean, if I look at some of the drivers of that, so some of that will be the benefit of the momentum we've got in the mobile business. There'll also be ongoing -- so half-on-half, we consider we'd continue to see ongoing reductions in labor costs. So we've got the run rate benefit of the [ RIF, FTE ] reduction in the first half. That flows through to the second half if I look on a half-on-half basis.

We will have a lower OpEx base in the second half, and we'll also work -- we also have to see significant reductions in our product costs as well. So we're looking to offset some -- we're looking to book some benefits there as well. So those are broad brush where you'd see that sort of step-up half-on-half.

You're still talking like labor cost savings, lower OpEx, but EBITDAI year-on-year is down. Like I assume gross profit then, your budgeting is down year-on-year. Is that fair to assume?

That's -- I think year-on-year, we'd end up pretty flat yet, adjusting for data centers.

Yes. And then just on the sort of legacy business lines, other connectivity. So if you call out this migration of legacy products to modern lower ARPU solutions, sort of how far through that migration do you think you are? Are we sort of at the start of it? Are we nearing the end? Are we somewhere in -- halfway in between?

I think it depends on the different products that you're talking about. In service management, we are a reasonable way through as the customers move across into that. We've been doing that for a period of time. If you look at some of the other areas, like managed data, that will continue to happen as you see the shift from legacy WAN to SD-WAN. So probably, you still got a reasonable, I think, maybe a 30%, 40% done and still 60% to 70% to go across that because when you think about enterprise products, particularly, they're long -- you've got customers on longer-term contracts. Those changes happen as they renew or move off, but with them, often comes a lower cost of supply as well.

And maybe just last one on marketing cost. Obviously, you stepped up quite a bit of the new brand campaign out there. Is this sort of the level we should expect going forward? Or do you think it will revert back to where it was a couple of years ago?

I think we -- it's important to continue to support investment in our brand and business growth. As I sort of flagged, you shouldn't replicate the first half and the second half because we've already -- we stepped that up in the prior year. But if you were to look at a kind of total year investment being the step-up you've seen in half 1 plus sort of taking H2 '25, that would give you a good sense of the kind of level.

There are no further questions at this time. I'll now hand back to Ms. Jolie Hodson for closing remarks.

Okay. Thank you, everyone, for joining the call and for your ongoing support.

[Foreign Language] Good morning. My name is Justine Smyth, and I am the Chair of Spark New Zealand. On behalf of the Board, I'd like to welcome you to Spark's 2025 Annual Meeting of Shareholders.

Just before we get started, some housekeeping matters. Bathrooms are located in the atrium. In the unlikely event of an emergency, please use the venue using the nearest exit and follow the instructions of the Spark employees who will be on hand to direct you outside to the assembly point. And I can tell you this morning, unexpectedly, we had a fire alarm go off, so we did have to evacuate, and our staff performed very well, so they know exactly what they're doing. You're in good hands. It's unfortunate.

But never mind, with that taken care of, I'd now like to declare the meeting open. Based on the information conveyed to me, I confirm there's 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 then will put forward the resolutions as described in the Notice of Meeting and respond to general questions put to us by shareholders.

For those of you joining us virtually, you'll be able to vote and submit questions during the meeting. We'll 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.

I would now like to introduce my fellow directors who are on the stage with me from the left of the stage of David Havercroft, Lindsay Wright, Tarek Robbiati, Jolie Hodson, Vince Hawksworth, Lisa Nelson, and Warwick Bray. Also present today is our Chief Financial Officer, our Chief Legal Officer, our Company Secretary, auditors from Deloitte's, lawyers from Russell McVeagh, and our share registrar.

I'd now like to turn to our performance over the past year. The past 12 months have been one of the toughest periods in Spark's history as we faced economic headwinds and lower customer spending. We acknowledge that not all the challenges we faced were beyond our control and understand shareholders will rightly be concerned by our share price performance. At our AGM last year, I outlined the actions we would take to improve the performance. This included refocusing Spark on our core business of connectivity, simplifying our portfolio by divesting non-core assets, expanding our cost-out reduction program, and generating value through our data center strategy. Good progress has been made against these priorities.

Connectivity is at the heart of Spark. It accounts for 80% of the group's gross margins. This is why we have renewed our focus on our core, and in particular, building our momentum in the mobile market. To support this focus and recycle capital into our core business, we undertook a strategic review of non-core assets. And as a result, we completed the sale of our remaining stake in our cell tower business, Connexa, and we disposed of our small shareholding in Hutchison Telecommunications Australia, delivering combined proceeds of $356 million.

We introduced four new global partnerships into our IT network and IT operations, to improve customer experiences while supporting significant cost reductions. And at the start of August, we announced an agreement to sell 75% interest in our data centers to Pacific Equity Partners, valuing the business at up to $705 million and securing a funding pathway to build out our significant data center development pipeline. This partnership allows us to realize value for our data centers in the short term, but while retaining a 25% stake in this growing market to create value for our shareholders over the longer term. There's still more work to do, and we remain focused on delivering what we said we would.

I'd like to recognize our Spark people for their commitment as we have reshaped the business to respond to our changed operating environment, and to set Spark up for a stronger future.

Turning now to our FY '25 financial performance. Our results include reported and adjusted figures following the Connexa transaction and the transformation costs connected to our operating model changes. Reported results also exclude the data center business, as it was classified as an as held for sale and for accounting purposes. So both reported and adjusted year-on-year comparisons are provided on screen now, and I will speak to the adjusted numbers so that you have a like-for-like comparison.

On an adjusted basis, FY '25 revenue declined 4% to $3.7 billion, EBITDAI declined 9% to $1,060 million, and net profit after tax declined 34% to $227 million. Free cash flow of $330 million was the same as in FY '24 despite lower earnings, because we reduced total CapEx by 17% to $429 million. Our return on invested capital was 8.7%, which continues to outperform the majority of our global peers.

The Board declared a final dividend of $0.125 per share in line with guidance, bringing the total FY '25 dividend to $0.25 per share.

In line with our focus on transformation, the Board undertook a review of Spark's capital management settings during the year with the aim to maximize shareholder value. Our updated Capital Management Framework has 3 core focus areas: maintaining financial strength, ensuring an appropriate return on our investments, and sustainable shareholder returns.

From FY '26, we have made changes to our dividend policy to support a sustainable dividend funded by free cash flow. Our definition of free cash flow now includes changes in working capital and capital expenditure used to operate our core business. Moving forward, the only capital expenditure that will be excluded from free cash flow will be spectrum purchases and strategic investments outside our core business, such as data centers. We have also changed our target dividend payout ratio to 70% to 100% of free cash flow to provide flexibility if needed in the future. This means that the dividend guidance we provide you each year will be aligned to free cash flows.

So this brings me now to FY '26 guidance, which reaffirms what we provided to the market at our FY '25 results. Adjusted EBITDAI $1,010 million to $1,070 million. This assumes that the data center sale completes by the end of December 2025, and it excludes any gain on that sale. Business as usual, capital expenditure $380 million to $410 million. Strategic capital expenditure, which is effectively our data centers, $50 million to $70 million. Free cash flow of $290 million to $330 million. And we're guiding to a dividend payout ratio for FY '26 of 100% of free cash flow.

So as we look ahead, we are firmly focused on returning Spark to top line growth and improving shareholder returns. Recognizing our environment has changed significantly since we last -- announced our last strategy in April 2023, the Board has approved a new 5-year strategy. Spark SPK-30 takes a long-term view and provides our shareholders with clarity around Spark's strategic priorities, and where we will invest to differentiate ourselves from our competitors. We are refocusing Spark from a broader digital services ambition to our core business of connectivity. Capital allocation will be prioritized to our core and we will continue to build a scalable cost base through partnerships and AI.

By focusing our investment on what matters most to our customers, our network and customer experiences, we will give our customers more reason to keep choosing Spark.

Jolie will take you through the strategy in more detail shortly, but our focus over the next 5 years is returning Spark to its history of stable performance, with predictable free cash flow and growing dividends for our shareholders.

In a year of significant change for Spark, we've also taken the opportunity to undertake Board renewal, to bring further depth and breadth to an already experienced Board.

Lindsay Wright, Vince Hawksworth and Tarek Robbiati bring broad governance and senior management experience, and deep sector knowledge across telecommunications, capital markets, infrastructure investment and retail customer sectors. You will hear more from each of our new directors this morning.

Before I wrap up, I am offering myself for re-election today. Recognizing my tenure, the Board remains focused on identifying a new Chair for Spark, and this succession process continues. As such, my intention is to serve for a period of just up to 12 months to facilitate successful transition to a new Chair and to support ongoing stability for Spark as it embarks on its new strategy.

As I offer myself for re-election, I want to say what an honor and a privilege it has been to serve you, our shareholders, as a director for the past 14 years, and as Chair for past 7. I acknowledge recent years have been especially tough, and restoring market confidence is my #1 priority as Chair. We have made strong progress in transforming the business and we have started FY '26 with renewed focus and determination. The Board and I remain committed to realizing our ambitions in years ahead, and thank you for your continued support.

[Foreign Language] I will now invite Jolie to address the meeting.

[Foreign Language] Good morning, everyone, and thank you, Justine. I want to begin by thanking our shareholders for your support and our Spark people for their considerable efforts, as we worked hard to transform our business and respond to the challenges we have faced in recent times. Justine has provided details on the actions that we've taken to transform during FY '25 and our high-level financial results. I will now take you through the steps we're taking to drive momentum in our business before detailing our new strategy.

So connectivity is our core business and mobile our #1 priority. We have a significant program of activity supporting mobile that is driving momentum in FY '26, including new high data plans, new brand campaigns and new price points across the market. This is moving the dial and Spark remains the #1 mobile provider by some distance, with 41.4% total market revenue share. Broadband remains competitive, with connections declining by 3.8%. But positively, the revenue decline we have experienced in the first half stabilized in the second. This remains a key part of our core connectivity portfolio.

In IT, we saw cloud revenues continue to grow off the back of strong public cloud growth. However, the shift from private cloud put pressure on margins. IT services revenue declined due to lower market demand. And as we look ahead, we'll continue to simplify this portfolio.

During the year, we expanded the focus of our cost reduction program and undertook a significant redesign of our operations. We also transformed our technology delivery model, which refers to how we operate our IT and network functions across the business. Our new technology delivery model includes 4 key partnerships which allow us to leverage our partners' global expertise and investments in AI and automation to deliver better customer experiences in a more efficient way.

Across all these partnerships, Spark retains our critical assets and control over all components of competitive advantage. This transformation has brought significant change for our people. It's never easy to make changes that impact our teams, and we do not do so lightly. But to deliver a leaner, more competitive business in a changing market, we have had to make the tough but necessary choices to set Spark up for future growth and to ensure our cost base is sustainable.

Overall, we delivered an $85 million cost reduction in the second half compared with the same period in FY '24. This ensures we're in a stronger position as we move into FY '26 and embark on our new 5-year strategy.

After the first quarter of FY '26, trading is tracking in line with our expectations with the new brand campaign, iPhone launch, and price increases supporting mobile service revenue growth. The FY '26 productivity program is on track, with significant savings delivered across labor and more of the savings realized in product costs then in OpEx in FY '26. As noted in August, we have upweighted our investment around our marketing to support the growth in a competitive market. We've also seen the impact of some additional partnership costs in OpEx, which are more than offset by the labor reductions.

So turning now to the future. We know that connectivity will only become more central to our customers' lives. Data usage on our mobile network has averaged around 14% growth every year over the past 3 years. This also drives up demand for cost-effective cloud and data center solutions. Rapid AI advancements will enable us to do things differently, both within our own business and for our customers. In the near term, we expect economic conditions to remain subdued. But we are hopeful of improvement as we continue to see quantitative easing and incentives for businesses to invest. We know our competitive environment will continue to change, and this makes our adaptability as a business and the scalability of our cost base, critical to our success.

It is important to remember that we are building on strong foundations and this can be overlooked during times and performance has been challenged. We have leading positions in our markets, in our network quality and in our brand strength. We have privileged positions in the highest value mobile segments with high levels of customer loyalty. Our customer experience, Net Promoter Score has grown every year for the last 5 years to an all-time high. We have a significant customer base across consumer, SME and enterprise and a highly valuable asset base that reaches almost all New Zealanders. And our return on investment continues to outperform global peers. So the first of our new strategy is to strengthen and grow this position.

So this brings me to our FY '30 strategy. Our purpose, on the left, is enduring. We see ourselves as an enabling business that is here to help all of New Zealand win big in a digital world. Our ambition for the next 5 years is it's better with Spark, whether it's our financial performance, network performance, customer experiences or workplace culture, we want it to be better with Spark. Better than our competitors, but also better than we are now, continually improve the things that matter most. That's our ambition for the next 5 years. This is underpinned by a focus on delivering a better network and better customer experiences.

In network, we'll invest where it matters most for our customers. We'll leverage AI and automation to proactively resolve network issues and uplift regional resilience. We'll also explore new commercialization opportunities from in 5G stand-alone investment. Customer experience remains core to our success, and we aim to continue improving every year by being there for our customers when it matters, being simple and easy to deal with, and by valuing our loyal customers.

We've then made two strategic choices, to lead in core connectivity and simplify and optimize beyond the core. Our capital investment will be prioritized behind core connectivity, and that includes mobile, broadband and our business connectivity, such as managed data networks, the Internet of Things, collaboration and voice.

And when we look beyond the core, to cloud, IT services and procurement, our focus will be on simplifying these parts of the business. We have leading positions in these areas in the New Zealand market, and when we compare ourselves with global peers with similar scale IT business, we have favorable profit margins. That aside, we operate a more fragmented competitive environment in these segments, where changing mix and demand is impacting profitability. So this requires a different approach to our focus in the core.

Finally, our strategy is enabled by 4 key areas: people and culture, technology and AI, financial discipline, and sustainability. As Justine noted, our focus over the next 5 years is on returning Spark to its history, stable performance with predictable free cash flow and growing dividends over time. And with an ambition of growing return on invested capital to 11% to 13% by FY '30.

So I will finish today with our value proposition. This remains a profitable business with strong foundations within our sector. Our core connectivity business is supported by positive tailwinds as connectivity becomes more central in our customers' lives and data usage increases year-on-year. We have leading market positions across all connectivity segments. We have leading AI capability and access to new global partnerships that will enhance our competitive advantage in New Zealand.

We have a proven track record of cost discipline and adapting our business when we need to, and portfolio management to support shareholder returns. Our focus is clear, and our ambition is to deliver growing returns for our shareholders.

And finally, as I offer myself for re-election as an executive director this year, I want to finish by saying that it has been an absolute privilege to lead our team of incredible people here at Spark and to serve on the Board. The past couple of years have been incredibly challenging, and I acknowledge the impact this has had on our shareholders. We have taken decisive action to transform our business within this changing environment and I'm committed to seeing this through and returning back to growth.

I would like to acknowledge the support of you, our shareholders. [Foreign Language]

Thank you, Jolie. We now return to matters requiring resolutions outlined in the Notice of Meeting with a poll to be called on each resolution. The polls will be conducted at the end of the resolutions, and your ballot papers and online voting cards will be collated by our share register, MUFG. Each of the resolutions 1 to 6 set out in the Notice of Meeting are to be considered as ordinary resolutions. To be passed, they require the approval of a simple majority of votes cast by shareholders entitled to vote and voting on the resolution.

There will be an opportunity for shareholders to ask questions in-person, online and over the phone on each matter at the end of the discussion of the resolution. There will also be a further opportunity to ask general questions following the resolutions. When I call for questions, for those of you who are attending in-person, can I please ask that you raise your hand to receive a microphone and clearly state your name prior to asking your question. In the interest of fairness to all shareholders, anyone wishing to speak should be as concise as possible and be considerate to other shareholders. [Operator Instructions] We'll also be responding to questions from shareholders attending virtually via the online portal and those attending on the phone. If there are any questions that relate to personal -- customers matters, these can be directed to the customer services support people we have available here at the desk in the foyer once the meeting is closed. Any customer-related questions online will be directed to our Investor Relations team who will address these directly following the meeting.

For shareholders attending via the online portal, please submit any questions you have on any of the resolutions or on general business now. [Operator Instructions] I'd like to take this opportunity to remind everyone that this meeting is being webcast. So you'll also be heard and recorded by an audience outside of this room.

Our first resolution concerns the reelection of Lindsay Wright as a Director of Spark. Lindsay joined the Board as a Non-Executive Director in August 2025 and Lindsay now offers herself for re-election in accordance with the NZX listing rules.

The Board does recommend Lindsay to you as an Independent Director of Spark and unanimously supports her re-election.

I now invite Lindsay to address you.

Good morning, shareholders. My name is Lindsay Wright and are honored to stand before you today to seek election as a Director of Spark. I bring extensive commercial, business and strategic expertise to Spark. With over 30 years in executive roles across the financial services sector, I have a deep understanding of asset management and capital markets, both within New Zealand and internationally. I have well-developed expertise in risk management, capital management strategy, investments across public markets and alternative assets, finance and business transformation, including digital transformation.

Throughout my career, I've developed demonstrable leadership skills and experience, not only in traditional functional roles, but also in senior positions across the Asia Pacific region, including CEO and Head of Region responsibilities at several of the world's leading asset management firms. As a result, and I think importantly, I understand how to grow businesses organically and through acquisition and partnerships, and have a deep understanding of the expectations and requirements of investors.

My executive career has given me a well-developed appreciation for diversity, informed by living and working in cities around the world such as Sydney, Tokyo, Singapore, New York, Beijing and Hong Kong. I value diversity of thought, knowing it leads to better outcomes, and I bring this perspective to Spark.

In addition to my executive experience, I have a strong governance capability, spanning a wide array of executive directorships and regulated asset managers, securities firms, banks, and private equity and infrastructure investments throughout the Asia Pacific region. I also have over 15 years of experience serving non-executive directorships positions here in New Zealand. Notably, I've served with the Guardians of the New Zealand Superannuation Fund, as Deputy Chair and Chair of the Audit and Risk Management Committee as well with Kiwi Bank and Kiwi Wealth.

I currently serve as an Independent Director of NZX Limited, where I chair the Audit and Risk Management Committee. Additionally, I'm an independent Director and Chair of the Audit and Risk Management Committee at Milford Asset Management, and serve on its Board Investment Committee and Remuneration Committee. I also act as an independent Director for Navigator Global Investments and ASX-listed alternative term contributing as a member also of the Audit and Risk Management Committee.

This governance experience has enriched my ability to contribute significant value to Spark. I bring well-developed understanding of industry best practices and regulatory compliance specific to public markets. Overall, I'm committed to leveraging my skills and experience to support Spark's success, ensuring that my contributions advance the company's growth and effective capital management. On a personal note, my intellectual curiosity drives my passion for the industry and its crucial role across the economy. I believe in the continued growth of New Zealand's telecommunications sector with Spark continuing to play a leading role.

In my current capacity on the Spark Board, I serve as the Chair of the Audit and Risk Management Committee. These roles have provided me, albeit early days, strong understanding of Spark's operations and the governance frameworks necessary for effective oversight. I'm acutely aware of the challenges facing our business and I'm committed to supporting Spark's strategic repositioning through carefully considered and deliberate change. I believe that by pursuing the strategic change, we are laying the foundations for a more robust enterprise capable of delivering sustainable value to you, our shareholders.

Progress has already been made. However, there is a lot more to do. While we have encountered challenges along the way, our focus remains on continuously learning, actively listening and responding constructively to challenges. We are dedicated to integrating these valuable lessons into our operating model, ensuring ongoing improvement in how we manage the business.

I'm seeking election to the Board because I believe I possess the skills and experience necessary to help drive, support and deliver Spark's strategic repositioning. With a shared vision to create a more focused and resilient organization, I'm committed to contributing meaningfully to Spark's future direction. As a passionate New Zealander, I'm driven by the desire to see Spark thrive as a growing, vibrant and commercially focused enterprise. My goal is to ensure Spark delivers value for all stakeholders, shareholders, customers and employees alike. I fully understand my obligations and duties should you elect me as a director. I take these responsibilities extremely seriously. It's a privilege to stand before you seeking election as a Director of Spark to represent you on the Board, and I respectfully ask for your support. Thank you very much.

Thank you, Lindsay. I now propose that Lindsay Wright be reelected as a Director of the company. Are there any questions concerning the motion relating to Lindsay's reelection, either from the floor or online?

My name is [indiscernible], shareholder. What succession plan has been in place for you since your involvement with the Board? And maybe could you name please two things, for instance, from your international experience that you would like to bring on to the Board?

Thank you for the question. With regard to the first part, the succession plan, I joined the Board 3 months ago and have been working with the various other Board colleagues and relationship the development of the refreshed board and the related succession planning, which will occur both for the Chair and the other senior leadership management, as you would expect.

In terms of international capability and bringing that back to New Zealand, I've been back in the country about a year, so I've been a way for 23-odd years. But certainly, I think having been involved in very competitive businesses, particularly the financial services, bringing that real focus to the core activities and doing them extremely well. And I think you heard that through both Justine and Jolie's address in terms of the strategy refresh.

Thanks, Lindsay. Any other questions on the floor. We do have a question online or on the phone.

Thank you. We've got a question from shareholder, Paul Grant from online. Lindsay, what area of Spark do you feel needs the most of your attention?

Given my skill set coming on to the Board, where I believe I add a lot of value, and I just mentioned it in my address is around the commercial and business acumen, and working with both the Board and the team on the organic and partnership development of the strategy. I think I bring a lot of experience with regard to governance, both from my executive governments roles, but more particularly by independent roles through the last 15 years here in the New Zealand market.

Given my broader background, particularly my capability in risk management, both financial and broader enterprise, I think it bring a lot of value and then really working with the team on the ongoing business transformation. I think those are probably the key skills that I'll be bringing to the organization and to the Board.

Thank you, Lindsay. Any other? No other questions. Great. Thank you.

Our second resolution concerns the reelection of Tarek Robbiati as a Director of Spark. Tarek joined the Board as a Non-Executive Director in October 2025, just last month. Tarek now offers himself for re-election in accordance with the NZX listing rules. The Board recommends Tarek to you as an Independent Director of Spark and unanimously supports his re-election.

I now invite Tarek to address you.

Thank you, Justine, and good morning, shareholders. It is a pleasure for me to meet you and an honor and privilege to be here at my first Spark Annual Shareholder Meeting to be considered for election to the Spark Board.

By way of background, I come here from my home in Los Gatos, California, I am an Italian citizen, and I have been lucky enough to work around the world throughout my career, from Italy, to France, Latin America, the U.K., Australia, China and now New Zealand and the United States.

I am married to a New Zealand citizen, and I have been coming to New Zealand very frequently since 2015 and obtained my permanent residency in Aotearoa in 2021. I consider it the privilege to be able to spend time here both personally and professionally. I spent more than 30 years of my career in telecoms, technology and financial services industries in various roles.

I started my career as a strategy consultant with Accenture, working on various assignments in the telecommunications space and technology industries in Europe, Latin America. And then I became a senior research analyst in telecommunications and media in London with Lehman Brothers, and subsequently moved into various executive roles in the industry since then.

I served as Head of Corporate Finance with Orange plc in the U.K. and move to become Deputy Chief Financial Officer of Telstra Corporation in Australia. I then moved to China to take on the role of CEO of Telstra's mobile subsidiary in Hong Kong, CSL Limited and became Group Managing Director of Telstra International Group.

I also served as CEO of FlexiGroup Limited in Australian Financial Services company and eventually moved to the United States to become the Chief Financial Officer of Sprint Corporation, leading its transformation ahead of its merger with T-Mobile.

Since 2018, I have worked in the technology sector in Silicon Valley, first as Chief Financial Officer and Executive Vice President of Strategy for Hewlett Packard Enterprise. And I'm now the Chief Financial Officer of Pure Storage, the #1 provider of data storage and management solutions globally with a market capitalization of $33 billion.

Throughout my career, I have helped companies fundamentally transform and grow their businesses organically and organically. In parallel, I'll turn my attention to governance since 2006. When I became Director of TelstraClear New Zealand and served in various non-executive and executive directorship roles in private and publicly listed companies.

I currently serve on the Board and Chair the Audit Committee of Digicel Holding Bermuda Limited, the largest mobile operator in the Caribbean operating in 25 countries.

Now on to Spark. The reason why I joined the Spark Board is because I believe this company is uniquely positioned in New Zealand to drive the next generation of intelligent communications to consumers and businesses alike. I bring a unique perspective to the Board, one that combines 25 years of telecom industry operating experience with deep financial expertise that will contribute to the diversity of our discussions.

I have extensive executive experience in strategy, finance and enterprise transformations. I have worked in major corporations globally and have deep knowledge of debt and equity capital markets that have helped me appreciate and understand shareholders expect. I have worked with companies that required transformation and restructuring, companies that are leading their industries as well as companies that have a complex portfolio of assets that embarked on a journey back to growth. I have a real-world operating experience on a global basis to provide sound counsel to Spark as it works to realize its full potential.

I am very excited to have joined the Board of Spark and to be here in front of you today asking for your vote and endorsement for my election. Thank you very much.

Thank you, Tarek. I now propose that Tarek Robbiati is reelected as a Director of the company. Are there any questions concerning the motion relating to Tarek's re-election, either from the floor or from online.

Yes, Mr. Shroff, a shareholder. So Mr. Robbiati, where are you currently based and how much time would you -- do you expect to be able to devote to Spark in your role, if you're elect?

Thank you for the question. I'm currently based in California. And needless to say, as part of my appointment to the Board of Spark. We had extensive discussions with Justine and my fellow directors about my commitment of time. I'm committed to serve the right amount of time necessary to help Spark executed strategy, and this is why I'm here. It will be as necessary for all the Board meetings and around the board meetings as the company requires it.

Yes. I'll just add to that. I mean, any director spends the time required to both attend Board meetings and prepared for Board meetings. And Tarek is absolutely committed to doing the same amount of work that any director you'd expected to undertake as a Director of Spark. The other thing I'd add is that we are incredibly fortunate to have and being able to attract. And I think it has something to do with the wife, but to be able to attract the talent of Tarek to this Board, it is really hard to get somebody with the amount of experience, in-depth experience he has across all parts of the sector. So we are really hugely fortunate and we're really fortunate that he has, as I say, committed to the time and to spend with us and really deliver in his role.

I'm a shareholder. I welcome your visiting our companies in New Zealand. And I want to ask you, what is the single biggest thing you see with all the experience you have with all the other companies around the world in our space that Spark needs to do immediately to turn the financial performance around.

Thank you very much for the question. I think it's absolutely pertinent, given the journey that Spark has been on for the past 2 years, which are very tough. Our focus is really around executing the strategy. It's all about strategy execution and delivery of the commitments and the guidance we stated to the market. And I am vividly focused on this issue. Strategy is wonderful. But without execution, you don't get anywhere. And that's why I'm here.

Thanks, Tarek. Are there any other questions from the floor? We do have one online. So I'll go there.

Thank you. We've got a question from shareholder, Paul Grant. Tarek, what do you believe will get Spark's share price rising again?

Thank you, Mr. Grant for the question. Again, it's about execution and returning the company to growth. I think our Chief Executive, Jolie, made a strong point about this. This is where the focus of the management team is, the focus of the Board is. And essentially, our strategy just to repeat a little bit what Jolie has said, is really to reignite the growth in our core mobile connectivity business, and that's why we're here to do. So returning to growth is the #1 priority to get the share price to rise again as the valuation multiples are directly correlated to the amount of that we're able to generate.

Thanks, Tarek. Any other questions for Tarek? Sorry, we hit one on -- another one online.

Yes, we've got a question from Stephen Mayne, shareholder. It's unusual to appoint 3 independent new directors in the 3 months leading into the AGM. Which recruitment firm assisted with this process? And did the full board interview any other candidates? And could each of the new Directors, including Tarek comments about their experience of the recruitment process?

So yes, we have done an extensive search and process in relation to appointing new directors. As we went through that process and had a lot of very good candidates that we spoke to, and we have spoken to other candidates than what's sitting in front of you here today. But what we realized was when we were trying to choose particular candidates that between the 3 of Tarek, Vince and Lindsay, we had such a great broad range of skills that are covered right across the board. And so we decided that the Board refresh to appoint all 3 directors was really going to set Spark up in terms of the new strategy execution and obviously as well with the fact that I will be only serving for another period of 12 months.

So that is why we brought on 3 new directors. We had great talent in front of us, and we thought it was the right thing to do to really reinvigorate and actually bring such a broad range of experience across these 3 because they really do complement each other. They have very different skill sets, some common, but they really do complement each other. So we did use a recruitment firm. I don't think we normally would disclose the name of that firm, but we did. It's a firm we've used and had a relationship with a long period of time.

Great. And we've got one more question online from [indiscernible], a shareholder, to Tarek. Right now, Tarek, you're a full-time CFO. What is your vision for the Spark from the financial and technology perspectives?

Thank you, Mr. [indiscernible] for the question. I think this has been, by and large, answered by our Chief Executive, Jolie, but let me reiterate. I think it's really important that we returned the core mobile business to growth, and that we stand out in the New Zealand market with our mobile business capabilities that should translate into better financial performance given our position, enabling also a number of different applications for consumers and businesses alike.

No further questions.

Okay. Thank you. Our third resolution concerns the reelection of Vince Hawksworth as a Director of Spark. Vince joined the Board as a Non-Executive Director in October 2025. Vince now offers himself for re-election in accordance with the NZX listing rules. The Board recommends Vince to you as an Independent Director of Spark and unanimously supports his reelection.

I now invite Vince to address you, he's keen as mustard. I can tell that.

[Foreign Language] I extend my welcome to you, our shareholders today. My name is Vince Hawksworth. I was born in the U.K. and trained as a mining engineer. I also have an MBA from Waikato University.

Most recently, I was Chief Executive of Mercury New Zealand, having previously led Trustpower and Hydro Tasmania. My career has always put me at the intersection of customer needs, people and technology. I have significant leadership experience and believe that organizational culture and belief are at the heart of performance.

I respect Spark's distinguished heritage and its critical role as a leader in New Zealand's digital future. I also recognize that shareholders expect their company to deliver results, and this requires focus and teamwork. I look forward to working with my Board colleagues, Jolie and the executive team. It is a privilege to put myself forward with re-election as a Non-Executive Director at Spark New Zealand. I am currently a Director of Powerco New Zealand and a trustee of the Starship Foundation. I'm also working with Datagrid New Zealand on its ambitions to develop a hyperscale data center in Southland.

Spark's Board charter sets high standards for governance and independence requiring Non-Executive Directors to act autonomously, remain free from conflicts and place shareholder interest first. My career has been guided by these values. And if I am reelected, I will bring impartial oversight and an independent perspective.

Through my executive experience in the energy sector, I have led transformation initiatives that parallel Spark's ambitions. Like driving the integration of Trustpower and Mercury systems to increase performance, reduce costs and bring new products to customers, creating New Zealand's largest multi-utility retailer which resulted in increased value to shareholders.

Spark strategy demands directors who combine industry knowledge, ethical judgment and commercial acumen. I bring a strong track record in strategic leadership, risk management and sustainable growth. My executive roles have spanned large-scale integration projects, resilience planning and responsible capital allocation, delivered with culture as a key enabler of performance and success, all directly relevant to Spark's vision for market leadership and innovation. I will work to ensure Spark meets its obligations for transparency, environmental stewardship and risk governance, helping the company grow responsibly and remain a trusted partner for stakeholders.

In summary, my passion for technology, proven leadership in transformation and dedication to responsible governance, position me to contribute meaningfully to Spark and you, its shareholders. I ask you a trust and support as we work to ensure Spark thrives in a dynamic digital landscape. [Foreign Language]

Thanks, Vince. I now propose that Vince Hawksworth be re-elected as a Director of the company. Are there any questions concerning the motion relating to Vince's reelection, either from the floor or online?

Okay, nothing from floor? I'll take the online question.

Thank you. A question from shareholder, Paul Grant. Vince, what area of expertise can you offer in terms in getting Spark's share price growing again?

Thank you, Mr. Grant. Look, I think what I really bring is the ability to integrate thinking, some real industry experience in New Zealand in this utility sector, in the broader sector. You've got to remember the competitive environment isn't just telcos anymore, competitive environment is full of people entering. I guess I was Chief Executive of one of those competitors. So I've seen Spark as both a customer and a competitor, and what I can bring is insight and some New Zealand relevance and cohesion to the debates that will occur around the Board table.

Thanks, Vince. We have a further question online?

Yes. Thank you. A question -- just a follow-up question from Stephen Mayne. Specifically, could Vince and Tarek and Lindsay comments about their experience of the recruitment process that you talked about before? And just detail if they knew any of our directors or senior executives before engaging with the recruitment process?

Why don't you take that, Vince?

Yes, Look, from my perspective, the recruitment process was robust and arduous. We had numerous sub interviews with the Board, opportunity to ask questions and do our due diligence. In my case, in terms of knowing people who are already on the board, I guess New Zealand is a relatively small market. So I would have probably bumped into most of those people. Obviously, as a former Chief Executive in the New Zealand market, I knew Jolie and that's not surprising, both as customer of Spark, but also as one of our competitors.

But I think I would summarize it by saying that the process explored deeply the contribution that we could make or I could make to the Board, the fit, which I think is incredibly important, the cultural fit to make a difference to get things going in the direction we want them to. And I think also it explored our commitment. And I can tell you, I am committed to seeing this strategy work.

Thank you, Vince. And just perhaps I'll add for clarity. Before we went through the process before I spoke in my conversations with any of Vince, Tarek or Lindsay, I had never met them before. So just to make that clear, even though New Zealand is a very small market. So -- and what I would also add, whether you've observed it or not, we are really -- we make quite a determined effort on our Board here to make sure there's not a lot of cross directorships on the board. I don't think any of us -- no, none of us sit on another board with the other which is quite something in this very small market.

Thank you, Vince, for that very comprehensive presentation. Can I ask you, with your experience in the electrical market in New Zealand, can you see a big opportunity for Spark to get some real cost efficiencies from our suppliers?

I'm really looking forward to the answer. Vince?

I would say that Spark would be a fantastic customer for any of the suppliers. And we should never shy away from putting commercial pressure on those suppliers to do better.

Any other questions for Vince? There's nothing more online. Okay. Thank you.

Our fourth resolution concerns the reelection of Jolie Hodson as a Director of Spark. Jolie joined the Board as an Executive Director in September 2019. Jolie retires by rotation in accordance with the NZX listing rules and now offers herself for re-election. The Board recommends Jolie to you as a Director of Spark and unanimously supports her reelection. You have already heard from Joey earlier, so I now propose that Jolie Hodson be reelected as a Director of the company.

Are there any questions concerning the motion relating to Jolie's reelection either from the floor or online. I do have a question online.

Thank you. A question from Paul Grant. Jolie, in what areas is Spark losing market share? And what are you doing about it?

Thank you, Mr. Grant. Our focus in terms of market share, particularly in mobile has been making sure that we are investing in that core connectivity. You've seen additional work we've been doing around our brand, but also network, which that provides really strong experience for our customers and is the thing that enables us to do everything that we do to support whether you're a business, an individual or a community group wanting to achieve the things you do through digital technology.

So our share -- just to clarify, our share, market share. We have leading positions in all of our markets. So if you look at our overall mobile market share, our revenue shares sits at 41.4%. We lost 0.4 of a percentage point, some of that to smaller MVNO players and particularly in that lower end of the market, with a tougher economic environment, people have looked for some more cost-efficient plans. But overall, when we look through all of the segments that we operate in, we have strong positions.

Thank you, Jolie. Any other questions for Jolie? Great. Thank you.

The next resolution concerns my own reelection as a Director of Spark New Zealand. I have asked Warwick Bray to Chair this part of the meeting for me. Thank you.

Thanks, Justine. Justine is retiring by rotation in accordance with the NZX listing rules and offers herself for reelection. Recognizing Justine's tenure, the Board remains focused on identifying a new Chair for Spark and this succession process continues. Justine's intention is to serve for a period of up to 12 months to facilitate a successful transition to a new Chair and to support ongoing stability for Spark as it embarks on its new strategy. The Board recommends Justine to you as an Independent Director of Spark and unanimously support her reelection.

I now propose to Justine Smyth to be reelected as a Director of the company. Are there any questions concerning the motion relating to Justine's reelection either from the floor or from online?

Thank you. We've got a question from Stephen Mayne. Thank you for disclosing the proxies early to the ASX along with the formal addresses. Could the Chair comment on whether she is surprised that of the 5 directors up for election today. She suffered the largest proxy protest vote with 7% against reelection. Did any of the proxy advisors recommend against her reelection based on tenure concerns?

So I guess another way of putting that is that more than -- well more than 90% of the votes were for Justine's reelection. She was unanimously supported by the Board and specifically all of the proxy advisors supported Justine's reelection. One more? I've got a question online.

Thank you. A question from Edmond Good, shareholder. Justine, why should shareholders reelect you as a Director considering the result of the company's performance and failure to adequately manage the changes in the economy/government policy?

Justine has been an outstanding chair of Spark. Justine has overseen the new strategy that's put in place. The directors unanimously asked Justine to stay on for this extra year in this period of transition, which we felt was very important to have stability in the Board and to be -- yes, to oversee the company in this time of transition, the Board felt stability was important. Another question, online?

Sorry, I was just compiling the list, one second. Compared with 1 year ago, the stock price of Spark significantly decreased. What is the reason behind this, even if Spark did sell some assets? And Justine, how do you expect to address this?

In terms of selling assets, we had a strategic review. And as part of that review, we sold further assets in terms of the telecommunications towers, our holding in Hutchison in Australia and our data centers. It has been a tough year, as acknowledged in Justine and Jolie speeches. It's been a tough year in terms of cost of living. It's been a tough year in the telecommunications environment. We've put in place a new strategy, and we're confident that implementation of that strategy would lead to a return to growth.

Thanks. No further questions online.

So questions from the floor?

I'm a shareholder. I noticed the Board has said that Justine is an Independent Director. And it seems to fly in the face of the NZX guidelines. I wonder if you could explain that, please?

Yes. So we evaluate director independence annually of all of our directors. And the length of -- and that review led to a view that Justine's tenure has not eroded the separation of the Board and management. The Board strongly consider that Justine's understanding of Spark, her experience and skills in the industry add significant ongoing value to Spark, and are of the view that her tenure doesn't interfere with her capacity to bring an independent judgment. And I see that in every Board meeting on issues to act in the best interest of Spark and to present the interests of its shareholders. And I would note that Justine is putting yourself up for election for a period of 1 year, not 3 years.

With that, there are no more questions from the floor, and there are no more questions online. So pass back to Justine to continue chairing the meeting.

Thank you, Warwick. Our sixth resolution relates to the remuneration of the company's auditor, Deloitte. Following the procedure set out in the company's act, Deloitte is automatically reappointed as the auditor of the company. Deloitte was first appointed as auditor in 2020, and Spark's policy requires that the lead audit partner is changed every 5 years. In line with this policy, Ms. Melissa Collier has been appointed as the new lead audit partner for FY '26. The motion concerns the fixing of the auditor's remuneration and seeks shareholder approval that the directors be authorized fix the auditor's remuneration for the ensuing year.

In line with this motion, 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 the motion relating to Deloitte's remuneration either from the floor or online?

Nothing from the floor, but I think there is a question online.

A question from Stephen Mayne, a shareholder. When was the external audit last put out to tender and when will it likely next be put out for tender?

We last put it out for tender. Someone can correct me if I'm wrong, but that was 6 years ago. After we had long-standing auditors for the previous 20 years. So at this point in time, there's no further comment on when we would be putting it out to tender. Obviously, we do review all our various external advisors from time to time, but there's no intention at this time.

No further questions on that resolution. Thank you.

Please now submit your vote for the resolutions on your election voting form or for the shareholders attending in-person, you should have a ballot paper which has given to when you registered. So please select for, against or abstain. Representatives from our share registrar 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.

I'd like to thank shareholders for -- I think, actually, we're just going to -- are we going to just wait while some -- while the voting takes place.

[Voting]

We will go to general questions. We will do that in a moment. Yes, sorry. We'll definitely have some time for questions. No, don't worry about that.

Just so I'd like to thank shareholders for their level of participation in today's meeting. Online voting should hopefully be completed by now. Final results will be released to the NZX and ASX following the meeting.

Before we take general questions from the floor and we'll start with you first, sir, I'd like to advise the outcome of the proxy votes that were lodged in respect of the resolutions. They're just there for your information. I won't be reading them out, but they are showing on the screen for you.

I'd now like to offer shareholders the opportunity to raise general questions. Any person wishing to speak should raise their hand to receive the microphone as we've done previously. We'll also be responding to questions from shareholders attending virtually as you know, via online portal and those attending over the phone. [Operator Instructions]

And before I take questions from the floor, we did have a few pre-submitted questions prior to the AGM starting from shareholders, which I'm just going to address now. Some of the questions have been edited to make them more concise, some were quite lengthy. There are also shareholders who submitted multiple questions in advance. And so we will respond to some of the questions individually via e-mail in the interest of ensuring all shareholders have the opportunity to participate in this meeting. So I will just deal with those -- five of those questions just now to -- before we start taking questions from the floor.

Michael Watson has asked when the DRP is being reinstated?

So at the time of our FY '25 full year result in August, we announced that our dividend reinvestment plan has been suspended. If the Board decide to reinstate the DRP in the future, it will make a market announcement at that time. So I have no further information on that at this time.

Alan Turner wants to know why Spark has so many Directors?

Spark currently has 7 Non-Executive Directors on the Board. And they bring a wide range of skills and experience and expertise, which is what you would expect as required to govern a company of this size. I'd also note that the number of directors is consistent with many other listed companies of our size in the market.

Lavino Calico says that the business remains heavily reliant on the New Zealand economy, and ask why we haven't considered exploring minority stakes in overseas companies as this would diversify Spark's revenue and hedge against domestic economic stagnation.

So look, businesses have varying degrees of success investing overseas. I think we all are aware of that. In Spark's competitive advantage is in New Zealand. And that is why it is our focus. And what you've also heard today is our strategy is very much getting back to the core of connectivity. And so that is where we need to remain focused to really start getting that growth back that we've talked about and adding that shareholder value.

Gale Bennett had submitted a list of questions, many of which have already been addressed earlier by myself or Jolie in our addresses. So I'm just going to talk to or raise two of those now, and our team will respond to the rest of the questions individually through e-mail.

So one of those questions is how many senior managers are currently employed and what's been done to reduce overheads?

So Spark currently has 9 members on its leadership team and 62 senior leaders who report into members of that leadership team. As Jolie and I noted earlier, we've made significant changes to the business in the past year to streamline our operations and to align our structure with changing markets. So this resulted in a reduction of 25% of our workforce and $85 million cost reduction. So it is never easy to make changes that impact our people, but we've to make tough and necessary choices to get Spark -- to set Spark up for that future growth.

Another of her questions, Gale's questions is, what is Spark's plan to restore shareholder value given the decline in share price?

I think we have covered a lot of this in our addresses, but I think it's important to reiterate. We do understand the impact that this has had on shareholders. The decline in share price reflects both cyclical economic pressures and structural challenges that we have faced. But we also have said that we accept responsibility for our performance and we have responded decisively with a reset of our strategy, divestment of non-core assets and a renewed focus on our core connectivity business, as I've said. So we are confident that these actions will restore long-term value.

Okay. So with that underway, I'm now going to take questions from the floor. And this gentleman can start us off.

Yes. Just what's our voting for the Director Lindsay Wright. No problem. I've voted for her, but I think she said, she was on the Board with the Milford management. I see that financial management on the Board with Milford. I see they sweeped in and bought millions of share back in -- well, bought back a few months ago, when the Spark fell a bit, the price come off and the everybody saying, coming off that index is the cause, and I just wonder if that's a conflict of interest.

That's a really good question.

And then plus just one more.

Can I just deal with that one because...

Yes, okay.

So just on that, so in terms of her directorship with Milford on the Board, Milford, and obviously, we looked into this and satisfied ourselves. So Lindsay can comment if she needs to, but the Board doesn't make any decisions of Milford -- we doesn't make any decisions about investments in individual issuer companies. Obviously, they have funds that make those decisions, which Lindsay doesn't sit on those funds.

And yes, so Milford has been a long-term shareholder, actually, and it does buy and sell shares on a on a regular basis. It's holding and us does go up and down. At the moment, they're not as substantial, they're not over 5% and they're not a substantial shareholder of us at the moment.

Perhaps I can just reiterate that. As a Board member of Milford, I have absolutely nothing to do, neither does any other Board member for that matter, with the investment decisions made in respective funds of Milford Asset Management. That is a responsibility of the portfolio managers and the teams. And just to reiterate, I had no visibility around that. So them buying and selling and/or voting, I have zero visibility. My roles on the Board of the corporate and the management of the funds is done by the investment teams and professionals as you would expect.

Thanks, Lindsay.

Okay. It's probably a positive, if you did have something to with it. The second question about Facebook and the messaging. What's the ballpark figure for Spark to get out of that? I mean that's Facebook [indiscernible] any mobile...

I'm not sure of the question, Jolie, do you want to?

Well, Facebook, that will be an application that runs over [indiscernible]. We don't get necessarily any money in relation to that. That will be their own revenues from that.

Are there any other questions from the floor? You should probably actually join me too, Jolie, just in case I need to...

Yes. Michael Shroff, a shareholder. Where is your call center currently based?

Our call center -- you can -- our call centers are no different. Our call center for years have been based. We have both presence in New Zealand, and we do have presence overseas in...

The Philippines.

The Philippines. That's been the same for a number of years. There's been no change there.

And the 111 call center is in New Zealand as well.

I noticed that you have sold some the data center stakes recently as the whole wells are really hot on data center, is that a good strategy? What's the reason that selling 75% of the data center state?

Yes, it's a good question. The data center strategy required -- to invest in data centers and to build, we have a number of sites. We're one of the biggest data center owners in New Zealand, as you know. But the investments that's required to grow those sites and put capacity into those sites is probably about $2 billion. So over the next 5 to 10 years, and so by doing this partnership and selling 75%, basically, that growth will be funded through that partnership. And by retaining our 25% stake, we will have access to that investment as that investment grows. So that's the reason of what we've retained a stake, but also funding $2 billion of growth in data centers would have meant taking money away from our core connectivity business, which is where we make 80% of our margins. So that is why we have done that.

And realized, I would add, recycling capital in that way, realized a very attractive multiple on that sale. It's about 30x in terms of the value that the data centers were valued at in that transaction. And keeping -- obviously, keeping those data centers in our business, the multiple is around 8x. So it's a significant value uplift for shareholders in doing that transaction.

I'm Helen. I'm the shareholder. I'm just wondering how much the Elon Musk's Starlink, the satellite, Starlink will affect Sparks in long term? And what's the strategy for that?

So Starlink has a role to play in New Zealand in terms of connectivity and the role that it plays within that. So if you think about the progress that's made in the last 3 years with broadband, it's about 53,000 connections. If you think about it in the context of a market of maybe 1.7 million households. So we have 660,000 connections. So we see it as playing a role in helping to support, if you think about rural places that there may not be either fiber to those homes or sometimes not the mobile connectivity there as well. So it has a complementary role to play within the network offerings.

My name is Gary Jamieson, I'm a shareholder. I have two comments I want to make. The first is that I don't think like much of some of your TV advertising, particularly with the car splits? And the second thing is, I get a little bit of annoyed at home when making payments that I keep forgetting. I've got to go and get my phone for the code that you keep sending out before the payment could be made?

Okay. Just maybe to answer that first question. We know that not everybody is going to be a fan of a particular commercial that we make. But the importance for us is making sure we are demonstrating that we're doing around the network, and we have very strong tracking around those commercials when we do make them, and we're seeing good response to that.

On the second piece around the code, I'm presuming you're talking about two-factor authentication. And one of the things that is really important is to make sure that we are dealing with the person we think we are and to avoid scam and fraud. So that is why we're requiring number of levels of authentication. And while that might be frustrating, we would rather keep you safe and secure and make sure that there isn't any -- it is from us, and we know it's you on the other end of that transaction. That's why we have security processes like that.

I'd also add too, obviously, through your phone, a lot of it is -- might be bank -- your bank or the transactions you're doing with the bank. It is your bank that requires that two-factor authentication. It happens to be coming through your phone, but it's actually the protocols and requirements of the person who's using the app often as well.

Vivian, both a shareholder and a customer. So question is from a customer perspective. Is it possible for a customer to pick and mix your products and services? Because at the moment, I'm finding it a bit rigid.

There should be every opportunity to use different of our services, whether that's mobile and that's whether it's our Spark brand or our Skinny brand or in broadband or voice. We have a customer team who are sitting outside. So maybe perhaps after the meeting, it might be worthwhile going out and chatting to them about what your specific needs is, and then I'm sure we'll be able to help you.

Is there a consideration for further staff layoff in the name of cost cutting?

If you think about the industry that we work in, there is always change happening, technologies, new technologies come in automation. So we constantly need to look at both what we need within the organization, but also the environment that we're working in. And when the economy has changed like it has, we needed to adapt to do that. It's not something we do lightly. But I would be wrong here to stand here and say that we would never have future people change. Will it be of the scale and size that we've had in the last 12 months? I wouldn't expect so. But as we use new automation, artificial intelligence, there were things that help complement and augment what our people do.

Kevin, just a quick question. Given that your operating revenue is down $100 million, and by the way, after complementary on the operating expenses, we were minus $7, on the previous year...

So if you -- previous year, I think -- and our whole operating expenses were $7. I would be pretty excited about that.

I congratulate you on that. You just said that there were cost savings of $85 million. Where did that come from?

In the second half, so that was from labor and in relation to some of our product costs. So things set up in our gross margin, and then our other operating costs. So a combination of the partnerships that we've done, the work we continue to do in terms of bringing together different parts of our organization, subsidiaries and eliminating duplication within the organization. So that's what's driven it. You will also see further costs flow through from the changes we made in FY '25 into our FY '26 year. And I sort of touched on that in my notes in terms of that program being on track.

Okay. Just one other. The -- if '24 tax was 196 -- $196 million, 2025 was $95 million. What -- can you explain that?

There were varying different changes in the tax expense. So one of the things it was a change around in 2024, I think around the government depreciation policies. We also had some divestments of different assets as well. We can come back with maybe perhaps some more detailed response to you.

Jolie, you find this gentleman afterwards. Thank you.

Just one other question. And I get really annoyed too, exactly like the other lady. I go down to the Spark shop down here, and I asked them why can't I have an independent watch plan. The keep telling me, no, it's got to be tethered to phone plan...

Okay. We'll let you talk with the team outside about that particular...

That's really annoying. I think there's a big, huge opportunity for revenue growth in that...

Thank you. Rodney?

Yes, we've got a few questions from shareholders online. First question from Mr. Grant. With your home broadband monthly fees going up faster than the rate of inflation, are you planning another increase in the next 12 months? If you do plan another increase, Don't you agree you will lose even more market share and shrink the loyalty of your consumers?

So we review our price annually, and we increased our broadband prices this year by $5 to $8, depending on which plan you're on. That also includes some of the things like we have Netflix and things added with those plans. So if they have price increases, we need to reflect that. A large amount of our cost related to, for example, fiber comes from the local fiber companies, like, Chorus. So if over time, those costs increase. Ultimately, we need to make sure we are making suitable price increases to reflect the investments that need to be made, whether that's in the mobile network to support wireless broadband or whether that's in our customer experiences.

So we're very cognizant about making sure we have a range of plans that are available for our customers. And so that can be from -- at the lower end really good value to some of the things where there's more inclusions up. So we hope to be able to serve everyone with a wide range of plans within that.

Okay. The next question comes from Henry Chan. You mentioned previously about the use of satellite capability for mobile phone users. Compared with the key competitors in New Zealand, you seem to have a little bit of a product gap there? How is the company addressing this gap?

So we are testing a satellite proposition, and we will be a market with that at the beginning of the year. We haven't seen significant market share shift in relation to satellite. What I was talking about before was really satellite broadband, not so much around mobile. Again, it's an offering that all of our bidders in the marketplace will have in 2026. It just expands coverage. If you think about our mobile networks, the really extend to 99% of the population. So they deliver really great service for New Zealanders wherever they are, but there's an opportunity with satellite just to extend to those periods where people aren't regularly there.

Okay. Thank you. It seems the only way Spark is making money is by selling off assets. Sorry, this is from shareholder, Simon Todd. I've held shares for a number of years, and they have obviously decreased in value. Given you've been selling off assets, how is that going to help with an improvement in investment value?

Yes. I mean, the -- just in terms of making money, if you look at our adjusted numbers, the money that we make and the revenue is not from selling off assets. That is excluded. So the revenue is from our transactional business. And we exclude, as we said we often -- when we have a one-off gain on sale, we exclude that, and we're very clear about that. So yes, acknowledge the share price has dropped. We're all well aware of that. And we -- as we've said on a number of occasions, I think already today that there's been a tough year in the New Zealand economy.

We haven't been immune to that volatility, but we also accept responsibility for our performance, and we've taken a significant transformation program to reset the business. And that is where we're focused and continuing on growing both revenue and profitability for this business over time in terms of getting back to that long-term shareholder value creation.

Thank you. Next question comes from Grant Collingwood, online. What does Spark New Zealand actually doing to build and improve core service, pricing and coverage to gain market share from competitors?

If you stand back and look at our new 5-year strategy, it is really centered in the core of our business, so mobile, particularly. It's based on a better network experience and a better customer experience. So therefore, our investments as we think about capital allocation is going into making sure we're investing in the network throughout the country. We're making sure we've got good resilience within that. And we're making sure we're innovating in the plans and the ways that we are helping our customers to use those -- use the networks or use the services to really enable them to do the things they need to.

One of those areas in enterprise is in 5G private network. So very much working with different organizations within New Zealand to see how they can improve their operations and do it through this new capability they're bringing together. So for us, it's the focus on -- really clear focus on the core part of the business that generates most of the revenue and earnings for that and making sure where we are investing in network to really help uplift that experience is aligned to that part of the business, too.

Thank you. Next question is from Simon, a shareholder. I've been a shareholder and a Spark customer for over 20 years. As there's no optical fiber in the part of New Zealand where I live, and in addition, Spark has chosen not to provide any cellular coverage here. I rely on a copper landline for my Spark service. I understand that Chorus will be retiring the copper network completely by the end of the decade. Do you have any plans for keeping me as a customer in a few years' time?

Yes, we do. When you think about the copper networks and the PSTN, which is our voice network that is being retired over time. Those technologies are very old. For example, our PSTN voice network hasn't had parts made for that since 2003. So it's very important that we do move to new forms of technology. Clearly, we need to make sure that there's a service that is able to meet your needs and whether that is a satellite, which helps to support Internet or across mobile, they will be an important part of that. So we're very cognizant of making sure that customers have the services where they need them.

I'll just say to that, too, obviously, that customer sounds like lives in a very -- must be quite a remote part of the country if they're not getting cellular service because we have 99% of the country covered.

Okay. We've got another question online from Grant Collingwood. How much duplication is there by operating Skinny besides Spark?

Well, if you think about Skinny and Spark, they offer two very different brand propositions. Skinny very much is that no-frills, last value, get a good service, but I don't want any of the bells and whistles you might add. If you think about Spark, it offers more of a premium service. And so it serves different customer needs. There are many services within it that are supported by the organization, i.e., they don't run in duplication, including the network within that.

So I don't think there's significant cost associated with having two brands. In fact, it helps us better meet the needs of our customers and be more competitive across the mobile.

And I've got a question from Stephen Mayne, shareholder. At last year's AGM, I asked you to put up a voluntary remuneration report advisory note today, but you have refused unlike the practice by Xero and Fletcher Building, which have embraced Australian-style remuneration voting practices because they're also dual listed on the ASX. Did you discuss the idea of putting up a remuneration report vote? And have any of the other investors ask you to do this?

Look, while putting up our remuneration report as required by Australian law. It's not the requirement of the NZX which we -- where our primary listing is. So we're well aware of that. It's not something we're currently considering. And given we have other priorities of focus at this time, there is a significant amount of disclosure regarding remuneration within the annual report, you will have seen that, and that should provide comfort to shareholders. And I know they've called out there, but Xero's primary listing is on the ASX that is required by law to do that.

Thanks no further questions online at this point.

Okay. Thank you. This seems to be no further questions. That was a really great and active meeting. Thank you very much for those contributions.

I'd like to thank you all for coming today and also to those who have attended virtually, we value your input as shareholders. We will announce the final results of the poll to the stock exchange this afternoon. I now declare the meeting closed.

For those of you attending the meeting here at Spark City, I invite you to join us for morning tea in the function room at the front out here. It'd be nice to have a chat to you. [Foreign Language]

[Foreign Language] everyone. Welcome to Spark's Investor Day.

If I just start with a few housekeeping items. The bathrooms are located just outside the door by the lifts. And in the case of emergency, staff -- if you make your way out to Albert Street, staff will be able to direct you from there, but I'm sure we'll have no such luck for that today.

Okay. Just in terms of today, management will share details of our new strategy for the next 5 years. And since we set our last strategy. We've been seeing a fundamental shift in economic conditions in New Zealand with consumer, business and government spending materially reducing. This has put significant pressure on Spark and demonstrated that some areas of our business are more exposed to cyclical conditions than others.

We have undertaken extensive transformation over the last year to respond to these challenges. This included refocusing on our core of connectivity, transforming our cost base and realizing value from noncore assets and our data center business. We have made good progress, but there is still more work for us to do.

As part of the transformation focus, the Board undertook a review of our capital management, which was shared with you at FY '25 results, and Stewart will cover again later today.

We've also recently renewed the Board with 3 new directors joining us in FY '26. Lindsay Wright joined us in August and Vince Hawksworth and Tarek Robbiati will join us in October. Between them, they bring a broad experience and expertise and governance, executive business management and deep sector knowledge across telecommunications, finance, capital management, infrastructure investment and customer and retail sectors.

We have involved two of our new directors in our FY '30 strategy process. And their skills will be valuable addition as we move into this next chapter for Spark.

In recognition of my tenure, chair succession remains a focus for the Board. And in the context of the renewal process we have underway, I have confirmed this morning that I will stand for reelection at the upcoming AGM in November with the intention to serve for a period of up to 12 months.

My intention in standing for reelection is to ensure a successful transition to a new chair and to support the stability of Spark as it embarks on its new strategy and builds on the progress made so far.

The strategy to FY '30 is centered on things that make Spark great, our network, our customer experiences and our people. With capital allocation prioritized to our core business, our aim is to deliver growing returns for our shareholders.

And so on behalf of the Board, I'd like to thank investors for your support. I look forward to speaking to you after today's presentations.

And I'll hand over to Jolie. Thank you.

Thank you, Justine. [Foreign Language] Welcome, everyone, to the Investor Day. Today is really a chance for us to overview the new strategy in a little bit more detail. At the full year results, we obviously released some of that high-level overview of that strategy. And today, we're going to go into it in the different components, whether that's the network experience, customer experience, what does that deliver?

So I'm going to do the first part of the overview. Then we will turn to Greg, who will talk to leading core connectivity, Mark on business connectivity and simplifying beyond the core. You'll then hear from Renee about our better network ambition. Matt will cover our ambitions for customer experience, and we'll finish with our CFO Stewart, who'll speak to our enablers and overall strategy ambitions.

We'll then move to Q&A. If you're joining us online, you can ask a question at any time by using the Ask a Question tab at the top of your screen. And we will cover these in the Q&A section at the end of the presentation.

Before we look forward, let's first reflect on the last 2 years of our Spark '26 Strategy. When we presented this to you a couple of years ago, we had four ambitions: to be digital and data-driven everywhere, to fuel growth from our digital infrastructure, to become the home of high-tech solutions, and for our business to be innovative, diverse and sustainable.

Being digital and data-driven was about delivering better customer experiences to support our leading positions in core markets. Today, we remain market leader in mobile and in broadband, and we exceeded our customer satisfaction target of plus 33 iNPS to plus 41 in FY '25. Our AI investment has enabled us to do more with less, automate manual tasks and we've reduced call center volumes by 20%.

Looking at digital infrastructure. We realized $356 million in value from the sale of the remaining stake in Connexa and HTAL during this period. And in total, over the last 3 years, the sale of our passive mobile infrastructure delivered $911 million in proceeds. We've used circa 1/3 of that to invest in 5G stand-alone and our data centers.

We now have New Zealand's first 5G stand-alone network. And as you know, we'll soon realize value from our data center assets through the transaction that we have completed with Pacific Equity Partners or will be about to complete, we've certainly agreed. Our retained 25% stake enables long-term value creation as the market grows.

The area of strategy most disrupted by the changed economic environment was our ambition to expand into the broader high-tech solutions. With businesses deferring technology investments, this is certainly not viable in the near term. There are, however, areas of opportunity related to our core connectivity, including through IoT and 5G stand-alone that we have invested. As we shared at our full year update, we are also seeking investment partners for our MATTR business.

Finally, we continue to invest in our culture and social license to operate. Spark's maturing sustainability performance saw us included in the Dow Jones Best-In-Class Index. We have continued to reduce our median gender pay gap. And while overall people engagement has been impacted by the recent transformation, we've seen solid progress on broader measures.

While progress was made against these strategic priorities, we recognize earnings performance and shareholder returns have been impacted as the economic environment in New Zealand changed and we needed to adapt our business to respond. ROIC reduced to 8.7%, but does continue to outperform the majority of our global peers. Ultimately, this changing environment is why we've had to reset the strategy a year early.

So what's changed since our last strategy? As I just outlined, the economic environment for New Zealand has changed and net migration has reduced. We have seen significantly lower spending in business and government, high levels of price competition. And as I touched on earlier, this impact was magnified for Spark given our scale in the IT business.

We've also seen a fundamental shift in AI's capabilities over this time. We've been using AI within Spark for many years, but with the much broader uptake of generative AI, this has opened up new opportunities to do things differently and we're just at the start of that next evolution.

We haven't sat still as those changes happened around us. As you know, we implemented a significant transformation program in FY '25 to refocus on our core with a refreshed mobile positioning, increased brand investment, ongoing investment in our 5G rollout and securing a U.S.-based satellite provider, which will launch in the second half of FY '26.

We've also transformed our operating model to be simpler and leaner with a material reduction of 1,300 roles across the business in FY '25. This supported our labor and OpEx cost reduction of $85 million in the second half of '25.

Our new global partnerships will accelerate our use of AI by providing access to global best practice and improving efficiency. We completed our noncore asset review, and a series of divestments to reduce debt and recycle capital to the core.

So looking forward to the next 5 years, we know that connectivity will only become more crucial to our customers' lives. Data usage on our mobile network has averaged around 14% growth per annum over the last 3 years. Connectivity and data growth also drives up demand for cost-effective cloud and data center solutions.

And as I just mentioned, rapid AI advancements alongside our global partnerships will enable us to bring and do things differently, not only within our own business but for our customers as well. And in the near term, we expect economic conditions to be subdued. But we're hopeful of improvement as we continue to see quantitative easing and incentives for businesses to invest.

And finally, as has always been the case, we continue to operate in a competitive environment that's constantly changing. This makes our adaptability as a business and the scalability of our cost base critical to our success.

It's also important to remember that we are building on strong foundations. It can be overlooked at times and performance has been more challenged. We have leading positions in our markets, in our network quality and in our brand strength. We have privileged positions in the highest value mobile segments with high levels of customer loyalty.

Our customer experience score has grown every year for the last 5 years to an all-time high. We have a significant customer base across consumer, SME, enterprise and government and a highly valuable asset base that reaches almost all New Zealanders. We also have the highest value spectrum holdings of 350 megahertz.

And yesterday, we announced a long-term partnership with Tu Atea, the Maori spectrum and telecommunications service, to secure exclusive rights to use 20 megahertz of C-band spectrum for a period of 18 years. And this enables Spark to deploy 100 megahertz of C-band spectrum and we expect 5G speeds to increase by up to 25%, and that will be able to support up to 20% more traffic on our 5G network as a result.

Finally, our return on investment continues to outperform our global peers. The focus of our new strategy is to strengthen and grow this position.

This brings me to our FY '30 strategy. Our purpose on the left is enduring. We see ourselves as an enabling business that is here to help all of New Zealand win big in a digital world. Our ambition for the next 5 years is it's better with Spark, underpinned by a better network and better customer experiences.

We've made two clear strategic choices that we will lead in core connectivity and simplify and optimize beyond that core. And finally, our strategy is enabled by four key areas: people and culture, technology and AI, financial discipline and sustainability.

So what do we mean it's better with Spark? Whether it's our network performance, whether it's our customer experiences or the workplace culture that we create for our people, we want it to be better with Spark, better than our competitors, but also better than we are now, continually improving the things that matter most, and that's our ambition for the next 5 years.

So when we undertook the strategy refresh, we started with a simple and yet fundamental question, why Spark? Why do our customers choose us? What do they choose to pay a premium to some of our products and services. And we know from the research we undertook with over 4,000 New Zealanders that network is king within those choices.

The four top reasons for someone choosing a mobile provider are network related. Reliability is number one, then coverage, safety and security and speed. Value comes next. It's about good value for money, simple and easy pricing and discounts for bundling multiple products with us. And then comes customer service, being able to solve problems, reward customer loyalty and provide products and services that are easy to understand.

So with the understanding that we must always be price competitive in the markets that -- and offer the right value exchange, this confirmed our strategic focus on network and customer experience ahead.

We then decided where and how we will compete to win. As we've shared, capital investment will be prioritized behind core connectivity, which covers mobile, broadband, IT, business connectivity, managed data networks, collaboration and voice.

Core connectivity contributes about 80% of our margin, and we have clear leadership positions in all of those markets. Our customers like to bundle connectivity products together, meaning they reinforce each other. And we have positive tailwinds for growth such as demand for data and new solutions coming off the back of investment in 5G stand-alone.

When we look beyond the core to cloud, IT services, and procurement, our focus will be on simplifying and optimizing these businesses. While we have leading positions and when we compare ourselves to global peers with similar scale IT businesses, we can say we are more profitable.

That aside, we operate a more fragmented, competitive environment in these segments where changing mix and demand is impacting profitability. This requires a different approach to our focus on the core, which we'll talk through later today.

Before we go further into the detail, I wanted to touch on data centers and how this sits within the broader strategy. Our data centers remain a core connectivity asset.

But as you'll be aware, we recently announced the sale of a 75% stake to -- of our data center business to PEP. This secures a funding pathway for our development pipeline and values the business at up to $705 million, representing an FY '25 pro forma EBITDA multiple of 30.8x, which compares favorably to similar transactions in the marketplace.

Importantly, it enables Spark to realize value for our data center assets in the short term while also continuing to participate in the growing market through our 25% retained stake, creating further value for our shareholders over the long term. We'll use the proceeds to reduce group net debt, and this will also enable us to focus our capital investment behind our core connectivity business.

DC Co will be established as a stand-alone entity with its own Board, management team and financing facilities which are nonrecourse to Spark. This means our future annual capital contribution is expected to be modest.

DC Co already has a leading position in the market with 11 facilities across New Zealand, around 270 customers and 30% of its revenue attributable to hyperscalers. The 130 megawatt development pipeline is spread across three strategic Auckland locations at Takanini, the CBD and the North Shore.

Land, resource consents, fiber and power have been secured to progress the first stages of these builds and to take advantage of the attractive market dynamics here in New Zealand.

The growth opportunity ahead for DC Co is significant. So when you combine demand from enterprise and government, traditional cloud growth and demand from AI, we expect forecasted demand to grow around 8x over the next 10 years. And our DC Co business is well positioned to secure its share of that growth.

So to summarize the new strategy, in an increasingly digital world, our products and solutions are only becoming more important. Customer data use continues to increase every year. Data center capacity demand is growing. Digital transformation remains critical to both public and private sectors.

Connectivity is our core business and our absolute focus in the years ahead. When New Zealanders trust us to keep them connected, we want it to be better with Spark whether that's our -- through our experience on the network or whether that's helping them to resolve issues or simple customer experiences.

With this focus on our core and the things that matter most to our customers, we approach these next 5 years with clarity and determination to deliver stable returns for our shareholders and growing dividends over time.

With that, now I'm going to hand over to Greg Clark, who will talk to you about our core connectivity business.

Thank you, Jolie. Good afternoon to those in the room and also online. I'm Greg Clark. I am the Consumer and SME Director for customer side of our business. And I'm here today to talk to you about core connectivity with a particular focus on the consumer and SME segment from mobile through broadband.

So as you know, the crown jewel is mobile. Mobile accounts for 40% of our revenue and 52% of our gross margin. We have #1 market share by mobile service revenue and over 2.6 million customers. In consumer, we have a unique multi-brand positioning with Spark and Skinny, enabling us to compete at the value and premium segments of the market.

And in consumer, our consumer and SME segment accounts for over 85% of our mobile service revenue. And enterprise and government, the market dynamics are different, which my colleague, Mark, will speak to soon, but -- in that part of the business, we have around 50% market share, a clear leadership position.

And through our wholesale business, we continue to participate in the small but growing MVNO or mobile virtual network operator market. We have a new MVNO platform launching early in 2026 that will enhance our competitiveness within this segment further. So this is a really strong position for us to build from, but we know that we can't be complacent.

As we look ahead, we know that there will continue to be positive tailwinds that support growth, growing customer demand for data. As Jolie mentioned, the data usage is increasing 14% year-on-year and population growth, a key driver of connection growth in mature markets, while we see that, that is impacted by lower migration in the near term, we do expect to see that improving over the strategy period.

When we break our customer base down by type and tenure, what we can see is that we have our strongest market share in the most valuable segments. By that, I mean the segments where customers spend more and are more loyal versus those customers that spend less and tend to switch between brands more frequently. So that means our strategy must be cornered on nurturing and defending these high-value customers.

Overall, we expect customer mobile service revenue growth to be driven by modest population growth, along with value growth from price increases supportive with new product innovation and clear value exchange with our customers around those price changes.

And in enterprise and government, where performance has been more challenged than recent times, connections have stabilized, following workforce reductions across the economy, and we expect base growth to return in line with improved economic conditions.

We do, however, continue to expect ARPU pressure in the near term from competitive pricing activity that's been prevalent in enterprise and government within FY '25.

So we have four key focus areas through to FY '30. Firstly, it's about providing more choice to our customers and continuing to participate across all four segments of the market from pay monthly to prepaid, business and MVNO. Both our Spark and Skinny brands continue to resonate really well with customers being highly trusted so we know that they have a clear and distinct role for us to play in the market and how we compete.

And in business mobile, we can invest in mobile propositions that would differentiate Spark on more than just price. For example, network slicing, data prioritization and converged offerings along with mobile device management.

Then we will reward and recognize our high-value and loyal customers to support retention and encourage trade-up into higher-value segments based on the way that we set up the pricing architecture within our lineup.

As I said before, loyalty is our strength. From our analysis, around 40% of our customers are in premium segments, which contribute over 70% of our revenue. This isn't about introducing a complex loyalty scheme, but it's more about recognizing loyalty, rewarding and recognizing customers in meaningful ways, whether that be priority access to new products and services, advanced tickets to Spark Arena events or exclusive deals on hero devices for high-value customers.

We have developed strong marketing automation capability over recent years that will support us in targeting customers with personalized offers that are relevant to them in an efficient way to help bring reward and recognition to life in meaningful ways.

Next, we want to provide a clearer link between our network investment and our customer experiences so that we can provide better network usage experiences when it matters most to our customers. This might include communicating specific network changes that have happened for customers in area such as 5G going live or if there's been a network issue that customers have raised. Once we've solved that, we'll loop back and communicate that to our customers.

We will focus features that provide our customers additional value and choice as they move through pricing tiers. And this is even more important when you consider that device replacement cycles are slowing as innovation leaps between those devices are slower. So having innovation within our own category becomes really important in terms of keeping engagement up with the category and our customers engaged.

A good recent example of this is our launch of kids account that we did in partnership with the Parenting Place, which is about introducing or helping parents introduce kids into the mobile world with a few additional safety controls to get them started.

Within the SME segment, we'll continue to focus on growing our mobile base by driving a narrow range of IT services and penetration across that base. So what we know in that market is that SME customers that hold core connectivity services and IT services with us are 50% less likely to change providers. So that's a powerful insight for us and illustrates clear opportunity.

So what we'll do there is with a narrow range of IT services from IT partners, we will work with our Spark business hubs to target customers with a broader range -- sorry, to grow the density of our IT services across our core connectivity base. For example, this could be a Cisco Webex collaboration solution or it could be Microsoft Office 365 licensing bundled with mobile, which is something we're currently piloting.

Our Spark business hubs differentiate Spark in the market within the SME segment. We are the only telco with that channel in the market. It provides a point of differentiation, and it is our consistently highest customer satisfaction performing channel.

So we're in a strong position with this segment. It's something that resonates particularly well with our customers. So we're in a unique market position bolstered by our business hubs and integrated IT services, providing us with a competitive edge.

Switching focus now to broadband. This is a tougher market than mobile. It is much more fragmented and competitive. However, Spark continues to have a leading position by some distance. We have over 660,000 broadband customers across our Spark and Skinny brands, and our wireless broadband proposition now makes up 32% of our base.

We see continuous -- our customers continue to value the convenience of wireless broadband, which can be unboxed, plugged in and operational within minutes or even transported from one location to another, such as from the family home to the batch.

And as our 5G rollout matures, the performance of wireless broadband is only going to improve. While 4G wireless broadband offers average speeds of around 63 megabits per second today, that increases to around 336 megabits per second competing with entry-level fiber products.

So looking ahead to FY '30, we know this is a mature and commoditized market, meaning growth will most likely follow migration and housing development, and how we compete in that kind of market is really important. We want to maintain market leadership, but we need to balance connection share with maintaining overall value.

This makes wireless broadband growth important given the benefits it brings alongside the appeal to our customer base. It's a much more attractive margin proposition for Spark. We've reached 50% population coverage for 5G to date, and we expect to complete the rollout by within the strategy period, which will open up more capacity and higher speeds to the market.

We also know we have an opportunity to improve our focus on bundling to support both broadband and mobile retention. Around 50% of Spark households today have mobile and broadband together, which obviously presents the opportunity of the 50% that don't.

There is experience value for customers here. We have an outage assist solution that keeps customers via mobile connected in the instance of any fixed line outage when they have mobile and broadband together with us.

And we know that broadband can play an important role in the most prioritized mobile segment, pay monthly, and reducing churn or creating tenure. Our pay monthly customers with broadband has superior retention compared to mobile-only customers with up to 12 percentage points of annualized churn benefit.

This makes our focus in broadband very clear, using product innovation and compelling offers across our customer base and through our sales channels to increase bundling and therefore, retention in the years ahead while continuing to grow wireless broadband as our 5G rollout matures.

We've also chosen to invest more in our brand and marketing to help drive growth in core connectivity services in a more competitive market.

I'll now hand over to Mark, who will talk you through business connectivity.

Thanks, Greg. Good afternoon, everyone. My name is Mark Beder. I'm the Customer Director for Business. We're now going to switch our focus from consumer market to business. Business connectivity includes not just mobile, but managed data and networks, IoT, which is Internet of Things, collaboration and voice.

And within this mix, we've got modern products that are in growth like IoT and collaboration. We have sort of more mature products like managed data and networks that are moving from legacy formats to more modern formats and alternatives.

And then we have legacy voice, and as we know, that's in long-term decline. But there are also product lines within it like 0800 that we are seeing grow.

And we went through the strategy process. It was really clear to us that these core products were leveraging our core infrastructure and support mobile retention. So they were core to our business. And Spark has a really strong position here.

So 80% of our enterprise and government customer base, which spans over 1,100 customers, purchased connectivity products and services from us. We also have over 110,000 SME customers that purchase mobile broadband, collaboration, managed data, IoT and IT services.

And we're investing in newer connectivity assets that these customers are enabling, things like 5G stand-alone network, our IoT networks that have now over 2.3 million connections.

So we look forward to FY '30, we know business connectivity will continue to be core foundation layer for our customers. Connectivity solutions will continue to modernize. Customers will continue to want to purchase multiple connectivity products from one provider. And what we mean by that is they might purchase fixed and collaboration or fixed and mobile.

So our focus areas are, firstly, proactively transitioning customers from those legacy products like traditional voice, wide area networks and on-prem and collaboration solutions to modernized voice of these products, sort of like software-defined networks in collaboration or voice in the cloud.

Second, leveraging AI and automation to improve the efficiency of how we deliver these services. For example, using digital service offerings to deliver better experience at a better cost. We know customers like self-service options and that they're simpler and easier to use.

And so we're upgrading our B2B portals to help customers use and be better experiences for our customers. And also, we're leveraging global partnerships so that we can go faster in the space.

And finally, as we look forward, advanced connectivity solutions that leverage the network investments and making things like 5G stand-alone and Network-as-a-Service, which Renee will talk to, also will come into play. And as an example, things like 5G private networks, we're starting to trial those with customers, and Renee will talk more about that as well.

So I'll shift track now and start talking about things beyond the core. And when we talk about things beyond the core, we're talking about cloud, IT services and procurement.

In cloud, we talk about private, public, hybrid cloud solutions. Private cloud is Infrastructure-as-a-Service and the managed services that we wrap around it, things like backup as a service and storage. Public cloud is where we use AWS or Amazon or Microsoft in those spaces.

And hybrid cloud is how we toggle between the two. So for instance, moving from private to public. And this is the area that we've seen the most structural movement. So obviously, as customers move from on-prem to private solutions or from private solutions to public solutions.

IT services includes a number of different things, such as modern workplace, which is where we provide things like desktop as a service. So for example, we would be providing a company with their laptops, their software and providing ongoing support and upgrades.

Service management is where we provide IT service desk and the application, which is more like us acting as an IT department. And also, we've got our consulting division, which is things where we provide IT consulting services, or more recently, data and AI.

And IT services is where we've seen the most deferred investment and more cyclical impact from the recession. And procurement is obviously the resell of our hardware and software licenses, which have high revenue but low margin.

And as Jolie talked about earlier, these are good businesses. When we put them against global peers during the strategy work that we've done, we could see that they have more scale and profitability.

But also, as I said, that we've seen structural and cyclical shifts in these markets, and this has impacted both revenue and profitability. And these businesses have different drivers and investment profiles than our core of connectivity, and we need to think about them very differently than we do our core business.

So our focus in this segment is firstly, to simplify portfolios by sunsetting and exiting legacy offerings, so we can focus our efforts on the areas that we can grow and we believe we can win.

For example, in IT services, this is about migrating customers from older and more bespoke legacy services to our new ServiceFlex platform, which is automated and more efficient and effective for customers.

And when we reset our operating model this year, we also established a dedicated team within Spark that focuses solely on legacy transitions. This gives us absolute focus and will accelerate the path on how we can achieve this.

We also focus on improving our digital services channels using AI and automation, which we know will make it easier for our customers and improves efficiency by automating tasks that we currently have in manual state.

Our new global partnerships will also play an important role in optimizing these businesses. In cloud, for example, our partnerships with HPE lowers our private cloud infrastructure costs by moving from a more fixed to a variable model.

Our partnership with Microsoft improves our margins on public cloud and our ability to retain and lead our share in the marketplace as well. And then we've also been able to move from private to public cloud in our internal stack, which give us some cost savings.

And within IT services, we'll be able to highly target the product variations we provide, specifically in modern workplace. And we'll migrate customers from legacy bespoke solutions to our ServiceFlex management platform, which is more automated and more efficient for us to deliver. And we know that data and AI is a growing space for us, and we'll continue to maintain to do that.

We've also rightsized and consolidated our operating model over the period of FY '25, as Jolie talked through, and that included bringing our subsidiary business into Spark, which -- into a standard service line model, which gives us the ability to adapt more quickly into changing demand or economic conditions.

So in summary, for cloud IT services and procurement, our focus is digitization, simplification and improving margins as these categories continue to change.

So lastly, I'll just touch on our strategic asset base and how we're thinking about this ahead. We have a significant domestic asset base, which we consider core.

This ranges from our highly valued spectrum holdings to our active mobile assets, IoT networks and fiber routes, which include shared fiber and the fiber that we own directly; Entelar Group, which obviously delivers both mobile and also our fiber delivery; and as Jolie talked about, our data center shareholding. These assets provide competitive advantage and network resilience, and we'll continue to retain them and invest in them.

We then have our international connectivity assets and our shareholding in subsea cable businesses, Southern Cross and Tasman Global Access and our own purpose-built satellite station in Warkworth. These are valuable extensions to our network that provide us with owners' economics on high-growth routes. While they are valuable, we consider them noncore and we'll continue to consider the right level of ownership over time.

Lastly, we have our digital connectivity assets that sit outside the core, MATTR, which operates in digital trust and our private cloud infrastructure. And as Jolie has already shared, we have already commenced the process to introduce new investors into the MATTR business.

So with that, I'll hand over to Renee to talk about our network ambitions.

[Foreign Language] Good afternoon, everyone. My name is Renee Mateparae. I am Spark's Network and Operations Director.

The better network ambition within our strategy underpins our success across all markets we operate in. And this is not just about winning awards so that we can talk about the fact we have a better network. This is about creating a network that is reliable, trusted and advanced. It's about creating a network that delivers more for our customers when they need it most.

When we talk about reliable and trusted, this is about investing where it matters for our customers. So this means that every dollar we invest in our networks is targeted to deliver better real-world network experiences for those customers in the areas that matter, so a reliable network connection, good coverage and a safe and secure connection.

It's about proactively resolving network issues. So moving to a world where we can detect and resolve network issues proactively and leverage our partnership with Nokia to accelerate our network automation through the use of AI, advanced analytics and smart automation.

And it's about uplifting our regional resilience. This means targeted investments in our mobile fixed and transport networks and satellite connectivity that Jolie mentioned earlier to improve redundancy and coverage across Aotearoa.

Now when we talk about new value from advanced technologies, this is about the creation of new commercialization opportunities for us at Spark. It means new customer solutions. With New Zealand's first 5G stand-alone network, we will be bringing new capabilities to our customers, such as network slicing and private networks.

As I said, satellite is also underway and will be in place for our customers in the next year. We'll also be looking at new commercial models. And as our announcement this morning about our partnership with Aduna suggests, we will be participating in the global shift to create new commercial models for Network-as-a-Service that are API-based and globally standardized.

So I'll talk a little bit more now about each of these areas. So firstly, customer-focused connectivity. When we talk about a network being reliable, this is about getting the connection and the performance that you need when you need it.

We see AI and automation playing a big role in this as we move forward. And we've been investing in automation for a number of years. Our new partnership with Nokia will see us accelerate our capability in this area.

Our ambition is to proactively detect and resolve issues in real time, often before customers will even know that there's a problem. A great example of this that's in our network today is our recently upgraded optical transport network that we call OTN 2.

This is a self-healing network that can detect when there's a fiber cut on our main transport routes. It can automatically then reroute the traffic onto an alternative fiber. And this means that we can migrate services seamlessly to the new path with little to no customer impact. We'll be doubling down on this type of self-healing and looking for opportunities to apply similar technologies to our other networks and to our operation centers.

Resilience is a broader concept for us at Spark, and it includes investments that we're making in regional infrastructure to build greater redundancy across the country. It's really about making sure that we can get back up and running faster when we know that things inevitably do go wrong.

So whether that's a severe weather event or it's a farmer accidentally digging up a fiber, we're investing to make sure we improve regional coverage. So that means more sites in regional locations.

We've been investing in our access and aggregation network, which connects all of our mobile cell sites back to our core network. This investment provides additional redundancy across the network. It means that we can get those services back online faster for our customers. And the idea of safe and secure is about protecting our customers, making sure that customers have a secure connection through protections like proactive threat detection and network security.

Another great example of this network-based threat detection is our SMS firewall. So this firewall uses a global database of URLs, phrases and calls to action that are typically found in text scams. Since we implemented the SMS firewall, we've blocked over 1 million texts from our customers, so meaning that those customers are better protected.

Moving on now to advanced technology and what we're looking at in this space. So we are the first New Zealand telco with a 5G stand-alone network. What that means is we have a 5G core network as well as a 5G radio network. And we are migrating traffic across to this new core network today.

We're in the process of productizing the new core and the capabilities that, that will offer. A 5G stand-alone network enables a greater level of customization and also ultra-reliability for customers. And to bring this to life, this isn't just theoretical.

As Mark referred to earlier, we have live examples that are with customers today. So this year, we were the first telco to launch a private 5G network for a business customer with Air New Zealand. So here, we're using a private 5G network in Air New Zealand's warehouses to help carry out the laborious task of stock taking.

So if you think a warehouse environment, you've got very high shelves and obstructions, which means that WiFi isn't reliable enough. We worked with our partners to have a drone that was tethered to a robot, scanning those high shelves, taking photos of the stock, and that could be anything from aircraft parts to headphones and blankets.

These stock takes would traditionally happen twice a year. They're very labor-intensive, and they also took staff away from their core roles. The feedback that we've had is that the solution increased productivity, provide real-time stock taking and also enhanced safety because people didn't have to scale the high shelves to be able to count the stock.

We are working with other business customers at the moment to install tailored solutions that run on 5G networks. And so expect some announcements soon, particularly in large warehouse environments and places like ports. What this means is it opens a whole set of new commercialization opportunities.

As I mentioned, our partnership with Aduna that was announced earlier today means that we're able to take the opportunity to commercialize things like Network-as-a-Service and network APIs. So looking at Aduna in particular, we see great opportunity in being able to commercialize this partnership that was announced earlier today.

So Aduna is a joint venture between global telecom operators and Ericsson. It enables businesses and developers to directly access and customize telecommunication networks using globally standardized network APIs. And API is an application programming interface.

So it is a little bit like a bridge that allows different software applications to talk to each other and in future, to talk to elements of our network that we will provide access to via these new network APIs. So if you imagine, if you have a remote control for your TV, the remote control is like an API. It lets you interact with the TV without you needing to know how the TV works internally.

You just push the buttons to change the channel or adjust the volume. And this means that businesses and developers will be able to directly access and customize networks using these APIs. We see this accelerating innovation and reducing time to market for new digital services.

For Spark, what this means is we can explore also new commercial models that go alongside this to monetize our significant network investment and particularly our focus around core connectivity. Means we can find new ways to capture value from the capabilities that we're introducing into our network.

One of the first API solutions that we are looking to develop with Aduna is around fraud protection. So SIM swap fraud occurs when a mobile number is transferred to a new SIM card without the account holders' consent.

By providing a time stamp indicating when the SIM card was -- when the SIM card that was associated with that phone number was last changed, this API will allow businesses to identify where there's been a recent SIM swap, and that might suggest unauthorized access into that account. It enables the businesses to then act to do things such as blocking transactions that can ultimately protect the end user.

We see the API economy is forecast to grow by USD 6.7 billion by 2028 worldwide. By unlocking network services like this, it's an exciting area for Spark to explore over the next 5 years.

I will now hand over to Matt, who will share a bit more about our better customer experiences.

Thank you, Renee. Hi, everyone. I'm Matt Bain, I'm responsible for brand and marketing, CX and data automation here at Spark.

So let's start with our customers. As you've heard, customers is really at the heart of the strategy and the experiences they have decide whether they stay with us or not and how much they spend with us. So that's driven a lot of what you're hearing today.

Thankfully, our interaction NPS, which is our key metric for customer satisfaction, has been rising over the last 5 years. It's more than doubled from 19 to 41. And that's been a methodical process of understanding where customers are not satisfied, prioritizing pain points and fixing those as we go, in particular, using digital channels where we can because of the efficiency they deliver.

That leaves our teams to handle the more complex interactions, which they have more time for. And so this is a process -- and we acknowledge that there's no finish line here, right? This is a constant process, we need to keep evolving in this area.

Now every interaction with our customers is an opportunity for us to build our reputation, build our brand and bring to life our better with Spark ambition. So we need them to know that we're there for them when it matters. And there's three key areas for us.

So the first is how do we make sure that our baseline experience is consistent and reliable, that starts with our network but permeates up through every touch point in our business.

Secondly, how are we bringing both our network, our product and CX features to market quickly so then as we go, we can ratchet up that experience level over time more quickly. And then how do we make sure that when and if things do go bump in the night, that we're there to support them quickly and even proactively.

Now being simple and easy to deal with for us means, as I said, getting the basics right, that's something we do now. It's not about fixing everything all at once.

We are very clear on what are the parts of the customer experience that will have the biggest impact if we fix them and therefore, let's prioritize those for investment and have a plan that does that over the next 5 years. Increasingly, it will mean preempting critical service issues before they happen.

Now Greg mentioned outage assist, that's the capability we already have in our business. This means that if you have fiber broadband with us, and it goes out, we proactively contact you and say we see your fiber is out, here's some free data on us through your mobile plan. And we've had huge positive satisfaction coming back from these types of activities.

So in the last year alone, there's 450,000 customers that use that service, and it cut about 150,000 calls out of the call center. So this is improving the service that our customers are getting, but also reducing our cost as a business.

You heard a little bit about reward and recognition. Now as we did the research with our base to drive the strategy forward, what came out really clearly is in our industry, reward and recognition is something that is not done well by anyone yet. And therefore, this has become a big focus.

Our acquisition engine is working pretty well. So the focus turns to how do we use the capabilities we've got and we'll come on to those to really make sure that our most valued customers feel their value.

If we move on to the various channels. So stores and call centers still are incredibly important. People talk a lot about digital, but 92% of our postpaid acquisition still comes through our physical retail and call center channels. So continuing to find ways to evolve the experience in those channels is really important as we go forward.

Today, we launched a new feature for authentication. So traditionally, in a business like ours, you have to prove who you are with a passport or driver's license. That's inconvenient. People don't carry those around all the time.

As of today, in a Spark store, you can authenticate through the app. And that's taking minutes off of the experience and making sure that customers don't walk out the door because they can't actually authenticate themselves.

In the future, we're looking at how all those kinds of technologies change the way that stores operate. So moving from fixed till systems to mobile devices to serve customers, so you serve them where they are and you free up retail space for other activity.

When we spoke about interaction NPS, that satisfaction measure, that was overall. What we see is we are at a very high level in our retail environment, but we've got work to do in our digital channel.

So our two biggest digital channels are our app, if you're an existing customer. So that is the dominant channel if you're a customer for a business like us. We've got opportunities there to ratchet that up.

We're at the moment looking at how do we refresh that experience and what's the critical journeys we need to do better to make sure that our existing customers can find what they need, change their plans, upgrade, we can cross-sell to them.

The great thing about that is when you're on our app, there's a huge opportunity to reward you, recognize you or send you an offer, right? We're quite good at sending offers that we're going to do more on the recognizing you're a great customer. Thank you very much.

On the acquisition side, the website, again, same thing. That's the single biggest channel for people who are going to come and buy from us because most people who go into a store have been to a website first and website conversion rates and direct sales, we expect to increase over time.

So that's the second focus for digital is making sure that we have a structured plan to improve the experience our customers have in our website over time. Now like in every meeting like this, you probably hear a lot about AI. Everyone's talking about it. This is underlying our omnichannel strategy today.

We have spoken to some of you, the last time I was on stage a few years ago about the capabilities we've built we now call Kapello. This is quite an advanced platform with hundreds of machine learning models that can target individual customers and households and deliver next best action through each of the channel they're in.

So we have got some great capability here. We also, since then, have rolled out a lot of AI into places like call centers, right? So one of the big time sucks in the call center is agents having to write call summaries for every single call, right?

So they're doing that while you're talking to them and they have to have it done at the end of the call by taking a couple of minutes. And if they pass the call to someone else, that data goes to make sure that the next person picking up the call inside our call center knows about that interaction.

Because it's not much fun, only about 20% of it gets done typically in the call center, right? So we now have that done autonomously with LLMs that have been trained to do that.

It's now 97% of all the calls have real-time call summaries created so they're there afterwards, and they were 99% accurate now, too. So that kind of capability that takes minutes out of call time and also make sure that when the calls are transferred, it's a seamless process.

We're now looking to how do we take AI agents directly to our customers. It's got to be done with caution. Things like AI agents authenticating a customer before they're passed on to a human are the sorts of task we'll look at first because again, it takes minutes out, make sure that it's a repetitive task that can be done reliably by machine.

And again, this is about making the customer experience better, but also making sure that our people's time is used more effectively.

Now, we're not just using AI in our retail environment, and our marketing. We now have it quite broadly applied through the business at scale. So in network, as you heard, it's supporting better network experiences, we're more quickly identifying problems and resolving them.

Our frontline teams have AI assistants that actually they use internally, which answers questions for them about our business, which has taken about 60% of queries to back office teams from front lines out of the workplace as well.

Marketing, we've spoken about. In sales, we've got AI supporting our enterprise and government sales teams. And our SME segment, which Greg heads, has a SME conference and they give prizes for the best salespeople, the best salespeople now are the people who are using the predictive tools to identify the next best action for any given customer. So we're seeing that on the ground at scale, the stuff is working for us.

One for the analysts in the room, one final one just to talk about how we're doing it internally in our business. So most of our business owners have -- are quite analytical and they like to understand what's happening in the business and they have a lot of questions which they ask a finance person who may not be able to code SQL.

So an analyst will then do an SQL query to a database to download the raw data, which is then put into a spreadsheet and some commentaries done. We've now got text to SQL LLMs working across our critical data.

So in seconds, you can get the answer to a business question, it will give you a multimodal report with the raw data tabulated and then an explanation of what it thinks it's doing -- is going on. And if you have a follow-up question, immediate answer. So these are the kinds of things we already have operating, and it gives us a great platform as we move forward.

One of the things we're now looking to, and I think this is more broadly leading businesses and AI are looking at is how do we move from point solutions to point solutions. So here's a task I do, wouldn't it be great to automate that? How do we take a whole process and automate that?

So that's combining robotic process automation, LLMs and machine learning models together to make sure that we can take whole chunks of time consuming workout to bring experiences to our customers more quickly.

A recent example of that is some work we've done with Webex. So Webex is a solution we sell to our customers wherein you call them up, it will give you options of who you want to talk to, and it will call route you basically inside the business. They can be quite complex, right?

So if you're a salesperson, you're selling that first meeting with a client, what do you need, that will result in some requirements gathering and some call flow process mapping, which will result in a pricing structure, which will result in a contract.

We can now do that not in weeks, but in an hour. So we now have an iPad app where our salespeople go to our client, requirements are captured, call flows are autonomously created in real time and priced, and then through our sales force integration, contracts are created.

So these are the sorts of opportunities we see in the next few years as being able to make a big difference to the way we operate. So you can tell we're excited about it. With the acceleration of AI, we're well placed. We're not at the starting line. We've got some runs on the board already.

We're planning to do implementation at scale. The partners we mentioned, Salesforce, Snowflake, Microsoft, Adobe, these guys are also running hard at it, and we've chosen them because we don't want to build our own anymore.

We want to be on the back of these large global leaders who are investing a huge amount in making sure that AI is available in their platforms. So this is going to enable us to -- it's going to underpin the way that we provide better experiences for our customers going forward, and we deliver at pace.

So this also enables some of the productivity savings we're looking for, which Stewart is going to now come up and talk to you about. So I'll hand over to him to talk about our enablers and financial ambition.

Hi there, I'm Stewart Taylor. I'm -- for those I haven't met, I'm Spark's Chief Financial Officer. So welcome here this afternoon.

I've got a few things to talk through. I want to talk about our enablers, I want to talk about our -- I'm going to go cover our capital management reset briefly, and I'm going to talk to our financial and nonfinancial ambitions as well.

So every strategy needs execution and to do execution properly, you clearly need enablers. So we've thought carefully about what we consider are the full key enablers for our strategy to be.

Now the first of these is people and culture and over the past few years, we've had to make some really tough calls to reshape our workforce to adapt both to the changes in the economic environment and also the changes to the competitive environment in the market that we work in as well, but this hasn't at all diminished our commitment to having people at the heart of Spark's success.

So our goal there is to create a culture that's focused on customers, it's focused on performance, and continuing to win in market. Now we see this as a win-win. It will create rewarding career paths for our people, and it also will deliver results for our shareholders as well.

Now to do this, we'll need to lift -- we clearly need to lift engagement and this means investing in learning and development, building relevant capabilities like the use of AI that Matt just spoke to and that are really connected with our strategy. And we're also investing and having an ongoing focus on things like health, safety and well-being as well.

Now the second pillar or the second enabler here is our technology and AI strategy. So as a telco more so than anything where we use technology to underpin our products and services. So the combination of technology alongside our people, is absolutely critical for our ability to compete in the market.

So our technology strategy needs to be clear and it's got to focus in three key areas. The first of these is data. So high-quality data at scale is required to deliver broad automation through things like AI that Matt just talked about. And at Spark, what we have done is we've invested in the migration of data to our scalable cloud environment and improving data quality, so it is AI-ready.

The second pillar here is AI-enabled platform. So going forward, we're investing in partnerships with globally leading platforms like ServiceNow, Salesforce and Adobe to benefit from the huge investment that they can make in AI on their platforms and then our ability to leverage this.

And third here is scale delivery partners. So we've established a partnership with Infosys is the best example where we can accelerate our ability to integrate new capabilities and -- into our business and accelerate the rate at which we can deliver improvements to our customers and our business.

Now of course, in technology, this needs to be underpinned by those core disciplines of security and compliance. So the protection of our network, our customer data from evolving cyber threats is absolutely essential to maintaining trust and uninterrupted service.

Now the third enabler is sustainability, and it's an enduring commitment to sustainability. Now what we have done is we've refreshed our sustainability framework so it aligns with our business strategy and emphasizes the connection between sustainability and value creation at Spark.

So we've got two clear focus areas here. The first being low impact with high connectivity. This means bringing connectivity to more people across the country, but doing this in a way that protects and considers the environment. So we consider energy efficiency and how we do that.

The second focus area is supporting a digital world that's equitable and trusted. And this -- we do this through the way in which we invest in digital equity and the responsible approach we take to things like privacy, data ethics and AI.

And if you think about we're in a privileged position as a trusted brand in New Zealand, so whilst we want to work at the forefront of something like AI, we also need to consider how that is used, and we need to consider the downstream risks as well, and put mitigations in place early.

Now last but certainly not least is financial discipline, which I'll speak to more now. So the way I think about financial discipline is in that -- under that lens of long-term value creation and put this again under three pillars. So we've got revenue growth, we've got efficiency and we've got disciplined capital management.

So revenue growth, and this is consistent with what you would have heard from Greg. We expect mobile service revenue to grow. Now what are the drivers of that? Well, they're going to be customer demand for data, modest population growth. New Zealand should continue to be an attractive place to work and live, and our ability to execute annual price reviews.

Now underlying that, we've heard about better network and better customer experience. So our ability to retain customers using a better network and a better customer experience and having a real customer life -- view on customer lifetime value are critical to that revenue growth.

And then probably the third piece around revenue growth is referring to some of the examples Renee made earlier about how we can use our investment in 5G stand-alone to actually create new monetization opportunities as well. So that's revenue growth.

If I move across to the second leg of this, that's -- of value creation, that's efficiency. And this really builds on work that we've already been doing. And we've started and that comes with the simplification of our noncore operations.

It comes with leveraging the global partnerships, which brings scale advantages with them. And it also leverages the continuing investment we're making in AI that Matt spoke to, and that will also be a critical part of supporting the ongoing efficiencies and a lean operating model.

Now finally, I will talk to disciplined capital management. And to do this, I will actually just go -- I will go straight to the new capital management framework, which I know I shared with many of you at the FY '25 results presentation, but I'll summarize quickly now for anyone who may have missed out on that.

Now this -- it was really important that in the context of a new 5-year strategy, the Board also reviewed our capital management settings as well. And this was done with three clear goals. The first one is to maintain financial strength, the second to ensure an appropriate return from our spend and investment, and the third is delivering sustainable shareholder returns.

So if I take the first one, this is about remaining focused on a strong balance sheet. And for Spark, that means targeting metrics consistent with our current credit rating.

The second part of this is around any investments or M&A that we undertake for growth will need to meet our hurdle rates. And specifically, they need to be NPV positive. And if we think about using our capital base efficiently as well, they need to generate a return on invested capital that is greater than our cost of capital.

And to support this, we've revised or we've introduced new definitions of CapEx. So there's two definitions. The first one is BAU CapEx. So this includes all capital investment in our core business with the exception of spectrum. And so if I give you a practical example, the 5G stand-alone investment that we have been making and we will continue to make will be included as part of BAU CapEx.

The second -- so the second definition of CapEx so that sits outside BAU as strategic CapEx, and this includes all capital investment outside the core business. Now this is a pretty -- the criteria for which to qualify here are pretty narrow. So there's a limited -- potentially a limited number of things that would qualify in strategic CapEx.

And again, if I apply practical example, so for FY '26, the only thing we have there are the capital commitments we have to the data center business before completion of the transaction.

Now this then all feeds down to our dividend policy and to support a sustainable dividend paid out of free cash flow. And so to do that, we've introduced a new definition of free cash flow. This includes changes in working capital and includes the BAU capital expenditure I just described to you, which is that used to operate the core business.

And then overlaid on that, we've -- as a policy setting, we've extended the payout ratio, the dividend payout ratio and the policy to 70% to 100%. Now this is a policy setting. It is there to provide flexibility in the future should we need it.

Now you have seen in FY '26 guidance, we've included a payout ratio of 100% of free cash flow. We'll also continue to have a dividend reinvestment plan, which will be utilized when we consider it appropriate. It's currently suspended in FY '26, and that's on the anticipated receipt of proceeds from the data center transaction, and a subsequent reduction in debt that, that generates.

Now I don't know -- I might have left the best to last. So talking to our financial and our nonfinancial ambitions for FY '30. So left-hand column, I've got the financial ambitions. Right-hand column, I've got the nonfinancial ambitions.

So if I go to our financial ambition first, I think the overriding financial ambition that we don't have written here is that we want to generate stable annuity style returns for our shareholders, which are paid from a sustainable free cash flow. That is our overarching financial ambition.

Now to do this, we consider that we'll need to deliver low -- we have an ambition to deliver low-digit -- low single-digit CAGR EBITDA growth from FY '25 to '30. Now that will be driven. We've talked about some of the -- the main lever of revenue growth, which is around mobile service revenue.

The other leg of this is clearly productivity. So our ambition there is to deliver annualized savings of $150 million to $180 million by FY '30. And this includes labor, includes OpEx, and it also includes efficiencies in the product cost line as well.

Now I'm going to drop down to free cash flow here as obviously that is -- that's a critical driver of those stable annuity-style returns. So we're talking about mid-single-digit CAGR from FY '25 to FY '30. If I can just create a bit of clarity there. We think of mid-single-digit growth as 5% to 8%. So if I took the FY '25 free cash flow as a base, I'd say the ambition for that would be at the top end of that 5% to 8% range.

Now underpinning this CapEx to revenue ratio of 10% to 12% and we're then targeting a return on invested capital of between 11% and 13%, which is better than the 8.7% that we reported in FY '25. So those are our financial ambitions.

We also have our nonfinancial ambitions, which we consider to be quite a critical driver of those financial ones.

To reiterate what other members of the leadership squad have said, so customer, right? We want to have a higher than 45 iNPS score which is what we consider to be the best measure of customer satisfaction. At this level, we think we would be -- we would definitely be at industry best practice.

Networks. So having been awarded the most reliable network, the widest coverage by Opensignal, it's our ambition to maintain that leadership position. For people, back to what I talked about as people being a key enabler, we're targeting top quartile employee engagement there.

And for sustainability, we're focused on our science-based emissions reduction target, which is to reduce absolute emissions, so our absolute Scope 1 and 2 greenhouse gas emissions by 56% by 2030 from our FY '20 baseline year.

So with that, I will now hand back to Jolie to provide a bit of a recap on SPK-30 and what you've heard today.

So let me just recap on the strategy. SPK-30 takes a long-term view recognizing the scale and pace of technology changes happening. We're reshaping customer expectations, ways of working and the products and services that will be offered, provides our shareholders with clarity around Spark's strategic priorities, and we will invest to differentiate ourselves from competitors.

We are refocusing Spark from a broader digital services ambition back to a core connectivity business with our data center transaction providing clarity on funding, of the development pipeline, our capital allocation prioritized to the core. And we'll continue to build a scalable cost base through partnerships in AI.

By focusing our investment on what matters most to our customers, our network and customer experiences, we'll give our customers more reasons to keep choosing Spark and create a performance-driven culture. Ultimately, this will deliver stable annuity-like returns for our shareholders with predictable free cash flow and growing dividends over time as Stewart has touched on.

Finish today with our value proposition. This remains a profitable business with strong foundations within our sector. Our core connectivity business is supported by positive tailwinds as connectivity becomes more central in our customers' lives and data usage increases year-on-year.

We have leading market positions across all segments of connectivity and leading AI capability and access to new global partnerships that will enhance our competitive advantage in New Zealand.

We have a proven track record of cost discipline and adapting our businesses when we need to, portfolio management to manage and support shareholder returns and our focus is clear, our ambition is to deliver growing returns for our shareholders.

With that, I'm going to wrap up the presentation section today and move us to Q&A. The leadership team will join me on stage and will take questions from the floor and online. And I'll direct the questions to the most relevant member of the team. We just need a couple of minutes to set that up. Thank you.

Okay. Happy to take questions from the floor. Arie?

Just a couple of questions maybe on mobile first. You touched on the new MVNO platform. And I just wondered what observations you sort of had on the wholesale market at the moment. Obviously seeing some value destroyed by one of your competitors in the enterprise space, albeit they had a very small starting position. So yes, just keen on your observations on MVNO and then we're not going to sort of see value destroyed for the three MNOs by bad behavior and wholesale?

I think if you look at the MVNO market that exists today in New Zealand, it's sort of sitting at just under that 2%. So a range of different providers within that, we are a participant in there and one of the approaches that we're taking to that particular market is making sure that we have a good offering, but we're thoughtful and they have learned off other markets around how MVNO has evolved over time.

So from our perspective, we haven't seen anything yet that would suggest that, but we're very thoughtful as we look at the strategy here and making sure that we have good offerings, and we think about how we have structured those offerings.

And just one quick one, too, on broadband. There's nothing in the presentation really in the way of targets for customer numbers or for fixed wireless penetration? I mean, obviously, you've got the investment you've made in stand-alone, and you still do have quite a large CapEx envelope, 10% to 12% going forward. So yes, over the 5-year horizon of the plan, what sort of targets do you have for broadband?

I think if you think about the components of wireless broadband, the big sort of driver within that is the shift and rollout of 5G. So we're about 50% of population coverage at the moment of 5G, so we need to continue to roll that.

The closure of the 3G network will also contribute to the release of 850 spectrum and you also saw the announcement we made yesterday around increasing the spectrum holding that we have in the C-band up to 100, which allows us to do more.

If you think about then the opportunity to expand because you increase the addressable market, you are able to lift our caps as well within that. What we're also seeing is the different dynamics between fiber pricing, wireless pricing as they change over time, that creates greater opportunity.

So our focus will be on growing that. You'll also be aware that we have the most or the highest wireless broadband base in probably developed markets. So we have been leading the charge on this. So the next phase forward is still for us to determine exactly what that will look like in terms of levels.

But you could reasonably say maybe within the next 5-year period, wouldn't be unreasonable to expect that sort of 5% sort of further growth in wireless broadband on top of what we have today, but that will follow out your 5G rollout.

We're also looking and Greg touched on in terms of the bundling, how we bundle more across that with mobile, so looking to grow that way as well.

And just one more for now from me. Just within the capital management framework, just looking at how you're thinking about retention of businesses versus exiting.

And so just looking for at least a little bit of granularity on those noncore businesses, the cloud, IT and procurement, where you do have a very large-scale business but are sort of, I guess, signaling and this is perhaps a question but signaling that you may not be the highest value owner of that business over the medium term. How are you thinking about that?

And then also, if you could just touch on how much capital you have invested in that business, so including working capital, and what sort of earnings -- EBITDA earnings are you generating from those three businesses?

Right. There's many questions in that, Arie. So if I start with the first piece. I think when you think about the noncore component or simplifying beyond that core and optimizing those businesses in terms of your private cloud, your IT services and your procurement.

If you think about our focus, certainly in the short term, in the next sort of 18 months, is around improving the profitability with that using automation to make sure that we can match some of those services shift to modernize, Mark talked about the modernization of some of those services, and therefore, we need to underscore that profitability there.

Those businesses are profitable from an EBITDA perspective in terms of that we don't provide, as you know, down to EBITDA for all of those components of the business, but they are, and they're more profitable than what we see in other markets.

I would say also that we always look at all components of the assets that we own and make the decision about whether or not we should be -- we're the best long-term owner for those organizations or businesses that sit within it, segments that sit within it.

And you've seen us execute a number of noncore divestments over the last sort of 18 months within that. We'll continue to have a view to that. Are we the best owner? Is this right time within the market, too, to be looking at that?

The key kind of assets that sit within there, so Southern Cross, we've talked about before. We have a 40% shareholding in that business. If you thought about -- we will always have some shareholding within it, but we will -- but that doesn't mean we need to be at 40%. We will consider that probably in the next 18 months, when the next part of the cable is developed.

Yes. In terms of the capital intensity of the cloud IT services and procurement business...

Procurement has very little to none...

Including -- well, you have $1.3 billion of working capital and receivables and prepayments, and then, yes, I understand there's not going to be a lot of PP&E for procurement. But across those three businesses, which are nonconnectivity businesses, you've got scale. Just interested in how much invested capital sits in those three lines.

We don't disclose that separately. We haven't done that before.

Yes. I mean, so what we do, Arie, is every quarter, we do -- we run through an exercise where we go down to a ROIC level. Now we don't go any further with that because -- and what we do is we use a consistent cost allocation approach to that. But like any cost allocation approach, there's -- it requires some assumptions.

So we're consistently looking at those businesses and what the return is. And as you could deduce, the cloud business users has a reasonable amount of capital deployed to it, may be procurement a bit less. But that's sort of how we're looking at -- that's how we look at those businesses.

And yes, within that structure and things there's -- Mark is also doing work that he's talked to look at sort of where we are in the cycle in terms of profitability and what we can also do to optimize the efficiency in those business as well and improve returns in the sort of -- in the -- under the -- in the current term.

Yes. I guess just in the context of financial discipline, though, I guess, sort of if you've got confidence enough to share numbers externally, it means that there's a lot of discipline going into how they're provided.

And so I just wonder whether you're looking at the returns you're generating in that business, and like I said, in the retention versus holding, making sure that you're maximizing returns.

We've just recently seen Fonterra obviously come to a realization it wasn't the highest value long-term owner of a consumer business, and it's done very well out of exiting that by the looks of it.

Just wondering whether you've got the same sort of lens when you look at what is a large business that you've identified outside of its core. That's where I'm sort of looking for some comfort from.

We will continue to assess each of those businesses and make a decision. By the mere fact that they sit in that part of the strategy, capital allocation is going to the core, and then we will make decisions at the right time against each of those businesses as to whether we are the best holder or not.

Yes. Can we just give a little bit of color on this 5G stand-alone and the opportunity? Like what percentage of enterprises out there could this be applicable for? And then sort of the value to you guys, I assume it's a higher cost to enterprises. Sort of is it 10% more expensive? Is it double the cost sort of? I don't really have any idea about that.

Okay. Mark, do you want to just talk about the types of examples that...

Yes. So there's two types of 5G networks. There's private networking, which is used for businesses that might want ports or manufacturing facilities where they have their own network and they use 5G and they get lower latency and they get a private network.

And then there's a stand-alone piece for businesses where they might have a slice of the network and use it for different purposes, whether it be for prioritization of traffic or other slices for different things.

So we haven't -- we're working through that, obviously, with the network team on how we would bundle that up as a service for customers. We're trialing 5G private networks at the moment. And obviously, as 5G standalone gets rolled out, we'll start looking at what those use cases might look like.

And then over the top of that, you've got, as Renee talked about, Network-as-a-Service, which is Aduna and things like that, where you can start bundling different types of use cases for customers and it might be fraud detection or it might be other use cases as those APIs start to develop. And as they start to develop, we'll look at how we can productize those.

But you think about them in a way, sort of different to an ARPU calculation, it's more around a service contract for a period of time for a use of a particular part of the network within that.

And keeping in mind too, the stand-alone core now supports our core traffic for all of our mobile network traffic, we're moving across to that. What that creates is greater capacity.

If you think about the discussion we had just before about wireless broadband, the other opportunity opens up as -- for us to take much more traffic across the network. It allows us to lift our caps within that. So if you think about the return, a lot of that return is about the shift on to 5G of wireless broadband as well.

And maybe just on this bundling opportunity that you talked to. Is this more just a loyalty improvement? Or is there actual financial uplift? Because I would have said you've got a much higher market share in mobile. I would have thought most of the uptick you can bring is onboarding more broadband customers, and once you add a discount to, say, a fiber product, the profitability will be pretty negligible.

I think what you've got to think about within that loyalty goes to also retention and holding on to high-value customers in terms of within that and making sure you're offering them a range of things together. So the churn reduction, the difference in churn between those customers that hold more than one service with us is much higher. So there's a straight value equation there from doing that.

I don't know, Mark, if you want to talk about more of that?

I think the other thing that -- there's also a customer experience benefit. So when we talked about the outage assist proposition, 450,000 instances of fiber outages, 6.3 million gig of data applied to customers. So there's value there.

And then you can start to think about the construct from a customer perspective and how it's actually positioned as a companion within a broader plan.

So sort of recognizing the valuable base that we do have and making sure that we retain that base, as you point to, with a leading share in this marketplace.

And then maybe just on sort of fixed wireless. We know it's quite a lot higher gross margin. But if we roll down to sort of an EBIT or free cash flow margin for, say, 5G, obviously, it's a more expensive modem that you've got to get to the consumer, I assume call center cost may be a bit higher for the fixed wireless side of things. How much is it?

It's way smaller, yes.

Is it at the sort of free cash flow EBIT margin between the fiber and...

Well, if you think about our -- and Renee can touch on in a minute, but if you think about our mobile networks, we design them to be able to serve our mobile services. So they're always prioritized. So the capital investment that's already going in there exists already for our 5G networks.

So this is about monetizing that part of the network. So therefore, when you think about the cash implication of shifting or replacing a fiber line, it's quite substantial because we have built the network already. We already have the spectrum that we're operating across it.

Modem costs are different. So 4 to 5 are different. There's no question. But as you look around the world and what we're seeing internationally is that 5G or wireless broadband is growing in the states, other countries, that starts to bring your modem costs down.

And in the life of a customer and in the life of an arrangement like that, that is a relatively sort of short to medium-term incremental cost when you think about retaining a customer for a longer period of time and being able to offer a service that also matches with what an entry like fiber might look like as well when you look at the speed.

So that's where the value equation and cash equation comes from. And it delivers around about $130 million of broad terms already today of margin savings from replacing that fiber. I don't know, Renee, if there's anything else you want to add?

And to Jolie's point, very much the network investment we're seeing is a cost of doing business, right? So we are needing to introduce 5G from a mobile network perspective. So this just offers a way for us to monetize that investment in a different way and make additional margin.

I think from a 5G wireless broadband perspective, what we are seeing and talked about it earlier is just that increased or better customer experience. So significantly higher speeds, which makes it more of a competitor to fiber, so that makes it a more compelling proposition.

And also the customer experience that we're able to wrap around that as those modem costs come down. So we see it as a way of kind of accelerating our ability to get return on investment for the network investment.

Other questions in the room?

The satellite provider, is this going to be an example of just sort of keeping up with the Joneses or one in this case? Or can you monetize it?

I think when you think about the coverage and service quality, what people expect of a resilient mobile service, I think satellite adds to that. It is another provider, much the same way you have a fiber provider within that.

We will continue to look as we launch -- move towards launching that service at what monetize opportunities there are within that in terms of the structure. There will be some things that I think would be included in plans.

There may be other things that we'd look to do separately with monetization. When we are ready to launch that into the marketplace, we'll share a bit more about those plans.

So I don't want to preempt that, but beyond text, where can it go?

Well, over time, there's obviously ambitions to add voice and -- but if you think about the whole of New Zealand at the moment, so it's 2,000 towers supporting, there's lots of spectrum that helps support the service that mobile providers already have today. This is about complementing the edge of the network and where people don't necessarily always get that service when they want it.

Can you just clarify the -- when you're talking about the data center and modest annual capital commitment, what does modest mean?

So do you want to talk...

Yes. So I mean, I think we've talked about the construct. So DC Co becomes an entity in its own right. It has its own leverage and therefore, as its EBITDA grows, its ability to take on more debt also grows as well. So our equity contribution as a 25% owner is something between $10 million and $20 million a year.

And is that counted as sort of BAU strategic CapEx?

I think we'd probably count that as strategic CapEx.

Otherwise, we do have a question from online?

Thank you. We have a question online from Entcho Raykovski of Evans & Partners. Structurally, how do you see the opportunity in wireless broadband given the recent slowdown in subscribers? And how much of that recent slowdown is in your view, cyclical?

And the follow-up to that, I guess, is where do you think wireless broadband subscribers can get to as a percentage of the greater broadband subscriber base by FY '30?

I think, in part, we've probably touched on some of this already. But to the question of how much is cyclical, I think the economic environment means there's lots of competition in and around particularly at low end of broadband.

If I think about wireless, so the biggest opportunity is with the 5G rollout and the continuation of building customers there and the bundling that exists with mobile. So from a point of view, we already touched too on the potential to continue to grow that percentage of the base.

I have already said too as well from a developed market point of view, we are already leading. So I think in that next period, you're probably talking somewhere up to that 5% growth, if all of those things were to come through within that we would look to grow that base.

Okay. Just two questions from me. First one is for mobile. I think some industry data has suggested that Spark has lost a bit of market share over the last couple of years, whereas it seems like the customer satisfaction score has doubled. Can you just talk about the disconnection there?

If we want to talk about our market share, and if you look at it, we provided some information in our full year results. So if you look at for the last 6 months, we lost about 0.4 of a percentage point. One also had a similar impact. Two grew -- 2 degrees grew slightly, and then MVNO was the main growth within that market.

Still sits in and around about that just under 2% of the market share. So I think from a point of view of market share, our focus is very much on driving retention of existing customers in those high-value segments. There are certain parts of the market that we have Skinny to compete in, but we wouldn't necessarily drop to the lowest part of the market.

Our focus is very much on providing good service, continuing to recognize customers within that and being competitive, particularly in the enterprise and government area where we have seen more price competition in that part of the market, which would have had an impact on the service revenue given our share is so high within that part of the marketplace.

And that's really more about some price competition within it. Keeping in mind that mobile and enterprise and government is roughly around sort of 10% of our mobile revenues. So we don't see the same dynamic that we have seen in the enterprise and our consumer base.

And then the second question, maybe for Stewart. So in terms of the free cash flow ambition for FY '30, you just mentioned that the base is FY '25. So you've changed the definition of free cash flow at the result. Can you just clarify whether the FY '25 figure is based on the old definition or the new one?

Yes. So we've used the new definition so we treat it consistently. So -- and in the results announcement pack, we've included a reconciliation between the old and new definition of free cash flow. So FY '25 free cash flow based on the new definition, so FY '25 base is $260 million.

And then we've also guided...

Yes, and we've guided for '26. So the guidance -- the range of guidance for '26 is $290 million to $330 million.

Just another one from me. Just on MATTR and clearly, not going to get any new information, I hope from my first a lot of questions in terms of financials. But just in terms of the partner process, I mean, is it your expectation that there's going to be some value realization out of the back end of that? And then also second question on it is, is your preference for a full exit or to remain in it with a partner.

Well, we're in a process right now, as you've noted, looking for investment partners to come on board, which would see us dilute our holding. Really the impacts of that process will determine, I guess, what our overall shareholding would be.

But again, those assets sit inside the second part of the equation in terms of simplify the core. So our focus for capital allocation will be to core business ahead, and that process allows us to do that.

And yes, just -- should we expect some value realization for the investment you've made to date?

We'll update you when the process is complete, Arie. As you see, we've run through a huge amount of processes and divestments over this last 6 to 8 months, whether that's the data centers, whether it's the other disposal of noncore assets, and we've had a discipline in running those processes, and this won't be any different for the MATTR process.

And then just, Stewart, on the CapEx envelope of 10% to 12% and the low single-digit EBITDA guidance range. Would it be fair to say that your expectation would be that there wouldn't be a lot of strategic investment being made within the over and above business as usual for you to hit that bottom sort of low-end EBITDA guidance? Or is there strategic investment included outside of your immediate DC commitment to get to that guidance?

Well, and [ Simon ], if you -- it's a good question. But if I think about the strategy, the strategy is to focus on -- is a focus on core connectivity and it's allocating our capital to that.

And so sitting here today, do we consider that we have sufficient capital resources to be able to invest in those -- in connectivity, then yes, we do, and we can do that, and that is all within that BAU CapEx envelope.

I mean if -- and so should there be anything in the future, it would need to meet those investment hurdles. And so it would need to have an accretive return on invested capital, it would need to be NPV positive.

Sitting here right now, there's -- we're not looking at anything that we would put our finger on and say, yes, that's something we would do. And therefore, it may qualify for that strategic CapEx bucket.

Jolie, if we look at the start of '26, the cycle hasn't turned pretty clearly and competitive intensity doesn't appear to have dropped either. Like if this carries on another 12 or 18 months, are there other cost levers you can pull to achieve that? Or does that sacrifice some long-term goals?

I think we've always taken a balance and you know over the years of -- the reality is we're in an industry that you have to continue to look at your cost and whether that's -- we've got about $1.7 billion sitting up in cost of sales.

We also have close to $900 million in that labor and OpEx component within it. We already have some ambition for this year around that range of $30 million to $50 million of productivity savings sitting in that area.

What we would look -- to the extent that there was further economic deterioration, we would, of course, need to look at both our cost base, but also our capital spend within that because at the end of the day, those things need to come together to deliver on our free cash ambitions within it.

And we would make -- depending on where that was, where we were seeing that exposure, we'd make the decisions around, for example, are we right owners of parts of the business, and we would look to move.

So do we have more productivity to come? Yes, we do. And we sort of set that target out of that $150 million to $180 million net by the time we get to FY '30. And that really looks at offsetting inflationary costs we see come through, plus continuing to use automation and technology to really shift us forward in terms of the cost base.

And Matt sort of talked to some of the things that we're already thinking about within that. The global partners are a key part of this as well in terms of the profiles we've set with them and our ambitions for what we want to achieve through those partnerships.

Just maybe one on the network proactive resolution. Like is that cost out? Is that monetization? Is that retention? Like what's the return from what looks like should be a core function?

Yes, I think when you think about -- well, and Renee, actually, I'll hand to you, Renee, you can talk about that, and then I can come back.

It's multiple things. So absolutely, it would be cost out. Part of our partnership with Nokia was looking at how we can increase automation around things like anomaly detection. So yes, it as BAU of what we do today, but it's leveraging tools like AI so that we can do it better and better.

And there is also a strong improvement to the customer experience, obviously. The example that I gave around OTN 2. If you can automatically detect when there's a problem, and then you can resolve it ideally or provide a better customer experience through things like outage assist, that is just one of the ways that we help customers to feel like they can rely on their connectivity.

So for me, it's very much a cost side to it, how do we simplify and streamline the business and how do we get a better customer experience at the same time.

And increasingly productive, I think, as well, [ Paul ]. So that allows you to better focus your maintenance spend, where are you spending capital, is it really aligned to where we need to complement the network experience for customers and therefore, aligning both of those operating costs and capital up.

Yes. Stewart, just had a few questions on Slide 27, which is looking at these noncore assets. I think we've already talked a little bit about MATTR, but I was just interested to talk about the other three.

So the subsea cable stake, the satellite business. And then a little bit more detail around -- you got the cloud infrastructure business. Are we talking about the old Revera business when we refer to that.

So I suppose I'm just interested in kind of the -- it says we're looking at your ownership options over time, but I was just wondering if you can give us a bit more of a clarity in terms of a time frame and process around those other three noncore assets?

I guess it's a little bit of a build on Arie's question, I would say. Maybe you want some clarification, and you can process around private. So private cloud infrastructure is a combination of what we had acquired both through our CCL and Revera acquisitions, but also our own investments over time.

So we've held those businesses for a long period of time. Equally, they have the data centers in them, so they're linked to the data center transaction with that. The infrastructure that sits there, we've done some work around modernizing that and making sure that we have kind of the best cost available for that.

When we think about what's happening in terms of that sector and segment, we see strong growth in public cloud. Private cloud will over the longer term, we think decline within that. It's not a linear line like voice. It has a different profile than that, and we'll see a combination of hybrid cloud.

So from our perspective, it's about making sure we are getting the best return we can as we see that shift between public and private. And then as I sort of put it to Arie, we would make the right decisions around are we the best owner at the time too and then consider that process ahead. I can't remember what else you asked.

You had Southern Cross there, Phil? Yes. So with Southern Cross, I mean, we're in that, we're 40% of that. And if you think about the value of a subsea cable, so that's -- the cash flows in that can be quite lumpy and therefore the sort of peak valuation tends to come just after you've developed an asset there, and so that's going on at the moment.

So you think about -- so there, you think about where does peak value -- where is peak value map. But I mean, also, there's also the question of liquidity in that investment as well. So you have a willing -- do you have a willing partner as well. But I mean there is clearly value there and that value will be optimized in the near future.

I think to people looking at the annual report, these things around the EBITDA, it's not necessary a way that you think about valuing that business because of the lumpiness that Stewart just talked to.

And if you think about our share in broad terms, just to give a context around our value there, our ownership probably sits around somewhere just south of the $100 million mark. And core connectivity from international cable is a key part of still running our business.

So we need to be able to have international connectivity that wouldn't necessarily be any kind of view around the different ownership structure, would perhaps be around less ownership, not no ownership.

We've got one online, Rodney?

Yes. We've got another question from Entcho Raykovski from E&P. In your aspiration for low single-digit CAGR and EBITDA to FY '30, what is your broad assumption around the economic cycle and macro conditions? Where are the areas you could see cyclical upside or potentially downside?

Yes, I'm happy to take that. So I mean, we've clearly been in quite a -- we've been in a relatively long downturn. So I mean, we have -- so in that context, look, we've been relatively conservative about how we thought about the economic cycle and macro conditions. But I mean, we also consider that there should be some benefit coming through the cycle if you look forward to 2030 as well. And so, Rodney, the other, where were the areas you could consider cyclical upside, was that...

Yes, that's right. Where are the areas you could see cyclical upside or potentially downside?

I mean, probably the major area of cyclical upside would be around how you saw mobile service revenue grow. So we've talked about customers demand for data. We've also talked about population growth.

So I mean, you'd expect population growth to potentially come with a bit of cyclical upside. Well, net migration to New Zealand has been pretty lean over the last 18 months or so. So that would be an opportunity.

There'd be opportunity -- Mark, did you have anything in your -- I mean, there's clearly opportunities probably in the enterprise business as well that we looked at.

As we talked about, I mean, there's things like the newer network pieces that have come into play. But we haven't seen that growth curve come yet in our enterprise but...

I think more holistically, if you thought about, we're in -- we've been at the bottom of a cycle, particularly when you think about government and enterprise spending overall, particularly on tech deferrals and other things.

So as you start to come out of the bottom of that, we'd expect to see some demand continue to increase. As Stewart said, we've been fairly conservative about how quickly that happens and when that happens. But over a strategy cycle, that most definitely will happen, and that will be another area that we'd continue to see potential opportunity.

In terms of the question of downsides, I think we talked about a little bit before with Paul's question really around we'd always be looking at the toggle between what we need to do on productivity and cost to be able to offset anything that we saw around revenue, if, for example, there was longer, more prolonged periods of economic downturn.

However, given we haven't counted on a lot of upturn in this next period, certainly in the next year or so, I think that's more muted, the potential risk associated with that.

For Matt and possibly Renee as well. Why have the telco sector been so poor at retention plans or loyalty plans? Like obviously, you see it in other industries like airlines and so forth. But yes, telcos have been pretty bad at it. So why is that?

I can start, maybe Greg might want to jump into on loyalty. So we've taken a look at this. And what we see globally is that we haven't seen evidence that our traditional loyalty plan performs to a high level. So airline points type of thing, a lot of telcos have tried it.

We -- if you don't have anything to use for loyalty, you need to probably spend something like that. We have quite a sophisticated AI infrastructure that already can identify customers and target them through channels.

So our approach is for different segments, what does reward and recognition mean to them, what's the appropriate level of reward and recognition and then what have we got at our disposal to make them feel that they're valued as customers.

So rather than just sell to them, how are we giving them exclusive offers, how are we giving them money can't buy experiences that we as a brand can deliver. And we can scale that quite quickly. I'm not sure Greg, if you'd add to that.

I think that's good. And then the ability to personalize things that are relevant to specific customers is getting better and better, and it becomes less transactional and about always needing the customer to do something for that value.

The other piece, it looks back to the earlier question around why we're putting so much effort into customer experience. So when you look into the detail of iNPS, we know that a promoter is twice as likely to stay with us as a detractor. So ongoing investment in that area to improve our customer experience is also part of the loyalty play.

You talked before about the 40% of your customers are in this sort of premium segment. I assume a good chunk of that is sort of customers on all-you-can-eat plans.

So with data usage growing and AI is probably going to fuel this, when do you expect sort of the vast majority of customers to already be on all-you-can-eat plans? And do you think when that happens, your pricing power would be a bit less versus today?

Do you want to talk to that, Mark?

Yes. Look, I think there's a fair bit of the market has gone unlimited. So then it's about what are those other proprietary features that you can add in to keep innovating within the category to create value. And then there's always going to be a segment of the market where they don't need all-you-can-eat, right?

So if you look at the prepaid segment, for example, the main customer driver there is cost control and hand to mouth. So I think it's always about having a range of propositions that meet your customer needs and not everything will need to be unlimited.

And of course, remembering that the market is made up just over 50 sort of percent as pay monthly and 50% is prepaid as people look to seek to get greater data, maybe not right up into the top unlimited component, there's still a movement up the data curve, which enables monetization within it.

And then just on the spectrum deal you announced earlier, can you give a bit more details on sort of the financial side of things? How is it sort of structured? I assume it's because the 18-year deal goes through the P&L rather than CapEx? Is that the way to think about it?

So in terms of how you think about that, that we will pay for that spectrum over -- annually over a period of time. Not really going to provide any more commercial deals.

It's a partnership though that we're pleased to do because it looks at a range of things, not only around the actual spectrum but also looks at working together on certain elements. So I don't know, Renee, if you want to talk about a little bit more on that partnership?

I think one of the really exciting things about the partnership is it is broader. So there's a spectrum side of it, but we're also looking at working with Tu Atea around making available small cells for regional connectivity particularly Maori-based solutions that can help drive connectivity in hard-to-reach spaces.

We're looking at options around civil defense and emergency sort of deployables as well. And then also looking at opportunities around workforce development and how we can encourage Maori talent into the tech sector. So it's a really broad partnership and something we're very proud to be part of.

And just for clarity, it's a right-of-use asset, so it will have amortization, but you can see the payment is annual as well within it. We've got one more online.

Yes, I've got a few more online. The first question comes from a shareholder, [ Edmond Good ]. The question is, do you think there's enough ambition in the strategy to support achievement of your long-term goals.

I think when you think about the ambition strategy, it's really around a return to our core. We have market-leading positions in all of the core connectivity that we have. We're investing heavily behind our network.

We're looking to drive the growth we see across multiple products within our business. And when you think about the importance to New Zealanders of continuing to be able to grow, use more data, and have a digital economy, that doesn't exist without the digital infrastructure that we provide.

So what we've done here now is really focus on what's important, what's critical, what we can provide and what we have clear leadership to do. Same time, we've taken and made sure that on the second part, the simplify and optimize, we are making good choices about the businesses we won't be in or applying as much capital to over a period of time.

So we think there is enough ambition there to underpin the growth we want to see in earnings and free cash flow and then the dividends that flow off that as well, while being able to reinvest in building this core business because it sits at the heart of the digital economy.

Okay. And then just another question from Entcho at Evans & Partners. In pursuing satellite to mobile, do you expect that you'll need to deploy some capital to develop ground station infrastructure? If so, what's the quantum of the investment? But if not, how do you think about the ongoing payments to third parties to deliver this technology?

Yes. There are various ways that you can provide satellite to mobile technology. Within the plan that we're looking at the moment, we don't have current and near-term requirements to build ground station infrastructure, but it could be something that we look at in future years.

Right now, we are focusing on getting the satellite to device technology working and making sure that we can test and prepare for the launch of that in the first half of 2026, so that it is able to provide that service for customers.

Okay. No more questions online? Anyone in the room? Otherwise, thank you for your participation and contribution and ongoing support, and we're happy to catch up with a cup of tea afterwards, if anyone has any further questions they'd like to ask. So Thanks, everyone, for attending today.