Multichoice tanks to a R2.9 billion loss

Multimedia group Multichoice has reported its annual financial results for the year ended 31 March 2023, recording a loss of R2.92 billion for the year.

Group revenue increased 7% to R59.1 billion (2022: R55.2 billion), with costs and expenses rising 9% and 12%, respectively.

Operating profit before taxes and foreign exchange losses amounted to R10.16 billion, down 1% from R10.3 billion recorded in 2022. Profit before tax was R921 million but dropped to a loss of R2.92 billion after tax (from a profit of R2.9 billion in 2022).

According to Multichoice, the high tax cost came because the group’s effective tax rate increased due to increased foreign exchange losses.

This resulted in a lower profit before taxation, it said. The tax hit was also due to an increase in “uncertain tax positions” recognised and withholding taxes incurred in the ‘Rest of Africa’ segment.

The group lost R5.6 billion to foreign exchange translation losses.

No dividend was declared in view of the challenging South African market, the uncertain currency outlook, the funding needs of the Rest of Africa business and the investment required to drive Showmax to become the leading streaming platform on the continent, it said.

Multichoice said that, despite the headline loss, the group’s core business operations are still strong, showing growth in the Africa segment, with active subscriber numbers up.

It said that it added 1.7 million 90-active subscribers (growth of 8%) to reach a total base of 23.5 million subscribers – 9.3 million of which are in South Africa.

The group’s performance in South Africa, however, was challenging, it said, with households coming under pressure and the consumer environment weakening significantly.

“Permanent high stages of load shedding, interest rate hikes and elevated inflation levels have left a large portion of the group’s customer base unable to watch or afford video entertainment services,” it said.

“Although SA 90-day subscribers grew by 0.3 million YoY, lower levels of activity, represented by active days, were experienced, which resulted in a 2% decline in SA revenue.”

Subscription revenues amounted to R48.6 billion, up 7% YoY, driven by the Rest of Africa, which delivered a 25% YoY increase. Advertising revenues were up a solid 7% (6% organic) supported by the FIFA World Cup and local content properties.

Core headline earnings – which the Multichoice board says is reflective of its “sustainable business performance” – increased 2% YoY to R3.5 billion. However, this was mainly attributable to the improved contribution from the Rest of Africa, tempered by the lower profits in South Africa.

Looking ahead, Multichoice said that it will continue to shift its business from being a traditional Pay-TV platform into a broader technology player while pushing further into its African business.

The entertainment business will remain a core focus in FY24, and the group is pinning a lot on the recently-announced new Showmax group – in partnership with Comcast – which will bring new products, price points and offerings for viewers.

The group will also be launching KingMakers in South Africa under the SuperSportBet brand, while FY24 will see Moment launching its B2B platform and starting to roll out payments technology to support more frictionless digital payment experiences for customers at a lower cost to the group in several markets across the continent.

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