MultiChoice reports R50 billion revenue in maiden results

MultiChoice on Tuesday reported a 6% rise in revenue to R50.1 billion, in its maiden results for the year ended March 2019.

The pay-TV company listed on the JSE in February following a spin-off by technology giant Naspers.

MultiChoice reported a 12% increase in its subscriber base to 15.1 million, while trading profit climbed 11% (or 27% organically) to R7 billion.

This was underpinned by solid subscriber growth, as well as an ongoing focus on cost containment, the group said. Core headline earnings, the board’s measure of sustainable business performance, was up 10% to R1.8 billion and consolidated free cash flow doubled to R3.3 billion.

This year also marks the first time that the Rest of Africa (RoA) subscriber base of 7.7 million exceeded the 7.4 million households in South Africa, it said.

Sustained efforts to grow the Connected Video segment and position the business for the future, resulted in good uptake in Showmax and DStv Now services – as a result, online [OTT] subscribers doubled year-on-year (YoY), MultiChoice said.

“Our growth is exceptionally pleasing, especially in the current economic climate, and a clear indication that our strategy is working. We continue to believe in the growing appetite for video entertainment across the African continent,” said Calvo Mawela, MultiChoice group chief executive officer.

Strong customer growth resulted in subscription revenues increasing 7% YoY (8% organically) to R41.2 billion. This represents an acceleration in growth from previous years, driven by the continued success of the group’s value strategy in RoA and a healthy contribution from South Africa.

As part of an ongoing cost optimisation programme, a further R1.3 billion in costs were removed during the year.

As a result, overall costs were contained at an increase of 5% (2% organic) and the group achieved its target of keeping the growth in costs below revenue growth.

Capital expenditure of R1.0 billion increased marginally YoY due to additional investments in information technology infrastructure to improve customer experience, as well as the renewal of our digital terrestrial television (DTT) licence in Nigeria.

“Our strong balance sheet positions us well for the future. It provides financial flexibility to fund our business plan and the agility to enhance returns to shareholders,” said Mawela.

South Africa

MultiChoice said that the South African business delivered solid subscriber growth of 8% YoY, or 0.5 million subscribers.

The segment generated revenue of R33.7 billion, up 3% (4% organic) on the back of healthy subscriber growth in the mass market and despite absorbing the recent 1% VAT increase by not passing it onto customers.

“The premium segment remained under pressure due to the tougher economic conditions,” it said.

Trading profit was in line with the prior year at R10.2 billion, while the trading margin remained relatively stable at 30%.

Product and service enhancements during the year include expanded content offerings in select bouquets and the launch of the a new Explora PVR, the media giant said.

In the year ahead, MultiChoice said it will continue its focus on scaling its video entertainment services across the continent, mainly in the middle and mass markets.

“As the leading video entertainment group on the continent, our strategy is to leverage a unique African growth opportunity to deliver attractive returns to shareholders.

“We believe the three pillars that are key to this are driving an ongoing turnaround in RoA, generating strong cash flows and maintaining balance sheet flexibility to grow our business. We believe we are very well positioned to deliver on all of these,” said Mawela.

No dividend is being declared for FY2019, however, the group said it remains on track to declare a dividend of R2.5 billion – or 569 cents per share – for FY2020.

Read: MultiChoice reports ‘solid’ subscriber growth for DStv

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MultiChoice reports R50 billion revenue in maiden results