Multichoice, the satellite television company behind DStv, SuperSport, and Showmax, has announced it will report a financial loss for the first half (H1) of 2024, with its official report due on November 12.
In a statement, Multichoice attributed the loss to challenging macroeconomic conditions and adverse foreign exchange rates impacting its key markets, particularly Nigeria and Zambia.
The company noted,
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“The first half of the 2024 financial year was negatively impacted by severe pressure in the macroeconomic, foreign exchange rate, and consumer environment in key markets, most notably Nigeria and Zambia.”
Recall that Multichoice Nigerian branch alone incurred over $216.9 million in foreign exchange losses over the past year, a figure four times greater than combined losses in the previous four years.
Inflationary pressure and currency devaluation in markets like Nigeria and Ghana reduced consumers spending power, leading to a decline in active subscribers. Citing economic challenges, Multichoice Nigeria had In April increased the prices of DStv and GOtv packages by at least 25%. This marked the third increment since last year, following the initial adjustment implemented on May 1, 2023.
Fast forward to June 2024, in Nigeria, the company’s active subscribers dropped to 8.1 million (a 1.2 million decline), reducing the country’s revenue contribution to the rest of Africa segment from 44% to 35%.
Multichoice had stated that due to the challenging market dynamics, the short-term focus of its RoA (Nigeria, Angola, Kenya, Ghana, and Zimbabwe) business was shifted from subscriber growth to safeguard profitability and cash flows.
The company has expressed that its investment in Showmax, a video streaming website, contributed a larger share to its financial decline. Cornered in a bid to surpass streaming competitors like Netflix and Prime Video, the company highlighted that Showmax has reached the peak of its investment cycle. Additionally, Multichoice intends to implement an inflationary pricing strategy and aims for R2 billion in cost savings by March 2025 to mitigate weaker subscriber activity and foreign exchange challenges.
“Multichoice has entered the peak investment cycle of Showmax and expects losses and headline losses per share to increase as a result of the early life cycle of the Showmax business”, the company noted.
It also expects to report a further R2.1-billion in forex “movements” through its income statement on “non-quasi equity intergroup loans in the current period”.
As part of its financial forecast, Multichoice expects to report an R2.1 billion foreign exchange impact from intergroup loans, further straining results. Adjusted for R2.3 billion in forex losses in other African operations and a R1.6 billion increase in Showmax investment.
The company projects a year-on-year increase of over 30% in group trading profit, driven by inflation-adjusted pricing and cost optimization strategies.