MultiChoice Sees Surge in Earnings Amidst Subscriber Boom

Image sourced from The Vanguard Nigeria

South African broadcasting conglomerate MultiChoice Group reports that it has added 1.4-million 90-day active subscribers to its services between the beginning of 2021 to 31 March.

MultiChoice also reports that earnings were exceedingly robust despite the ongoing pandemic. This is partly due to the 7% growth year-on-year of its subscribers.

The Johannesburg-based corporation ended 2020 with 20.9-million subscribers – 43% from South Africa, while a further 57% of subscribers from the rest of the continent.

Growth in the Face of COVID-19

MultiChoice continued to grow despite challenges stemming from the onset of the COVID-19 pandemic, a feat similar to other streaming or broadcasting entertainment services.

Company revenue surged 4% to R53.4-billion ($3.2-billion), with subscription revenues accounting for R44.7-billion ($2.6-billion) of the total. MultiChoice’s board’s primary measure of performance – its core headline earnings – were up by 32% at R3.3-billion ($198.4-million). The feat was managed despite subscription and advertising revenues were “significantly impacted” by COVID-19 and South Africa’s hard lockdown.

Advertising revenues were down 34% year-on-year at the interim stage, according to MultiChoice’s yearly earnings results report. Advertising began to rally in the second half of 2020 with lockdown restrictions laxing and the return of live sport. Advertising made significant recoveries in Q3 and Q4, ending at 11% down at R2.8-billion ($168.3-million).

Commercial subscription revenues started to recover in the latter part of the year as well, finishing at 35% lower than the year prior. Trading profits rose 28% to R10.3-billion ($619.3-million), benefiting from a R1.5-billion ($90.1-million) reduction in losses in the rest of Africa and 9% growth in South Africa, particularly.

MultiChoice managed to grow in spite of the pandemic with renewed revenue growth, cost controls and the embracing of new methods of working influenced by the pandemic’s consequences. Consequences that saw the company’s operating costs reduced.

The growth was further supported by a massive R1.1-billion ($66.1-million) in savings from the lack of sporting events for most of 2020. MultiChoice saved enormous amounts of operating costs for sporting events.

Significant major contributors to revenue growth include:

  • Renegotiated sports rights
  • Lower costs for its DStv decoders
  • Sourcing and procurement savings
  • The continued benefits of its ongoing digital adoption programmes

MultiChoice Continues to Differentiate

MultiChoice continued its strategy of differentiation through new local content and stepped up its investment by producing 4567 additional hours, representing a 19% increase year on year, despite disruptions caused by strict early lockdown measures in South Africa and abroad.

Since the beginning of 2021, the group has begun and is working to continue launching 11 new local language/content channels across sub-Saharan Africa.

On 10 June, its board approved an offer for MultiChoice to increase its equity investment in Blue Lake Ventures (BetKing) from 20% to 49% for $281.5-million (R3.83-billion). DStv subscribers should prepare to hear more from BetKing on their TVs in short order.

MultiChoice shares closed 2.71% lower at R133.48 ($9.86) yesterday.

By Luis Monzon
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