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MultiChoice sees return to profitability ahead of February listing


Ahead of its planned unbundling by Naspers and eventual listing on the Johannesburg Stock Exchange (JSE) later this month, PayTV operator, MultiChoice, says it expects its rest-of-Africa operations to return to profitability in a few years’ time.

In its pre-listing statement in compliance with the JSE’s listings requirements, the company expects an annual reduction in trading losses from the rest of Africa, with the unit returning to profitability “in the medium term.”

According to MultiChoice, its non-South Africa unit has been steadily adding subscribers and growing revenues but remains unprofitable.

In the 2018 financial year, the operation recorded a trading loss of R4.6bn, from R4.9bn the year before. While the South African business recorded a trading profit of R10.4bn in the financial year 2018, from R9.8bn previously.

In the face of new competition from global streaming giants such as Netflix, and IrokoTV, Multi-Choice is banking on local content giving it an edge.

The company noted in its presentation that its production costs were about 40% lower than those of its international rivals and that it was spending R2.5bn a year on local productions, excluding sport.

The operator, which has 13.9million subscribers in 50 African states, said Africa’s “addressable” pay-TV market would be 46-million households in 2022. About 15-million of those were in SA, where the company currently has 7.2million subscribers.

While MultiChoice Group is largely expected to remain in the JSE’s top 40 index when it is unbundled, predictions of the company’s valuation are wide-ranging. Most valuations range from R50bn to R90bn. US bank JPMorgan values Naspers’s share of MultiChoice at $5.5bn (R74bn), or just under R200 a share. The company also plans to pay a R2.5bn dividend to shareholders in 2020.

The new company will be named MultiChoice Group and will include MultiChoice South Africa, MultiChoice Africa, Showmax Africa, and Irdeto.

It would be recalled that Naspers last year announced plans to list its Video Entertainment business separately on the Johannesburg Stock Exchange (JSE) and also simultaneously look to unbundle the shares in this business to its shareholders.

MultiChoice is a South African company that operates the DStv Satellite Television service, a major satellite TV service in Sub-Saharan Africa.



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