It has been a very disappointing session for owners of BSA Ltd (ASX: BSA) shares.
The ASX small cap stock was down as much as 90% to a low of 9.4 cents in morning trade.
Its shares have recovered a touch since then but remain down by 83% at the time of writing.
What is this ASX small cap stock?
BSA is an Australian owned and operated services provider.
It notes that it has over 25 years' experience delivering fixed-line and wireless telco services, smart metering services, and premium electric vehicle charging solutions.
It provides these services to Australia's household brands, including the NBN Co, Foxtel and Telstra Group Ltd (ASX: TLS).
Why is it crashing deep into the red today?
Investors have been selling off this ASX small cap stock today after it released a very worrying update this morning.
According to the release, the company has been verbally notified by NBN Co that, at this stage, it has not been selected as a preferred tenderer on the new NBN Field Services Contract.
As a result of this notification, BSA advised that it believes an award will be unlikely and steps are being taken to try and optimise its position in relation to the tender outcome and is planning for all eventualities. The tender was being pursued in a teaming arrangement with UGL.
The current NBN Unified Field Operations contract, with an expiry date of 30 September 2025 (along with extension options, at NBN's discretion, up to a maximum of a further 12 months), remains in place.
However, the contract has no volume guarantees to date and the company has not received any notifications around volume changes through to the expiry of the current term of the contract.
How big a blow is this?
This is a massive blow to the small cap ASX stock. It highlights that the current NBN contract represented approximately 80% of its revenue in FY 2024.
Commenting on the news, the company said:
At this stage, no further information is available. The Company has been planning for a range of tender outcomes and will now assess the impact of this development along with actively evaluating all strategic options to mitigate the impact if BSA is not successful in this tender. BSA will update shareholders as further details emerge. BSA will continue to keep the market informed in accordance with its continuous disclosure obligations.
