RugbyPass inks NZR deal, page-13

Hi@Fidosnos

Not sure I qualify as an 'expert' but certainly a very interested party!

With regards to broadband...one of the problems Sky has faced in the last 5 years is the high churn rates for their Sky Box customers (satellite). The customers pay on average NZ$80/month (after Covid adjustments) - and so are very valuable to keep.

Sky have made a lot of positive moves more recently and we have seen the churn drop. Improving Sky GO as a companion app that is 'free' for Sky Box customers is an example of a move that has been very popular. However, more is still needed.

Broadband is long overdue in my view as the service complements the content business (our core competency) very well. High speed internet at attractive price points is a great way to reward our customers. The plan is to first offer broadband as a bundle with Sky Box customers...and then start offering NEON/Sky Sport NOW bundles later on.

I am not sure if Sky will initially use broadband as a loss leader to retain their most profitable Sky Box customers - but they might.

I know that Chorus wholesale 1Gbs fibre for $56/month. Sky was originally going to partner with Feenix Communications however Vocus managed to put a compelling case for Sky to switch to them at the 11th hour. So I imagine Vocus have put together an attractive package for Sky - and Vocus have a reasonably extensive fibre network in their own right.

Anyway, let's just say Vocus charge Sky $65/month. Well, even if Sky charged $70/month... then the average Sky Box customer would pay $150/month for super fast broadband and their existing Sky content. Definitely cheaper than their existing setup whereby they probably pay $85+ for 100Mbs.

Sky may go even sharper on the pricing initially to attract Sky Broadband customers.

As Sky deepen their relationship with their customers by rewarding their loyalty with cheaper broadband it becomes less likely for the customer to cancel their Sky sub. Their is a 'hassle' factor whereby if you cancel Sky and lose your broadband (Sky will not offer broadband as a standalone I don't believe) then you have to contact another ISP to get a new connection etc. So one would expect churn rates to drop over time.

I don't think Sky think they will make zillions of dollars of profit from the broadband component in and of itself... it is the bundle that becomes more profitable over time.