NetLink Trust reports Q1 net profit of S$19 million

NATIONAL broadband network operator NetLink NBN Trust's first-quarter results beat initial public offering (IPO) forecasts, the manager said in unaudited statements released on Friday.

NetLink Trust, which debuted on the main board in July 2017, turned in a net profit of S$19 million for the three months to June 30, beating the projected earnings of S$15 million by 26.9 per cent.

Revenue came in at S$86.1 million, up by a smidgen of 2.8 per cent on the projected S$83.8 million. The outperformance was mainly due to higher diversion revenue, from the recognition of turnover from completed projects, as well as ducts and manholes service revenue on joint-build projects with Singtel.

Expenses were below projections because of lower installation costs, depreciation and amortisation expenses, staff costs and finance costs, with the capital expenditure incurred being less than expected.

The trust clocked earnings per unit of 0.49 Singapore cent, with a net asset value of 78.8 Singapore cents a unit, against 81.5 Singapore cents as at March 31.

Tong Yew Heng, chief executive of the manager, said in a media statement that NetLink Trust has seen "a steady growth in the number of connections" in the residential, non-residential and non-building address point (NBAP) segments. "This has enabled us to deliver on our forecast distribution and is a reflection of the resilience of our business model," he added.

NetLink Trust "remains on track to achieve the number of end-user connections in both the residential and non-residential fibre segments in the projection as stated in the prospectus for FY2019", the manager said in its outlook statement.

The trust had 1,217,079 residential end-user connections and 44,784 non-residential end-user connections as at June 30, while NBAP connections were up by 35.2 per cent on the previous quarter, to to 1,129 connections. The prospectus had projected some 1.28 million residential end-user fibre connections for that period, and 47,299 non-residential end-user connections.

It added: "Though the trust goup expects revenues from key connection services to meet the projection for FY2019, overall revenues may be affected by lower installation revenues.

"The Trust Group continues to expand its network in new housing estates. The trust group has also been working proactively with the (requesting licensees) to anticipate future demand in the non-residential and NBAP segments.

"With its extensive nationwide fibre network, the trust group is well-positioned to support Smart Nation initiatives, the developments in Punggol Digital District and Jurong Innovation District and the fourth mobile telecommunication operator in its mobile network deployment.

"In addition, the trust group is monitoring the development of the 5G network in Singapore and will explore opportunities associated with the new technology."

The manager said that the trust "expects to deliver the FY2019 projected distribution as per the prospectus". It had projected a distribution per unit of 4.64 Singapore cents. Its policy is to make distributions on a semi-annual basis.

With NetLink Trust's IPO in 2017, Singtel divested its stake from complete ownership to 24.99 per cent, to fulfil an obligation to the Info-communication Media Development Authority.

NetLink Trust closed flat at S$0.775, before the results.