MultiChoice Reports Resilient FY 2024 Performance as Nigeria Operations Weigh on Earnings

MultiChoice Reports Resilient FY 2024 Performance as Nigeria Operations Weigh on Earnings

MultiChoice Group demonstrated resilient operational performance for the year ended March 2024 (FY2024), delivering a 26% trading profit margin in South Africa, while the Rest of Africa operations and Nigeria’s challenging macro-economic conditions, weighed on earnings.

Clear strategic milestones were reached, with the group successfully launching Showmax 2.0, SuperSportBet and Moment, all of which are now revenue-generating and supporting the group’s future growth prospects.

“Four years after setting out a clear strategy of building Africa’s entertainment platform of choice and investing in services to support a broader ecosystem, our three core segments are now fully operational: video entertainment, interactive entertainment and fintech. Our focus now shifts to building on these solid foundations to drive growth in these new areas, and on further enhancing business efficiency across our operations.

While we are not alone in feeling the challenges of a weak consumer environment, I am proud of the speed and effectiveness of the team in implementing strategic actions to retain customers, safeguard cash generation and drive costs savings which surpassed our targets. It is the strength of this team, the quality of the underlying business and the clarity of our strategy which underpins my confidence in delivering on our potential,” said Calvo Mawela, MultiChoice Group CEO.

Some key points for the past financial year:

Subscriber base: Given the challenging consumer environment, overall active subscribers declined by 9%. This was mainly due to a 13% decline in the Rest of Africa business, with Nigeria, Angola and Zambia most affected, while the South African business was more resilient, declining by only 5%.

Group revenue: increased by 3% on an organic basis. However, due to weaker local currencies and consumer pressure, reported Group revenue declined by 5% to ZAR56.0bn.

Subscription revenues: grew by 2% on an organic basis. However, on a reported basis, subscription revenues declined by 7% due to a weaker Naira.

Group trading profit: increased 24% on an organic basis, despite the additional ZAR1.4bn investment in Showmax to drive future growth. After factoring in the ZAR4.5bn impact related to foreign exchange weakness, reported trading profit declined by 21% to ZAR7.9bn.

Positive operating leverage: Given the positive impact of the lower expenditure (including ZAR1.9bn in cost savings and ZAR1.5bn in reduced decoder subsidies), the group achieved positive operating leverage of 4.3% (i.e. a 3.3% organic revenue increase against a 1% organic reduction in operating expenses).

Adjusted core headline earnings: Higher realised hedging gains and benefits from a narrower gap between official and parallel Naira rate, was more than offset by the weaker trading profitability, resulting in adjusted core headline earnings (which now includes losses on cash remittances after tax and minorities) decreasing by 20% to ZAR1.3bn.

Free cash flow: amounted to ZAR589m, impacted by lower profitability and the  ZAR1.7bn in Showmax platform payments.

Retained cash and cash equivalents: 3bn in cash (before short-term commitments) and access to ZAR4.1bn in undrawn borrowing facilities provides significant headroom and flexibility to fund opportunities.

MultiChoice is by far the largest producer of original content on the African continent. In FY24, the group again produced over 6 500 hours of local content and its local content library now has more than 84,000 hours of content, a 12% increase YoY.

Rest of Africa Pay-TV (MultiChoice Africa)

The business in the Rest of Africa faced the toughest macro-economic conditions in its core markets with high, double-digit inflation and extreme depreciation of local currencies, (especially in Nigeria, Angola, Kenya and Zambia) which impacted USD revenues by 32%.

The active subscriber base declined to 8.1m, but effective retention efforts contributed to an improved subscriber mix.

Due to the challenging market dynamics, the short-term focus of this business shifted from subscriber growth to safeguard profitability and cash flows. Several cost-saving initiatives were implemented, including scaling back significantly on decoder subsidies (-46% YoY or ZAR1.3bn), and reducing SG&A costs by ZAR500m. These interventions enabled the Rest of Africa business to increase trading profit by 48% YoY to ZAR1.3bn.

MultiChoice Group (MCG), listed on the Johannesburg Stock Exchange (JSE), is a leading provider of entertainment and related consumer services, with an expanding ecosystem, underpinned by scalable technologies, and a track record now spanning almost 40 years. MCG provides video entertainment products and services through its linear and streaming platforms to 23.5m households across 50 countries on the African continent.