Why the Sky Network (ASX:SKT) share price will be on watch today

The Sky Network Television Limited (ASX: SKT) share price will be on watch this morning after announcing a positive business update.

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The Sky Network Television Limited (ASX: SKT) share price will be on watch this morning. This comes after the company announced provided a business update in regards to its full year 2021 performance.

At market close yesterday, the Sky Network share price finished the day at 14.5 cents.

Sky upgrades guidance

The Sky share price will be in focus this morning after the company provided investors with a positive update.

According to its release, Sky advised that strong trading conditions have continued to run throughout the second-half of FY21. Management noted that it has diligently implemented cost saving measures as well as seen an uptick in satellite and streaming revenues.

As a result, the company upgraded its guidance again for the full year from its November earnings forecast announcement. The company projects revenue for FY21 to be in the vicinity of $695 million to $715 million. This is an increase on the previous $680 million to $710 million in revenue estimated.

In addition, earnings before tax, interest, depreciation and amortisation (EBITDA) is expected to come between $170 million to $182.5 million. On November forecasts, Sky was anticipating EBITDA to be in the range of $140 million to $155 million.

Net profit after tax (NPAT) is assumed to increase around $37.5 million to $45 million. Originally NPAT planned to lay between $20 million to $30 million.

Capital expenditure is expected to remain unchanged at $45 million to $55 million.

As a whole, Sky revealed that the revised guidance includes the proposed sale of its OSB assets to NEP New Zealand. Indeed, the one off transaction cost is sure to bump up the Sky's coffers. Completion of the deal is currently with New Zealand's government agency, Commerce Commission. It's assumed that the sale process will be given the green light in the near future.

The company is scheduled to release its full year results on 23 February, 2021.

Management commentary

Sky Chief Executive, Sophie Moloney, hailed the continued positive momentum, saying:

It is particularly encouraging to see improvements in our satellite customer loyalty alongside further growth in our streaming revenues. Reducing Sky's ongoing operating costs remains in sharp focus while we continue to deliver the content that our customers value in ways that work for them.

How has the Sky share price performed?

The Sky share price has tumbled over the past 12 months, reflecting losses of almost 80% for shareholders.

The company's shares reached a high of 67 cents this time last year, and has treaded lower ever since.

In March, its shares fell to an all time low of 11.5 cents due to COVID-19 disrupting Sky's revenues and outlook.

Based on the current share price, Sky commands a market capitalisation of roughly $257 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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