The share prices of Telstra Group Ltd (ASX: TLS) and Ventia Services Group Ltd (ASX: VNT) are both higher on a partnership.
Telstra is Australia’s largest telecommunications business, while Ventia Services is a leading essential infrastructure services provider in Australia and New Zealand. Ventia clients include defence, social infrastructure, water, electricity, gas, resources, telecommunications and transport.
Five-year partnership
Ventia announced to the ASX today that it had signed a five-year partnership with Telstra to “optimise the delivery of design, construct and maintenance of Telstra’s critical digital infrastructure.”
Ventia said the strategic partnership is expected to generate over $400 million in annual revenue over the next five years. The infrastructure services provider said this deal reflected Ventia’s “strong customer focus and its strategy to redefine service excellence”.
What’s in the agreement? It covers nationwide ‘lifecycle management’ and fixed network services for Telstra’s digital infrastructure facilities. The partnership will also cover the design and large-scale construction of asset relocation and commercial works, as well as the continuation of some services related to network design and construction, including wideband, optical fibre, data, IP networks and wireless.
I’d say infrastructure is key for the telco and Telstra shares.
Existing contracts will expire in late December and works under this new contract are expected to commence in early 2025.
Management commentary
Ventia Chief Executive Officer and Managing Director Dean Banks said:
We are proud to have been a trusted partner to Telstra for nearly 30 years and we are excited to expand our partnership to support their strategic goals.
Telstra InfraCo Chief Executive Officer Brendon Riley said:
We are delighted to continue our valued partnership with Ventia, leveraging their extensive experience and knowledge in infrastructure construction and maintenance to help drive further operational efficiencies across our extensive fixed network site portfolio.
Final thoughts on Telstra shares
Telstra is a strong business with a great market position in the telecommunications space. Its high margins and ongoing customer growth suggests the business has a promising future. It’s also a very appealing option for dividends because it usually offers a very good dividend yield. It’s also currently growing its payments to shareholders amid underlying profit growth.
However, there are other ASX dividend shares that could deliver even stronger returns in the coming years.
