Service Stream to post FY loss on Syntheo

Specialist telecoms construction firm Service Stream will book a full-year loss on its troubled Syntheo joint venture with Lend Lease and will pull the contractor off the NBN.

On exiting an extended trading halt, Service Stream said it would book an EBITDA loss of $13 million for the year to June 30, after taking a hit of more than $30 million in its fixed communications segment.

Net debt would come in at $52 million.

The result included an EBITDA loss of $20 million from the Syntheo joint venture before any corporate allocations.

Service Stream entered a trading halt on 11 June to review the struggling venture. 

Syntheo will stop construction work under its NBN Co contracts in Western Australia and South Australia - marking the first time a major company will exit the project -  after completing work currently in progress. 

NBN Co said Syntheo's withdrawal on the expiration of its existing contract in November would not affect the planned completion date of 2021 for the network.

Joint venture partner Lend Lease will take control of delivering Syntheo’s remaining obligations under its agreement with NBN Co, Service Stream said.

Service Stream will also take a non-cash goodwill impairment charge of approximately $90 million in the year to June.

Its operations outside fixed communications, including mobile communications, energy and water, and unallocated corporate costs contributed full-year earnings of about $18.5 million.

NBN Co will have to negotiate with SA Power Networks to take on a larger role in South Australia to compensate for Syntheo's exit, and will have to work with Downer EDI in Western Australia for a similarly broader role in the build.