BSA (ASX:BSA): After losing NBN as a client and crashing 80% in February, investors suspect its salvaging hope from the wreck

BSA (ASX:BSA) crashed over 75% in one day back in February but is gradually recovering and its quarterly from earlier this week was a major catalyst. When a stock sees a drop of that magnitude, you know there’s an existential crisis – and this appeared to be the case with BSA (ASX:BSA). With shares recovering, it begs the question of if it is facing a less uncertain future, or perhaps if things seriously that dire in the first place?

Who is BSA?

BSA designs, builds, installs, operates and maintains major infrastructure – mostly telco infrastructure. The company, headquartered in the Sydney suburb of Chatswood, boasts over 2 decades of experience and prides itself in being a one-stop shop from project conception to operational maintenance. It has over 1,000 staff. One of its major clients was the NBN (National Broadband Network). A major, major client – responsible for 80% of its revenues – $255m in FY24.

It can be good to have one particularly large client responsible for revenues, as it shows potential customers that you can be trusted. But if that customer walks, it spells big trouble. And this is just what happened.

The NBN walked away from BSA

Back in mid-February, the company released an announcement to the market saying it,’ Has been verbally notified by NBN Co that, at this stage, it has not been selected as a preferred tenderer on the new nbn Field Services Contract’.

‘As a result of the notification, BSA believes an award to be unlikely and steps are being taken to try and optimise its position in relation to the tender outcome’.

The announcement revealed that the current contract, which expires on 30 September 2025 not counting potential 12-month extension options, remains in place for now. But in FY24, it accounted for 80% of revenues – not a typo. With $255.7m in revenue during FY24, the loss of this contract would represent a loss of ~$200m in revenue.

The board told investors it had been planning for a range of outcomes and would assess the impact of not being ultimately successful. A month later, in March, BSA was formally notified that it was unsuccessful. Adding insult to injury, its smart metering customers informed the company of plans to reduce its work.

The end of the world?

With four-fifths of its revenue at risk, the company looked to be in trouble. The company only hada 6.6% NPAT margin, had less than $2m cash at bank as at the end of FY24. It had told investors it was targeting double-digit EBITDA margins in the medium-term but this is probably out the door.

We wrote at the time it was plausible that it could be the wake up call it needs to diversify into new industries. The company’s announcements list smart metering and EV charging solutions as industries it serves and it may have no choice but to pivot to these lucrative opportunities.

Hope?

BSA released its quarterly for Q2 of 2025. In many respects, there was little not already known as the contract would end at the end of September. The company’s revenue showed modest growth of 7% to $286.8m.

Investors were told steps were being taken to mitigate the impacts. It incurred $8.3m of restructure costs, most of which were redundancies, and there would likely be further costs not yet recognised.

‘BSA’s executive team and board are keenly focused on maximising the ongoing profitability of BSA’s residual operations and rightsizing the company’s overheads,’ it said.

‘BSA will continue to keep the market updated on relevant developments as appropriate’.

So, clearly BSA is not out of the woods just yet and the future direction is not yet certain. But investors can see the company is taking steps to mitigate the impact and evidently welcome them.

The takeaway

We hope this case study serves as a lesson to investors about companies that rely significantly on one major client for such a significant share of its revenues. It is one thing to lose one customer that brings in 20-25% of revenue, but to lose the one that brings in 80% of revenue is another altogether.

Even if BSA finds one or two new service lines and/or customers, it will take years to build revenues back up to >$250m again.

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