New customer additions for the quarter totalled 242,000, up 70% year-on-year and ahead of consensus at 178,000. The company also flags the highest third quarter growth in 11 years in the UK and Ireland and there's also a robust contribution from the European businesses acquired in 2014.
Record growth was recorded in Germany and Austria with the best third quarter performance for three years achieved in Italy. This translates into strong numbers with operating profit for the nine months to 31 March up 20% to £1.03 billion. So why are some analysts unconvinced?
Liberum's Ian Whittaker concedes that 'Q3 reads very well' but adds there are 'questions on the details'. Reiterating his 'sell' advice and very bearish 530p price target he notes changes to the way key performance indicators (KPIs) are measured means it is difficult to assess the quality of the new customers added, asking whether traditional pay-TV subscribers are being replaced with users of the video-on-demand Now TV service.
Whittaker highlights the fact that ARPU (average revenue per user) is up only £1 in the UK and Ireland over the last seven quarters to £47, is flat in Italy over the same time frame at €43 and is down €1 in Germany and Austria at €35 arguing this could be a sign 'the quality of the subscriber base is under pressure'. Investec's Steve Liechti retains a 'reduce' rating on the shares and adds this is 'based on increasing competitive pressures in a consolidating industry with cost pressures a drag'.