Multichoice reports solid growth despite pandemic, reveals CFO Tim Jacobs

Strong all-round performance sets the stage for growth at Multichoice South Africa in 2022.

Multichoice South Africa recorded a 12 percent increase in trading profit for the year ended 31 March 2021, bringing the group’s consolidated revenue to R41 billion, in line with the prior year. This was despite lower advertising income and commercial subscription revenues as a consequence of Covid-19.

Commenting on the results, CFO Tim Jacobs said that the results reflected a strong all-round performance, underpinned by solid execution and tight cost controls.

“Our subscriber growth, which accelerated to two percentage points to seven percent year-on-year in a tough operating environment, was a key driver of revenue. Advertising revenue was severely impacted by Covid-19 in the early part of the year due to lower economic activity and disrupted programming, including sport, but recovered lost ground in the second half of the year,” he explained.

Tim did, however, point out that Multichoice remains cautious about the impact of the pandemic on consumers across the continent.

He said, “It is not yet clear where economic activity will settle for the bulk of our consumer base given the numerous challenges that they face and the fact that vaccinations are lagging. We have seen the easing of lockdowns impacting positively on our ability to produce local content. In addition, it has impacted positively on our advertising revenues and on revenues generated from our commercial customers in the hospitality industry.”

Growth in the financial year under review was supported by healthy subscriber growth in the middle and mass market as well as the uplift from annual price increase, but negated by a lower average premium subscriber base, which was affected by the lack of live sport in the first half of the financial year and consumer affordability.

MultiChoice added half a million 90-day active subscribers to close the year ended 31 March 2021 on 8.9 million subscribers.

Driven mainly by increased penetration of the middle and mass market segments, this represents growth of six percent year on year. The impact of the pandemic and the associated lockdowns saw consumers prioritise video entertainment services.

“We would like to see our premium customer base in South Africa stabilising and need to keep driving growth in connected video users. In addition, we need to drive revenue to offset some content costs shifting into financial year 2022 as a result of sport events being postponed or rescheduled. Finally, we need to keep reducing the losses and drive the return-on-assets business to return to profitability, as we have done consistently over the past few years,” Tim said.

Amid Covid-19 uncertainty and a volatile macroeconomic environment, the group plans to continue scaling its video entertainment services, focusing on both traditional linear broadcasting, as well as streaming services. In addition, it plans to further increase its investment in local content to a target 45% of total general entertainment spend.

“We continue to consider select opportunities to expand our ecosystem by investing in adjacencies. To this extent we have just announced that we will be increasing our stake in BetKing, a leading pan-African sports betting and entertainment company to 49 percent for $282 million [R3,951.15 million],” Tim said.