BSkyB’s results were better than most analysts expected, but this didn’t make life any easier for Sarah Simon, a senior analyst at Berenberg Bank, who continued her negative advice to clients, and marking down the bank’s price target for BSkyB shares from 800p to 780p. October 16th saw BSkyB’s share price fell back a few pence from 859p to 850p.

Simon’s rationale says: “While BSkyB continues to drive higher product penetration, our analysis suggests that this is not dropping through to the bottom line as one might expect. Flat ARPU on a sequential basis, despite accelerated new product sales, rapidly escalating Sky Store revenues, booming Sky Bet revenues (helped by the World Cup), and a price increase that took effect during the quarter, suggest that many of these products are being discounted.”

“Indeed this point is apparent from a quick scan of the offers available,” says Berenberg. “While management stated that the current standard standalone broadband offer is 50 per cent off, until last week the company was offering the same product for zero payment. Offers obviously change all the time, but it is clear that the environment has become more promotional than ever, a point confirmed by management.”

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