The pay TV operator – operating in 50 Sub-Saharan countries including Cape Verde and Madagascar – has reported robust numbers at the back of stern competition from streaming services.
Far from being the group’s annus mirabilis, the company presented numbers that showed shrewd cost containment and well balanced growth success across its entire group. Revenue went up by 3% to R51.4 billion – R34.2 billion (67%) of that coming from their South African market – underscored by a 5% growth in 90-day active subscribers base to 19.5 million.
The group also recorded an EBITDA of R8 billion, which was a healthy 14% increase from the previous year, although it is worth noting that RoA (rest of Africa) produced a combined trading loss of R2.9 billion due to macro-economic headwinds and currency depreciation that saw Zimbabwe and Zambia’s year-on-year subscriber growth decline by 41% and 11% respectively.
Unbundled from its wealthy parents – Naspers Limited – just over 12 months ago, this is the first full trading year MCG has had to endure outside of the tech giant’s “protection” and the markets have commended the leadership of the Chief Executive Calvo Mawela and his team for successfully keeping the mushrooming entertainment streaming services at bay, over the past 12 months.
“Our balance sheet positions us well to weather the uncertainties in the market moving forward.” Mawela said, highlighting the group’s hoarding of a R9.1 billion war chest (with an additional R5 billion available in undrawn facilities).
The group also announced a 565c per share maiden dividend that culminates to R2.5 billion circa plus a planned R1.4 billion Phuthumani Nathi dividend settlement that will bring their liquidity down to R10.2 billion.
Perhaps the most jaw-dropping moment of the presentation came when MCG revealed they have signed an agreement with American based Netflix and Amazon Prime Video to integrate their services into the new Dstv Explora decoder, the clearest indication yet that the group acknowledges it cannot contest a digital ecosystem that is expected to eventually replace the pay-per-view format as we know it today. This will put them in-line with their desire to better that 39% growth they achieved for their OTT services segment- at the back of a 100% rating increase in the DStv Now app functionality from 2.2 to 4.4, a growing JOOX Music app subscriber base and some encouraging Showmax numbers – in FY20.
Although it is likely that revenue will be impacted by the decline in advertising income due to canceled programming during the lockdown, the return of sporting events and the consolidation of their access platforms (integration of DStv Now app, JOOX Music app, Showmax, Netflix Inc and Amazon Prime Video into the Explora decoders) is expected to keep MultiChoice in a strong position heading into the final three quarters of their new trading year.
Business Corner 