As the company alerts investors to a significant reduction in its financial performance, MultiChoice has officially announced a drop in trading profits. MultiChoice predicted a 50% decline in trading profit for the fiscal year that ends on March 31, 2025, in a trading report that was made public on Thursday.
The corporation claims that a number of significant issues are to blame for this decline. Widespread piracy, intense competition from international streaming sites, and macroeconomic pressures are all contributing factors. The business has also made significant investments in Showmax, its streaming service, which has increased the financial burden.
MultiChoice claims that the impact of foreign exchange volatility has been significant. Significant currency devaluation has occurred in important sub-Saharan African markets, such as Nigeria, Kenya, Zambia, and Angola. In terms of South African rand, this has drastically decreased the group’s earnings.
The company disclosed that in 2024 alone, currency devaluation cost it $217 million (ZAR4.3 billion). Nigeria notably contributed the most to this loss as the value of the Naira fell by 50%. The picture is still concerning even once these forex effects are eliminated. MultiChoice still anticipates a 7%–11% decline in its “organic” trading profit. This suggests that there are more serious operational problems than just currency shifts.
Despite the sharp MultiChoice trading profit decline, there is some good news. The business anticipates turning a profit this year after losing R9.35 per share the previous year. However, corporate actions—rather than better company performance—will bring about this good shift. The November 2024 sale of a 60% share in NMS Insurance Services to Sanlam is one significant factor. Adjusting a Showmax liability downward will also increase the figures.
Analysts also anticipate that headline earnings per share will increase, possibly by as much as 66%. However, MultiChoice cautions investors that these enhancements do not represent the company’s core competencies.
According to the corporation, there is “unprecedented financial disruption” in the current environment. A number of macroeconomic problems, including unstable power supplies, rising inflation, weak currencies, and interest rate increases, nevertheless hamper performance. Additionally, these difficulties have made life more difficult for customers.
Due to the strain on household finances, many people are reducing their pay-TV subscriptions.
MultiChoice has lost millions of subscribers as a result. In less than two years, the base’s population fell from almost 23 million to 19.3 million. In South Africa alone, only 7.6 million homes are currently subscribers, a 5% decline. The group lost over 800,000 subscribers in other parts of Africa, with Zambia and Nigeria experiencing the largest drops.
Meanwhile, the media industry is rapidly evolving. There is an increase in piracy. Traditional TV continues to lose viewers to streaming behemoths like Netflix and Disney+. Social media platforms are also disrupting viewer habits.
MultiChoice’s flagship service, DStv, is suffering. While the mid-tier Compact group saw a 9% fall, premium subscriptions fell 8%.
It is obvious that the business has significant structural and commercial difficulties. How it reacts in the upcoming months may determine its destiny.
