MultiChoice Group Ltd. has reported its third consecutive semi-annual loss, citing foreign exchange difficulties in Nigeria and persistent power outages in South Africa as key contributors to its financial challenges.
In a filing on Wednesday, Africa’s largest pay-TV company disclosed a net loss of 1.32 billion rand ($72.4 million) for the six months ending Sept. 30.
The company attributed the recorded loss to the poor performance of the naira against the dollar. Challenges in Nigeria stemmed from the mid-June decision to allow the Naira to trade more freely against the dollar, resulting in a 40% devaluation. This compelled MultiChoice to revalue inter-group loans, leading to foreign exchange losses.
Insights from MultiChoice:
“After adding 1.4 million 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 following a FIFA World Cup or northern hemisphere football off-season.
A total of 0.1 million subscribers were added to end the period at 13.0 million 90-day active subscribers. The active subscriber base was broadly stable at 8.9 million subscribers, and subscription revenues grew 14% organically. Revenue of ZAR10.5 billion 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 ZAR330 million (+ZAR2.2 billion YoY on an organic basis), 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 recognized losses incurred on cash remittances now being recorded in trading profit. The net effect of these forex movements was a negative ZAR1.6 billion impact on the segment’s trading profit for the period.”
In addition to currency challenges, South Africa experienced rolling blackouts, contributing to a 5% decline in the number of active days per subscriber, further impacting MultiChoice’s financial performance during the specified period.
The company’s shares fell 0.6% in Johannesburg at close on Wednesday after plunging as much as 3.6% to a record.
MultiChoice plans to relaunch its Showmax streaming service in the second half of its financial year and introduce a sports betting service in South Africa following the success of a similar offering in Nigeria.
