This was mainly due to higher diversion revenue and ducts and manholes service revenue.
StarHub recently announced that it will be ceasing its cable services by July 2019 and will be migrating its broadband subscribers to fibre, where NetLink is the only provider in Singapore.
In a Monday report, Maybank analyst Luis Hilado says that with this, his current forecast of 95% residential fibre household penetration by FY21 could happen sooner.
See also: Worst may be over for 17Live, says Lim & Tan in unrated report
On the other hand, OCBC analyst Joseph Ng says, “Leaving aside potential upfront benefits from additional residential terminal points required as a result of this exercise, NLT NBN should be able to collect additional monthly recurring charges arising from greater fibre connections.”
The trust’s management also does not expect this to move the needle significantly as the switch from Hybrid Fibre-Coaxial (HFC) to fibre has already been taking place, albeit with a higher intensity moving forward.
Meanwhile, the trust is also exploring its potential in telco network sharing discussions.
See also: Parent company may tap Genting Singapore for more dividends, says DBS
“Its relatively low gearing is meant to keep the powder dry for potential capex under its guaranteed return businesses,” says Hilado.
Nonetheless, NetLink is trading at an attractive FY19 yield of 5.9%. And Hilado believes that if capex remains low, there could be a special distribution towards the end of the current review period in FY22.
As at 3.01pm, units in NetLink NBN Trust are trading 1 cent higher at 79 cents or 1.0 times FY19 book.
