BSkyB took a big gamble when it launched into Britain’s ultra-competitive broadband market last summer. Today’s record figures show its thinking — of using broadband to lure in customers to pay-tv and related areas — was spot on.
The group, which is 39.1 per cent owned by News Corporation, parent company of The Times, not only surpassed its target of hitting 700,000 broadband customers by the end of June. The gross number of customer-sign ups across all of the services offered by the satellite operator was 349,000 — the highest quarterly figure since 2001.
Even better, churn — the number of customers cancelling services — fell to 12.1 per cent and average revenue per customer, was up to £412, compared with £406 at the end of March.
Shareholders, some of whom had concerns about the investment required for broadband, are now confident that Sky will be a winner in the fierce battle for the sitting room taking place between communications giants including BT and Carphone Warehouse. The group’s shares are up 30 per cent this year.
The figures meanwhile are a painful reminder of the work yet to be done at Virgin Media, the group’s bitter cable rival.
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There is though a cloud on the horizon — the Competition Commission investigation into Sky’s acquisition of a 17.9 per cent stake in ITV.
As yet the investigation has not proved a distraction for Sky. But the risk remains that the stake could ultimately end in the hands of Virgin Media.
The willingness of Sky to splash out £900 million to snatch the stake from the grasp of Virgin Media last year indicated that that is a prospect it does not take lightly.
To see the ITV stake fall into the hands of Virgin under the hands of a savvy new private-equity owner, would pose even more of a threat.