Sky shares fall as customer defection rate increases

Sky reported rising customer attrition rates across Europe as the broadcaster curtailed discounts in the UK and Ireland and lost viewers in Italy after failing to secure the rights to Champions League soccer.

The shares fell as much as 5%, the most in 10 weeks.

The 12-month rolling rate at which customers left, known as churn, rose to 10.7% in the UK and Ireland at the end of March, compared with 10.1% a year earlier, Sky said.

In Germany and Austria churn rose to 9.8% and in Italy the rate advanced to 11%.

“Churn has seen a significant pickup in the quarter,” Ian Whittaker, a Liberum analyst in London, said. He also cited increased competition for Sky in Europe as France’s Vivendi expands its pay-TV operations.

Sky, which operates in five European countries, is facing tougher competition from the likes of BT Group, with which it competes for sports rights, and Netflix.

Average revenue per user in the third quarter in the UK and Ireland was £47 (€59.50), while in Germany and Austria it was €35 and in Italy it was €42.

As more carriers provide combined TV, internet and phone bundles, Sky is trying to differentiate itself with services such as Now TV.

Sales increased 5% in currency-adjusted terms to £8.72bn in the nine months ended March 31, the broadcaster said.

* Bloomberg