MultiChoice Group yesterday said it grew its overall subscriber base, while DSTV Premium and DSTV Compact Plus subscribers in South Africa declined.
JSE-listed MultiChoice released its financial results for the year ended March 31, 2022, on Thursday and revealed that it increased its overall subscriber base by 5 percent to 21.8 million 90-day active users.
The company said Connected Video users on the DStv app and Showmax showed strong growth.
Showmax subscribers increased by 68 percent, while monthly online users increased by 28 percent overall, boosted by an ongoing focus on local content, payment channels and billing.
The group said it increased its local content production by 32 percent year-on-year (y-o-y) to 6 028 hours over the reported period.
The company posted a 4 percent increase in revenue, which increased from R53 billion in 2021 to R55bn in 2022.
Despite the increase in revenue, MultiChoice’s profit for the year declined from R4.07bn in 2021 to R2.88bn in 2022.
Core headline earnings, the board’s measure of sustainable business performance, increased by 6 percent y-o-y to R3.5bn.
“This represents a strong recovery from the 26 percent decrease reported at the half-year as activities normalised in the second half relative to the prior year and a weaker ZAR (rand) reduced realised losses on foreign exchange contracts,” it said.
Calvo Mawela, the chief executive said: “MultiChoice will look to further expand our entertainment ecosystem by identifying growth opportunities that leverage our scale and local capabilities.”
The group said its South African business also faced a difficult consumer climate.
According to MultiChoice, rising unemployment levels, intermittent load shedding and disruption caused by the July riots in Durban and Johannesburg had affected its business.
The group’s y-o-y growth in South Africa was flat at only 1 percent or 100 000 customers.
In an interview, MultiChoice chief financial officer Tim Jacobs said, “We were very pleased with the results. We’ve come out over the last two years of Covid with a significantly higher subscriber base. We grew over a million subscribers off that base, that has been a testament strength of our product and its desirability. Sports definitely helped that,” Jacobs said.
He said the company also delivered strong cash flows of R5.5bn despite R1.1bn prepayments this year.
“Overall, we were delighted with where we ended up,” Jacobs said.
According to Jacobs, the balance sheet was looking strong.
“We have R6.3bn of cash on the balance sheet, we have R5bn of unutilised facilities. Some of that has already been allocated, R4bn to dividends, R1.5bn will be paid out to Phuthuma Nathi shareholders, and R2.5bn to MultiChoice Group shareholders,” he said.
He said since the company borrowed money to acquire Kingmakers last year, there was R1.3bn allocated to repaying that loan.
“The leverage is not very high, which means we have significant capacity to borrow on the balance sheet if the need arises,” he said.
Jacobs said in the DSTV Premium segment, the company last year saw that there was a remarkable slow down in the rate churn.
“Previously, we saw an 8 percent churn, but the churn halved this year to 4 percent, and that was on the back of a couple of things. Firstly, we had a full set of sports coming back in, secondly, we had the British and Irish Lions rugby tour, and the Olympics, all these big sporting codes helped us to cement the sports offering. We are also looking at bundling our Premium package with a lot of additional benefits, bundling them with rewards, Disney Plus. These will lower costs, for a Premium subscriber,” he said.
Jacobs said MultiChoice had a few positive things to look forward to next year.
“The Fifa World Cup, that tends to be a very attractive growth for us. We are expecting the rest of Africa business to get to break even by the end of the financial year 2023,” he said.
He added, however, that MultiChoice was aware that the consumer was under pressure.
“The ability for us to have a different approach to cost is going to once again play an important part in being able to deliver a positive result for the next year,” he said.