by Thinus Ferreira
Another 1.8 million MultiChoice subscribers, including 400 000 in South Africa, have dumped the pay-TV operator while France's Canal+ is salivating to close its aggressive takeover of the company, with the troubled pay-TV operator saying it is facing "the most challenging operating conditions in almost 40 years".
MultiChoice on Tuesday released its disastrous financial results for the six months ending 30 September during which another 800 000 subscribers abandoned its service, its revenue tanked, its losses increased and the Randburg-based company remains mired in an even deeper technical insolvency.
In a statement, MultiChoice says "On a year-on-year (YoY) basis, the linear subscriber base declined by 11% or 1.8 million subscribers to 14.9 million active subscribers, impacted by the challenging macroeconomic conditions that negatively impacted discretionary consumer spend".
A year ago MultiChoice's DStv and other subscribers stood at 16.7 million. MultiChoice's subscriber loss was 5% in South Africa (down to 7.4 million from 7.8 million) and 15% in the Rest of Africa (RoA). Its overall subscriber base is now 14.9 million customers.
MultiChoice says the subscriber loss is because of the "extremely hostile operating environment that the group has encountered over the past 12 months".
"The loss in the Rest of Africa (RoA) has been primarily due to the significant consumer pressure in Nigeria, where inflation has remained above 30% for the majority of the last 12 months and, more recently, due to extreme power disruptions in Zambia," MultiChoice says.
During the six months, MultiChoice went from bad to worse with revenue that dropped 11% to R24.8 billion while operating profit fell 49% to R2.5 billion. MultiChoice posted a headline loss of R1.8 billion.
While Showmax showed a 50% increase year-on-year in its paying number of subscribers, MultiChoice's video streaming service increased its loss from R799 million to R2.4 billion. Showmax's revenue plunged from R704 million to R469 million.
MultiChoice notes that it had "strong revenue growth" in new products like DStv Stream (+71%), DStv Internet (+85%), DStv Insurance (+31%) and KingMakers (+53%)".
Decoder sales were up 46%.
In South Africa, DStv Media Sales' advertising revenues increased 3% but in Rest of Africa (RoA) ad
revenues were down 34% because of currency, economic and power pressure in the Nigerian and Zambian markets.
The company says in its statement it is "also adjusting to global pay-TV challenges as streaming
services, the rise of social media and changing consumer preference impact the
traditional broadcast business".
According to MultiChoice, "Globally, the pay-TV industry is facing challenges from streaming, the rise of short-form video on social media platforms and changing consumer preferences".
"These pressure points are starting to accelerate in the group's core market in South Africa, while severe
macro, power and other consumer headwinds in the group's Rest of Africa (RoA) footprint are limiting growth in linear and streaming, despite lower market penetration."
"At the same time, the most severe foreign exchange environment in the group's history has negatively impacted its financial results."
Calvo Mawela, MultiChoice Group CEO, says "We are making good progress in addressing the technical insolvency that resulted from non-cash accounting entries at the end of the last financial year".
"We expect to return to a positive net equity position by the end of November this year, supported by a number of developments and initiatives. The group's liquidity position remains strong, with over R10 billion in total available funds."
