MultiChoice Group reports resilient performance despite macroeconomic challenges

MultiChoice Group (MCG), Africa’s largest video entertainment company, reported resilient performance in its interim financial results for the first half of FY25, ended 30 September 2024. Despite facing unprecedented foreign exchange volatility and tough macroeconomic conditions, the Group continued to make strategic progress in its core business areas, driving growth in new products and expanding its streaming services.

The challenging operating environment significantly impacted the Group’s financial performance, with foreign exchange losses reducing profits by close to ZAR7 billion. Over the past 18 months, abnormal currency weakness across key African markets eroded the Group’s earnings, while weak consumer spending hampered subscriber growth.

In response, MultiChoice accelerated its cost-saving measures, achieving ZAR1.3 billion in permanent savings in the last six months alone. The company is now targeting total savings of ZAR2.5 billion for the full financial year. CEO Calvo Mawela highlighted the proactive steps taken to adjust to current economic realities, emphasizing that the company is “right-sizing” its business model to navigate industry changes.

“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,” Mawela stated. “We expect to return to a positive net equity position by the end of November, supported by several developments and initiatives. Our liquidity remains strong, with over ZAR10 billion in total available funds.”

Amid global shifts in consumer behavior towards streaming services, MultiChoice’s Showmax platform reported a 50% increase in its paying customer base year-on-year (YoY), reinforcing its position as a leading streaming service in sub-Saharan Africa. The Group invested an additional ZAR1.6 billion in Showmax during the interim period, aimed at enhancing content offerings and supporting growth.

The company also saw substantial growth in its new products. DStv Stream experienced a 71 percent increase in revenue, DStv Internet grew by 85 percent, and DStv Insurance recorded a 31percent rise. KingMakers, MultiChoice’s sports betting business, continued to gain traction in Nigeria, reporting a 53 percent increase in revenue and a 27 percent growth in monthly active users.

MultiChoice reported a 4 percent increase in organic revenues YoY, reaching ZAR25.4 billion, despite a reported revenue decline of 10 percent due to foreign exchange headwinds. The Group’s trading profit before factoring in the investment in Showmax grew by 33 percent, reflecting strong cost optimization efforts. However, after accounting for the ZAR1.6 billion investment in Showmax, the trading profit declined marginally by 1 percent YoY to ZAR5 billion.

Adjusted core headline earnings, a key metric of underlying business performance, amounted to ZAR7 million, impacted by significant foreign exchange losses and investments in Showmax. The Group maintained a positive free cash flow of ZAR0.6 billion, with ZAR5.7 billion retained in cash and cash equivalents. MultiChoice’s liquidity position remains robust, with ZAR4.4 billion in undrawn facilities available

MultiChoice produced 2,763 hours of local content in the first half of FY25, increasing its local content library to over 86,000 hours. SuperSport, the Group’s sports broadcasting arm, delivered extensive coverage of major events including the Paris 2024 Olympic Games, EURO 2024, and the ICC T20 Men’s World Cup. SuperSport also expanded its user base, with the SuperSport Schools app surpassing one million registered users.

The Group’s Rest of Africa segment implemented several measures to improve financial performance, including price adjustments, renegotiation of content deals, and intensified anti-piracy efforts. Irdeto, MultiChoice’s cybersecurity division, reported strong revenue growth, boosted by securing new customers in Asia and expanding managed services.

KingMakers continued to perform well, securing the second-largest market share in Nigeria’s online betting sector. In South Africa, the newly launched SuperSportBet reported a tenfold increase in net gaming revenue over the past nine months. The Group’s digital payment solution, Moment, expanded to 40 African countries, processing USD242 million in total payment volumes.

Looking ahead, MultiChoice remains committed to improving profitability, particularly in its South African operations. The Group plans to streamline its cost base across the Rest of Africa to enhance profitability and will continue to invest in Showmax to solidify its position as the leading streaming service in Africa.

“Our focus extends beyond cost efficiency,” Mawela noted. “We are equally committed to driving new revenue streams and see significant medium to long-term opportunities in video entertainment, particularly in streaming, and in our adjacent new businesses.”

With a strong liquidity position and continued investment in strategic growth initiatives, MultiChoice aims to capitalize on emerging opportunities and reinforce its leadership in Africa’s video entertainment industry.

This comprehensive update reflects MultiChoice Group’s ongoing resilience and strategic focus as it navigates macroeconomic headwinds, positioning itself for future growth in the evolving landscape of video entertainment.