UPDATE 2-BSkyB snaps up 'stay at home' customers in recession

* Says customers joining at fastest rate for five years

* ARPU reaches new high of 464 pounds

* Shares up 1.4 percent

(Adds details, quotes, writes through)

By Kate Holton and Paul Sandle

LONDON, July 30 (Reuters) - Britain's dominant pay-TV firm BSkyB (BSY.L) signed up subscribers at the fastest rate for five years this year, luring customers who want to stay home during a recession with high-definition services and strong programming.

BSkyB said it had signed up 124,000 net new customers in the fourth quarter of its financial year, giving it a total of 9.4 million customers, while the amount each user paid annually was at a new high of 464 pounds.

Demand for its new, cheaper high-definition TV service was described as "very high", with 534,000 customers having taken the additional product since January this year.

Analysts had worried that cost conscious customers could drop their Sky service during the recession.

But the group has managed to maintain its strong performance by selling new products to existing customers and signing new subscribers with strong programming such as Premier League soccer and Hollywood movies.

Many of those new customers are thought to be Britons who are looking for TV entertainment and broadband as they spend more time at home to cut spending during the downturn.

"While expectations were high going into the results, key operational metrics were well ahead of even the top of the range forecast," UBS analyst Daniel Kerven said, adding that growth in such tough conditions was testimony to its structural growth.

Churn, or the percentage of customers who left Sky, was broadly level at 9.9 percent, also pleasing analysts.

Sky increased the full-year dividend by 5 percent to 17.6 pence, its fifth successive year of increase.

Shares in the group, which had risen 16 percent in the last two months after an aggressive rival went into administration, were up 1 percent at 524 pence and ahead of the FTSE 100 Index.

Chief Executive Jeremy Darroch told reporters he still expected the consumer environment to remain challenging but said they were well placed as customers stayed at home.

"We've delivered a strong operational and financial performance," he said. "We expect the overall economic backdrop to remain difficult over the next 12 months but we think we're well placed to meet the challenges ahead.

"Almost one in six customers are choosing to take Sky for TV, broadband and talk and there is plenty of opportunity for further growth ahead."

The strong finish to the year gave BSkyB full-year revenues up 7 percent to 5.3 billion pounds ($8.7 billion), in line with analyst expectations, with adjusted operating profit up 4 percent at 780 million pounds. (Reporting by Kate Holton; Editing By Kate Kelland and Lin Noueihed)

($1=.6107 Pound)