MultiChoice has reported an increase in premium subscribers in the half-year to September 30 as the group battles load-shedding, currency fluctuations and consumer pressure, while revenue, trading profit and core headline earnings also rose.
CEO Calvo Mawela told Business Day he is happy with how the group has performed against its cocktail of challenges.
“For me as a CEO, that’s the test. Are we delivering operationally against what we set for ourselves in terms of growth trajectory? I think the team is delivering against that. However, we got hit by headwinds that we can’t control.”
He said that factors such as the devaluation of the Nigerian naira was bound to hurt business.
Nigeria’s new forex policy, announced in June, is a big departure from the previous regime, which was characterised by multiple exchange rates and tight government controls. Under the new policy, the value of the naira will be determined by market forces, rather than by the central bank. This means that the local currency is now free-floating, and its value can fluctuate based on supply and demand.
The naira has lost about half of its value since the policy came into effect, hurting companies such as MultiChoice and MTN, which have large operations in the West African country. Such companies are also contending with a weaker rand in their home country, making foreign payments more expensive.
And with load-shedding in SA “people can’t watch [TV, and] you’re bound to lose subscribers”.
Strong business
Mawela previously said viewership across the television broadcast sector dropped by as much as 32% during load-shedding. For MultiChoice, it dropped an average of 12%.
“I’m happy with the performance that I’m seeing on an organic basis and I think we still have a strong business,” he said.
Subscriber numbers at the group, which includes DStv, decreased 2% to 21.7-million, mainly due to power cuts in SA and the removal of nonpaying customers. The base of its SA business, which accounts for 40% of customers, declined 5% to 8.6-million, though premium subscribers grew 5% “reflecting a positive trend for the first time in many years.”
The rest of Africa base grew 1% to 13-million, despite the impact of weaker local currencies and consumer pressure.
The group invested substantially in Showmax, its online streaming service that competes with Netflix and Amazon Prime Video, and plans to relaunch it in the second half of the financial year. The investment was R500m more than the previous year, mainly due to dual platform costs that it says will normalise once customers have been migrated.
A new Showmax group was created that is 70% owned by MultiChoice and 30% by Comcast-owned NBCUniversal, and powered by its Peacock technology.
As expenses for the platform are shared proportionally, total additional investment in Showmax stood at about R714m.
Constant currency
Group revenue grew 4% organically to R28.3bn, but was 1% lower on a reported basis due to currency fluctuations and falling overall subscribers. Trading profit increased 18% organically and 10% after accounting for the investment in Showmax. The numbers were, however, affected by foreign exchange headwinds and a lower contribution from SA.
MultiChoice’s organic calculations are done on a constant currency basis, taking out the effects of factors such as currency fluctuations.
The group’s core headline earnings declined 5% to R1.9bn, but increased 25% on an adjusted basis that includes the losses on cash remittances in markets such as Nigeria.
The group’s free cash flow declined 40% to R1.1bn, affected by the pressure on the SA business and the increased investment in Showmax.
No interim dividend was declared but the group said it is confident in its war chest of R14.6bn.
MultiChoice shares were flat on Wednesday, ending the trading session down 0.57% at R67.50. The stock is down 44% so far in 2023.
Correction: November 20 2023
A previous version of this article said an interim dividend of R2.50 per share was declared. This is not the case.
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