Netlink Trust

Hi JM, keyword is Transcelestial.


*frame on*
JM, first of all, thank you very much for all the contributions.
I had read and benefited from all your posts.
I must admit that I'm not a fan of bond/fixed income (thou I had tried as part of fun learning journey).

I read keenly and absorbed all your teaching.

Thank you and hope to learn more from you.
*frame off*

For all valuebuddies, FY18 is tough, FY19 had turned up.
Wish everyone continue to learn value investment.
It's alive...

(21-02-2019, 09:45 PM)tanjm Wrote: From a Science Fiction point of view, I would say that a competitor to fibre would be quantum entanglement. This would provide theoretically nearly infinite, instantaneous capacity limited only by the physical network equipment. There are researchers working on that. It is impossible to predict.

I've read this a decade back and the idea is that due to Conservation of Energy, the sum of the state of the 2 quantum bit separated has to be zero. Hence if you change the state of one quantum bit, the other will change INSTANTANEOUSLY

Quantum is quite mind boggling. Actually we don't really understand how it works except observe that that's how it works Even simple thing like LED light.

"If you think you understand quantum mechanics, you don't understand quantum mechanics." - Richard Feynman

Man City and West Ham -- soccer teams on the English Premier League -- will be playing against each other next Wednesday.

Man City won the EPL trophy 3 times in the past 10 years, while West Ham was never close, in the years of EPL since 1992. Man City also scores several wins in other leagues of recent years. The opposite is true for West Ham.

Given such data, most which team has a higher probability of winning the match? Clearly, it is Man City.

But the payout for a Man City win is only $1.125 for every $1, or a 12% return. The payout for a West Ham win is $21 for every $1, or a 2000% return.

And so the bookmakers also agree that a Man City's win is a very high probability event. And for West Ham, the opposite.

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I do not have any idea on the type of technology that will prevail in transmitting data, in the next 10 years or so. So to me, I have no sense on the probability of Netlink being a winner; as a business, in terms of profits, cashflow, dividends, etc. 

In spite of my ignorance, the market still offers me a chance to bet on Netlink. Assuming Netlink continues to earn a similar level of profit and dividends, then my payoff is about 5% p.a., assuming no re-rating of its multiples. 

Since Netlink's 'payoff' is nearer to the lower end (the lowest being 3% government securities), it must mean that most people think that the probability of Netlink maintaining the status quo is high. There are people who are experts in the field who are likely to have a better grasp on future data transmission technology. These people may deem that Netlink has a high probability of maintaining its business, and hence the 5% p.a. is a very low risk return.

But how many people are experts in the field?

If you are not an expert, and you are holding Netlink units, then you are probably taking too much risk for the given returns.

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Back to Man City vs West Ham. Which team will you place your bets?

Even though Man City has a high probability of winning, the returns are not enticing enough to make a bet of sizeable/meaningful proportion. And even though West Ham offers very high returns, its low probability of winning also makes it senseless to make a sizeable/meaningful bet. 

These odds are priced efficiently. And so an intelligent investor will avoid placing any bets on either teams.

Unlike gamblers, investors commonly make the mistake of conflating the probability of winning, with the payoff of winning; in other words, they assume that the probability of winning is high, because the payoff is high.

If some revolutionary new tech becomes available, it would be all over the news so you won't miss it. And new revolutionary tech will take some years to go into mainstream usage, so the impact will gradually be priced in. There should be time to make an exit, and with some years of dividend, you might well escape with minor loss or slight gain.

5G needs line of sight view. Singapore garden city will be a hurdle as tree leaves can be enough to block it. And with many high rise building, this could be another challenge. There could be "every installation" has it's customization ? As the speed is fast, data through put could be expensive. So I don't see it much threat in home use. There is also concern on health with the 5G but this will be interesting to find out only after implementation and years later.

What I do see is there is more needs to tap on Netlink bnb tr infra to support tech like autonomous vehicle all over the islands. The points are $$$. The potential could be huge for the company..

We're comparing 5G vs a fibre network company as if the 5G doesn't need a fibre backbone network. To me i think the 5G telcos should just leverage on netlink's fibre network already built around SG. Then 5G telcos and netlink trust would be complimenting each other.

(23-02-2019, 07:44 PM)Sampling Wrote: We're comparing 5G vs a fibre network company as if the 5G doesn't need a fibre backbone network. To me i think the 5G telcos should just leverage on netlink's fibre network already built around SG. Then 5G telcos and netlink trust would be complimenting each other.

My point is the argument is too simplistic. A home fibre connection is a regulated and fixed fee for Netlink -  even if the consumer only consumes a small amount of traffic. If netlink loses this revenue, it has to be replaced by an additional revenue through the 5G network which may or may not be regulated. If the recurring revenue through the 5G network is bandwidth usage based, then it might not replace that fixed fee. Of course, it is likely that installation of connections would accrue to netlink but that may be a one time. 

In other words, I’d like to know how Netlink charges telcos for cell tower connectivity.

Actually, I now believe that 5G may not replace home fibre in the medium term. The infrastructure cost for 5G is so great that telcos are likely to want to maximise their revenue and impose bandwidth caps, so home connections would still be desirable. Only when the network cost is mostly paid off then perhaps we see some relaxation of that (or a rats race climb to “6G”!).

I wrote to Netlink Trust investor relations. They replied that

(A) the cost of a NBAP connection currently is $1,231 per month per segment fibre (I assume this means per connection). The connection rates are regulated.

(B) (I asked them what they would gain from installing new NBAP points). They can't advise on the installation revenue gain.

If the telcos put on bandwidth caps on a per user basis but still need to cater to peak traffic and IOT and install a lot more NBAP (because the cell coverage is smaller per base station), then I'd say I am now convinced 5G isn't a medium term (defined as 10 years or so) threat at all and may even be revenue enhancing.

(26-02-2019, 02:29 PM)tanjm Wrote: I wrote to Netlink Trust investor relations. They replied that

(A) the cost of a NBAP connection currently is $1,231 per month per segment fibre (I assume this means per connection). The connection rates are regulated.

(B) (I asked them what they would gain from installing new NBAP points). They can't advise on the installation revenue gain.

If the telcos put on bandwidth caps on a per user basis but still need to cater to peak traffic and IOT and install a lot more NBAP (because the cell coverage is smaller per base station), then I'd say I am now convinced 5G isn't a medium term (defined as 10 years or so) threat at all and may even be revenue enhancing.

Well based on my humble opinion, I don't think at least in SG, 5G is a threat to a company like netlink trust.

When there was 3g/4G, we also don't see the cable broadband affected by it.

What I do know is, for fibre to work, there's a few thing. Will try to explain in layman terms..

firstly there's the protection layer of the ducts. Someone need to dig up a hole in the road and construct the backbones.
then the next layer is the "duct" itself. when a duct is constructed usually an X number of fibre cables is also "laid" or "installed" inside the duct.

The X number of fibre cables laid can be used by any party to "transmit" data using the fibre cables. For argument's sake, lets say X is 20, which means there are 20 fibre cables laid. Telcos could use these cables for their existing base stations. Yes, existing base stations also need a "fibre backbone" to connect back to their systems or to other base stations. Broadband retailers could also use this backbone to provide broadband connections to their customers.

Same as for 5G. 5G tech is mainly tech to transmit data from base stations to our phones at a faster speed compared with 3G, 4G, etc. If someone is logging into Gmail using the 5G, what's happening is really phone connects to base station, base station connects to something (lets call it "Y network backbone" ) to connect to the nearest Gmail servers.

So what is this "Y network backbone" ? Of course it can be a new backbone built by the 5G operators. It could also be Netlink Trust's existing infra set up. Heck this "y network backbone"  could even be a connection to the satellites to connect to the Gmail servers.

Maybe it's cheaper to build their on "y network backbone", if not probably netlink trust might gain from this.

Over half of NLT's revenue is from residential.  Like tanjim, I was wondering if 5G could displace the 'last-mile' connection to homes, and this revenue.  Something like this or this - basically a wireless (beam-like) transmitter that goes through your window or is externally mounted, pointing to the telco's device (mounted on a street light for example) which accesses the fibre backbone.  Many homes could connect to a single access point.

(26-02-2019, 02:29 PM)tanjm Wrote: I wrote to Netlink Trust investor relations. They replied that

(A) the cost of a NBAP connection currently is $1,231 per month per segment fibre (I assume this means per connection). The connection rates are regulated.

A Phillips Capital report gives the monthly recurring charge of NBAP as $73.50.
I think this is for 1/16th of a fibre strand (See 3.1 here), which roughly matches the reply above.

(21-02-2019, 09:45 PM)tanjm Wrote: A single optical fibre - the thickness of a human hair - now carries 1Gbps but that's merely a limitation of the network terminating equipment. As far as I know, if you install the right network equipment, you can push it to 10Gbps per fibre without replacing the fibre with existing production tech. In the laboratory, scientists have pushed the capacity to 255 Terabits per second per fibre.

Allowing for 10Gbps per fibre strand, if I was to split it up lets say into 100 channels (100Mbps each), and connect each one to a separate home, the $1231/month becomes $12 per month for the connection fee alone.  Given that retailers charge $30/month for a 500Mbps connection, it doesn't seem worthwhile yet.  This may change if we can get better fibre speeds later (eg: 51Gbps per strand).