Just putting a few numbers on the upcoming datacentre spend by Spark.
1/ In PRFY2023 slide 19, Spark suggested that they would be spending $250m-$300m on data centres 'over the next three years' (which I take to mean FY2024, FY2025 and FY2026). The mid point of that estimated spend is $275m.
2/ In AR2024 p17, Spark declared that they had spent on Capex, $37m on 'cloud', $41m on 'datacentres' and $11m on 'property'. They are non-specific about what this property spend was. But during the year they purchased land for a proposed North Shore 'data centre hub' to be located within the 'Aventuur' surf park. I am guessing the $11m property spend is that. So I get a total spent on datacentres over FY2024 of: $37m+$41m+$11m= $89m.
$89m is within the projected band spend on FY2024 data centres of $80m-$100m, referred to in PRFY2023 slide 19.
3/ In slide 12 of PRFY2024, there is a reference to a budgeted spend on datacentres over FY2025 of $70m-$90m. The mid point of that estimated datacentre capex spend is $80m.
4/ Taking what we know about the actual spend in FY2024 and the estimated spend in FY2025, we can work out an estimated 'mid point' capital spend for FY2026:
$275m-$89m -$80m = $126m.
That is quite a projected jump from the projected datacentre capex spend over FY2025, up by $46m or more than 50%! This could be what Solly was concerned about. So maybe Solly not so silly after all? However there is still a lot of cashflow to pass under the bridge before we get to this projected point. We have the 'Potential Hybrid Capital Notes Issue', which, given the capex requirements outlined, must surely now be a certainty that is just awaiting regulatory approval, for a start. Perhaps some of the weakness in the SPK share price of late is institutions selling in anticipation of being offered some of these 'Hybrid Capital Notes'? I wonder if these hybrid capital notes would convert to shares in some circumstances? I am not really sure what 'hybrid' means in this context. But could these 'hybrid capital notes' eventually lead to a potential dilutive share issue in some circumstances?
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