Multichoice
Multichoice CEO Calvo Mawela

Africa’s pay-tv giant MultiChoice is planning to utilise its R11.8 billion cash pile to fund growth and the weather the COVID-19 pandemic storm.

MultiChoice, which added 1.2 million 90-day active subscribers in the six months to end-September to close the period on 20.1 million households believes the strength of the balance sheet is critically important given the uncertain longer-term economic impact of COVID-19.

The company added that a strong balance sheet is also critical due to potential challenges for specific markets in the Rest of Africa (RoA) because of a lower oil price.

Some R7.3 billion in cash and cash equivalents, combined with R4.5 billion in undrawn facilities, provides R11.8 billion in financial flexibility to fund the group’s operations, the company said.

MultiChoice added that this strong financial position is after R4 billion utilised to settle MultiChoice and Phuthuma Nathi (PN) dividends in September.

The company said in a statement on Thursday that its focus for the full year would be further to scale its video entertainment platform across the continent, focusing on both traditional broadcasting and streaming services, and to increase its investment in local content.

“We will look to expand our entertainment ecosystem and revenue prospects through offering new products and services and by pursuing new growth opportunities. At the same time, we will focus on the ongoing development of employees and on continuing to make a meaningful impact in the communities where we operate,” says Calvo Mawela, the CEO of MultiChoice Group.

Multichoice
Multichoice

“Given the risks associated with weak macro and consumer environments, and the potential COVID-19 fallout, we will be looking to maintain tight cost controls, prioritise cash generation and preserve balance sheet strength.”

During the six months to end-September, MultiChoice exceeded the 20 million subscriber milestone for the first time. The customer base is split between 11.4 million households (57%) in the RoA and 8.7 million (43%) in South Africa.

The company said its core headline earnings were up 41% at R2.7 billion, 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 mostly neutral, as a R900 million revenue loss relating to lower advertising income and subscription revenues from commercial customers was offset by R800 million 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,” says Mawela.

 

“A strong focus on cost reduction allowed for a further R1 billion in cost savings during the period. We also narrowed the losses in the Rest of Africa by 59% year-on-year (or R500 million) to R338 million.”

The group said revenue increased 2% to R26.1 billion, with subscription revenues of R22.2 billion increasing a solid 5% (3% organic) year-on-year. COVID-19 significantly impacted topline momentum, the company said.

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