Sky churns its way to the top

Following today’s results from BSkyB for the nine months to 31 March 2007, Steve Weller, Head of Communications Services at independent price comparison and switching service uSwitch.com, comments:

“We predicted last November that Sky could potentially gain one million broadband customers by the end of 2007 and, from the growth we have seen this quarter, they are well on track to achieve this.

“It’s particularly interesting to see a 60% climb in telephony customers over the last quarter with 44,000 new additions each month accompanying the impressive growth of nearly 88,000 broadband customers. This demonstrates that consumers are prepared to take up bundled deals to get better value. With two out of three households, or 16 million, now signed up to a broadband bundle and a further quarter planning to do so within the year, these numbers could continue to soar.”

Weller continues: “However, today’s results show that Sky’s churn has crept up over the last six months, moving away from the 10% target to 11.8% in September, 11.9% in December and now 13.7%. This latest increase could be a direct result of the aggressive Virgin Media launch in February, which may have lured some of Sky’s loyal TV customer base. Helped by a hefty marketing spend of £546 million, Sky will continue to combat this.

“In addition to maintaining its marketing might in the battle against Virgin Media, it appears that there are some internal problems that Sky needs to address. Sky claims that 90% of new broadband customers are connected within 15 days, yet with 20,000 new broadband connections every week this leaves two thousand customers having to wait more than 15 days for their service.”