MultiChoice Group, the leading satellite television provider in Sub-Saharan Africa, has announced its worst financial performance in company history. According to MultiChoice’s financial statements for the year ending March 31, 2024, the entertainment powerhouse recorded a staggering R4.1 billion (approximately $222 million) loss, leaving it technically insolvent.
The downturn can be attributed to a significant 9% decline in active subscribers across MultiChoice’s services. The company’s Rest of Africa business experienced a massive 13% drop in subscribers, while its South African customer base fell by 5%. This erosion of its subscriber base, compounded by unfavorable foreign exchange rates, resulted in a 5% decrease in group revenues to R56 billion.
MultiChoice’s trading profits took a severe hit, plummeting 21% to R7.9 billion due to the weakened subscriber trends and currency pressures. The company’s long-term loans surged from R8 billion to R12 billion over the past year, exacerbating its financial woes.
“The impact of the subscriber decline and unfavorable foreign exchange rates has been devastating for MultiChoice,” said industry analyst Michael Thabane. “The company is facing an unprecedented crisis and needs to take swift and decisive action to regain its footing.”
In response to this crisis, MultiChoice has secured a R12 billion syndicated term loan to fund its working capital requirements. “The capital portion will be settled via bullet payments five years from each of the drawdown dates,” MultiChoice said in a statement. The five-year loan bears interest at the three-month Johannesburg Interbank Average Rate (JIBAR) + 1.44%.
Despite the grim financial picture, MultiChoice remains optimistic about a turnaround.
MultiChoice CEO Calvo Mawela said, “We have acted quickly to optimally position the business to weather the foreign exchange crisis that has developed across our core markets, this was done while simultaneously ensuring that our long-term strategic initiatives are not compromised.”
In the short term, MultiChoice has prioritized cash generation over growth and set an ambitious target of R2 billion in savings by the end of the 2025 fiscal year.
“These targets have been embedded in the group’s budgets and within the personal objectives of key executives to drive delivery,” Mawela added.
MultiChoice also plans to continue driving growth in its focused areas, including Showmax, Moment, SuperSportBet, DStv Insurance, DStv Internet, and DStv Stream.
Mawela stated, “The group will also continue its efforts to drive growth in focused areas.”
“We will cut costs while retaining our DStv and GOtv customers and supporting their activity rates through the next year,” he added.
The financial struggles come amid recent price hikes for MultiChoice’s DStv and GOtv packages in Nigeria, adding to the cost-of-living crisis faced by citizens. As reported by The Explainer, Nigerians are seeking cheaper alternatives in response to the price increases.
In a statement titled ‘Price Adjustment on DStv and GOtv Packages’, MultiChoice Nigeria CEO John Ugbe said, “We understand the impact this change may have on you – our valued customer, but the rise in the cost of business operations has led us to make this difficult decision.”
The Premium DStv package now costs N37,000, up from N29,500, while the Compact Plus package increased from N19,800 to N25,000.
