UK ISP Sky Broadband Suffers Slow Growth to 5.94 Million Subscribers

Sky has published their latest results to the end of Q1 2016 (calendar), which reveals that the total number of Sky Broadband subscribers in the UK and Ireland increased by just +46,000 in the quarter to total approx. 5.94 million (down sharply from the +144K added in Q4 2015 and +133k in Q3).

One reason for the sharp drop in quarterly subscriber growth could be put down to the fact that Sky didn’t run as many headline grabbing discounts during that period. Sky also delivered an overall customer churn figure of 10.7%, which is up from 10.2% at the end of 2015.

The first quarter also saw Sky launch their new Sky Q line of products, which we found a little confusing as it appeared to complicate Sky’s simple line-up of products with a new premium range of almost competing options and hardware. But at present it’s still a little too early to get any solid figures for Sky Q (we expect to see that next quarter).

Elsewhere Sky Broadband last week made their Sky Q Hub router available to existing broadband subscribers for an extra charge, although we had to do some digging before they confirmed it to us (here).

Sadly we don’t get any updates on the status of their forthcoming O2 (MVNO) based Sky Mobile product (expected towards the end of 2016), although reports recently revealed that Sky had also signed a major mobile network capacity deal with the owner of Three UK (here); this will only come to pass if O2 and Three UK gain approval for their merger, which sits on increasingly uncertain ground.

Jeremy Darroch, Sky’s Group Chief Executive, said:

“It’s been another strong quarter for Sky. Our strategy to broaden our business, expanding into new markets and customer segments, has delivered further excellent financial results with revenue up 5% and a double digit growth in profit.

We want to offer customers the very best TV experience, whenever and however they want to watch. With the launch of Sky Q in February, we now have three outstanding products to meet all our customers’ needs. We are pleased with the early response to Sky Q, as we focus on establishing this premium product in its first market.

Our promise of world class content, commitment to innovation and brilliant service is persuading more customers to join and stay with Sky, in every market. As we pass the major milestone of 40 million products in UK and Irish households, we will continue to execute this successful approach across the group.”

As usual there are also no updates on Sky’s ultrafast FTTH/P broadband trials in various parts of the United Kingdom (e.g. York) and they similarly avoid commenting upon the outcome of Ofcom’s recent Strategic Review proposals (here).

Otherwise Sky UK and Ireland saw revenue for the 9 months to 31st March 2016 of £6,161m (up 6% from 2015: £5,824 million) and operating profit for the same period of £1,154m (up 15% from 2015: £1,004 million). Meanwhile the monthly customer ARPU remained flat at £47.

Sky also said that its direct networks costs, which relate solely to the UK communication business, increased 7%. Apparently “this supports strong customer growth and increased take up of fibre products by our customers over the last 12 months, whilst remaining below the rate of revenue growth in our home communications business” (Sky never tells us how many fibre customers they actually have).

All in all the first quarter of 2016 has been a bit of a mixed affair for Sky and the second quarter probably won’t be too pretty either because it coincides with a mass of students ending their courses / contracts and heading home for the summer.