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Service Stream (ASX:SSM) wins more NBN work

Service Stream Limited (ASX: SSM) has won more work from the NBN with a further six months for the contract.

Service Stream’s latest contract win

The essential network services company said that it has extended its operations and maintenance master agreement (OMMA) with NBN Co for a further six months from 31 December 2020.

NBN Co also has an option to further extend the contract for six months to December 2021.

Service Stream will continue to be responsible for performing operations and maintenance field services for the NBN including service activations and service assurance activities. These services will be provided across the NBN’s fixed line multi-technology network.

How much money will this make Service Stream? It will depend on the NBN’s activation and maintenance work volumes. The agreement made $330 million revenue in FY20 and $280 million revenue in FY19.

Service Stream Managing Director Leigh Mackender said: “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 NBN.

We look forward to participating in NBN’s commercial procurement process to support a longer-term agreement being secured, post this current extension.”

Summary

Service Stream seems like a good business to get exposure to infrastructure spending, as seen with this latest deal with the NBN. The Service Stream share price is still 20% lower than it was before COVID-19 at $2.17, so it could be a buying opportunity based on this deal. Particularly with a fully franked dividend yield of 4.1%.

But there are even better ASX dividend shares out there in my opinion, such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which I wrote about here.

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At the time of publishing, Jaz owns shares of WHSP.

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