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BSKYB cheers broadband growth despite incurring losses

BSKYB released its interim results for the half year until December 2007, which saw the group counting the cost of its broadband investment.

The pay-TV operator’s results showed an operating profit of £295 million, which amongst other things took into account £91million of investment in Sky Broadband and Sky Talk.

However, the big hit came from its investment in ITV, where Sky had to write down £343 million due to a dip in the value of its 17.9 percent stake in ITV, and meant Sky posted a pre-tax loss of £112 million.  Sky has also been instructed to reduce its stake in ITV to below 7.5 percent, following an evaluation by the competition commission.  Sky is still considering whether it will appeal against the decision.

Costs are likely to mount this year as it continues to invest in promoting its Sky Broadband products but Sky says the peak of investment will be behind them by 2009.

On the plus side, the group demonstrated strong growth in its broadband product and was up 28% to 260,000, taking the total to 1.199 million customers.  There was also record growth in Sky+ and Sky Talk, leading to record product sales.  Overall the group added 167,000 new customers bringing the total to 8.832 million, keeping it on course for its target of 10 million by 2010.  Customer churn was also at a three year low at 10%.

Jeremy Darroch, Chief Executive of Sky said: “We have made good progress during the quarter. Our focus on value and quality has delivered a strong level of new customer additions, a 35% year on year increase in product sales, record ARPU, and lower churn. Our business continues to strengthen.

“We enter calendar year 2008 in good shape. A combination of outstanding choice, quality and value leadership leaves us well positioned. An 8% increase in our interim dividend reflects our confidence.”