The Boy Who Procrastinates (TBWP)

0.8146. Not a significant margin to its NAV I have to say but there are the areas of account to justify my purchase price. The Netlink NBN Trust is a business trust that possesses 100% of the devices in Netlink Trust (“Netlink”), which develops, manages and functions the fiber network infrastructure in Singapore.

Netlink, openNet formerly, supplies low cost fibre connection services to the retail providers (“RSP”) such as Singtel, Starhub, M1, MyRepublic, SuperInternet and ViewQwest. The comprehensive network may very well be the building blocks for the deliverance of islandwide end-user fiber connections for broadband and Internet-protocol TV in residential homes and non-residential premises.

To have a clearer overview of its business, let’s analyze the 3 largest areas where Netlink derives its revenue from. As Netlink monopolizes the provision of fiber contacts for residential premises in Singapore, it should come as no real surprise that most Netlink’s income (62%) is earned from the home end-user connections. This consists of a “one-off” installation charge upon the original connection and a repeating regular connection charge from the RSP for each residential end-user connection. Therefore, even if consumers change to a new RSP because of their fiber broadband programs, they shall be accessing the network deployed by Netlink.

In fact, the competition among RSP might press down the prices which could entice more people to switch to/indication up for fiber broadband. The next sizable revenue section (9.7%) is added by the duct and manhole’s services, which form elements of the passive fiber network infrastructure. That is composed of profits received from the RSP for being able to access its manholes and ducts because of their business needs. The next considerable revenue segment (8.1%) originates from the non-residential end-user connection. Unlike the field of home connection, Netlink does not have a monopolistic benefit in this domain name.

It faces competition from the other RSP which have their own fiber networks mainly in the central business district and other large business parks and data centers. As such, Netlink’s strategy is to focus on the growing small and medium-sized business businesses located beyond these areas. Another noteworthy division is the Non-Building Address Point (“NBAP”) contacts. These refer to connections of a location that does not have a physical address or assigned postal code such as traffic lighting, bus halts, lamp posts, ERP gantries, void carports, and decks.

The application of NBAP can range from wireless network base channels for telco operators to cams and sensors. Despite the fact that the provision of NBAP services remains in its early stage and only forms only 0.3% of Netlink’s income composition, it offers the most exciting development potential as projected in the prospectus. It’ll largely be driven by Singapore’s Smart Nation Program initiatives which require the deployment of the network of sensors and monitoring equipment to aid applications such as autonomous vehicles and high-definition security camcorders.

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Now that we have an obvious summary of Netlink’s underlying business, we can discuss the many drivers of development for some of the main element divisions. Migration from slower systems like Asymmetric Digital Subscriber Line (ADSL) and Hybrid Fiber-Coaxial (HFC) to fibre-based systems: This is backed by the increasing competition among RSP that allows broadband programs to become more affordable. Additionally, various RSP will work towards retiring the aging technology as it can not be commercially practical to allow them to maintain it.

Singtel has turned off its copper-based ADSL network in April this year and has offered hire deals to the affected 47,000 customers. Starhub has also recently announced that they have ceased further rollout of its HFC network to new residential and commercial structures. The switch from HFC and ADSL to fibre-based networks should lead to higher home end-user connections.