NetLink NBN posts fiscal 1Q net profit of S$19.0 million, beating projections

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NetLink NBN reported on Friday its fiscal first quarter net profit of S$19.0 million, beating the forecast of S$15.0 million from its IPO prospectus by 26.9 percent amid lower-than-expected expenses and higher-than-forecast revenue.

Revenue for the quarter ended 30 June was S$86.1 million, 2.8 percent above the IPO prospectus projection, mainly on higher diversion revenue and ducts and manholes service revenue, the trust manager said in an SGX filing after the market close on Friday. That was partially offset by lower-than-expected installation-related revenue, it said in the filing.

Diversion revenue was S$3.48 million in the quarter, compared with a projection for S$800,000, on the recognition of revenue from completed projects, NetLink NBN’s trust manager said. Ducts and manholes service revenue was S$9.41 million in the first quarter, 21 percent higher than the projection of S$7.77 million, mainly on joint-build projects with Singtel, it said.

NetLink NBN designs, builds, owns and operates the passive fiber network infrastructure, including ducts, manholes and fiber cables,  of Singapore’s Next Generation nationwide broadband network.

“We have continued to witness a steady growth in the number of connections across the residential, non-residential and NBAP segments. This has enabled us to deliver on our forecast distribution and is a reflection of the resilience of our business model,” Tong Yew Heng, CEO of the trust manager, said in the filing.

The total expenses for the quarter were S$69.8 million, S$1.5 million lower than the forecast, mainly on lower installation costs, depreciation and amortisation expenses, staff costs and finance costs, partially offset by higher operation and maintenance and diversion costs, NetLink NBN’s trust manager said.

At the end of the quarter, NetLink NBN had 1.217 million residential end-user connections and 44,784 non-residential end-user connections, an increase of 2.1 percent for each from the end of the fourth quarter, it said. NBAP connections increased by 35.2 percent to 1,129 connections, compared with the end of the previous quarter, it said.

In its outlook, NetLink NBN said it was on track to meet its IPO prospectus projects for both residential and non-residential end-user connections in the fiber segments.

“Though the trust group expects revenues from key connection services to meet the projection for fiscal 2019, overall revenues may be affected by lower installation revenues,” it said.

It also said it was working to anticipate future demand.

“With its extensive nationwide fiber 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,” it said. “In addition, the Trust Group is monitoring the development of the 5G network in Singapore and will explore opportunities associated with the new technology.”

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