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Sky delivers its Q1 results for its 2015-2016 financial year on October 21st, and there are anxieties that Sky’s UK DTH base might be in decline. The concerns were highlighted by equity analysts at Jefferies in a report to investors on October 15th.
Despite these concerns the overall news is positive. The report expects Sky UK to add around 100,000 broadband net subscribers (96,000 same period last year). “With each new dual-play customer taking at least three services (broadband, line rental, voice calls), this should translate into a significantly larger number of product net adds (Jefferies estimates 797k). The bank expects Sky UK revenues to be “robust”, with 130,000 net retail customers added to the roster. Revenues should be up 5.7 per cent (y-o-y) at £1.977 million.
As for Sky Italy the bank’s report expects the division to disclose a tougher first-half of the year, and not helped by losing the UEFA Champions League games to Mediaset Premium. This, suggests the bank, could mean a modest net loss of some 60,000 subs during Q1. Overall the bank is anticipating revenues falling by 5 per cent to €632 million.
But there will be good news from Sky’s German operation. “Customer/product net adds accelerated last year and we expect the strong momentum to have continued in 1Q15/16. We model 264k customer net adds (vs. 127k 4Q14/15, 209k 1Q14/15). Sky’s focus has been on adding DTH users rather than promoting the Sky Online product. As the first customers that were tied down to 2-year contracts come to the end of their terms, we understand that Sky has been seizing the opportunity to apply price increases to them.” The bank’s view is that this will translate to a 10 percent rise in revenues to €469 million.