Sky Broadband UK Growth Stable to Reach 5.62 Million Internet Users

Sky Broadband is holding its own against increasing pressure from BT and this is demonstrated by their Q2 2015 results reporting another +96,000 increase in Internet subscribers for the UK and Ireland (total 5.62 million), which is only a small dip from the +100k added in Q1 2015 and +106k in Q4-2014.

The news is good given that Sky seems to operate in an increasingly difficult environment, which over the past few months has seen BT continuing to challenge what makes the media giant so attractive (e.g. TV and premium sports content). But despite that Sky has spent big to retain much of its hold (example), albeit at a cost to consumer prices.

Most recently BT has picked up a new AMC channel with an exclusive UK airing of The Walking Dead TV spin-off (‘Fear the Walking Dead’) and they’ve also become the first to launch a 4K Ultra HD TV channel for sports content, which is an area where Sky would normally be expected to pioneer.

But today’s results show that Sky, which is fighting back with its NOW TV video streaming service and also still retains the lion’s share of top-level premium TV sports content, is managing to hold its own and actually improved upon their broadband growth vs the same period last year (Q2 2014 saw +50,000 net additions).

Jeremy Darroch, Sky’s Group CEO, said:

“The past 12 months have been an outstanding period of growth for Sky. We’ve successfully completed a deal that has transformed the size and scale of opportunity for the business whilst delivering an excellent financial and operational performance as more customers chose Sky and took more of our products.

It’s clear that the steps we have taken to broaden out our business are paying off. By distributing our content over multiple platforms and launching new products and services, we are now able to offer something for every household.

The UK and Ireland, where our strategy is most progressed, put in a particularly strong performance. We passed the 12-million customer milestone with the highest growth in 11 years; we surpassed 38 million paid-for subscription products; and we delivered the lowest churn in 11 years. This is the direct result of the investments we’ve made in connected services and quality content with more than 7 million customers now connected.”

Sadly Sky’s results, which earlier this year were consolidated and simplified into an incredibly vague form following the merger with Sky Italia (Italy) and Sky Deutschland (Germany), don’t give us a lot of detail. But we do learn that their Average Revenue Per User (ARPU) remains stuck at £47 per month, while Churn fell from 10.1% in Q1 to 9.8% now.

Sky’s share price is also continuing to ride high, despite a recent slip, and in 2016 they’ll become a quad-play provider by launching their own consumer mobile services via O2’s MVNO platform (here). Mind you BT has recently called upon Ofcom to take a closer look at Sky’s dominance of the Pay TV market and the regulator is already known to be investigating some aspects of this (e.g. Premier League Footy).

Put another way, Sky appear to be doing well in an increasingly competitive environment, but the media giant will need to keep innovating if they’re to avoid losing what they’ve already gained. The forthcoming mobile service will help, but Sky also needs to get a move on with their 4K TV plans (SkyQ) and it wouldn’t hurt to introduce a more competitive broadband router than the somewhat low-spec SR102 (Sky Hub); we know a fair few people can be discouraged by that last one.