Swoop to Expand Fibre Infrastructure in Greater Melbourne
SWP (SWP) Share Update July 2024 Monday 22nd
Swoop Announces Major Fibre Infrastructure Expansion in Melbourne
Swoop Holdings Limited (ASX: SWP) has announced a significant expansion of its fibre infrastructure network in Greater Melbourne, backed by a key customer contract with a multi-billion dollar global technology company.
Instant Summary:
- Swoop signs a key customer contract worth a minimum of $24 million, potentially up to $36 million over 22 years.
- Construction of the new fibre infrastructure network to commence immediately, targeting completion by end of FY26.
- The new network will serve key digital infrastructure areas and new developments in Greater Melbourne.
Project Overview
Swoop Holdings Limited has entered into a pivotal agreement to construct, own, and operate a new fibre infrastructure network in Melbourne. This initiative is supported by a significant customer contract with a multi-billion dollar global technology company listed on NASDAQ. The contract guarantees a minimum revenue of $24 million, with the potential to reach up to $36 million over a 22-year period.
The construction of the new network will begin immediately, with a target completion date by the end of FY26. This infrastructure will deliver high-speed fibre connectivity to key digital infrastructure areas and new residential developments in Greater Melbourne. The project aligns with Swoop's focus on core telecommunication infrastructure and high-speed residential services, as well as catering to business customers.
Financial Details
Under the terms of the contract, Swoop will receive committed payments of at least $24 million, payable in instalments during the construction phase. An additional $12 million in fees will be payable over the full term of the contract. Most of these payments will be received during FY25 and FY26, which will be used to cover construction costs. However, according to accounting standards, this revenue will be amortized over the 22-year duration of the agreements.
CEO's Statement
Alex West, CEO of Swoop, expressed excitement about the project, stating, 'We are extremely excited to be delivering a significant fibre network to the underserved areas of outer Melbourne. This will allow us to continue to focus on high-speed residential internet services to new developments and new business customers.'
West highlighted that the new network, built with state-of-the-art fibre technology, will provide essential connectivity to new housing regions, linking them to key digital infrastructure areas and Swoop's existing international network. The revenue from the new customer contract will cover most of the project funding, with the remaining balance sourced from Swoop's existing cash and bank facilities.
Future Prospects
West added, 'This is an exciting time for Swoop as we continue to focus on high-speed, high-margin, long-life infrastructure products that not only connect people and improve lives but also deliver great returns for the business.'
This announcement is likely to have a positive impact on Swoop's stock price, given the significant revenue potential and strategic importance of the new fibre infrastructure network. The partnership with a major global technology company adds credibility and financial stability to the project, which could attract more investors.
Investor Reaction:
Analysts and investors have responded positively to the news, noting the strategic importance of expanding fibre infrastructure in a growing market like Melbourne. The long-term revenue potential and the involvement of a reputable global technology company are seen as major positives.
Conclusion:
Investors should keep an eye on the progress of the construction and the financial performance of Swoop as the project unfolds. The successful implementation of this project could lead to significant revenue growth and improved market positioning for Swoop.