The Olympic Games may be over but customers are still signing up for pay-TV broadcaster’s Sky PLC’s (LON:SKY) services.
An update covering the third quarter of 2016 – the first quarter of Sky’s current year – saw the company boasting of good growth in all markets.
More than 100,000 new customers joined Sky, including Italy's highest first fiscal quarter customer growth in four years
Reported revenue in the UK & Ireland rose 5% on a like-for-like (LFL) basis from a year earlier to £2.10bn. Germany & Austria’s revenue rose 9% LFL to £434mln while in Italy revenue rose 4% LFL to £610mln.
Revenue for the whole group rose 5% on a like-for-like basis to £3.15bn and was up 7% year-on-year on a constant currency basis.
“We finished the quarter strongly after a slower start against the backdrop of the Rio Olympics and UEFA Euro 2016. It was also a strong quarter of innovation with the launch of our new streaming service, Sky Ticket, in Germany; Ultra HD in the UK, Ireland, Germany and Austria; and our enhanced mobile TV proposition, Sky Go Extra, in Italy, as we transform all our markets to multi-platform distribution services,” said Jeremy Darroch, the group’s chief executive.
“We are on track financially in a year of investment on screen,” he added.
The shares edged up a halfpenny to 865p in the first hour of trading, despite Shore Capital Markets deciding the shares were now fairly priced, prompting a change in its recommendation to ‘hold’ from ‘buy’.
“We are encouraged by the revenue, headline cost, and operational momentum summarised in this morning’s update, and are positive on Sky’s business model, and track record of growth, innovation and customer focus. We see revenue growth potential from a combination of existing and new customers and a range of new product initiatives going forward and (although some challenges must be overcome) expect further progress by Sky Italia and Sky Deutschland to make a useful contribution to medium-term progress,” said Shore’s Roddy Davidson, before moving on to the “but” moment.
Davidson reckons a valuation of 14.8 times forecast earnings for the current year and a prospective dividend yield of 4.1%" looks fair - particularly ahead of a period of speculation and uncertainty around the next Champions’ League rights auction.”