Broadcast Services Australia Ltd has won a major two-year outsourcing deal with Telstra worth more than $40 million.
The tender involves much of Telstra's telephony installation and maintenance services contract for the Brisbane and Sydney region.
BSA see the contract as a shift toward outsourcing within the telco, but Telstra just describes the move as a formalisation of existing arrangements.
Either way, the markets were excited by BSA's announcement, with its share price jumping 30 per cent on the news.
BSA values the May 2004-June 2006 contract at $43 million to 48 million. It covers new telephone connections, extension and fault repairs for Telstra customers between local exchanges and their residential homes or local businesses.
BSA joint managing director, Mark Foley, credited his company's existing work with Telstra showed it was a partner able to add value through its existing infrastructure.
"We can efficiently manage the substantial volume increase due to our installation, contractor, billing and management back office system," Foley said.
BSA company secretary, Ian McGregor, said that the deal would give the company certainty and build on its contracting base.
McGregor said BSA was one of 12 companies responding to a Telstra tender release last December to carry out such work across 4 regions. BSA was already carrying out such work for the telco but the contract would see BSA pick up extra work, he said, saving the telco money.
It would also become an accredited Telstra training provider, having already "absorbed" the Telstra-accredited workers in the marketplace, finding a need to generate more.
Contracting, McGregor said, was one of two major divisions for the company. Its telephony contracts also include Optus and Foxtel, whose work involves dealing with installation and faults, plus converting analogue customers to digital.
BSA also installs transmission towers for broadcasters and microwave links for SP telecom, plus it erects cellphone towers.
This year, BSA expects to generate revenues of $100 million, with EBITDA earnings of $7 million, thus the deal would amount to 10-15 per cent of expected revenues.
But McGregor said no projections had been made for next year.
Telstra spokesperson, Warwick Ponder, confirmed the deal, and said it would improve the company's capacity and flexibility to meet customer needs.
"Telstra is not contracting out more volume. It simply formalises existing arrangements," he said.
Ponder said maintenance was a major part of Telstra's work, but he declined to comment on any financial savings involved, nor could he comment on what might be happening with such work in the three other regions.