VAT rule hits Sky Italia

By Julian Clover | May 7, 2009

January’s doubling of the VAT rate from 10% to 20% was reflected in higher churn at Sky Italia.

The News Corp-owned satcaster said that while the 232,000 gross additions were 25% higher than in the first three months of 2008, higher churn had resulted in a net figure of just 46,000 being added to the subscriber base. News Corp says it expects the churn rate for the year to be in the region of 12%.

Mirroring the experience from elsewhere in the continent, the churn rate for premium customers is some 75% lower than for those on basic deals. 1.2 million of Sky Italia’s 4.8 million subscribers subscribe to one premium service of either an HD, PVR or second receiver, compared to 730,000 one year ago.

Sky Italia reported an operating income of $63 million in its third financial quarter against $97 million one year ago, local currency growth offset by increased expenses.