BSkyB H1 underlying profit lower; confident for FY UPDATE

BSkyB H1 underlying profit lower; confident for FY UPDATE

	Published : Wed, 31 Jan 2007 09:15 By : Agencies Print this Story

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LONDON (AFX) - British Sky Broadcasting Group PLC reported an as-expected drop in underlying interim profits, dented in part by the cost of setting up its 'free' high-speed internet service, and predicted that full-year results will meet forecasts.

In the six months to end-Dec, operating profit fell to 395 mln stg, or 336 mln after stripping out exceptional items, from 414 mln last time.

Earnings (as measured by EBITA) were expected to fall to 327 mln stg, according to a consensus of six brokers.

Revenue increased by 10 pct to 2.220 bln stg. Overall, the company signed up 432,000 new customers in the second quarter, which it claimed to be the highest in six years.

The group said 149,000 new customers have taken up its broadband offer in the second quarter, taking customer numbers to 193,000. Analysts were expecting between 120,000-180,000 new customers to have signed up.

By Jan 28, it had 259,000 broadband customers, with around 20 pct of new to Sky.

The company is hoping the promise of 'free' internet access will boost subscriptions to its mainstay pay-TV business.

Apart from its promotional draw, the lure of a free basic broadband service is designed to lower the number of TV customers switching to cable rival NTL, or cancelling their subscriptions altogether.

However having failed to achieve that objective in the first quarter, the so-called 'churn rate' edged slightly higher again in the second quarter, to 11.9 pct, from 11.8.

BSkyB admitted that the new 'acquisition and retention strategy' will result in a short-term impact on churn over the next one to two quarters, and the group sees net subscriber growth in the region of 90,000 to 100,000 over the next six months.

Still, the roll-out of the broadband network has proceeded ahead of plan, and Sky expects to achieve 70 pct coverage of the UK by the end of June 2007, six months ahead of schedule.

'At the end of our first full quarter as a broadband provider, benefits are starting to flow through the business,' chief executive James Murdoch said in a statement.

'Sky Broadband is attracting new and existing customers with more than two-thirds opting for our faster, paid-for products.

'We remain confident that performance for the full year will be in line with our expectations.'

The company hiked its interim dividend by 20 pct to 6.6 pence.

amy.brown@thomson.com

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