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Speedcast international Limited secures $184 million deal with NBN Co

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The Speedcast international Limited (ASX: SDA) share price rose by 1.81% today on news that it has secured a $184 million deal with the NBN Co.

Today, the company announced that it has secured a 10-year contract with NBN Co Limited to deliver enterprise-grade satellite services. Speedcast’s subsidiary will partner with NBN Co to design, build and manage NBN Co’s enterprise satellite services.

The value of the base network build and managed services project is $107 million and with other demand-driven services the aggregate revenue is expected to be up to $184 million in total.

Speedcast described the deal as transformational. It will set up a new office with world class specialists in Melbourne to support NBN Co.

Speedcast’s CEO, Pierre-Jean Beylier, said “We are honoured and grateful to have been chosen for such an important program and we are excited to play a part in expanding the communication services available in Australia. This contract is another huge success for Speedcast in our efforts to provide next-generation communications solutions to our clients and partners around the world.”

“I thank NBN Co for their trust in Speedcast’s ability to deliver reliable communications services enabling mission-critical applications that enterprise and government rely on; something we are passionate about and have been doing very successfully in Australia for many years as well as in over 100 countries around the world.”

The company said that the time required to finalise this material contract means that the contribution previously forecasted to be recognised in 2017 will be realised in 2018.

Foolish takeaway

The Speedcast share price rose by 1.81% in response to this news, which is a strong reaction considering the negative day the market had.

It could be a huge deal for Speedcast if it hits the top end of the $184 million revenue range. I think Speedcast could be a decent long-term buy at the current price, as data demand is only going to grow around the world. However, it’s not cheap so I would be wary of expecting quick returns at the current price.

Along with Speedcast, I think that these top stocks will generate very good long-term returns.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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