Service Stream counts on a slice of the NBN actionTELECOMS...

Service Stream counts on a slice of the NBN action

TELECOMS contractor Service Stream is bedding down its bid for work from the government's National Broadband Network.
The company has ruled out making acquisitions in the near term as it also focuses on expanding its environmental services business.

"We don't need acquisitions to grow," chief executive Graeme Sumner said.

"There's plenty of demand (for our services) for us to grow organically and it's cheaper than buying another business," he said. Mr Sumner, formerly Transfield's New Zealand chief, has been in the top job at Service Stream just nine months, but says the "honeymoon period is definitely over".

Handing down his first set of full-year results last month, showing a loss of $2.6 million, Mr Sumner said he was keen to win back investor confidence after the group was forced to take writedowns of $20m.
Mr Sumner is seeking to do this by focusing on a three-pronged growth strategy that will target environmental services, mobile infrastructure and fixed-line broadband services.

The environmental services space has plenty of growth opportunity as the business jumps on the bandwagon of households seeking to make themselves more environmentally friendly.

Mr Sumner said the group was heavily involved in smart meter installation, solar panel and solar hot water installation programs.

Moves by Vodafone and Optus to expand their mobile infrastructure should benefit Service Stream, but investors are most interested in the NBN prospects.

Expectations are growing that Service Stream can nab a slice of the $10 billion project. The company is among the 21 contractors shortlisted for the broadband build. Shares in
Service Stream surged 31 per cent to 38c in just a week a fortnight ago, prompting a price query from the Australian Securities Exchange.

The company said it could not explain the sudden rise, but noted that most analysts had taken a closer look at its NBN opportunities.

Citi analyst Christopher Vagg believes the stock is a buy for up to 50c, driven by "greater than expected opportunities in metering and broadband", while Austock analyst Heath Andrews says it "is an attractive takeover target, and as large NBN contracts are awarded, it stands to be rerated".