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Why the Service Stream (ASX:SSM) share price is jumping 7% higher

The Service Stream Limited (ASX:SSM) share price is shooting higher today after announcing a major agreement with Telstra Corporation Ltd (ASX:TLS)…
The post Why the Service Stream (ASX:SSM) share price is jumping 7% higher appeared first on The Motley Fool Australia. –

City skyline with building connected by graphic lines and the word 5G

The Service Stream Limited (ASX: SSM) share price is pushing higher on Friday after the release of an announcement.

At the time of writing, the essential network services provider’s shares are up 7% to $1.86.

What did Service Stream announce?

This morning Service Stream announced that it has secured a multi-year agreement with telco giant Telstra Corporation Ltd (ASX: TLS)

According to the release, under Telstra’s new commercial framework, Service Stream will be a key delivery partner responsible for performing design, construction, and maintenance activities associated with its wireless and fixed-line infrastructure networks.

This includes site acquisition, design, construction and upgrade services of wireless infrastructure and design, construction, and relocation of fixed-line network infrastructure.

The release explains that the two parties have signed a five-year agreement, which comprises an initial period of three years and two one-year extension options. Those options are at Telstra’s discretion. The agreement is expected to transition in or around April 2021.

What is the contract worth to Service Stream?

Management advised that the agreement does not provide guaranteed volumes.

However, it notes that the company has historically delivered approximately $70 million of wireless and $30 million in fixed-line infrastructure works per annum to Telstra under similar agreements. And this was with a larger pool of delivery partners historically operating across allocated regions.

Service Stream’s Managing Director, Leigh Mackender, commented: “Service Stream is very pleased to be selected as one of Telstra’s strategic delivery partners under their new Field Optimisation Agreement, continuing to support our long-term relationship which has existed for more than 15 years.”

“The business looks forward to partnering with Telstra and supporting both their wireless and fixed-line network programs, particularly at a time where demand for 5G wireless infrastructure is expected to increase,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Service Stream Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Service Stream (ASX:SSM) share price is jumping 7% higher appeared first on The Motley Fool Australia.

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