Sky revenues climb across Europe as it fights to keep UK subscribers

SKY is finding it tougher to hold on to subscribers, as it squeezes them with higher TV bills and abandoned broadband discounts in its battle with BT.

The annual rate of customer attrition in the company’s core UK market, a closely watched source of costs, rose to 11.2pc, up from 9.8pc.

However, Jeremy Darroch, Sky’s chief executive, said that he remained “very happy” with the performance as revenues continued to rise.

Sky shares ended up 1.9pc at 904p yesterday as investors welcomed the better-than-expected revenue figures and a renewed focus on clamping down on costs.

Sky’s total sales across Europe were up 7pc to £12bn. That included breaking the £8bn barrier in the UK for the first time.

Operating profit was flat, however, at £977m, as Sky spent heavily to promote new products such as its latest set-top box, Sky Q. It also invested in connecting a further two million set- top boxes to the internet to deliver ondemand services.

Statutory profits meanwhile fell sharply, as the prior year included oneoff benefits from the sale of Sky’s stakes in ITV and the National Geographic channel. Adjusted operating profits, stripping out amortisation costs as well as the disposals, were up 12pc to £1.5bn.

Sky warned investors that operating profit growth would also be limited next year as it counts the cost of a steep rise in its Premier League rights bill.

Andrew Griffith, Sky’s chief operat- ing officer, pledged a “big year” for cost savings to counter the effect. The company doubled the expected synergies from the integration of Sky Deutschland and Sky Italia to £400m.

Mr Griffith rejected analyst claims that the increase in subscribers leaving was a result of the rise of cheaper streaming services such as Netflix, saying Sky had deliberately allowed discount-seeking customers to leave to protect its margins.

The company hailed progress in its European operations, which lag behind the UK market. Germany delivered its first annual operating profit, while Italy returned to customer growth after five years of struggles in the country’s tough economy.

Mr Darroch said: “Each of our markets is making very strong progress.

“We have broadened our business and expanded into new consumer segments, applying our proven strategy across the group.”

Its next big move in the UK will be the launch of a mobile service, based on the O2 network, to challenge BT’s EE unit.

Dave Lewis, Tesco’s chief executive, is to step down from the Sky board after its annual general meeting this summer.

11.2pc Proportion of customers leaving Sky over the 12-month period, up from 9.8pc in the previous year