Spark is the new name for the telecommunications company
formerly known as Telecom, but Forsyth Barr broker Andrew
Rooney remains to be convinced a new name will spark up the
The change of name had a price tag of about $20 million, in
addition to regular brand refresh activities.
''While for many the name change may seem unnecessary, the
target is clear. Spark is about having a brand attractive to
the younger market - something Telecom would never be. It is
also about signalling internally to staff the company is
New value-added benefits such as Spotify were smaller-scale
innovations while services such as Lightbox, Bigpipe and
Appserv showed the new path Spark was taking, he said.
The risk the company must manage was not alienating those
customers who had a long association with Telecom and its
brand, ensuring they stayed with the company, Mr Rooney said.
The rebranding was more than a simple name change. It
represented a decision by Telecom to step beyond its history
of fixed line, broadband and mobile.
The company had to make it clear it intended offering
innovative new propositions to its customers, levering its
investment in core transport, mobile spectrum and eventually
new operational functionality.
''The test will be seeing if Telecom can use this investment
to deliver margin improvement,'' he said.
While Spark was about now and the future, investor focus
would be on the company's full-year results. Mr Rooney
expected a positive story about increasing cost cuts through
a combination of continued reductions in staff numbers and
savings from suppliers and other areas.
Mobile broadband connections should be a positive story as
the company had been aggressive in entry level for mobiles
and had a strong advertising presence for broadband.
However, continuing pressure on its average mobile revenue
was expected, along with continued margin pressure for
Gen-I/Spark Digital in fixed line calling and data areas, Mr
That would highlight the continuing tension between taking
costs out and reducing traditional revenue streams.
Earnings: No change
Target price: $2.40 per share, no change
Rating: unchanged at underperform