NetComm picks up NBN deal

Broadband product developer NetComm (ASX:NTC) has secured a subcontract to provide devices for the National Broadband Network.

Ericsson, which in June won the $1.1 billion deal to build the LTE component of the NBN, will source the devices to connect to the 2.3GHz network from NetComm.

Terms were not disclosed, but NetComm managing director David Stewart said the deal is “expected to have a significant impact on revenue from [the] 2013 to 2015 financial years.”

He said NetComm had ramped up its commitment to LTE since the company launched a router compatible with the 4G standard at Mobile World Congress in February.

The wireless and satellite portion of the NBN network will reach the 7% of remote homes not covered by the fibre rollout.

NetComm separately revealed its profit for FY11 will be impaired by around $2.23 million, due to a decision to take a charge relating to its lossmaking services business.

The company said it would write down the carrying value of around 76% of the inventory of the business.

Announcing the writedown, NetComm said that “given other substantial growth opportunities available” - referring in part to the Ericsson deal - “directors believe it is prudent to refocus the services business on specific prospects that will deliver longer term value and profits.”

The write down will not affect cashflows as inventory had been purchased in prior years, NetComm said.

NetComm swung to a $400,000 profit in the first half, after growing sales revenue 37%.

NTC shares stayed flat on Thursday at $0.120.