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NetLink's H1 profit after tax grows 1.5% to S$44.8m

FIBRE optic cable owner NetLink NBN Trust reported a profit after tax of S$44.8 million from April to September, a 1.5 per cent increase compared with the same period last year.

Tong Yew Heng, chief executive of the trustee-manager, said the Covid-19 pandemic has highlighted the importance of fibre broadband as an essential service, especially as more people work from home.

The company's earnings before interest, taxes, depreciation and amortisation grew by 3.4 per cent to S$139.7 million, mainly due to higher revenue from residential connections and other income arising from government grants.

This comes even as revenue on the whole dipped by 2.5 per cent to S$181.5 million, the company said in an exchange filing. This was attributed to lower installation-related revenue, diversion revenue and ducts and manholes service revenue. At the same time, total expenses decreased by 3.5 per cent to S$140.7 million.

Recurring revenue from residential connections rose by 4.1 per cent to S$118.5 million in the first half of its financial year, contributing to 65.3 per cent of NetLink Group's total revenue. Between September 2019 and 2020, the number of residential connections grew by 1.9 per cent to 1,437,360.

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Meanwhile, installation-related revenue fell 44.3 per cent to S$6.9 million in H1 due to lower installation charges from fewer installation orders and service activations, the same period last year, when StarHub was migrating its coaxial subscribers, NetLink said, adding that the pandemic has also disrupted installation works.

NetLink said while its capacity to fulfil new service requests has normalised, it remains mindful of the uncertainty brought by Covid-19 and its potential impact on the group.

Even so, it said its business model is resilient and well-supported by predictable revenue streams, which include monthly recurring charges for fibre connections and contracted revenues.

NetLink's distribution per unit is 2.53 Singapore cents, comparable with the same period last year at 2.52 cents.

NetLink's units closed at 97.5 Singapore cents on Friday, up 1.5 Singapore cents or 1.56 per cent.

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