Brace for Netlink NBN's network dominance

It’s the only fibre network operating 76,000 km of fibre cable, which has nationwide coverage.

According to OCBC Investment Research, NetLink NBN Trust’s (NLT NBN) nationwide network is becoming the foundation of the Next Generation Nationwide Broadband Network (Next Gen NBN), which allows ultra-high-speed internet access to delivered throughout mainland Singapore and its connected islands.

OCBC Investment Research analyst Eugene Chua noted in a report that NLT NBN designs, builds, owns, and operates the passive fibre network infrastructure of Singapore’s Next Gen NBN. “Currently, NLT NBN’s network is the only fibre network with nationwide residential coverage in Singapore. As of 31 March 2017, NLT NBN’s network consisted of 10 Central Offices and ~76,000 km of fibre cable, ~16,200 km of ducts, as well as ~62,000 manholes. NLT NBN’s network also supported ~43,000 nonresidential end-user connections, and was deployed to approximately ~31,000 nonresidential buildings as of 31 December 2017,” he said.

In Q3 2017, NetLink NBN Trust's profit increased to $21.67 in Q3, mainly due to higher monthly recurring revenues from residential and non-residential connection, ducts and manhole services, and central office.

Moreover, the broker thinks NBN has more room to grow with the development of new residential areas as well as an increase in penetration rates. “We expect NLT NBN to be a key participant of growth in other connected services within the non-residential and NBAP space, especially with Singapore’s push to transform into a digital economy,” he said.

Chua also noted that NBN’s business model has a steady growth outlook. He added, “With the increasing usage of fibre broadband services for day-to-day activities driven by growing demand for connectivity and rapid growth in data consumption from both residential and non-residential end-users, we believe NLT NBN has a resilient business model. Hence, we believe NLT NBN will be able to weather through various economic cycles given the defensive nature of its income streams.”

OCBC Investment Research forecasts NLT NBN to deliver distributions to unitholders of $170.1m in 2018 on an annualized basis,$181.1m in 2019F and $185.4m in 2020F.