Contractors chase network opportunities

16/10/2020 - 13:41

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Growing investment in telecommunications has created opportunities for the contractors that build the networks, including Cape, Diamond Underground and Streamline Connect,

Tony Farrell (left) and Nick Jenkins are ready for more growth after moving into their new warehouse in Belmont. Photo: Gabriel Oliveira

When asked to explain his business, Tony Farrell points to the communications towers near his Belmont warehouse.

He then explains that all the communication towers across Perth are connected via fibre so people can enjoy seamless mobile phone networks.

“For that to happen, somebody has to lay the glass fibre in the ground, somebody has to build the towers,” Mr Farrell told Business News.

That’s where Streamline Connect comes in.

“We do fibre and wireless,” Mr Farrell said.

“They are both niche industries, there is only a handful of competitors.

“Nobody has them married in the way that we do.”

Streamline has enjoyed rapid growth since it was established in its current form about three years ago.

It evolved from the acquisitions of Busselton business Streamline Underground, which was a major Telstra contractor, and a wireless contractor.

“We started with 18 people, we’re now 55 and on track for about 70 by the end of the year,” Mr Farrell said.

“This year has seen a good volume of projects coming through.”

Its competitors include CFC Group subsidiary Cape, and GenusPlus subsidiary Diamond Underground Services, which are larger and more diversified businesses.

Streamline director Nick Jenkins said the contractors were benefiting from a shift by some of their big clients.

“What we saw was that the miners and the carriers were moving away from the tier-one contractors that didn’t add a lot of value to their builds,” he said.

“They were dipping down to second-tier and third-tier contractors because they were the people physically doing the work.”

Mr Jenkins said a lot of work was coming out of the mining sector.

“The iron ore miners are spending on networks to support their autonomous operations and their data,” he said.

“The miners and their private networks are using more and more data, they have their remote operations centres back in Perth.”

Streamline’s largest contract, currently under way, is the installation of 175 kilometres of fibre optic cable for Fortescue Metals Group’s Eliwana mine and rail project.

It followed a similar project for OZ Minerals’ Prominent Hill project in South Australia.

Mr Jenkins said the Eliwana contract was a big milestone for his business.

“The unique thing is, we did the design and construct for that,” he said.

“Our design partner is engineering firm Calibre.”

Meanwhile, Streamline missed out on the installation of 170km of optical fibre as part of the construction of a new rail spur to Rio Tinto’s Koodaideri mine.

That contract was awarded to Cape’s 50:50 joint venture with Aboriginal contractor Kurtarra.

Mr Farrell said Streamline was also working for Telstra, Optus and Vodafone, which were investing in upgrades and expansion of their networks.

It also did work for technology vendors, such as Nokia, and for tier-one contractors.

“The vendors might come to us for the build, the carrier might come to us for some builds, and the tier ones who are doing national contracts will come to us and they all compete with each other and us,” Mr Farrell said.

He said this wide experience gave the firm a competitive edge.

“The miners are only just starting to build out their 4G networks but soon they’ll be building 5G,” Mr Farrell said.

“We’re already building 5G.

“That’s the advantage we have working with the carriers; we can add value to the miners.”

While the mining companies engaged technology vendors and specialists to design their networks, Mr Farrell likened Streamline to a house builder who told the architect what they could realistically achieve.

“What we bring is a known party that can add value,” he said.

Cape chief executive Greg Hutchinson said communications was one of three main sectors for the contractor, which had about 300 workers on its books.

In the communications sector, Cape was working for miners, utilities such as the Public Transport Authority, and was developing a stronger relationship with Telstra, he said.

“Upgrading existing infrastructure is the main focus,” Mr Hutchinson told Business News.

In the power sector, Mr Hutchinson said Cape continued to do a lot of work for Western Power, particularly the ongoing program to shift overhead lines to underground.

It was also busy in the water sector, working for the Water Corporation and miners.

“Mine sites are forever managing water,” Mr Hutchinson said.

This included dewatering of mine pits and reinjection of water to replenish aquifers.

GenusPlus director George Lloyd said Diamond Underground had been winning work across multiple industries, including telecommunications, mining, oil and gas and utilities.

“We have 150 people and our order book is strong,” Mr Lloyd told Business News.

As part of GenusPlus, Diamond Underground’s capabilities ranged from installing underground utilities such as gas, water, power and telecommunications, through to building communication towers.

Mr Lloyd said GenusPlus had grown to have more than 500 people across the group.

The privately owned company completed a private $15 million capital raising early this year to strengthen its balance sheet and provide funding for further growth.

While most of its work is in WA and SA, the business has people on the ground in Queensland and NSW.

Like many other contractors, Mr Lloyd said a challenge for the future would be finding skilled staff to deliver the increasing amount of money being invested across the sectors.

He said GenusPlus focused on the training and development of its employees, and was a large-scale employer of apprentices and trainees, to ensure it had sufficient skilled staff in future.

Mr Farrell agreed that finding experienced and skilled workers was a challenge.

“Our industry is growing fast and it needs more expertise,” he said.

“Some we will train but we will also try to bring in from overseas just to meet demand.”

Mr Farrell also noted that work volumes could be volatile, saying that 2019 was an unexpectedly quiet year.

There were several contributors to this outcome, including the restructuring and downsizing at Telstra, and the delayed merger of TPG and Vodafone.

“Last year, the whole telecommunications industry drew a breath,” Mr Farrell said.

Streamline focused on building relationships and tendering, particularly for the big mining projects.

”We’ve found all that hard work in the quiet time is starting to bear fruit,” Mr Jenkins said.

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