MultiChoice half-year adjusted core HEPS slump 98%

MultiChoice Group, a leading entertainment company, has reported a challenging first half of the year with a 10% drop in revenue and declines in subscriptions both in South Africa and the rest of Africa. Chief Financial Officer Tim Jacobs attributed these challenges to a weak consumer base and a persistently weak currency environment across many markets. Despite the tough trading environment, Jacobs remains cautiously optimistic about the future, pointing to some positive signs on the horizon. One of the key factors impacting MultiChoice's subscriber base is the affordability issue faced by consumers, particularly in the middle market segment. With a significant portion of disposable income going towards debt payments, many consumers are left with limited discretionary income, making it difficult for them to afford entertainment services like MultiChoice's premium bouquets. The company has observed stability in the premium bouquet segment, but pressure remains in the middle market where consumers are highly indebted. The economic challenges are further exacerbated in specific markets like Nigeria and Zambia, where factors like inflation, fuel hikes, and power outages have significantly impacted subscriber numbers. In Nigeria, economic pressures have led to a 15% drop in subscribers, while Zambia has experienced a more than 20% decline due to frequent power cuts. These two countries account for the majority of the decline in subscriber numbers in the rest of Africa, highlighting the diverse economic conditions MultiChoice operates in. Despite the gradual shift towards alternative content consumption models like over-the-top (OTT) services, Jacobs believes there is still a place for traditional TV viewing, especially in markets like South Africa and the broader African continent. The company's strong content lineup, including sports, local entertainment, and international offerings, continues to attract viewers, indicating ongoing engagement with MultiChoice's products. In response to the challenging market conditions, MultiChoice has been focusing on cost-cutting measures and business optimization to weather the economic storm. Jacobs highlighted the company's efforts to streamline operations and improve efficiency, with cost savings of 1.3 billion rands in the first six months. The pending insurance deal with Sunlum is expected to boost the company's financial position and alleviate the negative equity reported in the first half of the year. Looking ahead, MultiChoice anticipates further cost savings in the second half of the year and aims to double its cost-cutting objectives. The company also expects a more favorable currency impact as exchange rates stabilize, providing some relief in the challenging economic environment. Additionally, strategic partnerships and product enhancements, such as the expansion of payment options and the inclusion of new content like the local PSL, are expected to drive subscriber growth and revenue in the coming months. While the road ahead may still be challenging, MultiChoice remains committed to navigating the evolving entertainment landscape and meeting the needs of its diverse customer base. With a focus on financial discipline, operational efficiency, and strategic growth initiatives, the company is poised to overcome the current hurdles and position itself for long-term success in the dynamic media industry.