MultiChoice tops 20 million households

Growth in subscribers and a lid on costs helped the video entertainment group grow first-half earnings as advertising came under pressure.

MultiChoice has reported a strong rise in first-half earnings after rising subscriber numbers and lower forex losses helped compensate for a decline in advertising during the Covid-19 lockdown. Its results coincided with the launch of its new DStv Explora Ultra decoder, which will give subscribers access to Netflix and Showmax as it tries to keep viewers on its platform in the face of rising competition from streaming services.

The video entertainment group, which was unbundled by Naspers and listed on the JSE in February last year, has added 1.2 million 90-day active subscribers over the past year. It now reaches 20.1 million households in 50 countries across the continent. Increased consumer demand and an easing of electricity shortages in Southern Africa were behind the 6% growth in subscriber numbers, offsetting rising consumer pressure in many countries.

Revenue for the six months to end-September increased by 2% to R26.1 billion as a 5% rise in subscription revenues was offset by a decline in advertising revenue, mainly due to a lack of sport advertising and a softer market over the period. Commercial subscriptions also dipped as hotels, restaurants and other commercial customers largely closed during the lockdown.

While customers outside of South Africa now make up 57% of its audience, it still reported a trading loss from its Rest of Africa business – although narrower than previously. Including SA, group trading profit increased by 19% to R5.7 million as the pressure on revenue was balanced by delayed content costs. Core headline earnings jumped 41% to R2.7 billion, helped by lower foreign exchange losses. Headline earnings per share (HEPS) jumped 68% to 572c, while core HEPS came in 43% higher at 627c. It uses core headline earnings as its measure of sustainable business performance. It hasn’t declared an interim dividend.

Given the risks associated with the weak macro and consumer environments and the potential Covid-19 fallout, MultiChoice said it would maintain tight cost controls, prioritise cash generation and preserve the strength of its balance sheet.

Our subscriber base of more than 20 million customers provides considerable scale and a platform to continuously add more products and services,” CEO Calvo Mawela said. “We believe that, whether organically or through third parties, offering our customers an ecosystem of video entertainment options will be fundamental to our long-term success and to making our customers’ lives more convenient and fulfilling.”
The company’s shares fell 0.1% to R124.74 yesterday.

Main Image: Quartz