MultiChoice swings to loss as subscribers dwindle, currency depreciation hits

South African pay television company MultiChoice swung to a full-year headline loss as it contended with cash-strapped consumers, and foreign currency and other macro headwinds, it said on Wednesday. MultiChoice, which is a takeover target of France’s Canal+, reported an adjusted core headline loss of 800 million rand ($45.13 million) in the year ended March 31, from headline earnings of 1.3 billion rand a year earlier. Its trading profit almost halved to 4 billion rand, as trading losses from video streaming platform Showmax increased by 2.3 billion rand, and it booked 5.2 billion rand in foreign currency revenue losses.
“The past two financial years have been a period of significant financial disruption for economies, corporates and consumers across sub-Saharan Africa due to challenging macro-economic factors,” the company said in a statement. Combined with the impact of structural industry changes in video entertainment such as the rise of piracy, streaming services and social media, this has materially affected the overall performance of the MultiChoice Group.” The group lost 1.2 million broadcast subscribers over the year, to 14.5 million, and had to absorb a 10.2 billion rand negative impact on its top line due to local currency depreciation against the U.S. dollar.
“The ongoing cost-of-living crisis has meant that households are struggling to make ends meet and many had no choice but to give up their DStv subscription for the time being,” the company said. Revenue declined 9% to 50.8 billion rand as income from subscriptions fell 11% despite price increases, and also after it sold a 60% stake in its insurance business. Analysts had expected revenue of 52.9 billion rand. After relaunching Showmax just over a year ago, active paying subscribers grew 44% to gain regional market share, it said. Showmax competes with global streaming giants such as Netflix To drive uptake of Showmax, it ramped up investment in local content by releasing 82 originals. It also offered exclusive content from Comcast’s NBCUniversal and third-party productions from international studios.