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NetLink NBN Trust raises FY2019 DPU to 4.88 Singapore cents

FIBRE network provider NetLink NBN Trust has called for a distribution per unit (DPU) of 2.44 Singapore cents for the fourth quarter, the manager said, in results released on Monday.

The latest payout takes DPU for the 12 months to 4.88 Singapore cents, compared with 3.24 Singapore cents for the previous full year.

Net profit came in at S$20 million for the three months to March 31, up 30.9 per cent year-on-year, and 11.7 per cent higher than projected in the trust's listing prospectus.

Revenue rose 8.9 per cent to S$87.9 million, which was roughly in line with projections. Turnover came on growth in contributions from residential fibre connections, diversion and ducts and manholes service, even as installation-related revenue was lower than expected.

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The top line was up on recognition of revenue from projects, largely for the public sector, as well as the recovery of costs for ducts and manholes from joint-build projects.

NetLink Trust's residential connections were up by 11.3 per cent on the previous year to 1.33 million as at March 31, while non-residential connections increased by 5.4 per cent to 1.19 million, and non-building access point connections stood at 1,587.

Earnings per unit stood at 0.51 Singapore cent, up from 0.39 cent before.

NetLink Trust held its initial public offering (IPO) in 2017, with Singtel shedding its stake from full ownership to 24.99 per cent, in compliance with regulatory obligations.

Stock watchers have touted the trust as a defensive play in Singapore's telecom landscape, especially as the knives come out in the crowded consumer market.

UOB Kay Hian analysts wrote in a report on May 7 that key earnings drivers for the trust include Starhub's decision to move home and pay-television customers from cable to fibre by mid-2019.

NetLink Trust is also expanding its network coverage to new housing estates in Sengkang, Punggol and Tengah, the UOB Kay Hian report noted.

Analysts have also suggested that NetLink Trust could benefit from the impending roll-out of fifth-generation or 5G mobile technology in Singapore, which could tap the provider's fibre connectivity.

"The NetLink Group is monitoring the development of the 5G network in Singapore and will explore opportunities associated with the new market development," the manager said in its outlook statement, with the entry of Singapore's fourth mobile network operator cited as another potential opportunity.

Tong Yew Heng, chief executive of the manager, said in a statement: "Our financial performance and distributions to unitholders have exceeded IPO projections for the year, supported mainly by a strong increase in residential connections and diversion project income.

"For the upcoming financial year, we expect revenues from key connection services to be higher than that of FY2019, driven by higher residential connections and installation-related revenues."

Still, the trust is also looking at a ramp-up in capital expenditure, as the manager said that the group "will continue to invest to expand its network and will also utilise capex reserve on projects that will improve the network's capability and resilience".

NetLink Trust delivered net profit of S$77.4 million for the full year - up by 54.9 per cent on the previous year or 17.8 per cent above projections - on a 54.7 per cent increase in revenue to S$353.6 million, slightly better than expected.

The counter shed half a Singapore cent or 0.6 per cent to S$0.83 before the results were released.