Sky's Q3 results exceed City expectations
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BSkyB has unveiled better-than-expected third-quarter results, with net subscriber additions up by 51,000 on the year against analyst forecasts of just 20,000, taking its total UK and Ireland subscriber base to 8.49m. Churn—the proportion of subscribers cancelling contracts—rose 1.8% on the previous quarter to 13.7% as Sky removed discounted packages and focused on more profitable customers. That strategy saw average revenues per user (Arpu) rise by £12 on the previous quarter to a record £406.
The number of homes with Sky+, Sky's digital TV recorder service, rose by 199,000 in the third quarter to 2.17m, exceeding a 25% penetration target three years ahead of schedule. Sky had 244,000 customers for its high-definition television service at the end of March, a rise of 60,000 in the quarter. Big growth was seen in Sky's broadband division which more than doubled its customer base to 553,000 at the end of March, and 669,000 by April 29. Customers for Sky's discounted telephony service, Sky Talk, increased by 83% to 408,000.
Total revenues in the quarter rose from £1.06bn last year to £1.16bn. Pre-tax profits fell from £219m to £200m as Sky invested in its broadband roll-out and 'See, Speak, Surf' promotion of bundled digital TV, telephony and broadband services. Sky warned that operating profits could be down by between £15m and £20m for the full financial year to the end of June if its basic channels remained off Virgin Media's cable platform.
Sky CEO James Murdoch said the results of Sky's triple-play promotion had been "very encouraging". "In just eight months, Sky Broadband has passed the milestone of 500,000 customers who are enjoying fast speeds, wireless access and significant savings. Our network now reaches over 60% of UK homes and we are on track for our goal of more than 700,000 broadband customers by the end of June."
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