NetLink NBN Trust (SGX:CJLU)'s 1QFY25 earnings fell by 9% y-o-y, whereas revenue and EBITDA declined by 3% and 2% y-o-y.
Stable on the surface
Revenue decline was mainly owing to lower low-margin and often bumpy ancillary projects revenue whereas its key regulated asset base (RAB) revenue was stable despite the lower regulatory pricing kicking in from April 2024.
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Operating metrics – mild surprises but not concerning
NetLink posted stable RAB revenue y-o-y despite reduction in its regulated pricing from April 24. Residential connections increased by a strong 17,375 vs a run rate of ~6,000 in previous quarters.
Management attributed this to telcos’ promotions of 10Gbps fibre offerings and WiFi7 router offerings, which might have attracted new take-ups without terminating existing lower speed contracts (to avoid termination penalties).
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On the other hand, NBAP (non-building address point) connections surprisingly fell 1% q-o-q.
Management expects the rise in residential connections to reverse and expects growth momentum in NBAP connections to resume.
Earnings forecast trimmed
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Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
