SKY PLC (LON:SKY) (LSE:SKY.L) has released H1 results to the stock market for the period to 31 December 2016. It has registered faster customer growth than last year, with sector leading revenue growth across all markets.
Revenue has increased 12% to £6.4 billion; up 6% on a constant forex basis. Operating profit of £679 million is after absorbing a £314 million step up in Premier League costs. EPS of 28.3p is 5% behind H1 2015’s numbers.
Progress has been made on SKY’s strategy for growth. It launched Sky Mobile in the UK, as well as its next generation box – Sky+Pro – in Germany and Austria, and Sky Adsmart in Italy. Its run rate synergy target of £200 million was achieved earlier than expected, with further efficiency plans underway. There was also a record demand viewing of 2 billion streams and downloads in H1.
In the last three months SKY’s share price has increased by 25%. This is ahead of TMT peers such as Vodafone Group plc (LON:VOD) (LSE:VOD.L), BT Group plc (LON:BT.A) (LSEBT.A.L), ITV plc (LON:ITV) (LSE:ITV.L) and Talktalk Telecom Group PLC (LON:TALK) (LSE:TALK.L). Vodafone’s shares are down 15%, Talktalk’s stock price is 23% lower, BT’s shares have fallen by 21% and ITV’s stock is 23% higher.
In my view, SKY has performed well in a tough H1 and this should provide its investors with encouragement. I feel there is good value available elsewhere within the sector, since SKY is expected to be acquired in the near future.
Therefore, Vodafone could be a stock for investors to look at, since I feel its investment in infrastructure could differentiate it versus peers. BT’s profit warning this week could present an opportunity, but I feel the Italian investigation could run for a while and dampen its share price performance. However, with the lines within the TMT sector being blurred due to diversification, I think the segment is an exciting place to invest for the long term.