Spark Eyes Significant Investment in New Zealand Data Centers

(Bloomberg) -- Spark New Zealand is stepping up investment in data centers as greater use of artificial intelligence and cloud-based services fans demand.

The Auckland-based company estimates its development pipeline will require NZ$1 billion ($610 million) of investment over the next five to seven years, it said Friday. It is exploring equity funding options, including capital partnerships, to help meet that cost.

Spark expects the New Zealand data center market will grow to about 500 MW by 2030 from 90 MW currently. It owns 22 MW, or about 25% of the market, and has a development portfolio of 118 MW.

“Our data center strategy is a significant mid-term growth opportunity,” Chief Executive Officer Julie Hodson said. “We are well positioned to capture a significant share of this growth and maintain our competitive position in the market.” 

Spark intends to spend as much as NZ$90 million in the current financial year through June 2025, focusing on adding 15 MW of capacity at its site at Takanini in south Auckland and a smaller expansion at its Aotea site in the city’s central business district.

It has purchased adjacent land in Takanini that could grow that site to 75 MW and has agreed a land purchase on the northern fringes of the city for a potential 40 MW site.

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Spark said it is targeting margins of 70-80% from these businesses and annual return on funds invested of 10-15%.

Data center revenue rose 54% to NZ$37 million in the year ended June 30, it said today in its annual result announcement.

The company reported group adjusted net income fell 21% to NZ$342 million as revenue dropped 14%. Soft economic conditions impacted demand in IT services while intensified competition led to lower mobile device and accessories sales, it said.