MultiChoice headline loss widens by 137%

Pan-African broadcaster MultiChoice has reported a significant increase in full-year losses, largely attributed to foreign currency exchange rate fluctuations and a drop in subscriber numbers. Tim Jacobs, the Chief Financial Officer of MultiChoice Group, recently discussed the challenging financial period in an interview with CNBC Africa. Jacobs highlighted the tough customer environment characterized by financial strain and affordability concerns. The South Africa business experienced a 5% decline in subscribers, with a slight slowdown in premium subscribers. However, efforts to mitigate losses seemed to be showing signs of progress, with a gradual approach towards stability. The company faced challenges due to factors such as load-shedding and economic pressures, though significant traction was observed during major events like the Rugby World Cup. Amidst the struggles in the traditional television segment, MultiChoice found encouragement in the growth of its streaming service DSDB Stream, which witnessed a 139% increase, with 90% of customers being new additions to the platform. This shift towards streaming, primarily among a younger audience, reflects evolving consumer preferences. Investing in the Showmax business, MultiChoice aims to capitalize on this trend over time. In other African markets, inflation rates soaring to the upper 20s and 30s have presented significant challenges, particularly in countries like Nigeria, Angola, and Ghana. The harsh economic conditions have forced consumers to prioritize basic necessities over discretionary expenses like pay television, leading to a temporary decline in subscriber numbers. Jacobs emphasized the resilience of the African market but acknowledged the need for customers to adapt their spending habits to the new economic reality. Operationally, MultiChoice demonstrated commendable results through stringent cost-cutting measures, saving R1.9 billion in costs with an additional R1.5 billion related to subsidies. Despite an organic performance growth of 24% to R12.4 billion, a substantial foreign exchange loss of R4.5 billion from various African markets resulted in a decrease in reported trading profit. Discussing the specific impact on Nigeria, Jacobs revealed that a significant portion of the foreign exchange loss, exceeding R3.5 billion, stemmed from the Nigerian market. With inflation rates surpassing 30%, price adjustments were made to alleviate the burden on customers. However, the economic turmoil led to a 9% decrease in subscribers in Nigeria, accounting for over a million lost subscribers. Amid debates surrounding the future of television content delivery, Jacobs emphasized the enduring appeal of local content, which constituted 33% of broadcast minutes and garnered 46% of viewership. Acknowledging the global shift towards on-demand content consumption, MultiChoice remains focused on gradual transitions to accommodate changing consumer behaviors while safeguarding against rapid customer attrition. Despite the challenges, sports content continues to be a robust acquisition driver for MultiChoice, with major sporting events bolstering platform engagement. The company's extensive lineup of local and international content serves as a key differentiator in the competitive media landscape. Looking ahead, MultiChoice is navigating the pain of the current financial period by restructuring the business to align with prevailing economic conditions. While addressing consumer affordability remains a longer-term goal, the company is optimistic about future profitability prospects if currency rates stabilize. Regarding the Canal+ acquisition offer, Jacobs confirmed ongoing discussions to finalize the deal, emphasizing the importance of meeting shareholder expectations. MultiChoice's strategic cooperation with Canal+ aims to ensure a mutually beneficial arrangement that aligns with the company's growth objectives. Despite the challenges faced, MultiChoice remains steadfast in its commitment to providing quality content and adapting to evolving market dynamics under the leadership of Tim Jacobs, who continues to steer the company through turbulent financial waters.