(Reuters) - Spark New Zealand Ltd on Wednesday posted a nearly 6 percent drop in its half-year net profit, prompted by a higher effective income tax rate, and said it was still working towards launching a 5G network by 2020.
“5G will be a big driver of future innovation – not only for our industry but also for New Zealand’s economy. We are still working towards launching the network by July 2020 at the latest," said Managing Director Simon Moutter.
In December 2017, Spark had announced its intention to commence 5G services to New Zealand customers.
However, in November 2018, New Zealand's intelligence agency rejected Spark's proposal to use 5G equipment from China's Huawei Technologies Co Ltd, citing significant national security risks.
Spark said it had yet to make final decision about whether or when it should submit a revised proposal to the intelligence service. But it said it was confident this would not affect plans to launch 5G network as Spark is multi-vendor capable.
Australia also banned the Chinese telecom giant from supplying 5G equipment to the country earlier in 2018.
Western countries are increasingly wary about the rising influence of Chinese companies in the Asia Pacific region.
New Zealand's largest telecom and digital services provider posted a net profit of NZ$153 million ($105.3 million) for the six months to Dec. 31, compared to NZ$162 million last year.
Southern Cross Cable Network's decision to withhold dividend for the first-half pending an investment decision, and an increase in Spark's effective income tax rate, weighed on the company's bottom line.
Spark holds a roughly 37.5 percent stake in Southern Cross.
Spark's half-year operating revenue was NZ$1.75 billion, slightly down from the NZ$1.76 billion posted last year.
The company declared an ordinary dividend of NZ$0.11 per share and a special dividend of NZ$0.015 per share.
(Reporting by Rashmi Ashok and Shanima A in Bengaluru; Editing by Edmund Blair)
