Investments: Multichoice records $72m trading loss, cites currency devaluation, inflation in operating markets

*Multichoice, operator of DStv and GOtv subscription packages, attributes the loss to the impact of inflationary pressures and Foreign Exchange challenges in markets like Nigeria, and persistent power outages in South Africa

Alexander Davis | ConsumerConnect

Multichoice has announced a net loss of 1.32 billion Rand ($72.4 millon) for the six months ending September 30, 2023, marking the third consecutive semi-annual loss for the pay TV company.

ConsumerConnect learnt the South African company and owner of DStv and GOtv subscription packages, noted this while filing its returns Wednesday, November 15, 2023.

The Africa’s largest pay-TV provider, however, attributed the loss to Foreign Exchange (Forex) challenges in Nigeria, and persistent power outages in South Africa.

The depreciation of the Naira against the US Dollar, following a 40 percent devaluation when Nigeria allowed the national currency to trade more freely in mid-June 2023, was also cited as the primary reason for the loss, according to report.

Multichoice particularly highlighted the impact of inflationary pressures in key markets like Nigeria and typical trends following a FIFA World Cup or Northern Hemisphere football off-season.

Subscription revenues grew by 14 percent despite market challenges

Despite these challenges in its operating markets, the company noted it added 0.1 million subscribers, totalling 13.0 million 90-day active subscribers at the end of the period under consideration.

Besides, subscription revenues grew by 14 percent organically.

The company further reported that revenue of ZAR10.5bn was flat (+13% organic growth), with a weaker ZAR against the USD offsetting the impact of weaker local currencies relative to the USD.

The RoA (return on assets) segment delivered a trading profit of ZAR330m (+ZAR2.2 billion YoY on an organic basis) due to specific cost interventions around decoder subsidies and content costs.

As regards its business outlook, Multichoice stressed that weaker currencies remained a significant impediment to improvements in profitability, with average first-half exchanges sharply falling against the Dollar in the markets.

The firm highlighted the negative impact of the sharp fall of the Nigerian Naira, resulting in a large proportion of the previously recognised losses incurred on cash remittances now being recorded in trading profit.

The company, therefore, stated the net effect of those Forex movements was a negative ZAR1.6billion impact on the segment’s trading profit for the period.

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