Eskom load-shedding has reached DStv

MultiChoice, the parent company of DStv, has cautioned investors that it expects to generate lower revenue than expected for the fiscal year 2023. (FY2023).

According to MultiChoice, subscriber growth and activity during the FIFA World Cup and the holiday season were insufficient to offset the impact of load-shedding.

Although it did not specify how much income would be lost, MultiChoice stated that its South African sector trading margin would be between 23%-28%, which was lower than the market expectation of 28%-30%.

The broadcaster noted that this was due to its enormous fixed cost base as well as the additional expenditures spent in the Showmax-Comcast arrangement.

MultiChoice issued the warning in a voluntary trade update late on Monday, March 13, 2023.

MultiChoice warned about the persistent economic issues confronting several regions in its results for the first six months of its fiscal year 2023.

It did, however, say it was looking forward to the second half of the fiscal year (2H2023), which would be boosted by the broadcast of the FIFA World Cup from November to December, as well as Christmas season momentum.

“Although the 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,” MultiChoice said.

“Sustained high levels of load-shedding are 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 2H2023 revenue growth in the South African business will be below expectations.”

Nonetheless, MultiChoice stated that its Rest of Africa business was on course to return to trading profitability in 2023 owing to the favourable impact of increasing scale, which was supported by strong 2H2023 subscriber growth, particularly in Nigeria.

Additionally, the business expects to meet its R0.8 billion cost-cutting objective for FY2023, while the advantages of its hedging approach should boost profitability in a lower rand market.

MultiChoice’s fiscal year ends on March 31, 2023, and its annual results will be announced on June 13, 2023.

Their trading update came at the end of Monday’s JSE trading.

The price of a MultiChoice share on the JSE has plummeted 14.58% to R119.21 at roughly 09:30 on Tuesday, 14 March 2023.

It recovered somewhat to R123 (still down 11.87% from the market open), but shortly fell back to roughly R120 per share.