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Sam Bennett

Sam Bennett

17 Jun 2023

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MultiChoice Records R2.9 Billion Loss After Profitable Year

MultiChoice, the operator of DStv, has announced a notable after-tax loss of R2.9 billion for the financial year ending on March 31, 2023.

This stands in stark contrast to the R2.8 billion profit recorded in the previous year. The company attributes this loss to several factors, including the depreciation of the rand, load-shedding, and challenging macroeconomic conditions. Despite the loss, MultiChoice reports an overall revenue increase of 7% across its group operations.

MultiChoice cites the weak rand, load-shedding (scheduled power cuts), and other macroeconomic factors as key contributors to its poor financial performance.

In South Africa, the company experienced a 23% drop in trading profit, declining from R11 billion to R8.4 billion.

South African revenue also saw a slight decline of 2%, falling from R35.6 billion to just under R35 billion. MultiChoice states that the consumer-facing business environment in South Africa faced severe challenges during this period. Including interest rate hikes, high inflation, and elevated unemployment.

MultiChoice notes that load-shedding, which transitioned from being intermittent to becoming a regular occurrence. They had a detrimental effect on its South African pay-TV subscriber base and overall activity levels.

The company observed a significant increase in customer churn, particularly when load-shedding reached stage 4 and above.

Even customers with disposable income were more selective in their sign-ups to avoid periods of excessive power outages.

MultiChoice points out a disconnect between the growth of 90-day subscribers (indicating continued customer interest).

And the decline of active subscribers at the end of March, emphasizing the impact of load-shedding on customer behavior.

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Overall MultiChoice Group Performance

MultiChoice

Despite the challenges faced in South Africa, MultiChoice Group, which encompasses DStv operations in other African countries, Showmax, Irdeto (digital rights management company), KingMakers (sports betting operator), and Moment (fintech), reported a 7% increase in revenue, reaching R59.1 billion.

However, operating profit across the group, excluding foreign exchange losses, interest, and impairments, experienced a 1% decline from R10.2 billion to R10.3 billion.

The decline can be attributed to adverse foreign currency impacts amounting to R900 million and weaker South African earnings.

Given the challenging South African market, uncertain currency outlook, funding requirements for the Rest of Africa business.

And investments needed to propel Showmax as the leading streaming platform on the continent. MultiChoice has decided not to declare a dividend for FY23.

The company recognizes the need for strategic financial planning and remains focused on navigating the evolving landscape of the entertainment industry.

MultiChoice financial performance for the fiscal year ending in March 2023 resulted in a significant loss of R2.9 billion compared to the previous year’s profit.

The weak rand, load-shedding, and challenging macroeconomic conditions impacted the company’s South African operations, leading to a decline in trading profit and subscriber numbers.

However, the overall revenue for the MultiChoice Group saw an increase, albeit with a decline in operating profit.

MultiChoice emphasizes the need for financial prudence and investment in key areas to maintain its competitive edge in the evolving entertainment landscape.

MultiChoice Records R2.9 Billion Loss After Profitable Year