British Sky Broadcasting Group Plc’s first-quarter revenue beat estimates as the U.K.’s largest pay-TV provider signed more broadband customers in the face of greater competition from BT Group Plc.
Sales rose 7.5 percent to 1.84 billion pounds ($2.94 billion), the Isleworth, England-based company said in a statement today. That exceeded the 1.82 billion-pound average estimate of analysts surveyed by Bloomberg. The stock climbed as much as 5.3 percent, the biggest advance since November.
BSkyB, about 39 percent owned by Rupert Murdoch’s 21st Century Fox, signed 111,000 net new broadband customers in the period and the number of Sky+HD boxes grew by about 50,000 a week. BT, the biggest fixed-line phone company in the U.K., began offering new premium sports channels free of charge to paying broadband customers as of Aug. 1.
“The two standout factors for us were the strong broadband additions and progress in connected services,” Paul Richards, an analyst at Numis Securities Ltd. in London, wrote in a note on BSkyB’s results. “In the first quarter of increased competition from BT, Sky has reported 111,000 broadband additions, not just ahead of our 75,000 forecast but also ahead of the 102,000 last year.”
Richards has an add recommendation on BSkyB shares with a price target of 1,014 pence.
The stock rose 4.7 percent to 919.5 pence at 9:41 a.m. in London trading. That took the advance to 20 percent this year, giving the company a market value of 14.6 billion pounds.
“We are making excellent progress against the plan we set out in July to accelerate growth and returns from new services,” Chief Executive Officer Jeremy Darroch said in the statement.
Adjusted operating profit fell 8 percent to 285 million pounds, in line with company expectations, as BSkyB invested in new services and paid higher costs to air English Premier League soccer matches. Programming expenses rose 6 percent, including payments for the Premier League and original TV production.
There was an increase of more than 800,000 paid-for subscription products in the period -- from broadband and TV to Internet streaming and telephony -- a 50 percent rise year-on-year. Average revenue per user climbed 17 pounds to 559 pounds and BSkyB had 11.2 million retail customers at the end of the quarter.