MultiChoice Group (MCG), the operator of DStv, has published its financial results for the period ended September 2021, showing muted growth in South Africa amid a difficult consumer climate.
MCG said that it increased its 90-day active subscriber base by one million to reach 21.1 million subscribers, split between 12.2 million households (58%) in the Rest of Africa (RoA) and 8.9 million (42%) in South Africa.
This represents 5% year-on-year (YoY) growth, which came primarily from the Rest of Africa, thanks to major sporting events and successful local content productions.
The South African business was impacted by an increasingly difficult consumer climate, with growth rates impacted by rising unemployment levels and a short disruption caused by the tragic July riots in KwaZulu-Natal and Johannesburg, MultiChoice said. In addition, the prior period benefitted from strict lockdown conditions as consumers prioritised video entertainment services, it said.
This resulted in muted 2% subscriber growth YoY or 200,000 subscribers on a 90-day active basis, it said.
Revenue increased 8% to R17.8 billion due to strong advertising revenue growth (R700 million) and a 2% increase in subscription revenues. Trading profit increased 7% to R6.2 billion, despite the cost of major sporting events such as Euro 2020, the British and Irish Lions rugby tour and the Tokyo Olympics, it said.
“Connected Video users on DStv and Showmax continue to grow as online consumption increases,” MultiChoice said. Paying Showmax subscribers increased by 42% YoY, contributing to an increase of 3% in the group’s African OTT market share since December 2020.
Showmax further localised its business by adding local payment channels and enabling local billing in various markets, the group said.
How much they make from each subscriber
MultiChoice’s data for South Africa shows that monthly average revenue per user (ARPU) declined 2% from R278 to R273 – a lower rate than previous periods. It pointed to an improved Premium trend, annual price increases and a partial recovery in commercial subscription revenues.
The subscriber mix shows that around 1.4 million South Africans now subscribe to the Premium segment. By comparison, 2.8 million subscribers fall into the middle-markert segment, and 4.7 million South Africans are signed up on MultiChocie’s cheaper mass-market deals.
MultiChoice said that record viewership was achieved for Euro 2020, the British and Irish Lions and the Tokyo Olympics.
Connected Video users on the DStv app and Showmax continue to grow as online consumption increases. Paying Showmax subscribers were up 42%, with overall online users increasing 33% from the prior period, representing a 3% gain in share of the African OTT market since December 2020, it said.
“Showmax further localised its business by adding local payment channels and enabling local billing in various markets. Local content was stronger than ever with titles like DevilsDorp, Big Brother Naija and Temptation Island driving significant viewership and international interest.
“Showmax Pro continues to improve its customer experience and included the live broadcast of every medal event from the Tokyo Olympics, the Euro 2020, and every game from the English Premier League.”
The group also launched DStv Internet over this period, a plug-and-play fixed wireless LTE solution, which will enable broader access to the group’s online platforms into the future.
Overall group interim revenue increased 3% to R26.8 billion, with the stronger rand reducing the revenue contribution on translation of the RoA and technology segments.
Subscription revenues amounted to R22.1 billion, representing organic growth of 7%. Advertising revenues, which were impacted by Covid-19 in the prior period, rebounded strongly, growing 77% YoY (84% organic).
Operating profit was flat, at R5.85 billion, while group trading profit increased 5% to R6 billion, benefiting from 7% growth in South Africa.
Core headline earnings, the board’s measure of sustainable business performance, was down 26% on the prior period at R2 billion. This reduction in earnings was attributable to higher realised foreign exchange losses caused by the stronger rand relative to the hedged rates of the group’s forward exchange contracts in the South African business during this period, Multichoice said.
Headline earnings per ordinary share declined 38% t0 356 cents per share, and no dividend has been declared based on the interim results.