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Sky sees broadband profits ahead

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Sky is successfully reducing operating losses at its broadband unit and plans to move into profit after the 2009-10 financial year, it said today.

The company now has 2.2m broadband subscribers, though the rate of net customer additions for its broadband service slowed from 200,000 in its previous financial year to 118,000 in the twelve months to June 30.

Growth in telephony and line rental subscribers, however, accelerated, with 1.85m and 917,000 total subscribers to each product respectively.

"We will also continue to grow our broadband and telephony business and at the same time improve our returns for these products," the company said. "We are well positioned to drive increased take-up as customers respond to the value we offer, with still 7.9 million of our customers yet to choose Sky Broadband and Talk. This, in combination with recent price changes and lower costs from our move to full unbundling from this summer, is expected to deliver lower losses for the current financial year and a move into profit thereafter."

Sky's broadband performance in the current financial year pleased analysts, with UBS noting: "Voice and broadband were ahead of low expectations given Sky did not push broadband ahead of the migration to full unbundling now underway."

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