Multichoice is bleeding premium subscribers

 ·10 Nov 2022

DStv operator Multichoice has published its interim results for the six months ending 30 September 2022.

The group reported group revenue up 7% to R28.65 billion for the period, with operating profits up 6% to R6.2 billion.

However, it posted a headline loss of R248 million – loss per share of 60 cents – owing to net foreign exchange translation losses of about R3 billion attributable to the weaker rand.

The group’s earnings and cash flows for the interim period were also adversely impacted by an outsized investment in decoders ahead of the upcoming 2022 FIFA World Cup, it said.

“This investment supports the anticipated subscriber growth opportunity around the FWC while at the same time mitigating the growing risk of supply chain disruptions from global silicon chip shortages.

“SuperSport will be the only platform where customers across the group’s 50 markets can watch all 64 matches live and in a suitable time zone for African viewers. This working capital investment increased decoder subsidies and reduced group trading profit by R700 million and free cash flow by R800 million, primarily in the Rest of Africa,” it said.

Core headline earnings, which Multichoice says is more reflecting of the core business, increased 2% to R2.0 billion. This was mainly attributable to the reduction in losses in the Rest of Africa and positive foreign exchange movements, it said.

No dividend was declared.

South Africa performance

Multichoice said that its South African operations saw further growth in the mass market segment, but this was largely at the cost of premium and middle-market subscribers.

It reported 9.1 million 90-day active subscribers in the country, up 3% from last year.

However, it noted that the middle market was under pressure, as subscribers in this segment are most impacted by the negative economic environment, including high unemployment rates, consumer indebtedness, rising inflation and interest rates.

“Frequent load-shedding negatively impacted active subscriber numbers towards the end of September,” it said.

This resulted in a drop in premium subscribers in the interim period, with a slight recovery in the last quarter.

The group noted that while the premium segment continues to drop, the exodus has decelerated.

Overall, the group now has approximately 1.3 million subscribers (-3%), 2.7 million middle-market accounts (-4%) and 5.1 million mass market accounts (+9%)

Revenue in South Africa decreased 2% to R17.4b billion, mainly due to a weaker-than-normal Q1 when the impact of the end of the football season was exacerbated by an extremely challenging consumer climate.

“Since July, revenue run rates have improved and are now exceeding comparable prior periods on a monthly basis.”

Monthly average revenue per user (ARPU) declined 4% from R273 to R261, reflecting the ongoing shift to the mass market and the fact that subscriber growth was more weighted towards the latter part of the reporting period.

The group said that it is continuing to focus on value-added services, including insurance, which grew to 2.6 million customers during the first half of the year – up 19% – as well as DStv Internet, which gained further traction.

Multichoice said that for the rest of the year it will focus on the FIFA World Cup broadcasts while also expanding its value-add portfolio with products such as emergency medical and security services offered through the recently acquired Namola platform and offering cybersecurity and connected transport solutions through Irdeto.

Read: Trouble for Multichoice

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