MultiChoice, Africa’s leading pay-tv provider, has reported a third consecutive semi-annual loss, blaming forex challenges in Nigeria and persistent power outages in South Africa for its financial woes.
In a recent filing, MultiChoice revealed a net loss of 1.32 billion rand ($72.4 million) for the six months ending September 30.
The company attributed the loss to the poor performance of the Nigerian naira against the US dollar.
Following Nigeria’s decision to allow the naira to trade more freely against the dollar in mid-June, the currency experienced a 40percent devaluation. This forced MultiChoice to revalue inter-group loans, resulting in significant foreign exchange losses.
According to Multichoice, after adding 1.4m new subscribers in FY23, subscriber growth in the Rest of Africa was more subdued in 1H FY24. This was due to the impact of inflationary pressures in key markets like Nigeria, and similar trends to previous periods which followed a FIFA World Cup or northern hemisphere football off-season.
“A total of 0.1m subscribers were added to end the period at 13.0m 90-day active subscribers. The active subscriber base was broadly stable at 8.9m subscribers and subscription revenues grew 14% organically. Revenue of ZAR10.5bn was flat (+13% organic) with a weaker ZAR against the USD on conversion, offsetting the impact of weaker local currencies relative to the USD.
“The RoA(return on assets) segment delivered a trading profit of ZAR330m (+ZAR2.2bn YoY on an organic basis) which was underpinned by specific cost interventions around decoder subsidies and content costs.
“Weaker currencies remained a significant impediment to improvements in profitability, with average first-half exchanges falling sharply against the USD.
“The sharp fall of the naira resulted in a large proportion of the previously recognised losses incurred on cash remittances now being recorded in trading profit. The net effect of these forex movements was a negative ZAR1.6bn impact on the segment’s trading profit for the period.”
In addition to the currency woes, South Africa experienced rolling blackouts, contributing to a 5% decline in the number of active days per subscriber. This exacerbation further impacted MultiChoice’s financial performance during the specified period.
The company’s shares fell 0.6 per cent in Johannesburg at close on Wednesday after plunging as much as 3.6percent to a record.