DStv owner closing the taps

DStv-owner Multichoice is significantly cutting costs in South Africa, even if its stated R3.7 billion in savings raises eyebrows.

The group declared a profit of R1.8 billion in the financial year ended 31 March 2025, which marked a massive improvement from the losses of R2.9 billion and R4 billion in 2023 and 2024, respectively.

Several elements returned the broadcaster and streamer to a favourable position, including billions of rands in cost savings and a stabilisation in currencies from the rand’s appreciation against the dollar.

The group also got a boost from selling 60% of its shareholding in its insurance business (NMSIS) to Sanlam, which helped push it into profit.

A standout in the results was Multichoice achieving cost savings of R3.7 billion over the financial year, well ahead of its initial target of R2 billion.

However, when BusinessTech analysed the income statement, only a much lower figure of around R1.5 billion in cost savings could be tallied.

This included savings of R300 million in the cost of providing services and the sale of goods, as well as a R1.2 billion decrease in selling, general and administrative costs.

This left questions over where the other R2.5 billion in stated cost savings were found.

Multichoice CFO Tim Jacobs explained that the group looks at two types of costs in its base: realised costs and unavoidable costs.

Unavoidable costs are those that the business simply cannot cut in the normal scope of operations, such as essential reinvestment into the business

Realised costs and associated savings are those within the company’s control, which could include renogiations with stakeholders and what content it purchases from distributors.

Jacobs said that Multichoice essentially refers to cost savings of R3.7 billion as realised savings, and not an absolute saving on costs as derived from its income statement.

He added that the second half of the financial year was also better for the group on this metric, where it saved R2.4 billion from the overall R3.7 billion figure.

The group’s results showed that a large amount of its realised savings came from content, accounting for 42% of the total savings.

Other saving areas came from its contract renegotiation, sales and marketing, subsidies, as well as technology and transmission.

Although some may prefer to use the income statement to see the group’s cost management, savings of either R1.5 billion or R3.7 billion still highlight a company that is tightening the tap on spending.

No longer technically insolvent

The return to profit also saw a return to positive equity, with the company no longer technically insolvent.

A company is technically insolvent when its liabilities outweigh its assets, which means that it cannot cover its debts if liquidated.

While technical insolvency does not mean a company is bankrupt, it does show an increased likelihood that it will head in that direction, if left uncheked.

As reported by MyBroadband, Multichoice returned to a positive equity position over the past year, Although its assets decreased over the period, its liabilities decreased more.

Importantly, the group saw improvements in its lease liabilities, long-term loans, and tax liabilities over the financial year.

Regarding long-term loans, the group made an early repayment of R927 million on the R12 billion syndicated term loan concluded in the 2023 financial year.

The R1.2 billion in after-tax upfront proceeds from the NMSIS sale allowed for the reduction in the loan.

The group reported a 10.5% decrease in assets, mainly due to a 17.6% drop in its current assets.

The most significant contributors were decreased programme and film rights, which could be seen in the drop in content costs, and a reduction in cash and cash equivalents.

Regarding liquidity, it holds R5.1 billion in cash and cash equivalents, and retains access to R3.0 billion in undrawn general borrowing facilities.