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Sky results in line with expectations

There are certainly no complaints from financial analysts over Sky’s full-year results, issued early July 30th.

Typical is Equity analyst Jerry Dellis at investment bank Jefferies, who welcomed the UK’s declining churn rates as proof that the June price hike in the UK has “landed well” with subscribers. Jefferies compliments Sky’s 96,000 Broadband net additions and says this suggests Sky is matching rival BT’s promotional activity. However, he says that there are signs that Q4 revenue growth slowed (relative to Q3) and this might suggest that subscriber retention discounting is “edging higher”.

Germany is clearly doing well (Revenue up 9.1 per cent) and more or less spot on expectations at €1.808 million, and with EBITDA at €96 million being right in the middle of consensus expectations. Churn in German was broadly flat at 8.6 per cent, although Ellis warns that this time next year it might not be such an appealing figure as German subscribers come to the end of their 2 year contracts.

Italy is still a headache, with revenues down 6.3 per cent y-o-y (vs  -3.4 per cent Q3, -0.6 per cent Q2, +0.8 per cent Q1), and a thumping 77 per cent loss in wholesale revenues because of the lost Champions League rights. Advertising is also down as Sky Italia suffers the comparison with last year’s Winter Olympics and World Cup.

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