Sky customer growth slows in third quarter

Sky won 177,000 new customers in the three months to March, 160,000 fewer than the previous quarter.

The pay TV and broadband company now has almost 21.7 million retail customers, including 12.3 million in the UK and Ireland.

Maisie Williams plays Arya Stark in Game of Thrones, shown on Sky Atlantic

Revenue rose 5% to £8.7bn for the nine months to March, while operating profit rose 12% to £1.14bn.

The number of customers leaving - the churn rate - rose to 10.7% from 10.1% in the UK as discounting fell.

Churn was steady in Germany at 9.8%, but jumped 1.1 percentage points in Italy to 11%, partly due to the loss of Champions League rights.

Shares fell 5%, or 51p, to £9.76 in afternoon trading in London. Sky's stock is now down about 12% this year.

Analysts fear that Sky's traditional pay TV model could come under increasing pressure from streaming services such as Netflix and BT's rival offering.

There are also concerns about changes to rights to football matches from Germany's Bundesliga, which authorities have said will not go to a single bidder.

Liberium said that Sky would face increasing competition in its European markets from Vivendi. The French media group earlier this month agreed to buy the Italian pay TV assets of Silvio Berlusconi's Mediaset. "We could see these higher churn rates persist as competition intensifies," they said in a note to clients.

However, analysts at Shore Capital were more positive: "Sky's content base and commitment to delivery across multiple platforms and revenue models places it in a strong position."

Jeremy Darroch, Sky chief executive, said it had been a strong quarter, with the company now providing more than 40 million products in the UK and Ireland.

He said early response to the new premium Sky Q box had been pleasing ahead of the first installations in the current quarter.

Total costs rose 4%, with programming up 5%, while net debt rose £700m to £6.3bn.

Average revenue per user was steady at £47 in the UK, €35 in Germany and €42 in Italy. 

Sky, which has 11 million broadband customers in the UK, has been calling for Ofcom to separate BT from its infrastructure arm Openreach. However, in February the regulator stopped short of demanding it be hived off.

The company said on Thursday that "the ball is still in Ofcom's court" regarding Openreach.