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Sky bathes in cash - then adds £5bn to its debt mountain

Rising ARPU, churn steady, but broadband still lags

Sky is successfully unbundling itself, or so it seems, and trying to fight off the twin assaults of telco giant BT breaking its live football stronghold in the UK and the emergence of over-the-top players such as Netflix.

For the period covering the six months ended 31 December, the company formerly known as "BSkyB" had an additional 876,000 UK customers than the year before. Moreover, average revenue per user in the UK and Ireland rose from £46 to £47.

Sky enjoyed similar growth in Germany, and held its own in Italy, where it reduced churn.

UK and Ireland churn was steady at 10.5 per cent (9.2 annualised), down from 10.9 per cent, and the lowest since 2003.

However, Sky added 106,000 broadband punters (net), slightly less than BT, one of its main competitors.

Overall revenue was £5.6bn, up five per cent year-on-year.

As a result of buying out its European businesses, however, group debt increased from £1.43bn to £6.26bn. Sky issued £5bn of bonds to pay for the Italian and German operations last year.

Wholesome family entertainment (not), in the shape of Sky's awesome Gomorrah

Sky has turned itself into an OTT player to fend off the threat from players such as Silicon Valley cash sink Netflix, and has unbundled its own programming by creating NOW TV, offering movies, entertainment or sports "passes" on a daily, weekly or monthly basis.

It also bundles the passes with a low cost HDMI box – a rebadged Roku tuner.

However for now, licensing Sky's own content still dwarfs OTT revenue. Wholesale and syndication revenue, including overseas sales of Gomorrah – a grim, must-see drama about the Naples mafia – was £260m in the reporting period. ®

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