With the Rugby World Cup now a memory, Sky is hoping events such as the Olympics will stem the flow of lost customers.

Tens of thousands of Kiwis are switching off Sky Television's satellite service, the company has warned investors.

The warning wiped more than $340 million off the value of the company by mid-afternoon on Friday, with Sky's shares plunging 16 per cent to $4.60.

Sky forecast the number of customers for its core pay-TV service – which is priced from $49.22 a month – would drop by 45,000 in the year to the end of June.

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The fall would be partly compensated for by a 25,000 rise in the number of customers who signed up to its generally lower-cost internet television offerings Neon and FanPass.

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Its total number of subscribers at the end of June would number about 830,000, it said.

Sky boss John Fellet has delivered bad news to investors.

Sky has faced increased competition from other internet television services such as Netflix and Spark's Lightbox service.

A statement from the company said the forecast fall in satellite subscribers was due to a number of factors, but it highlighted the impact of the Rugby World Cup coming to an end, which had impacted "the roll off of subscriber contracts".

First NZ Capital analyst Arie Dekker said the impact on the company would depend in part on whether it was Sky Basic or higher-value customers who were cancelling their subscriptions.

The customer-losses were much larger than Sky had experienced previously, he said.

"They lost 20,000 core subscribers last year and are looking at 45,000 this year. It will certainly be of some concern."

Forsyth Barr analyst Blair Galpin said it appeared Sky had been impacted by dissatisfaction with its "on demand" upgrade which some customers said made its electronic programming guide (EPG) harder to read.

Sky attempted to address that concern with a software update in April.

Both analysts were cautious about commenting on whether the subscriber drop might be the start of a long-term slide.

Sky reiterated its 2016 result would be at the "lower end" of the guidance it provided investors in October and also warned the drop in core subscribers could see its 2017 profit come in below existing analyst forecasts.

But it forecast the customer losses would slow during its next financial year thanks to the Rio Olympics in August and the Lion's Tour of New Zealand in June next year.

Sky chief executive John Fellet challenged the notion that internet television was necessarily less profitable than satellite television when he reported the company's interim financial results in February.

The company's Neon service is priced at $20 a month, but Fellet said transmission costs were cheaper than for satellite television as customers paid for their own internet connections.

Programme makers tend to sell rights to show programmes on satellite television separately to the subscription rights to stream them online, so Sky TV does not have the right to stream all programmes from its satellite channels on Neon.

Sky began letting customers buy online monthly subscriptions to its sport channels through FanPass passes costing $55.99 last year. Day and week passes are also available.

That has effectively "decoupled" its sports programming from Sky Basic for the first time. The passes do not provide access to its "pop-up" satellite sports channels.

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