NetLink NBN Trust’s IPO: 3 Opportunities Investors Should Know

Shares of NetLink NBN Trust (SGX: CJLU) started trading last Wednesday.

The business trust’s initial public offering, which drew in roughly $2.3 billion in proceeds, is the largest IPO in Singapore’s stock market since 2011 and the second largest in Asia this year, after Korea’s NetMarble Games.

In NetLink NBN Trust’s IPO prospectus, there was a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis prepared by Media Partners Asia. The analysis was commissioned by NetLink Trust.

In two previous articles, I shared the “Weaknesses” , “Threats” and “Strengths” of the trust’s business. Today, let’s look at the “Opportunities” .

Three opportunities for NetLink Trust

MPA highlighted the following opportunity for the business trust:  

“Rising uptake of fibre broadband subscriptions in Singapore from the gradual migration of end-users from older broadband technology types as well as the general growth in economy, population, total households, residential homes and businesses.”

According to MPA estimates, fibre subscriptions, which uses NetLink NBN Trust’s network, is expected to grow at an increased growth rate of 6.5% per year between 2016 and 2021. By 2021, MPA expects fibre subscriptions to make up 100% of the wired residential subscription market. Older technologies like ADSL and HFC are expected to be phased out.  

The second opportunity lies with the fourth telco, TPG Telecom, which is expected to offer a mobile service in 2018. It is possible that Australian telco might eventually provide a broadband service as well. MPA noted:

“NetLink Trust is a logical backhaul partner for TPG, Singapore’s fourth and newest mobile telco operator.”

Elsewhere, the third opportunity highlighted was:  

“Well-positioned to be the lead partner for Singapore’s Smart Nation Programme initiatives. Demand for fibre broadband services and fibre connections is facilitated by various government-led initiatives such as the Infocomm Media 2025, Fibre Ready Scheme, COPIF 2013 and CFE.”

MPA expects NetLink NBN Trust to benefit government-driven initiatives related to the Smart Nation Program. The initiatives are varied, spanning from making waste collection more efficient to improving security , and autonomous vehicles .

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.