UPDATE2 Sky Broadband Tops 5.9 Million Subs, Preps Sky Q for February

Sky UK has today published the company’s latest results to the end of 2015 (calendar), which reveals that the total number of Sky Broadband subscribers in the UK and Ireland increased by +144K in the quarter to total 5.89 million (better than the +133k added in Q3). The operator is now focused on the launch of Sky Q, but where is Sky Mobile?

Broadly speaking Sky could be said to have walked away from 2015 in a fairly positive mood. Similarly Ofcom recently gave them kudos for strong customer service satisfaction (here) and they’ve also managed to continue finding growth when others have faced more turbulent waters.

On the other hand Sky Broadband didn’t really deliver anything dramatically new in 2015, except for being outspoken in favour of Openreach’s split from BT and a few niche FTTP trials (e.g. York and Derbyshire) that the operator almost never mentions.

However 2016 is already shaping up to be a very different year, with Sky planning to launch their own O2 based Sky Mobile platform (quad play bundles) and their new Sky Q (here) proposition. Sadly the only mention we get of Sky Mobile in today’s report is this: “We are pleased with the progress we are making in our plans to add mobile to our offering.” ISPreview.co.uk queried this and was told that it would launch towards the end of 2016.

Meanwhile Sky Q represents somewhat of a branding and product re-do, which among other things will bring in new 4K (Ultra HD) supporting TV kit, a better broadband router (Sky Q Hub), WiFi signal boosting and the ability to wireless stream / share content around the home to watch on other TVs. Today’s results also confirm a 9th February 2016 launch, although the proposition will cost extra and that could be a tough sell for an already pricey TV service (see update below).

Sadly there’s still no confirmation of whether existing Sky Broadband customers will be offered an upgrade to the new Sky Q Hub, which Sky might wish to do given that their existing Sky Hub kit is now so ridiculously out of date.

Jeremy Darroch, Sky’s Group CEO, said:

“We have had another very strong half as we continue to transform Sky, broadening our business and expanding into new markets and customer segments. This strategy is delivering today and opening up significant growth opportunities for the future. We are pursuing those opportunities with energy and purpose.

Today’s results show that our approach is working and customers are responding in record numbers. Over 337,000 new customers joined Sky in the second quarter and we sold 1.1 million extra paid-for products. This has delivered strong financial performance with revenue growth of 5%, a 12% increase in operating profit and 10% growth in earnings per share.

All of our markets are now clearly benefiting from our leadership in content and innovation and being part of the broader Sky. The launch of Sky Q will redefine our top-end TV experience and extend our market-leading portfolio of products to serve the needs of every customer.

We have also announced that Nick Ferguson, our Chairman since 2012, will step down from the Sky Board at the end of April after 12 years as a Director. The entire Board offers its warmest thanks to Nick for his leadership as Chairman and the major contribution he has made to Sky over many years. We’re delighted that James Murdoch has agreed to step into the role of Chairman. James’ deep knowledge of the international media industry and his passion for supporting Sky’s ongoing success will make an even greater contribution to our business in the future.”

One other change worth noting is that Sky has announced the forthcoming launch (“later this year“) of yet another new NOW TV box (NOWTV Smart Box) for their popular video streaming service, although aside from a new User Interface (UI) and adding access to 60 free-to-air live TV channels it’s not clear what else is changing. The hardware is still using Roku’s kit and will sit “alongside” their basic NOW TV box, which makes us think that it might be based off the more expensive and 4K supporting Roku 4.

Unfortunately Sky’s results were consolidated and dumbed down following last year’s merger with Sky Italia (Italy) and Sky Deutschland (Germany), which means that we don’t actually get a lot of useful detail on their performance or progress. We did however note that their UK Average Revenue Per User (ARPU) remains unchanged on £47 and Churn now stands at 10.2% (up from 9.8% in Q3 2015).

Finally, revenue during H2 2015 (calendar) for the UK and Ireland stood at £4,072m (up 6% on the same time last year) and operating profit delivered a return of £756m (up 16%) over the same period.

UPDATE 10:20am

We asked about the availability of the new Sky Q router to existing Sky Broadband subscribers and have got a reply. Apparently the Sky Q Hub / Router will be free to Sky Q subscribers, but if the customer isn’t ordering Sky Q then they will still be able to purchase a Sky Q router (further information will be available closer to the release date).

UPDATE 10:24am

Sky has just released some early Sky Q pricing details. Apparently the set-up costs for Sky Q will be from just £99 and the typical monthly cost for existing Sky+ customers will be around £12 extra compared with their current Sky+ package  For new customers joining Sky, the ongoing monthly cost for Sky Q will start from £42 Sky Q.