I also note the following from Bell Potter's commentary in March 2021:
"Fueling Bell Potter’s concerns are ongoing issues surrounding the margin outlook for FY22 and beyond, when scale in the telecommunications business is set to decline further.
From a margin perspective, the transition to new contracting arrangements is also viewed by Bell Potter as a potential risk.
Bell Potter notes additional material contract wins under NBN Co’s upgrade program could be a key potential positive for Service Stream in coming months.
But while the broker has greater confidence there should be no further downgrades in the current cycle for Service Stream, significant uncertainty remains as to where margins ultimately land in FY22."
So in my opinion it just reinforces my primary concern that going into FY22 and FY23, there will be a significant risk of both: *A material step down in telco revenue *Group level reduction in margin
When revenue drops and margin declines its a double whammy to EBITDA.
SSM Price at posting:
84.5¢ Sentiment: None Disclosure: Not Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)