Tuesday, June 28, 2011

MultiChoice grows its pay TV DStv subscriber base in Africa to 4,9 million by end of March 2011; margins under pressure due to competition; rights.

MultiChoice that runs the DStv pay TV platform in South Africa and sub-Sahara Africa now has 4,9 million pay TV subscribers across the continent, having added almost a million more subscribers in the year that ended 31 March thanks to ''resilient'' pay TV business conditions for the company.

Naspers that owns MultiChoice and reported its financials for the year ending 31 March 2011 says MultiChoice is re-investing in the pay TV business.

ALSO READ: MultiChoice now plans to launch its new DStv BoxOffice in July; two months before new competitor SouthTel launched its VOD:TV video-on-demand service.

MultiChoice added a total of 977 000 DStv subscribers in the year ending 31 March and MultiChoice now reach about 5 million pay TV subscribers across the African continent. Of these new 977 000 DStv subscribers, 637 000 were new subscribers in South Africa, bringing the number of DStv subscribers of MultiChoice South Africa to 3,5 million. Of the 977 000 new subscribers, 340 000 were from sub-Saharan Africa outside of South Africa, growing the total MultiChoice Africa subscriber base to 1,4 million DStv subscribers.
The lower priced DStv Compact (South Africa) and DStv Family (Africa) subscriber base now reached a combined 602 000 households. This lower-priced DStv Compact bouquet represents 59% of the growth. Television advertising revenue also rebounded and grew by 32%.

There was however rising costs in MultiChoice's pay TV business related to buying additional satellite capacity, the growing subscriber base, increasing decoder subsidies to make pay TV uptake cheaper for new subscribers, the costs of acquiring sports rights internationally, and increased competitive pressures from new competition like On Digital Media's (ODM) TopTV in South Africa as well as pay TV operators elsewhere across the continent. MultiChoice's revenue grew to R21 billion (19%) but margins were under pressure.

It's especially the rising costs of sports rights - a driver of new subscriber uptake and a factor that combats subscriber churn that MultiChoice is conerned about and which is likely to affect its profits in the future. The ''growth-boosting event'' of the 2010 Fifa Soccer World Cup that South Africa hosted and was a major driving force of MultiChoice's pay TV revenues will not quickly be repeated. ''We had a really nice year with the World Cup, we've never been so buoyant in growth, close on a million new subscribers,'' says Koos Bekker, Naspers CEO.

''Competition [in the pay TV industry] is expected to intensify across the continent and the regulatory environment remains uncertain,'' says Naspers in its provisional fianncial report.