MultiChoice to reorganise SA entities for Canal+ deal

MultiChoice has begun reorganising the entities it owns and operates in SA to implement the licence and empowerment structure for its takeover by Canal+.

The deal will involve MultiChoice disposing of 26% economic interest in LicenceCo, the licensed broadcasting service provider that contracts with SA subscribers, and 15% economic interest in Orbicom, the licensed signal distributor and holder of electronic communications and radio frequency spectrum licences.

This comes after SA’s Competition Tribunal approved the French media group’s takeover of MultiChoice in July. 

The approval is subject to a number of agreed conditions, including the implementation of the reorganisation. 

To ensure compliance with foreign control restrictions, MultiChoice must undertake a reorganisation of some of its SA operations, which were held through MultiChoice SA, the group said in a note to investors.

“The reorganisation is specifically designed to ensure that the licensed entities within the MultiChoice group remain compliant with foreign control restrictions under the ECA [Electronic Communications Act], thereby preserving the integrity of the company’s broadcasting and signal distribution licences”

In February, the two broadcasters said that MultiChoice Group would be restructured so the current holder of the broadcasting licence in SA and the entity that contracted with SA subscribers, MultiChoice Ltd, or LicenceCo, would be carved out and become an independent entity.

MultiChoice Group’s shareholding in LicenceCo will ultimately give it a 49% economic interest and 20% share of voting rights. The MultiChoice Group will also retain its existing 75% direct interest in MultiChoice SA, which will exclude LicenceCo.

The remainder of the group’s video entertainment assets would remain part of the MultiChoice Group.

LicenceCo will continue to hold the subscription broadcasting licence in SA and contract with MultiChoice’s local subscribers.

It will be majority owned by historically disadvantaged entities — Phuthuma Nathi, which will ultimately hold a 27% economic interest in LicenceCo; two established black-owned and managed companies, Sonja de Bruyn’s Identity Partners Itai Consortium (IPIC) and Sipho Maskeo’s 13th Ave Investments; and a workers’ trust.

To make this happen, the parties entered into transaction agreements on August 1, including various subscription, repurchase and shareholders agreements “to give effect to the reorganisation.”

As part of the transaction, the parties will subscribe for different classes of ordinary shares, each carrying its own economic interest versus voting rights. 

Once complete, voting interests in LicenceCo will be as follows: 

Class A shares are ordinary shares with full economic rights from the outset. Class B and class C shares are notional vendor funded (NVF) shares that entitle the holder to a “trickle” dividend of 20% and 35%, respectively, until the NVF balance is reduced to zero, after which they convert to ordinary shares with full rights.

Phuthuma’s main asset is its 25% holding of MultiChoice’s SA business.

The scheme was created in 2006 when MultiChoice was still a wholly owned subsidiary of Naspers, with an initial public offering (IPO) that year and a second in 2007. The shares began trading publicly in December 2011 and now also trade on the Integrated Exchange (I-Ex), formerly known as the Equity Express Securities Exchange. 

According to the group’s annual financial statements to March 2025, the net asset value of LicenceCo and Orbicom is R11bn and R152m, respectively, while profit after tax for the period stood at R6.534bn and R3.92m, respectively.

gavazam@businesslive.co.za