Handshake turns to ink for Sirius's $20m BHP deal

ASX-listed Sirius Telecommunications has cemented the remaining three years of a five-year $20 million contract with BHP Billiton, signing on the dotted line to supply and manage BHP's telco systems at four key sites.

Since acquiring the facilities management business and existing contracts of now-defunct Nomad Telecommunications, Sirius had maintained the BHP deal on little more than "a handshake" agreement, said Roger Mason, managing director of Sirius.

Mason said it was good to formalise the lucrative contract after a period of uncertainty following BHP's merger with international minerals giant Billiton.

While Mason had not expected the confirmation of the contract to take so long, it has been a recurring issue for the service provider following Nomad's financial difficulties. According to Mason, around two-thirds of Sirius's sales staff are dedicated to formalising prior contracts held by Nomad.

"We've had to finish some things off," he said.

In March this year, Sirius swooped on Nomad's facilities management business for $3.45 million in the fire sale conducted by receiver Deloitte Touche in an attempt to make good on Nomad's $9 million-plus debts to creditors.

At the time, Mason said the deal represented "terrific value". "It was fortuitous for us because we had the float funds [around $5 million] sitting there waiting for an acquisition." Sirius expects the acquisition will triple its revenues to more than $25 million by 2002.

With the telco sector under public scrutiny following the high-profile collapse of One.Tel and the 350 retrenchments at Optus, Mason claimed Sirius was in a good position to move forward, having already streamlined its operations.

After absorbing around 200 staff in its March acquisition, Sirius has culled around 30 employees, with several more lost through natural attrition. However, Mason said the consolidation of Nomad's business into Sirius was aided by the Great Plains ERP (enterprise resource planning) software used by the former telco, which integrated directly into Sirius's own ERP system.

Next on the agenda for Sirius is to formalise a similar facilities management contract with Hamilton Island. The contract, formerly Nomad's, is estimated to be worth between $2 million and $4 million per year for the next three years. -- ARN

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