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Leading essential network services company Service Stream Limited (ASX: SSM) is pleased to
announce that it has recently secured new agreements worth $455 million over their terms supporting
critical infrastructure across the utility sector.
Service Stream is proud to have secured a new contract for nine years with Yarra Valley Water under
its Maintenance Services Delivery Partners program. The contract value is estimated to be $405
million over the term.
Yarra Valley Water is Victoria’s largest water utility, servicing more than two million people across
Melbourne’s northern and eastern suburbs. Under a refreshed commercial model for maintenance
services Yarra Valley Water has divided its operational delivery areas into two regions, North and
South.
Service Stream has been selected as the Delivery Partner for the Northern Region providing
mechanical, electrical and civil maintenance services across water and sewerage networks and
treatment facilities. The scope includes both responsive maintenance and selected programmed
activities.
Mobilisation will commence immediately, with operations due to commence in October 2026.
Service Stream Managing Director, Leigh Mackender, said:
“Service Stream is delighted to be selected as a delivery partner for this long-term program. We look
forward to working closely with Yarra Valley Water and supporting the maintenance of its critical
infrastructure across Melbourne.
In alignment with our Group’s strategy, this award further strengthens and diversifies Service Stream’s
operations and maintenance portfolio, providing additional annuity‑style revenue and further
expanding our secured work‑in‑hand profile
Millmerran Operating Company
Service Stream has been awarded two key contracts with Millmerran Operating Company (MOC) at its
Power Station in Millmerran, Queensland with an estimated combined value of $50 million over the
next 3 years.
These contracts will support the delivery of both Major and Forced Outage Works over the term, with
the scope including provision of access, mechanical inspections, testing, overhaul and repair activities
on the Boiler and Balance of Plant for the 425MW units.
Service Stream Managing Director, Leigh Mackender, said:
“We are pleased to be awarded these new agreements supporting the Millmeran Operating
Company’s power station infrastructure.
The securing of these agreements strengthens Service Stream’s major outage footprint in Queensland
while reinforcing our role as a trusted partner across critical energy infrastructure assets.”
Not a biggie, but it is good to see a director (Martin Monro) pick up 10k shares on-market at around these levels, after the nice run up.
16-Dec-2020: BSA secures nbn Contract [BSA up +5.17% today]
And: SSM secures multi-year Unified Operations Agreement with NBN [SSM down -12.13% today].
Why? One up, one down? Because back in August, BSA couldn't get a guernsey, however SSM and DOW were proudly announcing 4 year contracts with 2 x 2 year extension options (same as today's announcements) with the nbn for basically all of Australia - except Tas. DOW had WA, SA & NT, while SSM had Victoria, NSW, Queensland and the ACT. BSA had been given a 1 year extension on an expiring contract, but were still trying to negotiate a longer term deal.
Today, DOW have announnced nothing, SSM have announced they have been allocated regions across Queensland, SA, NT and WA, but no mention of NSW or Victoria. BSA have announced that they have been allocated regions across NSW and Victoria.
I'm betting that the market is thinking that SSM have lost NSW and Victoria to BSA, however that's not the way I'm reading it. The contracts that DOW and SSM announced in August were both 4 year contracts with extension options beyond 4 years. It's only been 4 MONTHS. I think the key term to note here is "regions". For instance, one company could have Melbourne and Sydney, i.e. the greater metro areas of each city, while the other company could have the rest of each state, i.e. the rural areas and smaller cities.
What I'm reading is that BSA have finally managed to secure a longer term contract with nbn, but only for certain regions within 2 states. However, SSM have now signed an ADDITIONAL contract with nbn which has given them work in WA, SA & NT plus additional work in Queensland, all in addition to the nbn work they will continue to do in NSW and Vic. In fact, in today's announcement by SSM, they said:
"Following the recent signing of the Unify Networks agreement in August across a similar term, Service Stream will effectively be providing nbn with operations and maintenance support across all mainland states and territories under either the Unify Networks or Services agreements. We look forward to continuing to support nbn’s maintenance programs for many years to come."
So, they have NOT lost NSW and Vic. I do NOT currently hold SSM or BSA (having owned both previously), but I do hold DOW shares. If I was going to buy BSA or SSM, I would prefer to buy SSM at this point, as long as I could get them at a good price. I consider Service Stream to be a far superior company to BSA. I think SSM will recover today's -12% SP loss over the coming days as the market realises that this announcement by SSM was positive, not negative, and they simply have MORE nbn work now than they did before.
It's also positive for BSA of course, but the reality is that BSA have now secured ongoing nbn work (over at least the next 4 years) in two of Australia's states (albeit the two with the largest population), while SSM has contracts for the same nbn work in EVERY Australian mainland state and territory (everywhere but Tasmania). And SSM is a larger, stronger, and better run company, in my opinion.
Further Reading: https://www.itnews.com.au/news/nbn-co-signs-service-stream-downer-edi-to-new-field-services-deals-552655
https://www.downergroup.com/downer-awarded-new-four-year-nbn-contract
http://www.bsa.com.au/pages/sectors/communications/nbn.html
https://www.servicestream.com.au/networks/telecommunications
https://www.afr.com/politics/federal/nbn-push-for-fibre-to-the-home-20200922-p55xxv
https://www.afr.com/companies/telecommunications/nbn-splashes-200m-on-it-upgrade-20201208-p56lj9
Service Stream secures multi-year (4+2+2) Unified Field Operations (Services) Agreement with nbn
DISC: Long term, happy holder
31-Aug-2020: Service Stream (SSM): SSM secures multi-year Unified Operations Agreement with NBN
See also: Downer EDI (DOW): 31-Aug-2020: Downer awarded new NBN contract
See also: BSA Ltd (BSA): from their FY2020 Investor Presentation (24-Aug-2020): Page 4 ("Full Year Highlights"), right side ("Order Book"):
So, both Downer (DOW) and Service Stream (SSM) have today BOTH announced multi-year (4+2+2) Unified Field Operations (Networks) Agreements/Contracts with NBN.
Downer's agreement is valued at ~$320 million over the maximum term of eight years. Downer will provide services including network restoration, copper rehabilitation, alternate power system activities, network performance and capacity enhancement, urgent field service work and site maintenance across Western Australia, South Australia and the Northern Territory.
Under their new NBN agreement, Service Stream will continue to be responsible for performing operations and maintenance activities across core network technologies, including Fibre to the Node (FTTN), Fibre to the Premise (FTTP), Fibre to the Basement (FTTB) Fibre to the Curb (FTTC) and Hybrid Fibre Coax (HFC) as well as other technologies which may be introduced in the future. The NBN has initially awarded Service Stream works across Victoria, New South Wales, Queensland and ACT, with additional works able to be allocated in other regions at nbn’s discretion.
So, both DOW and SSM have today announced between 4 and 8 years more work for the NBN, and together they cover every Australian state and territory except Tasmania.
BSA have announced nothing today, and I am of the opinion that they could well be left out in the cold in terms of NBN work going forwards. They still have Foxtel, but with the huge increase in cheaper streaming services (Stan, Fetch, Netflix, etc.) now available, Foxtel is not growing, they are shrinking, so that Foxtel work is unlikely to provide a growing revenue stream into future years for BSA, in my opinion. BSA still have their "Fire Build" work, but that tends to be project based, rather than recurring revenue. They also have national maintenance contracts with Aldi and 7-Eleven going forwards, but they need more. I have decided to cut BSA loose today, so I've just sold all my BSA shares - at 29 cps. It was a relatively small position anyway, and I think there are better opportunities elsewhere.
[I don't own any SSM. I do hold Downer (DOW) in my SMSF.]