by Thinus Ferreira
MultiChoice is warning that its 2023 revenue is being dragged lower due to South Africa's debilitating and increasing Eskom electricity blackout crisis which is having a "significant impact" on its DStv subscriber base's activity levels, and also because MultiChoice is having to spend more money in increased costs for its planned new Showmax streaming service relaunch after partnering with NBCUniversal.
MultiChoice now warns that its revenue growth is going to be below expectations.
In a trading update, the Randburg-based pay-TV operator has joined the chorus of South African companies warning about deteriorating economic conditions because of continuing electricity blackouts in the country - called "loadshedding - that is negatively impacting on consumer spending.
MultiChoice says that when it reported its half-year results on 10 November 2022 it was looking forward to subscriber growth in the second half of its financial year in 2023 and it "being buoyed by the broadcasting of the FIFA World Cup from November to December 2022 and festive season momentum".
"Although the FIFA World Cup delivered subscriber numbers broadly in line with expectations, the operating environment in South Africa has deteriorated beyond expectations over the past few months," MultiChoice now warns.
"Sustained high-levels of loadshedding are having a significant impact on the activity levels of the customer base. Combined with the negative effect of a weak economy on consumer spending, and thus on the group's customer mix, indications are that second-half revenue growth in the South African business will be below expectations."
"Given a largely fixed cost base, as well as the additional Showmax costs incurred in relation to the recently announced agreement with Comcast, this will result in the segment's financial year 2023 trading margin being between 23% to 28%, which is below the market guidance of 28% to 30%."
"Due to the positive impact of increased scale, supported by good second-half subscriber growth over the festive season (especially in Nigeria), the Rest of Africa (RoA) business remains on track to return to trading profitability this year."
"As a result of an ongoing focus on cost controls, the MultiChoice Group expects to exceed its financial year 2023 cost savings target of R0.8billion, while the benefits of its hedging policy should also impact positively on earnings in a weaker South African rand environment."