UPDATE 2-BSkyB boosted by soaring HD demand

* Adds 62,000 net customers in Q3

* HD additions smash forecasts, record revenue per user

* 9-month revenues and operating profit ahead of forecasts

* Shares up 4 percent, top FTSE climber

(Adds further details, quote)

By Kate Holton

LONDON, April 29 (BestGrowthStock) – Huge demand for high definition
services enabled British pay-TV firm BSkyB (BSY.L: ) to add 62,000
net new customers in the third quarter of the year, increase
user loyalty and extract a record amount from each subscriber.

The strong performance followed decent results from pay-TV
rival Virgin Media (VMED.O: ) (VMED.L: ) on Wednesday, which said it
was adding new customers at its fastest rate ever, showing
Britons are more willing to pay for high-quality content.

BSkyB, the dominant pay-TV firm, has also benefited from its
move to offer an increasing number of services, including
broadband, telephony and HD, which has enabled it to draw in
more customers and cross-sell to existing subscribers.

BSkyB also plans to roll out its new 3D TV service to
residential customers later this year, along with a new
video-on-demand offering, for little cost to the company because
both technologies will use Sky’s existing platforms.

“We’ve seen strong demand across the board,” Chief Executive
Jeremy Darroch told reporters on Thursday morning. “We sold
almost 900,000 net additional subscription products as customer
demand continues to rise.

“To put that into perspective, that’s more than 10 times
what we were selling just four years ago.”

The news sent shares in the group up 3.8 percent to 619
pence in early trading, making it the top climber in the FTSE
100.

Sky, which added 428,000 HD subscribers in the three months
to March, said its range of new offerings attracted strong
customer loyalty, with churn, or the percentage of customers who
dropped their subscription, at 9.9 percent.

Analysts had been expecting overall net additions of 60,000,
HD additions of 336,000 and churn of 10.4 percent, according to
a Reuters poll of nine analysts.

The new additions take Sky’s total customer base to 9.77
million homes and the average revenue per user generated each
year was above 500 pounds for the first time.

Darroch said the high definition offering had been the
stand-out performer.

“It has exceeded everyone’s expectations,” he said. “At 30
pence a day it is great value and I think… the potential for
future growth remains very good.”

The group said the strong performance enabled it to post
nine-month revenues up 11 percent at 4.38 billion pounds ($6.64
billion), compared with a Reuters poll expecting 4.37 billion
pounds.

Adjusted operating profit was up 5 percent at 618 million
pounds, despite the investment required for new high definition
boxes.

“The Key Performance Indicators are encouraging considering
strong results from Virgin Media yesterday, indicating that
BSkyB is not feeling the effects of any increased competition in
either pay-TV or broadband,” UBS analyst Polo Tang said in a
note.

The only concern for Sky in the current environment is a
battle it is facing with the regulator, which has ruled that Sky
must sell its prized sporting content to rivals at a heavy
discount to current prices.

Sky has appealed to suspend the decision while it launches a
full appeal and it is waiting for an outcome. [ID:nLDE63M0ZN]

Investing Advice

(Reporting by Kate Holton; Editing by Mike Nesbit)
($1=.6598 pounds)

UPDATE 2-BSkyB boosted by soaring HD demand