Spark New Zealand Ltd. weaker-than-expected earnings highlight difficult operating conditions for the telecom operator. When coupled with the company's higher debt levels, the ratings on the company are under pressure. We project Spark's credit metrics will remain outside our expectations for the remainder of fiscal 2025 (ending June 30). The company will be relying on asset sales to return to a leverage level aligned with the ratings, in our view. Its adjusted leverage was about 2.3x for the first half of fiscal 2025, which is well above our downward ratings trigger of an S&P Global Ratings-adjusted debt-to-EBITDA ratio of about 1.7x. We therefore revised our outlook on Spark to negative from stable. At the same time, we affirmed our 'A-'
