The Service Stream Limited (ASX: SSM) share price has been on the move today after trading ex-dividend and releasing a positive announcement.
At the time of writing the essential network services provider's shares are up 0.5% to $2.58, but would be up around 2.5% if you took its 5.5 cents per share final dividend out of the equation.
When a share trades ex-dividend it means that new buyers will not be entitled to the upcoming dividend. To reflect this, the buy price will almost always fall by the amount of the dividend which is waiting to be paid.
What did Service Stream announce?
This morning the company announced that it has extended its Operations and Maintenance Master Agreement (OMMA) with the nbn.
According to the release, the OMMA contract has been extended for an additional 12-month term through to December 21 2020.
Under the OMMA contract, which was initially executed back in December 2015, Service Stream will continue to be responsible for performing operations and maintenance field services for the nbn. This includes service activations, service assurance, and preventative maintenance activities across the nbn's fixed-line multi-technology network.
The new agreement is a big positive for Service Stream as it has been a key contributor to its revenue over the last couple of years. The OMMA contract provided revenue of approximately $275 million in FY 2019 and $215 million in FY 2018. This equates to ~32% of total revenue in FY 2019 and 34% of total revenue in FY 2018.
Managing Director, Leigh Mackender said: "We are delighted that by extending the OMMA contract, 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 National Broadband Network. We look forward to continuing as nbn's leading operations and maintenance delivery partner."
Elsewhere in the industry, both Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPM) shares have tumbled lower amid general weakness on the share market on Tuesday.
