MultiChoice Blames $72.4 Million Loss to Naira Devaluation and South Africa Blackouts

MultiChoice Group Ltd. has announced its third consecutive semi-annual loss and blamed the financial challenges it witnessed on foreign exchange in Nigeria (naira devaluation) and steady power outages in South Africa. 

In a filing released on Wednesday, Africa’s leading pay-TV company posted a net loss of 1.32 billion rand ($72.4 million) for the six months to Sept. 30.

The company said it recorded a massive revenue loss due to the naira's poor performance against the dollar. The challenges started in mid-June when the naira was allowed to trade freely against the dollar, resulting in a 40% devaluation. This development forced MultiChoice to revalue inter-group loans, leading to foreign exchange losses. 

The Statement 

• After adding 1.4 million new subscribers in FY23, subscriber growth in the rest of Africa was more subdued in 1H FY24. This was due to the impact of inflationary pressures in key markets like Nigeria and similar trends to previous periods which followed a FIFA World Cup or northern hemisphere football off-season. 

• A total of 0.1m subscribers were added to end the period at 13.0m 90-day active subscribers. The active subscriber base was broadly stable at 8.9m subscribers and subscription revenues grew 14% organically. Revenue of ZAR10.5bn was flat (+13% organic) with a weaker ZAR against the USD on conversion, offsetting the impact of weaker local currencies relative to the USD.  

• The RoA(return on assets) segment delivered a trading profit of ZAR330m (+ZAR2.2bn YoY on an organic basis) which was underpinned by specific cost interventions around decoder subsidies and content costs. 

• Weaker currencies remained a significant impediment to improvements in profitability, with average first-half exchanges falling sharply against the USD.  

• The sharp fall of the naira resulted in a large proportion of the previously recognised losses incurred on cash remittances now being recorded in trading profit. The net effect of these forex movements was a negative ZAR1.6bn impact on the segment’s trading profit for the period.

Together with the naira devaluation, MultiChoice also said that another circumstance that affected the platform was the continuous blackouts experienced in South Africa, which led to a 5% decline in active days per subscriber. All this together further impacted MultiChoice’s financial performance during the specified period. 

MultiChoice shares fell 0.6% in Johannesburg at close on Wednesday after plunging as much as 3.6% to a record. 

MultiChoice plans to relaunch its Showmax streaming service and a sports betting service in South Africa in the second half of its financial year, following the success of a similar offering in Nigeria.