Spark ‘notes’ speculation data centre deal close

Monday, 11 August 2025

Spark’s share price has halved over the past two years as it struggles for growth in a post-UFB world.

Spark has acknowledged overseas media reports that it is days away from agreeing to sell a controlling stake in its data centre business to a Sydney-based private equity firm.

The Australian Financial Review (AFR) reported that Private Equity Partners was in “advanced negotiations” to buy between a 50% and 75% stake in the data centre business.

The AFR has previously speculated that the business could be worth between “a couple of hundred million dollars” and $1.2 billion in its entirety and that any proceeds from a partial sale would probably be used to pay down Spark’s debt.

Its latest report suggested a valuation of about $600 million.

In a release to the NZX today, Spark said it noted the “further media speculation”, also noting it had advised investors in February that a process was underway “to support future data centre investment”.

“Spark confirms this process is ongoing, and it will keep the market updated in accordance with its continuous disclosure obligations,” it said.

Spark previously elected to sell off its cellphone tower infrastructure in two tranches.

The company once touted operating data centres as one of its biggest growth opportunities. But it announced in May that it was seeking a partial sale.

Industry insiders said Spark had found the market increasingly competitive.

Amazon Web Services, Google and Microsoft dominate the market for providing so-called “public cloud” services from their own data centres, while a range of players, including CDC Data Centre — which is partly owned by Infratil — also play in the same market as Spark.

While Spark’s current intention appears to be to retain a shareholding in its data centre business, it has in the past sold off infrastructure in stages.

In 2022, it sold a 70% stake in its mobile phone towers to a Canadian pension fund for $900m, while saying it remained “a key strategic partner” in that business through its 30% stake.

It sold that remaining shareholding two years later for $314m.

Spark’s asset sales have come as it struggles to grow sales and earnings in the post-UFB world created by its de-merger from Chorus in 2011 and New Zealand’s investment in ultrafast broadband.

Its share price has roughly halved over the past two years.

More recently the company, which will report its annual result on Wednesday week, is understood to have come under additional pressure from cost-cutting by its public sector clients and aggressive discounting by Australian-owned 2degrees in the business market.