MultiChoice profit nosedives with huge decline in subscribers

MultiChoice, once South Africa’s favourite television service, has experienced a drastic decline in the number of subscribers, resulting in its adjusted core headline earnings dropping from R1.5 billion to R7 million.

The group’s interim financial results for the period ended 30 September 2024 reveal that its subscriber base declined by 1.8 million subscribers year-on-year. By end of September, the group’s subscribers sat at 14.9 million, an 11% decline.

MultiChoice has attributed the decline in subscriptions to “unprecedented foreign exchange volatility” and macroeconomic challenges that weighed on customer growth.

Subscribers’ decline in Africa

The group said it lost 15% of subscribers in the rest of Africa, and 5% in South Africa.

“The loss in the rest of Africa has been primarily due to the significant consumer pressure in Nigeria, where inflation has remained above 30% for the majority of the last 12 months and, more recently, due to extreme power disruptions in Zambia.”

A decline in subscribers also resulted in the group’s revenue (on a reported basis) being down by 10%. The group attributed the subscriber weakness to foreign exchange rate pressures which impacted the rest of Africa and the translation effects of a stronger rand against the US dollar.

“However, revenues were up 4% on an organic basis because of the group’s inflationary pricing discipline, revenue growth of new products (insurance and internet) and Irdeto’s external business.”

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Subscribers’ decline in rands

MultiChoice attributed the adjusted core headline earnings’ decline from R1.5 billion in the period before to R7 million in the current period to foreign exchange losses and its investment in Showmax. 

“Group trading profit declined by 46% on the back of the foreign exchange headwinds in the rest of Africa business but a step-up in cost optimisation across the group supported a marginal 1% decline in trading profit on an organic basis.”

MultiChoice said it is facing the “most challenging operating conditions in almost 40 years”, however, it added it has been proactive to generate desired returns in the current economic realities and industry changes.

Addressing the technical insolvency

“Although operating across Africa typically subjects the group to currency moves, abnormal currency weakness over the past 18 months have reduced the group’s profits by close to R7 billion.”

The group said its normal cost savings programme was accelerated, resulting in permanent savings of R1.3 billion over the past six months and an increased target of R2.5 billion for the full year.

“We are making good progress in addressing the technical insolvency that resulted from non-cash accounting entries at the end of the last financial year. We expect to return to a positive net equity position by the end of November this year, supported by a number of developments and initiatives. The group’s liquidity position remains strong, with over R10 billion in total available funds,” said Calvo Mawela, MultiChoice Group CEO.

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Showmax to the rescue

Mawela added that the group is adjusting to pay-TV challenges as streaming services, the rise of social media and changing consumer preference impact the traditional broadcast business.

Showmax has reported 50% growth year-on-year in its paying customer base, excluding discontinued services (Showmax Pro and Showmax diaspora offerings).

“To create sufficient capacity and drive growth, the group stepped-up its investment in this business by an incremental R1.6 billion during the interim period.”

SuperSport

Mawela said the group is committed to delivering content that is loved by its customers. In the past six months, it has produced 2 763 hours of local content, which brings the group’s local content library to 86 215 hours.

“SuperSport reinforced its reputation as a global leader in sport broadcasting with extensive coverage of the Paris 2024 Olympic Games, Euro 2024, and the ICC T20 Men’s World Cup. Over the past six months, SuperSport has broadcast 10 240 live events and provided a total of 21 540 hours of live coverage, a 22% increase YoY.”

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