Why the BSA (ASX:BSA) share price has surged 7% higher today

The BSA Limited (ASX: BSA) share price is climbing higher today after the company announced a new significant contract with NBN Co.

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The BSA Limited (ASX: BSA) share price is climbing higher today on news of a new significant contract with NBN Co.

At the time of writing, the BSA share price is trading up 6.9% at an intraday high of 31 cents. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.8% to 6,922 points.

New multi-year contract

In today's release, BSA advised it has secured a major contract with nbn to provide activation and assurances services.

The unified field operations agreement will see BSA work on fibre to the premise (FTTP), fibre to the node (FTTN), fibre to the basement (FTTB), fibre to the curb (FTTC), and hybrid fibre coax (HFC) network infrastructure.

Scheduled to begin in early March 2021, the new deal will see BSA increase its base market share. Revenue generated in the first year of the contract is estimated to be in the range of $85 million. However, the company noted that further opportunities could arise in the future, allowing it to increase its earnings.

The initial term of the deal will be for a 4-year period. This can be extended on nbn's behalf for an additional two 2-year options.

Furthermore, under nbn's regional allocation model, BSA will be able to operate in regional areas across New South Wales and Victoria. Additional regions will be assigned at nbn's discretion.

What did management say?

Commenting on the deal, BSA managing director Tim Harris said:

We are extremely proud to have secured this contract and continue our long-standing collaborative partnership with nbn. This contract positions BSA ideally to be able to assist nbn deliver on their strategic goals moving forward, utilising our exceptional track record of service delivery and customer experience.

How has the BSA share price performed?

This has been a turbulent year for the BSA share price, reflecting ups and downs throughout the year. The company's shares reached a 52-week high of 41 cents in February before falling to a low of 23 cents in March.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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