Pressure and problems that have seen an exodus of customers and earnings cut at MultiChoice continue to loom large, the group admits in its latest update.
Africa’s largest pay-TV company, which is the subject of a takeover bid by French broadcaster Canal+, has spent the past year fighting headwinds that have battered the business.
These range from a cost-of-living crisis that has seen households cut their entertainment budgets to those same inflationary pressures pushing up operating costs across its 50 markets, as well as shifting consumer preferences towards alternatives such as gaming and social media.
The company has gone from having more than 23-million subscribers to 19.3-million in less than two years.
DStv’s parent company said the situation had not improved.
“The group has continued to experience pressure, as household spending remained constrained by the ongoing cost-of-living crisis, compounded by elevated inflation and interest rates in many of its markets,” MultiChoice said in a voluntary operational update on Friday.
“This is likely to impact negatively on performance in financial year 2025. The group has returned to a positive equity position, but capital preservation remains a key consideration in the current environment.”
The voluntary update is probably intended to prepare investors for another tough set of financial results for the year to end-March.
At the half-year mark, MultiChoice said “unprecedented foreign-exchange volatility” combined with macroeconomic challenges sent its annual profit, or adjusted earnings per share, nosediving from R1.5bn to R7m.
Subscriber numbers — measured on a 90-day active basis — fell 11% to 19.3-million from 21.7-million in the previous comparable period. In SA, the group has lost 400,000 customers from a year earlier, with the biggest drop being in premium subscribers.
Half-year revenue increased by 4% year on year to R25.4bn on an organic basis, benefiting from price increases and new products. However, on a reported basis, revenue fell 10%, affected by foreign exchange pressures on the rest of Africa business and a stronger rand against the dollar.
“While a decision regarding the MCSA [MultiChoice SA] dividend will be made by the MCSA board in June 2025, Phuthuma Nathi shareholders should be aware that any MCSA financial year 2025 dividend is likely to be significantly lower than prior years,” the group warned.
Phuthuma is said to be one of the most successful BEE schemes in SA, mainly due to the consistent flow of dividends to shareholders. The scheme, which owns 25% of MultiChoice SA, has about 77,000 investors who have received more than R17bn in dividends over the years.
This comes as MultiChoice is in the spotlight after a takeover bid by Canal+, which already owns more than a third of the DStv operator. It wants to buy out the rest of the company at R125 a share.
MultiChoice and its French would-be suitor have extended the date to complete the transaction to October, from April, citing delays in getting approvals from regulators and competition authorities.
The group’s shares closed down 0.81% at R110.60 on Friday.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.