UK ISP Sky Broadband Growth Slows to Reach 5.2 Million Subscribers

BSkyB (Sky Broadband) has today published the latest results for Q1-2014, which reveals that their broadband ISP platform has seen a sharp drop in growth after adding +70,000 customers in the quarter to total 5,197,000 (down from +110k in Q4 2013 and +111k in Q3 2013). But is this the shadow of free BTSport content or just a temporary blip.

According to Sky, the dip in growth reflects a greater focus on selling their TV products and slightly higher levels of churn from the acquired O2 broadband base as “we complete the migration of the remaining customers” (this apparently had an estimated impact of between 20,000 and 30,000). No mention of BTSport and in fairness Sky has previously remained quite resilient, despite BT’s move onto their turf.

Elsewhere Sky added +113,000 Line Rental customers in the quarter to total 4,789,000 (down from +151k in Q4-2013), which reflects their broadband movements. Sadly Sky still refuses to publish how many superfast broadband (FTTC) subscribers they have and we’re starting to see this as a vote of no confidence in its uptake. Funnily enough there’s also no mention in the press release of their recent York focused FTTP deal with CityFibre and TalkTalk (here), which perhaps reflects its somewhat experimental status.

Otherwise Sky said that 3,831,000 of their broadband and phone subscribers now connect via fully unbundled LLU (MPF) lines, which reflects a network majority of 77% (up from 74% in Q4-2013). The other 23% (1,161,000) are on shared unbundled (SMPF) lines and 205,000 use Sky’s BT-based broadband connections. Sky’s overall network coverage has not changed since last year and continues to reach 90% of UK homes. It should be noted that 37% of their customers take all three of TV, broadband and telephony.

Jeremy Darroch, CEO of BSkyB, said:

“We have had a strong third quarter and continued to grow at an accelerated rate as customers respond to the quality and breadth of our offering. Nine months into our plans for the year, we have added almost a third more new paid-for subscription products than in the same period last year.

Revenues increased by 7% in the first nine months compared with the same period last year. And, in a year of investment, adjusted EBITDA of £1.2 billion is a good result. We’re now more than three quarters of the way through our plan for the year and are on track to deliver returns in line with our expectations.”

In addition, Sky’s ARPU increased by a further £1 in the quarter to top £571 per year, while churn increased from 10.8% last quarter to 10.9% now. It’s also worth noting that revenue for the nine months to March 2014 stood at £5,666m (+6.6%), although their operating profit fell from £994m to total £910m over the same period.