Netlink NBN earnings fizzled by lower installation revenues in FY18

Blame sluggish project deployment that pulled revenues down to $228.6m.

Netlink NBN Trust clocked in disappointing revenues of $228.6m after installation-related earnings was 44% lower than expected at $10.3m, according to OCBC Investment Research.

"Installation-related revenue was lower due to slower than expected project deployment by some customers, as well as change in customers’ deployment requirements being different from management’s projections," analyst Eugene Chua noted.

However, the company also incurred lower than forecasted expenses due to reduced operating needs and deferred maintenance costs. As a result, FY18 proft after tax actually beat expectations by 10.8% after clocking in at $50m.

As installation-related revenue only accounts for a measly share of total revenues, Chua believes that NLT is poised for a stable growth trajectory ahead to lend assistance to the country's Smart Nation project.

"Over the longer-term, we remain positive over NLT NBN’s resilient business model and growth outlook with the development of new residential areas as well as increase in penetration rates," said Chua, adding that the non-residential and NBAP space are also set to take off in the coming quarters.

As of end-March, NLT NBN’s non-residential network supports 43,855 non-residential end-user connections, with 31,574 buildings reached, whilst its residential network supports 1,192,493 end-users, with 1,346,819 home reached and 1,482,711 home passed.

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