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Last Updated: Wednesday, 31 January 2007, 10:08 GMT
Broadband costs dent BSkyB profit
Broadband internet user
The firm launched its broadband service in July
Satellite television company BSkyB saw profits fall in the six months to 31 December, even as customers increased.

The firm saw profits dip to 356m from 390m a year earlier.

The firm saw 432,000 new pay-TV users in the second quarter but the net rise in subscribers was 183,000, with more customers defecting than forecast.

Yet the firm, which began its broadband service in July and aims to reach 10 million TV subscribers by 2010, said it was still on track to meet this target.

By the start of 2007, BSkyB had 259,000 broadband users, up from 44,000 in September.

But the launch also incurred a loss of 73m, helping to dent the firm's overall profits.

'Credible figures'

"Our focus in the second half of this financial year is to continue to drive customer demand, and accelerate the rate of broadband provisioning to reach 700,000 customers," said James Murdoch, BSkyB chief executive.

BSkyB said the rise in TV subscribers in the past three months marked the strongest quarterly customer growth in six years.

Given the demands of investing in the business, particularly the broadband launch, these are very creditable figures
Richard Hunter, Hargreaves Lansdown Stockbrokers

Some 432,000 new digital-to-home customers joined over the period while Sky Plus box sales tipped beyond two million.

But the churn level - the rate at which TV customers defect - was nearly 1% higher than forecast at 11.9%.

In the short term, the firm expects this defection rate to rise while it shifts away from offering discount packages to focusing on selling its broadband service.

SG Securities analyst Anthony de Larrinaga said this defection rate was of concern.

However, other analysts were more upbeat about the results.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said "given the demands of investing in the business, particularly the broadband launch, these are very creditable figures".

Shares in the firm were 1% lower in early trade following the results.


SEE ALSO
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17 Nov 06 |  Business
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