The share price of Service Stream Limited
(ASX: SSM) is up, it has secured a deal with Optus,
Service Stream is an essential provider of network services to the telecommunications and utility sectors in all Australian states and territories. It has over 2,200 employees and also can utilise more than 3,000 contractors.
Service Stream’s Optus Deal
Service Stream announced that it has secured a wireless design & construction agreement with Optus.
The company said that the agreement is a panel arrangement in the form of a newly awarded ‘Statement of Works for Mobile Deployment with Optus.
Under the contract, Service Stream will initially provide site acquisition, design and construction services on the Optus network nationally for 5G.
The agreement also allows for site upgrades, small cell and RANCAP services with regards to existing 4G infrastructure, subject to future negotiations. The term of the statement of works is for three years, with the option of a one-year extension.
Managing Director Leigh Mackender said: “We are delighted to have been awarded this agreement by Optus. It is strategically significant for Service Stream in that we now have arrangements in place to provide acquisition, design and construction services on all three wireless networks in Australia.
“Whilst, as is common in the wireless space, this new panel arrangement does not provide guaranteed volume, we estimate revenue at $40 million over the initial two years. We expect to commence works early in Q3 of FY20.”
Is The Service Stream A Buy?
The reaction for Service Stream’s share price has been quite muted, it’s up only 0.2%. But it has performed quite well since the start of the year, its share price has gone up almost 50% in 2019.
Service Stream continues to win new contracts and FY19 was a solid result with revenue going up 35%, reported EBITDA (click here to learn what EBITDA means) rose by 33% and statutory net profit increased by 21%. Not bad for a business priced at 20 times the 2019 financial year earnings. It could be a good small cap to keep an eye on, but the growth shares revealed for free
in the report below could be even better.
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