NetLink NBN Trust Q3 net profit down by 9.4% as costs mount

Annabeth Leow
Published Wed, Feb 13, 2019 · 10:30 AM

FIBRE network provider NetLink NBN Trust took a hit to third-quarter earnings from rising operation and maintenance, installation and staff costs, among other expenses, according to results out on Wednesday.

Net profit was S$19.6 million for the three months to Dec 31, 2018, down by 9.4 per cent on the same period the year before, even as revenue grew by 6.7 per cent year on year, to S$89 million.

The rise in income was on the back of more residential fibre connections, despite a lower monthly recurring charge, as well as more non-residential connections, where the monthly charge increased.

These increases - along with higher diversion from completed government projects, as well as the installation-related revenue bump from new one-time service activation charges - helped to offset lower revenue from the drop in non-building access point and segment monthly charges.

Home fibre connections stood at 1.28 million as at Dec 31, 2018, while non-residential connections stood at around 45,700, and non-building address point connections numbered 1,462.

But operation and maintenance costs jumped by 88 per cent year on year, no thanks to duct and manhole joint-build project costs, and staff costs surged by 45.4 per cent on lower capitalisation of staff costs, as fewer fibre capacity top-up projects were done compared with the previous year.

A change in the regulated pricing regime, which kicked in on Jan 1, 2018, also ate into the net profit margin, the manager said in the financial statements.

Earnings per unit were down to half a Singapore cent, from 0.56 Singapore cent previously.

No distributions were declared for the quarter, as the trust makes payouts on a twice-yearly basis.

Tong Yew Heng, chief executive of the manager, noted that NetLink NBN Trust - which was listed on the Singapore mainboard in July 2017 - has continued to out-perform its prospectus projections. The quarterly net profit beat forecasts by 17.6 per cent, while revenue was 3.4 per cent more than expected.

"We expect a steady growth in the number of connections as more end-users migrate to fibre," Mr Tong added in a statement. "We will continue to invest in our network to deliver sustainable growth and value to all our unit holders."

The manager also said that the trust group continues to expand its network in new housing estates, and is monitoring the development of Singapore's planned 5G network.

Separately, the board of the manager has been restructured with immediate effect, with the nominating and remuneration committee split into two committees. Eric Ang chairs the nominating committee and Chaly Mah the remuneration committee, with Arthur Lang the third seat on both committees.

The composition and structure of the risk and regulatory and audit committees were unchanged.

NetLink NBN Trust closed flat at S$0.805, before the announcements.

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