Spark to splash $221M on data centers, 5G in new plan

New Zealand telco Spark sees growth from data center demand and convergence, as it unveils latest three-year strategy.

Robert Clark, Contributing Editor, Special to Light Reading

April 6, 2023

3 Min Read
Spark to splash $221M on data centers, 5G in new plan

New Zealand's biggest telco Spark will invest up to 350 million New Zealand dollars (US$221 million) in data centers and mobile in its latest three-year strategy. It has set aside between NZ$250 million ($156 million) and NZ$300 million ($188 million) to expand data center capacity and another NZ$40 million ($25 million) to NZ$60 million ($38 million) to tip into 5G standalone and multi-access edge.

Unveiling the new strategy at a briefing Wednesday, chair Justine Smyth said Spark has built growth in the last three years through new technology and simplification, and is now able to invest for future expansion.

The new capex program will be funded by the proceeds of the NZ$911 million ($570 million) sale of 70% of Spark's mobile towers last year.

Figure 1: Standalone 5G is one of the areas Spark plans to invest in. (Source: Philipp Dimitri / Westend61 GmbH / Alamy Stock Photo) Standalone 5G is one of the areas Spark plans to invest in.
(Source: Philipp Dimitri / Westend61 GmbH / Alamy Stock Photo)

Based on surveys of its own customers, Spark believes local data center capacity will grow at more than 40% CAGR from around 50MW today to 200MW by 2026. "We still see data center growth as a big high-growth opportunity," COO Mark Beder said. "This is an investment that delivers a long-term, high-margin, high-revenue business for us."

He said the 11MW Takanini data center in Auckland will be completed in the middle of this year. Beyond that the new funding would allow the company to add up to 17MW in extra capacity that would likely come online in 2026.

Acceleration of convergence

Besides the ramp-up in data centers, Spark also spies opportunity in mobile where it is posting annual growth at 5.5% ahead of the market average of 4.6%. "In the next three years we will leverage convergence for growth," Beder said.

Spark would deliver converged solutions that bring together new technologies such as AI, 5G, computer vision, IoT and edge computing, he said, citing as examples Spark Health, which has been growing at 17% a year, and digital identity subsidiary MATTR.

The company also expects to shed around NZ$125 million ($78 million) to NZ$175 million ($109 million) in costs over the three years through simplification and automation.

CEO Jolie Hodson said that in the current plan, Spark had met its EBITDA (earnings before interest, taxes, depreciation and amortization) margin target every year, had increased its free cashflow and delivered shareholder returns at the top tier of international peers.

"We are now seeing the rapid acceleration of convergence – which is about bringing these different technologies together to solve business problems where it was not possible, or cost effective, to do so in the past," she said.

"When you consider the challenges businesses are facing – from inflation and labor shortages, to climate change and increasing regulation – there is a big role for technology to play in helping us do things differently."

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— Robert Clark, Contributing Editor, special to Light Reading

About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech (http://www.electricspeech.com). 

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