The Spark New Zealand Ltd (ASX: SPK) share price is on watch after the Kiwi telco's full-year earnings result delivered to guidance.
What does Spark New Zealand do?
Spark New Zealand is a major New Zealand telecommunications company with operations as a fixed-line telephone, mobile networks, internet service and ICT service provider.
Prior to the market open, the Kiwi telco share was up 9.9% in 2020 with a market capitalisation of $8.3 billion.
Why is the Spark New Zealand share price on watch?
Spark reported 2.5% revenue growth for the year ended 30 June 2020 (FY20) to deliver $3,623 million in revenue.
A strong first half of the year established the momentum which saw mobile service revenue grow 3.9% and cloud, security and service management revenue climb 10.8%.
Spark noted a quick response to the coronavirus pandemic as a key factor. The group moved to maintain essential services and contain costs to help offset lost earnings.
Earnings before interest, tax, depreciation, amortisation and investment income (EBITDAI) grew 2.1% to $1,113 million. That delivers to the middle of Spark's previously provided guidance for earnings.
Net profit after tax climbed 4.4% to $427 million thanks to that earnings growth and a lower tax expense.
Dividends
The Spark New Zealand share price is one to watch after reporting a final dividend of 12.5 cents per share (cps).
Combined with the 12.5 cps interim dividend announced in February, Spark's total FY20 distribution will be 25 cps.
Based on yesterday's closing Spark New Zealand share price of $4.54 per share, that represents an approximate 5.5% dividend yield.
FY21 guidance
After a strong yearly result, management did provide guidance for FY21 despite the current uncertainty.
EBITDAI is expected to fall between $1,090 million and $1,130 million compared to $1,113 in FY20.
Spark is targeting an FY21 dividend of 23 to 25 cps, 100% imputed. That represents a flat or marginal decline in distributions versus FY20 distributions.
The Spark New Zealand share price is one to watch as investors weigh up the FY21 forecast versus FY20 growth.
