A recent financial report released by MultiChoice Group (MCG) reveals that the company’s turnover was negatively affected by the coronavirus lockdown as it was with many other businesses.
The suspension of live sports has also had a direct impact on subscribers.
Despite subscriber growth in the mass market and price increases, the company’s revenue rose by 4%, supported by the rebound in advertising revenue and a mere 1% increase in subscription revenue. Live sport and other value-adding initiatives contributed to reducing churn in the premium base.
The company’s trading profit declined 1% to R11 billion as the ongoing cost-optimisation programme only partially offset consumer pressure in the middle market and the normalization of content costs and sales and marketing expenses.
CEO of MultiChoice Group, Calvo Phedi Mawela, said in a report; “Reduced losses in the Rest of Africa (RoA), a rebound in advertising revenues and a continued focus on cost containment enabled us to absorb the R1.1 billion impact of a normalisation in content costs as live sport returned and we resumed our local content production post the Covid-19 lockdowns.
We continued to enhance our video entertainment offering and expanded the variety of services offered to our customers as we grow our entertainment ecosystem.
MultiChoice Group Report
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The group’s linear pay-TV subscriber base (measured on a 90-day active basis) increased by 900,000 to reach 21.8 million households, comprising 9 million in South Africa and 12.8 million in the rest of Africa. The 5% growth year-on-year (YoY) is subdued due to the tough economic environment and elevated subscriber growth during Covid-19 related lockdowns in the previous year.
Here are a few highlights from the report:
● Revenue: R55.1 billion up 3% (up 7% organic)
● Trading profit: stable at R10.3 billion (up 1% organic, due to absorbing cost normalisation)
● Core headline earnings: R3.5 billion (up 6% as Forex impact was less negative))
● Dividend: R2.5 billion at 565 cents per share (±4% yield)
The Group pursued its differentiation strategy through local content, stepping up its local content production by 32% YoY to 6 028 hours and bringing its local content library close to 70,000 hours.
Local content accounted for 47% of total general entertainment content spend and the group remains on track to achieve a target of 50% by 2024.
“Local content and select sporting events such as the English Premier League, UEFA Champions League, and the 2022 FIFA World Cup will contribute to the growth in linear and streaming services.” said the Group’s CEO.
Seven major new channels were launched, including two Portuguese-focused channels in Angola and Mozambique. In South Africa, the group’s co-productions such as Reyka and Recipes for Love and Murder were broadcast to critical acclaim and international interest.
Growth in Connected Video users on the DStv app and Showmax service is outpacing the market, said MultiChoice.
Paying Showmax subscribers were up 68% YoY, whilst overall monthly online users of the group’s connected video services increased 28% YoY.
“Returning the Rest of Africa business to profitability in FY23, maintaining strong cash flows to support a healthy balance sheet and pursuing innovative products and services remain key pillars for long term value creation. As a platform of choice, our group will look to further expand our entertainment ecosystem by identifying growth opportunities that leverage our scale and local capabilities,” says Mawela. “We will continue to strive to be a trusted partner for our customers’ ever-evolving needs, enriching their lives by delivering entertainment and relevant consumer services underpinned by technology.”
Future Prospect of MultiChoice Group
Speaking on its future plans, MultiChoice Group said it will continue to drive the penetration of its video entertainment services across the African continent by offering customers an array of unique and rich media content delivered in a convenient and cost-effective way.