Spark NZ is confident of 5-10% annual growth in IT and managed services over the next three years despite the price pressure of public cloud competition.
The company said it is “uniquely positioned” to provide end-to-end managed services to NZ businesses compared to its local rivals.
Discussing its $1.1 billion IT and managed services revenue for FY20, the telco said about 31% of this figure was cloud revenue, which includes datacentre business. This represented a 6% annual growth in cloud revenue to $225 million.
In an investor call, chief finance officer Stefan Knight said Spark believes it can be New Zealand’s leading agnostic cloud provider by offering customers a hybrid cloud product, which combines public and private cloud solutions.
Public cloud is cloud computing services provided to several customers, whereas a private cloud involves services provided to one customer with select users over the internet or private network. Hybrid cloud products combine the two to suit the needs of business and enterprise customers.
“Spark is well placed to grow in this growing market. We see ourselves as the only NZ operator who can provide end-to-end IT and managed services that incorporate connectivity and mobility,” he said.
Procurement and partner revenue accounted for the largest part of IT and managed services of $407m ahead of cloud ($225m), with managed data and networks ($212m), service management ($158m), collaboration ($65m), and security ($37).
Market needs
Total IT and managed services revenue reportedly grew at a 10% rate in 2020.
Knight said the uncertainty was down to the falling costs of public cloud services affecting the price of Spark’s infrastructure as a service (IaaS) product, and how market trends will play out.
He said the percentage growth would depend on revenue by the new businesses Spark will take on and how quickly those businesses will scale.
Of the $200m Spark invested in FY20, it said one-third was in IT and managed services. Knight said he expected the company to continue to invest at “similar levels” over the next three years but that the specific investment in datacentres depends on its already announced review into infrastructure, promising an investor update in August.
The telco’s managed data and networks growth for FY20 was 2%. Product director Tessa Tierney said this growth was faster than the market, but that Spark was confident it can maintain growth by offering businesses managed network products that support applications for remote working, and improved Wi-Fi networks and local area network (LAN) capacities.
She said this incremental growth would offset the reduction in legacy business for managed data services.
