The Downer EDI Limited (ASX: DOW) share price has jumped 2% today on the announcement it has signed a new four-year contract with Telstra Corporation Ltd (ASX: TLS).
Downer is one of Australia and New Zealand’s leading providers of fixed and wireless network services. It’s among the largest constructors of telecommunications carrier networks, playing an important part in the 5G mobile rollout.
Telstra contract win
Downer announced this morning it has been awarded a Field Services contract by Telstra worth $330 million over a four-to-five year period. Under the new contract, Downer is set to provide a range of services including network asset relocations, facilities design, building upgrades, and a continuation of the 5G mobile rollout.
The contract, which begins in January 2021, comes with a four-year term and an option to extend by up to one year.
Downer CEO Grant Fenn said he was pleased to achieve an extension of Downer’s existing relationship with Telstra.
“Downer has been working closely with Telstra for over a decade and we have earned a reputation as a high-quality contractor trusted for our delivery excellence,” he said.
Will this save the Downer share price?
The Downer share price has been gradually recovering from a large decline in early 2020, but shares still trade well below their previous highs of around $8.75.
DOW share price chart
The Downer share price was knocked by a lacklustre half-year report in February 2020 and the news that ASX miner Perenti Global Ltd (ASX: PRN) was no longer interested in acquiring Downer’s mining division.
The Telstra contract win is favourable for Downer and its share price is continuing on a positive path, but I think there are better investment options out there.
Personally, rather than trying to pick the winners, I prefer to keep my investing simple and invest in a broad-based index ETF like the BetaShares Australia 200 ETF (ASX: A200).
