MultiChoice Group, Africa’s leading entertainment company has reported huge losses totaling 4.148 billion rand ($224.87 million) for the fiscal year ending March 2024. This is a sharp increase from the 2.9 billion rands ($157.21 million) loss recorded in the previous year.
MultiChoice is a South African media company that boasts a diverse portfolio, including DStv, Showmax, SuperSport, and MNet. The company has also ventured into medical and security services (Namola), cybersecurity (Irdeto) as well as sports betting (BetKing). The group serves 23.5 million customers across 50 markets in sub-Saharan Africa.
Why MultiChoice Group recorded significant losses
MultiChoice attributed its losses to foreign exchange losses in key markets such as Kenya, Nigeria, Zambia, and Angola.
“Currency depreciation against the US dollar in several markets impacted reported trading profit by 4.3 billion rands ($233.11 million) including Kenya ( 158 million rands – $8.57 million) when the shilling declined 17%; Nigeria (3.3 billion rand – $178.9 million) on a 50% decline in official naira,” MultiChoice said.
Additionally, Angola’s Kwanza fell 41%, resulting in a 335 million rand ($18.16 million) loss while Zambia’s Kwacha declined 17 %, leading to a loss of 305 million rand ($16.53 million).
To mitigate the effects of foreign exchange and inflation pressures in Kenya, the multinational company increased prices twice in April and August.
The company also introduced the GOTV Supa Plus as part of their subscription packages to drive upgrades and discourage viewers who were opting out of the service due to the price increases. The Kenyan shilling’s sharp decline reaching a record low of 160.75 against the dollar by January 2024 further compounded these challenges.
High inflation in several other countries saw subscribers discontinue their subscriptions resulting in a 13% drop in subscriber numbers. The steepest declines were recorded in Angola, Nigeria and Zambia.
The South African media firm’s streaming platform, Showmax, which has quickly gained popularity in Africa saw increased revenues. However, this did not translate to profits with the platform recording increased losses.
How MultiChoice plans to reverse its losses
Despite MultiChoice’s revenue and subscriber declines, its CEO, Calvo Mawela is confident that the company can turn things around without having to retrench its staff.
The entertainment company has set a savings target of R2 billion by 2025 to improve its financial position. These savings will be applied across the board, with a focus on big-ticket items such as satellite leases.
Mawela noted that the company was developing digital products that could be layered on its existing pay-TV base for increased revenue.
“Our strategy to grow these additional revenues is no longer only a vision, it is gaining real traction,” Mawela said.
The CEO disclosed that the company would focus on growing the Showmax platform which is on track to achieve $1 billion in revenues in five years.
Canal+, a French media and telecommunications conglomerate, has also demonstrated confidence in the MultiChoice brands stating that it has no plans to change them after taking over the company.
Canal+ and MultiChoicee have been in talks and recently reached an agreement with the former offering to buy out the latter for approximately R35 billion ($1.9 billion).
Peter Takaendesa, the head of equities at Mergence Investment Managers, is convinced that MultiChoice’s new revenue streams are not enough to offset the company’s challenges.
“MultiChoice remains a high fixed cost business and any revenue shortfall amplifies the pressure on profits and cash returns to shareholders,” Takaendesa said.
However, he noted that Canal+’s offer might be the company’s saving grace as it has become the dominant factor driving the share price.
“We think Canal+ was fully aware of these operational headwinds facing the business,” he added.
