Bad to worse for Multichoice

Media group Multichoice’s losses have doubled in the last year as the group continues to bleed customers.

In its financial results for 31 March 2024, the group said that it delivered “positive organic revenue growth” of 3% despite the severity of the macro and consumer headwinds impacting the business.

The group also outperformed its cost optimization, delivering R1.9 billion in cost savings against an initial target of R0.8 billion.

Despite the positive spins, however, the group reported a headline loss of R3.038 billion for the year, more than double the headline loss of R1.287 billion recorded in FY23.

In terms of segmental performance, South African trading profit decreased from R9.6 billion to R8.7 billion, while the rest of Africa increased trading profit to R1.3 billion (+48% growth).

However, Showmax posted trading losses of R2.6 billion (FY2023: R1.2 billion), even if it was below the R3 to R4 billion guided range.

Overall, the group’s 9% decline in active customers was primarily due to a 13% drop in the Rest of the African business, with mass-market customers in countries like Nigeria having to prioritise basic necessities over entertainment.

South Africa also showed a 5% decline to 7.6 million customers.

Moreover, the combination of foreign exchange problems and a lower subscriber base means that the group’s revenue dropped by 5% to R56 billion.

These problems also influenced the group’s trading profit, which decreased by 21% to R7.9 billion.

The group’s headline loss per share also doubled (over 100%) from -301 cents per share to -715 cents per share.

Amid Canal+’s proposed takeover of the group, the question of a dividend declaration did not even arise for FY24.

Outlook

The group said it “acted quickly to optimally position the business to weather the foreign exchange crisis that has developed across its core markets while simultaneously ensuring that its long-term strategic initiatives are not compromised”.

In the short term, the group has prioritised cash generation over growth, it said.

“Given ongoing uncertainty around economic recovery across the globe and the group’s operating footprint and the opportunity to further ‘right-size’ the business for a changing consumer environment, the group has accelerated its multi-year cost reduction programme with the target for FY25 increased to R2 billion.”

“The group will also continue its efforts to drive growth in focused areas, notably Showmax, Moment, SuperSportBet, DStv Insurance, DStv Internet and DStv Stream while working hard to retain its DStv and GOtv customers and support their activity rates through FY25.”

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