Media group Multichoice has posted a staggering headline loss of R1.8 billion for six month period ending 30 September 2024 – extending losses by almost 50% from the same period last year.
Group revenue was down 11% to R24.8 billion, with operating profit down 49% to R2.45 billion—and 1.8 million subscribers called it quits, 400,000 of which were in South Africa.
According to the group, the headline loss comes from “unprecedented foreign exchange pressures and economic challenges in key markets”, which impacted its earnings and dampened subscriber growth.
The group’s revenue decline was mainly impacted by foreign exchange pressures on the rest of Africa’s business and a stronger Rand against the US dollar.
Despite this, the group said it is on track to “right-size” its cost base and grow new revenue streams—looking specifically at future growth in streaming, which is gaining traction at the expense of traditional Pay-TV.
In this line, it reported its Showmax customer base growing 50% year-on-year, and stronger revenue growth in DStv Stream.
It has continued its cost-cutting measures, which have reached R1.3 billion in permanent savings so far, on track to reach the increased full-year target of R2.5 billion.
It said that its negative equity position is also on track to be resolved in November 2024.
“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.
Beyond the reported and salient figures, the Multichoice board prefers to examine its “adjusted” results, which “adjust for the effects of foreign currency and exclude acquisitions and disposals, to better reflect underlying trends and sustainable operational performance.”
Using this metric, the group posits that its revenues increased by 4% YoY to R25.4 billion on an “organic basis”, and its adjusted core headline earnings amounted to R7 million, impacted by foreign exchange losses and the investment in Showmax.
Subscriber numbers
The group’s subscriber base remains under pressure, with around 400,000 customers in South Africa alone cutting their cords.
The group’s subscriber base in South Africa declined by 5% to 7.4 million, from 7.8 million before, with 90-day active subscribers also down by around the same amount (6%).
Multichoice noted that the pressure appears to be easing, given that this is lower than customer declines reported in the second half of FY 2024.
On a year-on-year basis, the group’s linear subscriber base declined by 11% or 1.8 million subscribers to 14.9 million active subscribers, impacted by the challenging macroeconomic conditions that negatively impacted discretionary consumer spend.
The pressure is evident in the middle market and premium segment, where the South African user base declined 5% in each, to 2.1 million and around 1 million customers, respectively.
The premium segment includes DStv Premium and DStv Compact Plus packages; the mid-market segment includes DStv Compact and DStv Commercial packages.
The premium segment, in particular, has seen consistent declines, though Multichoice noted that this appears to be slowing.
User revenue is also under pressure, with blended average revenue per user (ARPU) across the group down 3% to R221, from R229 before. However, it is up slightly in South Africa (+3%) to R289.
Multichoice said that its focus in South Africa is to target customer retention and optimise its efficiencies, which includes improving its streaming, revamping DStv Rewards and pushing a digital migration in terms of customer services.
