South African entertainment company MultiChoice Group suffered a devastating 99% decline in half-year profit, as a tough operating climate eroded its subscriber base.
The group disclosed this information in its Interim Financial Results for the six months ended 30 September 2024, released on Tuesday.
The owner of DStv, operating in 50 sub-Saharan African countries, cited a confluence of factors for its poor performance: weakening local currencies, reduced consumer spending, particularly in Nigeria’s challenging economic climate, and extensive power disruptions in Zambia.
Despite a slight improvement from the previous six months’ 803,000 loss, MultiChoice still shed 634,000 subscribers, with Zambia and Nigeria bearing the brunt of the decline.
Nigeria’s soaring inflation and Zambia’s crippling, drought-triggered power cuts, lasting up to 23 hours a day, were the primary culprits behind the company’s subscriber losses in these two key markets. In response to escalating inflationary pressures, MultiChoice Nigeria implemented three price hikes for its DStv and GOtv bouquets within 12 months.
In commenting on the company’s results, MultiChoice Group CEO Calvo Mawela highlighted that the current operating environment presents the most significant challenges the company has faced in almost 40 years.
To navigate the challenging economic landscape, the Group has implemented strategic measures to optimise its operations and align with evolving industry trends. While currency volatility is a common challenge for businesses operating across Africa, the unprecedented currency weakness over the past 18 months has resulted in a substantial loss of nearly R7 billion ($385,850,000) in profits.
“Combined with the impact of a weak macro environment on consumers’ disposable income and therefore on subscriber growth, it required the Group to fundamentally adjust its cost base – which is exactly what has been done,” Mawela said.
“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 ZAR10 billion in total available funds.”
A noteworthy bright spot in its report was the strong performance of the company’s streaming service Showmax, with a 50% year-over-year increase in paying subscribers, wdemonstrating its strategic positioning to ride the wave of Africa’s burgeoning streaming industry. To fuel this growth trajectory, the Group made a significant investment of ZAR1.6 billion in the business during the interim period.
Note: $1 = 18 ZAR
