MultiChoice earnings surge on new subscribers and cost cutting

MultiChoice earnings surge on new subscribers and cost cutting

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MULTICHOICE Group (MCG) added 1.4 million 90-day active subscribers in the year to March 31, a 7 percent growth year-on-year, while earnings growth was robust, despite the pandemic.

In a year that required careful navigation of Covid-19-related challenges, the group ended the year with 20.9 million subscribers – 57 percent in rest of Africa and 43 percent of them in South Africa.

Growth rates improved because of better consumer demand, continued penetration of the mass market, and the easing of electricity shortages in Southern Africa, the group said in its results yesterday.

Revenue increased 4 percent to R53.4 billion, with subscription revenues accounting for R44.7bn.

The dividend was held at 565 cents. Core headline earnings, the board’s measure of performance, was up 32 percent at R3.3bn. This was even though advertising and commercial subscription revenues were significantly impacted by Covid-19.

Advertising revenues were down 34 percent year-on-year at the interim stage, but with less lockdown intensity in the second half and the return of live sport, it recovered well, ending 11 percent down at R2.8bn. Similarly, commercial subscription revenues started to recover in the latter part of the year and finished the year 35 percent lower than in the prior year. The hospitality industry was expected to take some time to normalise.

Trading profit rose 28 percent to R10.3bn, benefiting from a R1.5bn reduction in losses in the rest of Africa and 9 percent growth in South Africa.

This strong performance, the group said, was due to revenue growth, cost controls and embracing new ways of working as a consequence of Covid-19 that reduced operating costs.

It was further supported by a delay of R1.1bn in sports events’ costs.

The major contributors to cost savings were renegotiated sports rights, lower decoder unit costs, sourcing and procurement savings, and the benefits of ongoing digital adoption throughout the organisation.

Consolidated free cash flow of R5.7bn was up 10 percent, underpinned by strong earnings growth, but dampened by the end of a contractual agreement on the Southern Africa transponder lease.

The group continued its strategy of differentiation through local content and stepped up its investment by producing 4 567 additional hours, representing a 19 percent increase year-on-year, despite disruptions caused by strict early lockdown measures.

During full-year 2021, the group launched 11 new local language/ content channels across sub-Saharan Africa.

On June 10, the board approved the offer for MCG to increase its equity investment in Blue Lake Ventures (BetKing) from 20 percent to 49 percent for $281.5m (R3.83bn).

Group balance sheet liquidity amounted to a healthy R12.5bn, after R4bn was used to settle the MCG and Phuthuma Nathi dividends in September, and R1.4bn was spent acquiring a 20 percent stake in BetKing.

MultiChoice shares closed 2.71 percent lower at R133.48 yesterday.

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