Staff Reporter
JOHANNESBURG, South Africa, November 16 — MultiChoice Group (MCG), Africa’s premier entertainment company, achieved notable success in its operational goals for the six months ending on September 30, 2023, marking the first half of the fiscal year 2024.
Continuing its tradition of staying ahead in technology investments and adapting to evolving consumer video consumption trends for future growth, the group strategically increased its investment in Showmax, anticipating an exciting re-launch in the latter half of the fiscal year.
Calvo Mawela, Chief Executive Officer, emphasized the group’s commitment to developing a leading entertainment platform catering to consumer needs in sub-Saharan Africa. Mawela stated, “We remain focused on leveraging our footprint to build a differentiated ecosystem and on developing additional revenue streams.”
The group experienced heightened subscriber activity, buoyed by the excitement surrounding three world cups, culminating in the Springboks securing back-to-back Rugby World Cup victories. Notably, the South African Premium customer base witnessed a 5% growth, marking a positive trend after several years.
While profitability faced challenges due to ongoing power interruptions, cost of living pressures, and currency depreciation against the US dollar, the impact was mitigated by a shift in focus towards subscriber retention, an improved customer mix, and diligent pricing and cost-saving measures. Consequently, the group maintained a positive trading profit margin of 3% in the Rest of Africa (a ZAR2.2bn organic improvement YoY) and delivered a 31% trading margin in South Africa.
Key highlights for the 1H FY24 period include:
– Group revenue: ZAR28.3bn, down 1% (up 4% organic), influenced by weaker local currencies and consumer pressure.
– Subscription revenues: 3% higher organically, with strong growth in the Rest of Africa (+14%) and Showmax (+25%), offset by pressure in the South African business (-4%).
– Group trading profit: increased 18% organically (excluding additional Showmax investment) and 10% improvement with Showmax investment. Reported trading profit was 18% lower at ZAR5.0bn, impacted by forex headwinds, Showmax trading losses, and lower South African contribution.
– Total content costs: up 10% (+ 4% organic) due to continued investment in local content and World Cup events.
– Core headline earnings: ZAR1.9bn, down 5%, influenced by factors impacting trading profit.
– Free cash flow: ZAR1.1bn, impacted by increased Showmax investment and lower South African business contribution.
The group continued to enrich its local content library, increasing spending on local content by 16% YoY to nearly 80,000 hours. Plans involve enhancing the monetization of content through both linear and streaming platforms.
Various successful program launches, including Shaka iLembe, Gqeberha: The Empire, Umkhoka: The Curse, 1802: Love Defies Time, Hartklop, and Kokkedoor: Vuur & Vlam, contributed to maintaining strong momentum in local language programming. Additionally, Big Brother Naija’s eighth season generated record advertising revenues.
SuperSport showcased its prowess by broadcasting three World Cup events in the period, including the FIFA Women’s World Cup, Netball World Cup, and Rugby World Cup. The Comrades Marathon in June 2023 marked the largest production in SuperSport’s history, reinforcing its commitment to diverse sports coverage.
As part of the “Here for Her” campaign, SuperSport made history with an all-female broadcasting crew for the Netball World Cup in Cape Town, shortlisted at the Sports Business Awards for “Best Sporting Event of 2023.”
Beyond World Cup coverage, SuperSport highlighted local sports stories through its documentary series, Pulse of a Nation, chronicling the history of football in South Africa. The SuperSport Schools platform, dedicated to making school sports accessible, expanded its user base by 69% over the last six months.
Operational Performance Review:
**South Africa:**
The challenging consumer environment persisted, with load shedding impacting subscriber activity. The group reported a 5% decline in 90-day active customers, with initiatives implemented to protect segment economics. Revenues declined by 3% to ZAR16.5bn, influenced by a 4% decline in subscription revenues.
**Rest of Africa (RoA):**
Subscriber growth in RoA was subdued in 1H FY24, with 0.1m subscribers added, totalling 13.0m 90-day active subscribers. Revenue of ZAR10.5bn was flat, and trading profit increased by ZAR2.2bn YoY on an organic basis.
**Showmax:**
The Showmax partnership with Comcast was concluded, with an active subscriber base increasing by 13% YoY, and revenues growing 46% (+45% organic) to ZAR0.6bn. Short-term operating costs increased, resulting in trading losses of ZAR0.8bn.
**Technology Segment:**
Irdeto’s external business delivered 17% topline growth, and KingMakers reported strong underlying operating momentum with an organic revenue growth of 22%.
**Moment (Fintech):**
The Moment joint venture progressed in integrating with core payments infrastructure, set to commercialize local services in 2H FY24.
**Future Prospects:**
Mawela highlighted the group’s growth strategy, emphasizing streaming investment and addressing external economic pressures. Efforts focus on driving efficiencies, optimizing returns, and carefully investing in future business lines.
“The second half of FY24 will be an important period in our journey to expand our ecosystem beyond Africa’s leading linear pay-TV operator into a broader ecosystem of interactive entertainment and consumer services. The relaunch of Showmax, SuperSportBet’s entry into the South African market, and Moment’s platform launch are crucial milestones as we accelerate growth and drive additional scale,” concluded Mawela.
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