NetLink NBN Trust: 9M FY26 Corporate Update – Key Highlights for Investors

Strong Market Position and Strategic Role in Smart Nation 2.0

NetLink NBN Trust continues to play a critical role in Singapore’s digital infrastructure, underpinning the nation’s push towards Smart Nation 2.0. The company’s fibre network is fundamental to enabling secure, universal, and future-ready connectivity across homes, schools, hospitals, and commercial hubs, positioning NetLink as a key enabler in Singapore’s digital transformation. The company’s infrastructure supports remote work, e-learning, healthcare, and smarter living, while also ensuring open and equal access to all telecommunications operators. This strategic positioning ensures that NetLink remains integral to Singapore’s continued digital growth and development.

Robust Operational Metrics and Network Expansion

• Residential End-Users: 1,517,049 connections as of 31 December 2025, covering both high-rise apartments and landed residential areas.
• Non-Residential End-Users: 52,574 connections, supporting a wide range of businesses and organisations.
• NBAP (Non-Building Address Points) Connections: 3,556, facilitating connectivity for lamp posts, WiFi hotspots, mobile base stations, and digital signage.
• Central Offices: 11 across Singapore, with 4,244 segment connections providing key backbone links.

These metrics highlight the extensive reach and embedded nature of NetLink’s network, which expands in tandem with new residential and commercial developments.

Financial Performance: 9M FY26 Results

• Market Capitalisation: S\$3.8 billion (unit price of S\$0.965 as at 31 Dec 2025).
• Revenue: S\$313.0 million for 9M FY26, up 1.6% from S\$308.2 million in 9M FY25. The increase was mainly driven by higher co-location and ancillary project revenue, partially offset by lower connections, ducts and manholes service revenue, and central office revenue.
• EBITDA: S\$215.5 million, down 0.6% from S\$216.8 million, reflecting slightly higher operating expenses, including property tax for Seletar Central Office and increased IT-related costs.
• EBITDA Margin: Margins decreased from 70.4% to 68.8%, reflecting higher operating costs.
• Profit After Tax: S\$65.4 million, a decrease of 11.8% from S\$74.1 million, mainly due to higher depreciation from a larger asset base and increased net finance costs. The latter rose by S\$1.9 million due to higher borrowings and lower interest income, although this was partially offset by lower interest expense on existing debt.
• Net Gearing: 20.3%, calculated as Net Debt over Total Assets (new methodology for better comparability).
• Strong Credit Metrics: Net Debt/EBITDA stood at 2.7x (up from 2.4x in March 2025), and EBITDA interest cover remained high at 12.8x. 100% of borrowings are at fixed rates, with a weighted average debt maturity of 3.4 years after refinancing activities in September 2025.

Capital Management and Recent Financing Activities

• In September 2025, NetLink issued S\$300 million in 10-year fixed-rate notes at 2.65% to refinance existing debt and fund capital expenditure. An additional S\$300 million in Qualifying Project Debt Securities was also issued to NetLink NBN Trust.
• Closing cash as of 31 December 2025 stood at S\$195 million, after net cash from operating activities (S\$215.5 million), net cash used in investing activities (S\$77.7 million), and net cash used in financing activities (S\$79.4 million).

Steady Distribution Per Unit (DPU) Growth

• DPU for H1 FY26 was 2.71 Singapore cents. Since its IPO, NetLink has grown its DPU every year, with a total of 42.0 cents (S\$1.6 billion) returned to unitholders, demonstrating consistent, reliable returns and underlining the trust’s stable, income-generating business model.

Resilient and Predictable Business Model

• NetLink’s revenue is highly predictable, supported by recurring cash flows and long-term contracts with creditworthy customers. The majority of its revenue is regulated under the Regulated Asset Base (RAB) framework, providing stability and visibility for future earnings.
• Revenue streams include residential, non-residential, NBAP, segment connections, ducts & manholes, central office, co-location, installation, and ancillary project revenues.

Regulatory Environment and Pricing Model

• Pricing for Principal Services: All key services are regulated by the Infocomm Media Development Authority (IMDA), with the latest review completed in November 2023 and revised prices effective from 1 April 2024.
• Current Monthly Recurring Charges (MRC):
  • Residential: S\$13.50 per connection
  • Non-Residential: S\$55.00 per connection
  • NBAP: S\$70.50 per connection
• RAB Pricing Framework: Uses a nominal pre-tax Weighted Average Cost of Capital (WACC) of 7.0% (set by IMDA), with a base year of 2012 for asset valuation. NetLink is required to set aside a S\$40 million Capex Reserve for the pricing period.
• IMDA may allow for mid-term price adjustments if significant changes in cost or demand arise due to unforeseen circumstances, which may impact future pricing and revenue.
• The regulatory environment provides long-term stability and low risk for investors, given the transparent and predictable nature of the revenue model.

Potential Price-Sensitive Issues for Shareholders

• Profit Decline: Despite a modest revenue increase, profit after tax fell 11.8% due to higher depreciation and finance costs, which could raise concerns about future earnings growth and affect share valuation.
• Debt Increase: Gross debt rose from S\$856 million in March 2025 to S\$990 million in December 2025, and Net Debt/EBITDA increased from 2.4x to 2.7x. While leverage remains manageable, ongoing increases may be scrutinised by investors.
• Regulatory Review: Any significant change in the regulatory framework or pricing model during future IMDA reviews, or a mid-term adjustment due to cost/demand shocks, could materially impact revenues and share price.
• Resilient DPU: The steady increase in DPU and strong track record of distributions should support investor confidence and may have a positive impact on share price, especially in a low-interest rate environment.

Conclusion

NetLink NBN Trust remains a core infrastructure play, offering steady, regulated earnings and reliable distributions. Shareholders should monitor future regulatory developments, cost pressures, and the trust’s leverage profile, as these factors could significantly impact future performance and share valuation. The trust’s strategic role in Singapore’s digital future and the consistency of its distributions continue to provide a compelling investment case, albeit with some caution warranted around rising costs and debt levels.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell securities. Investors should consult their own professional advisors and review official company filings before making investment decisions.

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