A screenshot from one of the scenes in the television drama series “Shaka Ilembe.” The premiere episode in June 2024 attracted over four million viewers and was the top-performing show with an audience share of over 45 percent in its time slot. Photo/Courtesy Multichoice
MultiChoice Group has reported a resilient operational performance for the year ended March 2024, delivering a 26 percent trading profit margin in South Africa, while increasing trading profit in the Rest of Africa by 48 percent, despite “very challenging macroeconomic conditions.”
A report on the past financial year shows that 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.
Overall active subscribers declined by nine percent mainly due to a 13 percent decline in the Rest of Africa business, with Nigeria, Angola and Zambia most affected. The South African business was, however, more resilient, declining by only five percent.
The Group’s revenue increased by three percent on an organic basis. However, due to weaker local currencies and consumer pressure, reported Group revenue declined by five percent to Shs11.3 trillion. The report also shows that subscription revenues grew by two percent on an organic basis. On a reported basis, though, subscription revenues declined by seven percent due to a weaker Naira.
The Group’s trading profit increased 24 percent on an organic basis, despite the additional Shs284.2 billion investment in Showmax to drive future growth. After factoring in the Shs913.5 billion impact related to foreign exchange weakness, reported trading profit declined by 21 percent to Shs1.6 trillion.
Given the positive impact of the lower expenditure (including Shs385.7 billion in cost savings and Shs304.5 billion in reduced decoder subsidies), the Group achieved positive operating leverage of 4.3 percent (for instance a 3.3 percent organic revenue increase against a one percent organic reduction in operating expenses).
A mixed bag
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 percent to Shs263.9 billion.
Free cash flow amounted to Shs119.5 billion, impacted by lower profitability and the Shs345.1 billion in Showmax platform payments.
The retained cash and cash equivalents resulted in Shs1.48 trillion in cash (before short-term commitments) and access to Shs832.3 billion in undrawn borrowing facilities provides significant headroom and flexibility to fund opportunities.
“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,” Calvo Mawela, MultiChoice Group CEO, said, adding, “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.”
Mr Mawela also proceeded to express his pride in “the speed and effectiveness of the team in implementing strategic actions to retain customers, safeguard cash generation and drive cost savings which surpassed our targets.” He added that “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.”
Content production
MultiChoice is by far the largest producer of original content on the African continent. In the Financial Year 2024, the Group produced over 6,500 hours of local content. Its local content library now has more than 84,000 hours of content, a 12 percent increase year-on-year (YoY).
The highlight for the year was Shaka Ilembe, which launched on Mzansi Magic in June to become Africa’s biggest TV series. Filmed entirely on location in South Africa, it was created through the skills and contributions of over 8,000 people. The premiere episode attracted over four million viewers and was the top-performing show with an audience share of over 45 percent in its time slot.
Other content highlights of the year were Reyka (season 2), Devil’s Peak and White Lies on linear (co-produced with Fremantle, Canal+, Abacus Distribution and BBC Studios-owned Lookout Point) and Spinners, Original Sin: My Son The Killer, and Catch Me a Killer, on streaming. Across Africa, the group launched 3 new proprietary channels - in Ethiopia (Maaddii Abol), Uganda (Pearl Magic Loko) and Mozambique (Maningue Magic Kool) while also producing content in Africa’s fourth most spoken language, Oromo.
SuperSport broadcast 34,490 live events during the year. Highlights included the Rugby World Cup in France, the Cricket World Cup in India, a second SA20 season in South Africa, Afcon 2023 in the Ivory Coast, the Fifa Women’s World Cup in New Zealand and Australia, as well as the Netball World Cup in Cape Town.
SuperSport Schools more than doubled its registered user base during the year. The fast-growing platform displayed more than 49,000 hours of live programming across 43 different sports codes, covering 900 school sport festivals and events, featuring more than 1,100 schools, and over 14, 500 teams.
South Africa Pay-TV
Due to a strong focus on retention initiatives, the decline in active subscribers in South Africa was limited to five percent. The base now stands at 7.6 million households. Power outages experienced on 275 days of the year further discouraged potential subscribers without backup power.
Although the Premium bouquet is trending toward a stable base, given the targeted retention efforts, the premium customer tier (which includes the Premium and Compact Plus bouquets) declined by eight percent. The mid-market Compact base, which is most exposed to the macro-economic challenges, was down nine percent, while the mass-market tier was two percent lower due to pressure in the Family base, the impact of load shedding, and reduced decoder subsidies.
A consequent three percent decline in subscription revenues and softer advertising income weighed on the segment’s total revenues (down two percent to Shs6.82 trillion), but was partially offset by strong traction from new revenue streams, especially the insurance business (NMSIS), which reported a 35 percent increase in premium revenue to almost Shs20.3 billion. Several interventions to reduce costs enabled the South Africa business to achieve a trading margin of over 26 percent.
Rest of Africa Pay-TV
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 US dollar revenues by 32 percent.
The active subscriber base declined to 8.1 million, 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 (down 46 percent YoY or Shs263.9 billion), and reducing SG&A costs by Shs101 billion. These interventions enabled the Rest of Africa business to increase trading profit by 48 percent YoY to Shs26.3 billion.
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 23.5 million households across 50 countries on the African continent and continues to grow by producing and acquiring the best local, sport and international content and offering tiered subscription packages and aggregated streaming services to its customer base.
