South African pay-TV giant MultiChoice has reported an annual loss of R4 billion ($217 million) on revenues of R56 billion, largely due to significant macroeconomic pressures. These challenges are prompting shareholders to consider whether ownership by Canal+ might offer some stability.
In key markets such as Nigeria and Ghana, devaluation and inflation have eroded consumer purchasing power, leading to a decrease in active subscribers. Specifically, Nigeria saw its subscriber base drop by 1.2 million to 8.1 million, reducing the country’s revenue contribution to the Rest of Africa segment from 44% to 35%.
In its executive summary, MultiChoice pointed out that in nations like Nigeria, mass-market customers are prioritizing essential needs over entertainment. The company acknowledged that FY24 faced the harshest macroeconomic conditions for its Rest of Africa business since 2016.
While the South African market showed greater resilience with only a 5% drop in active customers (totaling 7.6 million at year-end), it too encountered difficulties. MultiChoice noted that ongoing loadshedding throughout FY24 discouraged customers without backup power from subscribing, due to uncertainty about their ability to watch TV.
Across all regions, the number of premium customers, including those on Premium and Compact Plus packages, fell by 8%, and the mass-market tier saw a 2% decline.
These annual figures, unlikely to reassure investors, come in the wake of cost-cutting initiatives by MultiChoice. The company cut back on decoder subsidies, saving R1.9 billion, but was unable to mitigate the broader market challenges it faces.
For instance, MultiChoice experienced remittance losses of $59 million from Nigeria due to volatile foreign exchange markets, a notable decrease from the $132 million loss in FY 2023.