Advanced Television

MultiChoice warns on future margins

March 16, 2023

By Chris Forrester

South African pay-TV giant MultiChoice has warned that its future trading, and in particular its DStv bouquet of pay-channels, are under financial threat from South Africa’s dire business and trading environment.

The warning sent MultiChoice’s shares into free-fall on the Johannesburg stock exchange. They fell almost 14 percent on March 14, for example, although having hit a low-point on the day of 19.29 per cent.

MultiChoice’s comments came in its “Voluntary trading update” for the year ending March 2023. The update stated: “Although the FIFA World Cup delivered subscriber numbers broadly in line with expectations, the operating environment in South Africa has deteriorated beyond expectations over the past few months. Sustained high-levels of [electricity] loadshedding is having a significant impact on the activity levels of the customer base.”

“Combined with the negative effect of a weak economy on consumer spending, and thus on the Group’s customer mix, indications are that 2H revenue growth in the South African business will be below expectations. Given a largely fixed cost base, as well as the additional Showmax costs incurred in relation to the recently announced agreement with Comcast, this will result in the segment’s FY23
trading margin being between 23 percent – 28 percent, which is below the market guidance of 28 percent – 30 percent,” added MultiChoice.

“Due to the positive impact of increased scale, supported by good 2H subscriber growth over the Festive Season (especially in Nigeria), the Rest of Africa business remains on track to return to trading profitability this year. As a result of an ongoing focus on cost controls, the Group expects to exceed its FY23 cost savings target of Rand 0.8 billion [€41m], while the benefits of its hedging policy should also impact positively on earnings in a weaker [Rand] environment.”

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