Sky TV says service callouts doubled to more than 500 a day because of reception issues caused by an ageing satellite, and the company’s chairman has today delivered a blunt message to investors and customers about the ongoing issues: “We fell short.”
The pay-TV operator today delivered its half-year financialresults - reporting a net-loss-after tax of $1.7 million (adjusted to a $10.9m profit) - in what it has variously described as a “challenging” and “difficult” six months, with its attention focused on moving its customers across to a new satellite because of the ailing Optus D2 satellite.
Sky TV has also narrowed and lowered its full-year guidance for revenue, Ebitda and net profit after tax.
Thousands of customers have been left angry and frustrated after losing TV reception for at least several hours a day because of the satellite issues. Those woes have been exacerbated by the non-appearance of technicians for pre-arranged home visits.
“...for those who have been impacted it has been a very frustrating experience, especially for those customers who encountered several rescheduled technician visits without sufficiently clear communication of the rescheduled dates,” Sky chief executive Sophie Moloney said in the company’s half-year report, released today.
“This communication issue was primarily driven by the unplanned uplift in volumes, and credits have been offered to those customers directly impacted.”
She said inbound technical calls into the company’s call centre rose in January by 61%, and service call-outs more than doubled to 500 per day.
The Optus D2 satellite was launched in 2007.
“We fell short of the customer service levels to which we aspire,” Sky chairman Philip Bowman said in his own half-year letter to shareholders.
He indicated Optus would pay full compensation for the costs borne by Sky with the additional callouts.
“We are in constructive discussions [with Optus] to agree additional financial support for the incremental revenue and cost impacts resulting from the events...” he said.
“Whilst we will not have certainty regarding the final cost of the satellite migration project until the transition in early April, management continues to believe given the anticipated level of compensation from Optus that the programme will be largely cash-neutral by the end of FY26.”
Customers are expected to be migrated to the Koreasat6 satellite in April.
Financial results
Sky announced today half-year revenue of $385 million, down 2% on the same period last year.
Bowman said: “The half-year results that we present to you today show a small net loss after tax of $1.7m reflecting the weak economy and the priority that has been placed on Project Migrate at the expense of pursuing other revenue-generating opportunities. This result also includes a number of one-off items within our financial results that mask a more positive underlying performance of the business.”
On an adjusted basis, the company’s net profit after tax was $10.9m. Not included in the adjusted numbers are the satellite migration costs, organisational transformation, accelerated content amortisation and lease modification.
“The adjusting items are predominantly non-cash (in the case of content amortisation) or potentially cash neutral (in the case of satellite migration),” said Bowman. “Some reflect investment that should facilitate improved operational or financial outcomes in future years.”
He said management was confident that the financial results in the second half “will be significantly stronger”.
Moloney said: “At a high level, while the first half revenue miss is inconsistent with our strategic plan, driving improved margins through returning to a growth footing and continuing to manage the cost base remains firmly in focus.”
She described it as a difficult half-year, due to the interruptions caused by the satellite issues and ongoing economic pressures facing businesses and consumers. “While there are some one-off factors impacting our results, the fundamentals of our strategy and progress against our priorities remain a cause for optimism.”
In terms of guidance for the full year, revenue had been lowered to between $755m-$765m - compared with $760m-$785m last August.
Ebitda guidance was now between $145m-$152.5m (previously $150m-$170m). Net after-tax profit guidance was now $35m-$42.5m (previously $40m-$55m).
“We note satellite migration, accelerated amortisation and transformation one-offs are excluded. Capex guidance, which excludes satellite migration spending and associated cash support from Optus that comes through our leasing line, remains unchanged.”
The interim report also reveals Sky now has 465,000 Sky Box and Sky Pod customers - down from 479,000 six months ago and 501,000 a year ago. Sky Box revenue was now $240m, down from $253m on a year ago.
There is one bright note for Sky today. It has announced a new cricket rights deal - reclaiming the sport back from Spark/TVNZ. The new six-year deal kicks in from the summer of 2026/27.
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
