Telco Solution Drives Passive Income For Build-to-Rent Developers

Telecommunications provider Frontier Networks is set to move into the build-to-rent market on the back of its decade-long experience in the retirement living sector.

The move comes as build-to-rent continues to ramp up across Australia. 

Frontier Networks is an alternative to the NBN and offers a full white-label solution for developers and operators that covers everything from Wi-Fi access and security to lift management to pay and free-to-air TV connections.

Frontier Networks managing director Paul Mula said the company created the white-label solution to allow clients to rebrand the services that Frontier Networks provided.

“We knew some people in the retirement-living sector who said, ‘We need some help—the NBN is not coming and not delivering what people need and we need some help selling our units for more or faster’,” Mula said.

“We spent a number of years building and most importantly operating networks in that sector and perfecting our white-label solution.

“It parlays perfectly into the build-to-rent sector.” 

Mula said the solution also helped developers get more income out of the project.

“Our model allows them to get passive income out of the telco,” he said.

“They can actually brand the telco and we will manage and operate it.”

▲ Developers can on-sell connectivity to renters.

Developers can then rent out units with all services incorporated and get income from charging tenants for internet services. Alternatively, they can use the service as a sales tool to help rent the unit faster.

“If I was the developer, I would want to capture as much of the tenant’s spend as possible while they are in my building,” Mula said.

The company also partners with the developer at the start of the project to help efficiently design it so there is less operational expenditure later on, while saving on the initial build cost. 

“So we will build all of the telco stuff—we will also design and build all the community Wi-Fi throughout the building and also all the intercom systems, CCTV, access control, etc,” Mula said. 

“From a build point of view it’s a complete turnkey solution.”

Mula said it made sense for the company to move into the build-to-rent sector with the current demand for rentals set to increase with international migration.

“When you look at the numbers around rental vacancies, our view is that the timing is absolutely great for us to enter the build-to-rent market,” Mula said.

“So we think it is a massive market that is going to explode in Australia.”

▲ More build-to-rent projects are being planned or are under construction.

Mula said the eastern seaboard was where most of the build-to-rent interest was for upcoming projects.

“There are about 80,000 to 100,000 new apartments being built year on year in Australia, around 75 per cent of that is on the eastern seaboard,” Mula said.

“And most of that 75 per cent is within 5 to 10km of CBDs—so, Sydney, Melbourne and Brisbane.”

“There is a lot of build-to-rent development happening in Melbourne so we are currently expanding there,” Mula said.

“But there are some projects starting to pop up in such places as Fortitude Valley in Brisbane.”

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