Multichoice interim results show slight revenue increase of 2% – now has over 20m subscribers
November 16, 2020
MultiChoice Group, Africa’s leading video entertainment company, delivered resilient financial results for the six months ended 30 September 2020 (1H FY21).
The group added 1.2m 90-day active subscribers year-on-year (YoY), to close the period on 20.1m households, exceeding the 20m subscriber milestone for the first time. The customer base is split between 11.4m households (57%) in the Rest of Africa (RoA) and 8.7m (43%) in South Africa.
Core headline earnings were up 41% on the prior period at R2.7bn, with the strong growth attributable to a 38% improvement in organic trading profit and lower net realised foreign exchange losses. The trading profit impact of COVID-19 was largely neutral, as a R0.9bn revenue loss relating to lower advertising income and subscription revenues from commercial customers was offset by R0.8bn in delayed content costs.
“Despite operating in a challenging environment and being affected by lockdowns, production stoppages and disruptions to live sport, we delivered on all key metrics. A strong focus on cost reduction allowed for a further R1bn in cost savings during the period. We also narrowed the losses in the Rest of Africa by 59% year-on-year (or R0.5bn) to R338m.”Calvo Mawela, MCG Chief Executive Officer
Revenue increased 2% (-1% organic) to R26.1bn, with subscription revenues of R22.2bn increasing a solid 5% (3% organic) YoY. Top line momentum was significantly impacted by COVID-19. Advertising revenue declined R0.6bn YoY, mainly due to a lack of sports advertising and a generally softer advertising market resulting from lower economic activity. Commercial subscription revenues were R0,3bn lower as a result of most hotels, restaurants and other commercial customers remaining closed during lockdowns. Excluding the impact of COVID-19, revenue would have grown 6% YoY (4% organic).
The group continued its strategic focus of investing in local content and produced 1,870 additional hours, despite disruptions caused by strict early COVID-19 lockdown measures. The local content library is now close to 59,000 hours. To keep customers entertained, informed and educated, the group has launched nine new channels across sub-Saharan Africa since the start of the year and another 13 channels as part of the Ethiopian relaunch strategy. In Nigeria, it recently concluded another successful season of Big Brother Naija and South Africa saw the launch of several local productions such as Inconceivable, Gomora and Legacy. In addition, the reporting period saw two major international content agreements renegotiated to Rand and three new co-productions signed with global content producers.
MCG also continues to broadcast the best of sport and international content. Today the group announced the launch of the DStv Explora Ultra, its next generation decoder, offering customers an enhanced viewing experience and the best available local and international content from DStv, Showmax, BoxOffice and select partners. As part of the new experience, Netflix will now available for the first time on the Ultra decoder, which goes on sale next week. In addition, the group recently launched a whole range of new products and services to enhance the customer experience, including Showmax Pro, DStv Communities, DStv Rewards and Add Movies.
“Underpinned by our world class technology, our emphasis is on offering great content across different platforms and building an ecosystem which keeps customers engaged. Our subscriber base of more than 20m customers provides considerable scale and a platform to continuously add more products and services. We believe that, whether organically or through third parties, offering our customers an ecosystem of video entertainment options will be fundamental to our long-term success and to making our customers’ lives more convenient and fulfilling.Calvo Mawela, MCG Chief Executive Officer