{"id":779936,"date":"2024-07-08T07:30:00","date_gmt":"2024-07-08T05:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=779936"},"modified":"2024-07-08T07:30:14","modified_gmt":"2024-07-08T05:30:14","slug":"people-across-south-africa-are-cutting-their-dstv-cord","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/telecommunications\/779936\/people-across-south-africa-are-cutting-their-dstv-cord\/","title":{"rendered":"People across South Africa are cutting their DStv cord"},"content":{"rendered":"\n

South Africans and their African counterparts are dumping DStv as they move to more affordable streaming services.<\/p>\n\n\n\n

MultiChoice\u2019s financial results for the year ended 31 March 2024 showed it lost 9% of its active subscribers over the last year.<\/p>\n\n\n\n

The decline in active subscribers was mainly due to a 13% decline in the Rest of Africa business as mass-market customers dumped DStv.<\/p>\n\n\n\n

MultiChoice blamed tough economic conditions, where households prioritise basic necessities over entertainment, for the decline.<\/p>\n\n\n\n

In South Africa, DStv subscribers declined by 5%. The broadcaster also blamed tough trading conditions for the drop.<\/p>\n\n\n\n

\u201cThe South African economy continues to endure severe economic pressure, with consumers under financial distress due to high inflation and interest rates,\u201d it said.<\/p>\n\n\n\n

\u201cConsistent load-shedding through the year has created an environment where customers without backup power were reluctant to subscribe.\u201d<\/p>\n\n\n\n

MultiChoice said households did not want to pay for DStv because they were unsure if they could watch TV during power cuts.<\/p>\n\n\n\n

\u201cThe net effect was increased pressure on subscriber numbers, activity and viewership, with active subscribers down 5% to 7.6 million at year-end,\u201d it said.<\/p>\n\n\n\n

It explained that Premium and Compact Plus DStv packages declined by 8%. Premium bouquets were more stable than the Compact Plus offering.<\/p>\n\n\n\n

This was due to focused retention efforts and the progression of the Premium base towards a more stable core cohort of subscribers.<\/p>\n\n\n\n

The Compact base, like the Compact Plus base, was most exposed to the macroeconomic challenges. As such, it declined by 9%.<\/p>\n\n\n\n

The mass market tier, which traditionally showed strong growth, declined by 2% due to pressure in the Family base.<\/p>\n\n\n\n

The reality is that DStv has become a luxury which many South African and African households are not willing to spend money on.<\/p>\n\n\n\n

Many more affordable entertainment alternatives exist, like Netflix, YouTube, Showmax, and Disney+.<\/p>\n\n\n\n

With increased broadband penetration rates and lower data costs, South Africans are migrating from DStv to these streaming services.<\/p>\n\n\n\n

The chart below, courtesy of The Outlier, shows the decline in DStv subscribers over the last financial year.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

The decline in subscribers shown in financial results<\/strong><\/p>\n\n\n\n

The decline in DStv subscribers, which generate by far the most revenue for the company, filtered down to MultiChoice\u2019s financial results.<\/p>\n\n\n\n

Its latest financial statements showed it made a R4.1 billion loss and has become technically insolvent.<\/p>\n\n\n\n

Foreign exchange headwinds and a lower subscriber base combined to result in a 5% net decline in group revenues to R56 billion.<\/p>\n\n\n\n

Weaker subscriber trends and foreign exchange pressures affected group trading profit, down 21% to R7.9 billion.<\/p>\n\n\n\n

MultiChoice\u2019s loss for the year increased from R2.9 billion to R4.1 billion \u2013 a 42% decline. It is its worst performance on record.<\/p>\n\n\n\n

Even more concerning is that the DStv owner has become technically insolvent. Total assets declined from R47.6 billion to R43.9 billion, while liabilities increased to around R45 billion.<\/p>\n\n\n\n

This leaves MultiChoice with a negative equity of R1.068 billion, which means it is technically insolvent.<\/p>\n\n\n\n

Simply put, MultiChoice cannot settle all its liabilities if all its assets are liquidated. This is a dismal state for a company.<\/p>\n\n\n\n

Wayne McCurrie from FNB Wealth and Investments described MultiChoice\u2019s latest results as truly awful.<\/p>\n\n\n\n

He said the only saving grace for MultiChoice\u2019s share price was the Canal+ offer of R125 per share to acquire the company.<\/p>\n\n\n\n

However, analysts warned that the deal would face many hurdles, including approval from the Independent Communications Authority of South Africa (ICASA) and the Competition Commission.<\/p>\n\n\n\n

Therefore, it is not certain that the deal will go through. This poses a significant downside risk to current shareholders.<\/p>\n\n\n\n

Shane Watkins from All Weather Capital expects the share price to drop to below R60 if the deal does not happen.<\/p>\n\n\n\n

McCurrie is even more bearish, saying the share can go to R40 or even R30 if there is no Canal+ deal.<\/p>\n\n\n\n

Watkins added that unless MultiChoice is bought by Canal+ or dramatically improves its operations, it will need to raise capital through a rights issue.<\/p>\n\n\n\n

\n\n\n\n

Read: Vodacom CEO scores R61 million payday<\/a><\/strong><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africans and their African counterparts are dumping DStv as they move to more affordable streaming services.<\/p>\n","protected":false},"author":10,"featured_media":694107,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[78,1253],"class_list":["post-779936","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-telecommunications","tag-dstv","tag-multichoice"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/779936","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=779936"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/779936\/revisions"}],"predecessor-version":[{"id":781286,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/779936\/revisions\/781286"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/694107"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=779936"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=779936"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=779936"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}