The Service Stream Limited (ASX: SSM) share price is edging higher today following an update on its agreement with the NBN.
At the time of writing the essential network services provider’s shares are up slightly to $2.18.
What did Service Stream announce?
This morning the company released an update on its Operations and Maintenance Master Agreement (OMMA) with NBN Co.
According to the release, the two companies have extended the OMMA for an additional six-month period from the end of December 2020.
It also includes the option for the NBN to extend the agreement for a further six months to December 2021. The OMMA contract has been running since 2015.
Today’s agreement will see Service Stream continue to be responsible for performing operations and maintenance field services for the NBN. This includes service activations and service assurance activities.
OMMA services will be provided across the NBN’s fixed line multi-technology network.
This includes Fibre to the Node (FTTN), Fibre to the Premise (FTTP), Fibre to the Basement (FTTB), Fibre to the Curb (FTTC) and Hybrid Fibre-Coaxial (HFC) technologies within defined contracted areas across Queensland, New South Wales, Australia Capital Territory, Victoria, Western Australia, and the Northern Territory.
What is the contract worth to Service Stream?
The revenue generated under the OMMA contract will be dependent on NBN activation and maintenance work volumes.
However, management notes that the agreement generated approximately $330 million in FY 2020 and $280 million in FY 2019.
Service Stream’s Managing Director, Leigh Mackender, was very pleased with the contract extension.
He commented: “We are delighted that by further extending the OMMA agreement, nbn has demonstrated continued confidence in Service Stream’s ability to support its national operations and the enhancement of its customers’ experience as they connect to the National Broadband Network.”
Mr Mackender also appears optimistic that this could be the start of a much longer agreement.
“We look forward to participating in nbn’s commercial procurement process to support a longer-term agreement being secured, post this current extension,” he concluded.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Service Stream Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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