Spark NZ Cuts Net Debt by $240 Million Through Receivables Sale

Spark NZ’s Strategic Financing Move

Spark New Zealand has announced a significant new partnership with ASX-listed Challenger Limited, establishing a fresh financing structure for its popular interest free payment (IFP) plans. These plans allow customers to acquire mobile handsets and accessories without upfront interest, making device ownership more accessible and manageable.

The deal involves Spark selling approximately NZD 240 million of its existing IFP receivables to Challenger. This transaction is set to reduce Spark’s net debt in the first half of 2026, providing immediate balance sheet relief without materially impacting its net debt to EBITDA ratio as calculated by S&P.

Supporting Growth While Enhancing Capital Efficiency

Beyond the initial sale, Spark will regularly sell future IFP receivables to Challenger, creating a sustainable funding stream that supports the expansion of its IFP offerings. This ongoing arrangement is designed to optimise working capital and increase the scale of financing available to mobile customers, reinforcing IFP as a key acquisition and retention tool amid rising device prices.

Jolie Hodson, Spark’s CEO, emphasised the importance of mobile as the company’s top priority and highlighted how the partnership will enable reinvestment in growth areas. The structure allows Spark to maintain full control over the customer journey, including credit checks, collections, and device supply, ensuring a seamless experience despite the new financing arrangement.

Challenger’s Perspective and Market Implications

Challenger’s Chief Executive of Funds Management, Victor Rodriguez, described the acquisition of Spark’s IFP receivables as an attractive addition to their portfolio, citing the resilience and quality of the cash flows. He noted the growing significance of whole loans; including mortgages, personal loans, and asset finance; in the Australasian market, positioning this deal as a strategic move to expand Challenger’s investment base.

For Spark, this partnership not only improves capital efficiency but also supports the company’s strategic focus on mobile services, a sector increasingly vital to its revenue and customer engagement. The deal’s structure, which excludes proceeds from free cash flow calculations for dividend purposes, signals careful financial management aimed at balancing growth with shareholder returns.