Sky’s warning for ‘09: Fastest growing ISP sets sight on the 83% of its tv subscribers yet to take up Sky’s bundled broadband

Sky unveiled quarterly figures which it suggests makes it the country’s fastest growing broadband provider and warned rivals that it feels there is still much growth yet to come through converting more of its 9.4m satellite television customers to its broadband offering.

The company has maintained fourth place in the UK market (behind BT, Virgin Media and Carphone Warehouse) with its 1.95m broadband subscribers. The figure includes 193,000 net additions in the final quarter of 2008 which was a rise of 2% over the corresponding period in 2007.

The corporation took the opportunity in presenting these net addition figures to point out that only 13% of its television customer base takes its bundled television, Sky Talk and Sky Broadband product. Hence, the company has set a high priority for the first half of the year in marketing this triple play to the 87% of customers who, to date, have only opted for television services. After marketing this offer of a combined service for the first half of the year, the company has revealed it will unbundle the three products once an introductory, offer period is completed.

An official statement accompany the results concluded:

“More TV customers are saving money by switching to Sky for broadband and telephony, with the largest savings available to those who take all three products. As a result, we expect continued growth in customers taking a combined TV, broadband and telephony service, which currently stands at 13%.”

The implicit message of reassurance to the City, and hence the warning to its rivals, is that Sky is seeking growth from within its own customer base and has a direct relationship with more than 7m households which have yet to add broadband to their television subscription.

It is an important point because rivals, particularly TalkTalk, have had to downgrade their growth expectations blaming the economic downturn which has led to fewer people moving home, normally a trigger for seeking a new provider. With its latest figures Sky is reminding rivals, and the City, it is not reliant on the state of the housing market to add the necessary 1m to its near 2m existing broadband customers to overtake TalkTalk and assume third place in the market.

It could instantly leapfrog TalkTalk through the purchase of Tiscali. After TalkTalk pulled out of negotiations for the ISP at the end of last year, claiming the price was far too high, Sky remains the only publicly interested party. There was no mention of how far talks had progressed with Tiscali and industry observers have long pointed out that, in the knowledge the ISP were not going to be bought by a rival, Sky might be best placed concentrating on its own television customer base rather than going through the expense of purchasing and integrating a third party ISP.

Tags: BT, Sky, Sky Broadband, Sky Talk, TalkTalk, Tiscali, Virgin Media