Not true a large company cannot keep a record of each subcontracted work and identify the contractor - then there are the disputed ones ... If you want to keep it simple you get a master contractor and you let them subcontract. That way they just do all the repairs and you have your job and quality assurance. Telstra does use independents and has built a network but even they seem to have larger contractors in various areas as well. Its my view that the real problem with the NBN is that it really doesnt want to run the system after its up and running because the fear is that - like all government operations it will do it badly.
So the solution as i see it will be for them to earn the revenue and subcontract much of it but that will require them to break it up into manageable regions and get different subcontractors in each - as I understand it they have already done that with Optus and Telstra in parts that they have acquired. SSM wont get it all but they will get part of it after the build - my opinion. Then there will be someone else as well.
NBN wont have the mandate to have the staffing levels to have multiples of contractors after the build - now it probably needs them to complete because of the political agenda.
I see the smaller guys having to be prepared to be subcontractors rather than direct far more as this gets finished.
I dont see the same profitability after its built - but I think its size and I think SSM if it does the job well can retain its profitability but will lose its sub contracting profit. So unless it widens its net over the next three years it could be a problem but I think the areas they can service is getting wider each day. Lighting for example , even swap out motors ...
The whole service industry is narrowing as electronics and circuitry becomes the key to the performance. My opinion. My pool pump today has more electronics and just a motor the motor can be taken out and replaced in a few minutes - the electronics is able to identify the fault and requires replacement and maintenance. TV servicing is totally changed over the past decade. All of those moves makes it easier for SSM in my opinion.
SSM Price at posting:
50.0¢ Sentiment: None Disclosure: 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)