Sky Claims TV Gains But Looks To Mobile As Broadband Growth Slows

Sky’s diversification strategy continues to bear fruit as the launch of Sky Q, continued popularity of the NOW TV over the top (OTT) television service and rising adoption of its broadband products contributed to higher revenues and profits for the UK and Ireland.

UK revenues over the past year reached £8.4 billion, a rise of 7 percent, and profits stood at £1.5 billion, an 11 percent jump. Group revenues, including Germany, Australia and Italy, were up seven percent to £12 billion and profits were up 12 percent to £1.6 billion.

The company has come under pressure from the likes of BT, TalkTalk and even Netflix in recent times as contract free and bundled television services become increasingly popular.

Sky broadband

Sky has responded by launching new flexible video services such as NOW TV, more technically advanced products such as Ultra HD and Sky Q, while also offering free broadband to its TV subscribers.

It added 347,000 new broadband subscribers in its 2016 financial year, 24,000 of which signed up in Q4. However the company might be worried that only 70,000 joined in the second half of the year compared to 277,000 in the first half.

BT has just reported that of the 95,000 entirely new broadband customers that joined the Openreach network in Q4, its retail division snapped up 79 percent. Sky is one of the providers that wants to see the open access network division separated from BT

Sky no longer offers detailed figures, such as copper and fibre connections, but TechWeekEurope estimates its total broadband base now stands at just over six million.

One million of these are broadband-only customers, which Sky admitted to investors are more likely to change providers. Nonetheless, it is happy with the overall performance of the Sky Group.

“With revenue up 7 percent and profits up 12 percent, it’s been another excellent year for Sky. We have broadened our business and expanded into new consumer segments, applying our proven strategy across the group,” said Group CEO Jeremy Darroch.

“The group is leveraging the many opportunities of scale; sharing resources, insights, expertise and innovation. We are investing in a broad range of world class entertainment in every market, distributed across an unrivalled choice of market-leading platforms and supported by excellent service, because these are the things that really matter to customers.”

Sky’s next major foray will be the launch of a mobile virtual network operator (MVNO) on O2’s infrastructure in the UK. This will allow it to offer quad play services comprising landline, broadband, television and mobile services that will allow it to compete with Virgin Media, BT and TalkTalk and encourage customer retention.