NetLink sees growth in non-residential and NBAP spaces

It could find demand for point-to-point connections from data centre clients.

NetLink NBN Trust is expected to find growth opportunities in other connected services within the non-residential and non-building address points (NBAP) space, according to a report by OCBC Investment Research.

Within the NBAP and segment fibre connections, its manager highlighted that there are still opportunities at hand from point-to-point connections, with demand coming particularly from data centre clients.

“With the increasing usage of fibre broadband services for day-to-day activities driven by growing demand for connectivity and rapid broad-based growth in data consumption, we believe NLT NBN has a resilient business model, and hence able to weather through various economic cycles given the defensive nature of its income streams,” the report stated.

The company did see lower revenue contribution from ducts and manholes, but its manager attributed this partly to a slowing in the joint build projects with Singtel. NetLink has been building it out themselves, which can allow them to gain regulated returns under the regulated asset base (RAB) model.

Singtel has also been gradually retrieving copper wires from the ducts, and hence there have been reduced payments to NetLink.

Its growth in residential connection has also been more modest in Q3 at 0.8% QoQ, attributed to the ending of migration of coaxial cable subscribers to fibre by StarHub in September 2019. Still, NetLink is working on extending its reach to lower income groups and elderly homes

NetLink‘s post-tax profit inched up 9.6% YoY to $21.5m in Q3 2020, according to an SGX filing. Its revenue also rose 2.9% YoY to $91.6m over the same period.