MultiChoice Faces $225M Loss Amid Plans for Africa’s Business Growth

Africa’s largest pay television company, MultiChoice Group, reported a substantial increase in its annual loss, reaching 4.148 billion rand ($224.87 million) for the fiscal year ending March 2024. This was a significant rise from the previous year’s loss of 2.9 billion rand ($157.21 million). The company attributed this growing deficit primarily to foreign exchange losses in key markets such as Kenya, Nigeria, Zambia, and Angola.

MultiChoice’s financial woes were compounded by increased impairment losses, higher administration expenses, and rising tax burdens, all contributing to the expanded trading loss. The devaluation of local currencies against the US dollar played a major role, with the company noting that currency depreciation in several markets impacted reported trading profits by 4.3 billion rand ($233.11 million). Specific losses included 158 million rand ($8.57 million) from Kenya due to a 17% decline in the shilling, 3.3 billion rand ($178.9 million) from Nigeria following a 50% drop in the naira, 335 million rand ($18.16 million) from Angola with a 41% fall in the Kwanza, and 305 million rand ($16.53 million) from Zambia with a 17% decline in the Kwacha.

To counter these challenges, MultiChoice raised subscription prices twice in Kenya during April and August 2023. Despite these measures, the adverse economic conditions led to a 13% decrease in subscriber numbers in regions outside South Africa, with Nigeria, Angola, and Zambia experiencing the steepest declines.

MultiChoice’s streaming platform, Showmax, saw higher revenues but also faced increased losses due to investments related to its recent relaunch, which included new entertainment packages and improved viewer experiences. This relaunch aimed to compensate for the termination of higher average revenue per user (ARPU) Showmax Pro services.

In response to the declining performance of its traditional pay-TV services, MultiChoice has been diversifying its offerings. The company has ventured into sports betting through its KingMakers division in Nigeria, which saw a 37% increase in users and a 26% rise in revenue in constant currency terms for the year.

Amid these developments, MultiChoice is in the process of being acquired by France’s Groupe Canal+. An independent board, with a review by Standard Bank, deemed Canal+’s offer to purchase the remaining shares of MultiChoice as fair and reasonable. The acquisition is valued at approximately 55 billion rand ($2.98 billion) and is expected to be completed by April 2025.

This strategic move by Canal+ could provide a more stable financial foundation for MultiChoice, allowing it to navigate the economic challenges and continue expanding its diverse range of services, including DStv, Showmax, SuperSport, MNet, and other ventures in medical, security, and cybersecurity fields.

Multichoice Group Explores Growth Strategies for Africa’s Business Sector

South Africa’s entertainment firm, MultiChoice Group, is reevaluating its business strategy for its African operations in light of declining revenues and a shrinking subscriber base. The company’s latest annual report (2023) highlights several challenges, including high inflation, depreciating currencies, and elevated fuel prices across multiple markets, which have pressured households to prioritize basic needs over entertainment expenses.

Moreover, the issue of online piracy, especially illegal streaming of football matches, has significantly impacted the company’s revenue. To address these challenges, MultiChoice is revising its pricing and investment policies, aiming to leverage its strengths in local content and sports to regain market leadership. The group acknowledges the necessity of competitive pricing and affordability of broadband for streaming services and plans to focus on these areas.

In a bid to stabilize its African operations, MultiChoice has set a priority to fund the cash needs of the Rest of Africa segment, with the goal of achieving sustainable, standalone free cash flow in the upcoming year. The Rest of Africa represents a substantial market with an estimated 39 million addressable households, but it is also a complex environment marked by economic volatility and socio-political challenges.

Despite reporting a net loss of R4.14 billion ($227.27 million) for the year ending March 31, 2024, an increase from R2.92 billion ($160.29 million) in 2023, MultiChoice remains committed to its strategic initiatives. The company has entered into a deal to sell its insurance business to Sanlam Ltd for an upfront cash consideration of R1.2 billion ($65.87 million), with an additional performance-based earn-out of up to R1.5 billion ($82.34 million). This move is expected to help sustain its operations and focus on core entertainment offerings.

To counter the challenges and drive growth, MultiChoice is enhancing its digital strategy by doubling its online user base and focusing on delivering value through exclusive local content and sports programming. The company also aims to introduce more affordable, dish-less services to reduce setup costs and improve accessibility.

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