Spark New Zealand Ltd.

The stable outlook reflects our expectation that Spark's solid market position, as well as commitment to maintaining a conservative capital structure and our single 'A band' credit rating, would mitigate the group's exposure to structurally declining fixed-line revenues and the telecommunication industry's competitive dynamic. This should enable Spark's credit metrics to remain in line with the 'A-' rating level, including maintaining debt to EBITDA below 1.7x. Downward rating pressure could emerge if Spark's fully adjusted debt-to-EBITDA ratio exceeds 1.7x. In particular, we could lower the rating if shareholder returns are prioritized over the company's commitment to maintaining its conservative capital structure. A significant and persistent erosion of market shares across Spark's businesses could also pressure the ratings even if the

...We expect Spark New Zealand Ltd. to maintain its solid market positions in fixed and mobile telecommunications products and services in New Zealand. While Spark is not immune to the COVID-19 market disruption and resulting recessionary environment, we believe the combination of good earnings quality and prudent financial policies should help to mitigate the worst effects of the downturn and support the 'A-' ratings. Conservative financial policies and low leverage remain key credit strengths for Spark. We believe the company will maintain a strong balance sheet over the next few years, supported by solid cash flow generation and flexibility to adjust its cash dividends to manage credit metrics within rating tolerances. For the year ended June 30, 2020, Spark has reaffirmed its dividend guidance of 25 cents per share that will be at least 75% imputed. Competition limits near-term upside. New Zealand mobile markets are competitive and dominated by a handful of competitors across fixed and...

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