SINGAPORE (May 6): Netlink NBN Trust has declared a distribution per unit (DPU) of 2.53 cents for the six months ended March 30, which brings full year distribution to 5.05 cents, up 3.5% from the previous year.
While distribution is done every half year, Netlink reports earnings every quarter. For the three months to March 30, earnings dropped by 37.7% y-o-y to $12.5 million, compared to last year’s $20 million.
The drop was because of a one-off $15.4 million write-off of a discontinued project, which was recognised during the quarter.
Revenue for the same quarter came in at $92.4 million, up 5.2% y-o-y. The increase was mainly contributed by higher residential connections and diversion revenue, and partially offset by lower installation-related revenue and ducts and manholes service revenue.
Revenue for residential connections rose by 9.3% y-o-y to $59 million. As at March 31, 2020, there were 1.4 million residential fibre connections, up 7.5% y-o-y.
Non-residential fibre connections also grew 3.2% y-o-y to 47,681, which contributed to a 4% growth in revenue to $7.92 million.
Diversion revenue grew $3 million due to the completion of more projects in Q4FY20, compared to the corresponding quarter last year.
The lower installation-related revenue, and ducts and manholes service revenue, came in at $1.1 million and $2 million less respectively. The decrease in both revenues were due to fewer orders requiring installation on the migration of cable subscribers to fibre by StarHub, and attributable to the completion of fewer joint-build projects in Q4FY20.
Netlink NBN’s total expenses grew $16.5 million mainly due to higher other operating expenses, which included the $15.4 million write-off.
In its outlook statement, Netlink NBN has faced “temporary operational issues”. Its contractors’ foreign workforce faced restrictions due to Covid-19 outbreak, which has affected its capacity to fulfil service requests in late April and May 2020.
Nevertheless, Netlink maintains those delays will not have a “material impact” on its revenue.
On the back of the impact of the pandemic, the board of directors will take a 5% reduction in their fees, subject to unitholders’ approval. The CEO, CFO and COO will take an 8% reduction in base salary from May 1.
For the current FY2021, Netlink NBN will focus on adding capacity and flexibility for a denser network. It will also prepare to support 5G infrastructure, and make non-building address point (NBAP) connections easier and faster to deploy.
“As we continue to achieve sustainable growth through a steady increase in residential, nonresidential and NBAP connections, we remain mindful of the NetLink Group’s critical role in ensuring the availability of digital access in Singapore, especially during this COVID-19 pandemic” says Tong Yew Heng, the CEO of the trustee-manager.
“Despite temporary operational issues resulting from the COVID-19 pandemic, NetLink Group’s resilient business model is well-supported by predictable revenue streams. With a strong balance sheet and liquidity underpinned by stable cashflows and the access to financial resources, we are well-positioned to continue to invest and expand our network’s capabilities and resiliency,” he adds.
Shares at Netlink NBN closed 1 cent higher, or 1.0% up, at $1, on Wednesday, prior to the announcement.
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