ABN Amro has upgraded its rating on satellite broadcaster BSkyB from Add to Hold this morning, saying that it has ‘excellent fundamentals’ which are offset by potential technical and regulatory risks. This, says the broker, positions Sky as an ‘interesting dilemma’.
ABN believes that BSkyB is on schedule to meet its targets of 7 million subscribers by 2003 and average revenue per user (ARPU) of £400 by 2005. However, the broker believes that technical and regulatory risks could cause Sky’s stock to trade at a ‘discount to fair value’. One such regulatory risk is the OFT’s review of Sky’s dominant position in the market (see BSkyB Faces OFT Investigation); it is due to report in September.
By mid-morning today Sky stock was down 12p at 782p.