DStv-owner MultiChoice is gearing up for potential price increases amid mounting financial challenges as the company struggles to maintain a healthy balance sheet.
In an interview with Daily Investor, MultiChoice CFO Tim Jacobs said inflation-level price increases for DStv are necessary to ensure sustainable growth and the continued delivery of high-quality content.
“For many years, especially in South Africa, we have priced our products at less than half of inflation. We’ve been concerned and watching the consumer’s wallet,” Jacobs said.
However, the pay-TV provider is under increased pressure, reflected in the company’s latest results.
MultiChoice’s results for the six months ended 30 September 2023 revealed a 1% drop in revenue to R28.33 billion, with its South African revenue falling by 3%.
It also reported a loss of R911 million, a massive decline from the R55 million profit over the same period last year.
This comes despite the 4.3% subscription fee hike for DStv packages in South Africa that came into effect earlier this year.
“We are actually to the point now, with load-shedding and our revenue number coming under so much pressure, that we have to be a little bit more disciplined about recovering some of our costs,” Jacobs explained.
“The chances are that we’re gonna be looking at inflationary price increases, both in the South African market and the rest of Africa.”
Jacobs said the company would ensure “that we can continue delivering great content to our customers because that’s actually why they’re buying our products”.
In the first six months of the 2024 financial year, DStv has brought customers three World Cups and popular shows like Shaka Ilembe and Big Brother Night.
“But to do that, we have to keep delivering financial results for our investors,” he said. “We’re trying to balance the discipline of being super efficient in our business with the stuff that we can control.”
For example, he said MultiChoice exceeded its cost-saving targets in the first six months of the 2024 financial year.
The company had a full-year target of R800 million and has already delivered R500 million. MultiChoice is not raising the full-year target to R1 billion.
“We also managed to reduce our subsidies by R900 million. Some of that was in South Africa, and some of that was in the rest of Africa,” he said.