The Macquarie Telecom (ASX:MAQ) share price lost ground today after news the company has ditched Telstra and signed a new deal with Optus.
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Macquarie Telecom Group Ltd (ASX: MAQ) shares headed lower today following news the telecom service provider has signed a new deal with Optus. By the market’s close, the Macquarie Telecom share price had slumped 3.35% to $46.97.
Let’s take a closer look at the company’s new agreement.
Macquarie Telecom just said ‘yes’
The Macquarie Telecom share price is sliding lower today after it was reported in The Australian today the company has ended its existing wholesale mobile contract with Telstra Corporation Ltd (ASX: TLS), in favour of Optus.
According to The Australian, Macquarie Telecom has signed an exclusive deal worth approximately $34 million “with Australia’s second-biggest telco to deploy mobile services including 5G to its 100,000 business customers”.
In addition to Optus’ 5G network, Macquarie will also gain access to other cellular services. Macquarie Telecom claims it wants to “expand its mobile business and hire more staff over the next three years.”
As reported by IT News, Macquarie Telecom group executive Luke Clifton said:
2020 changed the way Australians work forever.
By providing 5G connectivity along with business grade NBN, we can ensure Australian businesses can work from more places than ever before.
Optus was the clear choice in terms of superior technology, flexibility to build the right solutions, and cooperation. It is leading Australia’s wholesale 5G market, offers incredibly fast 5G and continues to invest heavily in its 5G network.
The company did not disclose how long the deal would be in effect, other than to say it was “multi-year”.
What does the company do?
Macquarie Telecom is a business-to-business endeavour operating through two segments, namely its telecom and hosting segments.
The telecom segment relates to the provision of voice and mobile telecommunications services and the provision of services utilising the Macquarie Telecom data network. The hosting segment is focused on providing services utilising the company’s data hosting facilities. Macquarie generates the majority of its revenue from the telecom segment.
Macquarie Telecom share price snapshot
Despite today’s losses, the Macquarie Telecom share price has been on an upward trajectory over the past twelve months. In the midst of the COVID-19 sell-off, Macquarie Telecom shares reached a 52-week low of $19.20.
If you had bought shares exactly one year ago, you would now be sitting on a healthy return of over 90%. However, year to date, the company’s shares have fallen by nearly 10%.
Based on the current share price, Macquarie Telecom has a market capitalisation of around $1 billion.
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Motley Fool contributor Marc Sidarous has no position in any of the shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Aussie Broadband Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Aussie Broadband Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.