Service Stream shares hit by deal change

Service Stream shares hit by deal change

Shares in infrastructure services company Service Stream (ASX:SSM) fell 16% on Friday, after the company revealed it has learned of a change in its working arrangement with major customer Telstra (ASX:TLS).

Telstra has told Service Stream it intends to alter the model by which it provides installation and maintenance services to its customers.

In a market update, Service Stream advised that it understood that such orders will be issued directly to subcontractors which had been working under its direction.

Installation and maintenance services provided to Telstra accounted for around 16% of Service Stream's revenues in FY11.

Telstra plans to implement the new arrangements in stages, between December 2011 and March 2012.

But Service Stream added that it has learned that that the new arrangements will not affect the remaining majority of its access and associated services (A&AS) contract with Telstra.

Based on initial assessment, the company also anticipates FY12 earnings to be in line with FY11's result.

SSM shares fell to $0.315 by close of trading on Friday.

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Tags TelstraTelecommunicationsService StreamASX:TLSGuidanceASX:SSM

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