DStv parent company MultiChoice has warned investors that it expects to report lower revenue than anticipated for its 2023 financial year (FY2023).
MultiChoice said subscriber growth and activity during the Fifa World Cup and festive season had not been enough to ward off the impact of load-shedding.
Although it didn’t state how badly its revenue would be hit, MultiChoice said its South African segments trading margin would be between 23%–28%, below the market guidance of 28%–30%.
The broadcaster explained that its large fixed cost base and the additional costs incurred in the Showmax-Comcast agreement contributed to this.
MultiChoice gave its warning in a voluntary trading update issued late on Monday, 13 March 2023.
During its results for the first six months of its 2023 financial year, MultiChoice cautioned about the ongoing economic challenges facing various markets.
However, it also said it was looking forward to the second half of the financial year (2H2023) being buoyed by the broadcasting of the Fifa World Cup from November to December, and festive season momentum.
“Although the World Cup delivered subscriber numbers broadly in line with expectations, the operating environment in South Africa has deteriorated beyond expectations over the past few months,” MultiChoice said.
“Sustained high levels of load-shedding are having a significant impact on the activity levels of the customer base.”
“Combined with the negative effect of a weak economy on consumer spending, and thus on the Group’s customer mix, indications are that 2H2023 revenue growth in the South African business will be below expectations.”
However, MultiChoice said its Rest of Africa business remained on track to return to trading profitability in 2023 due to the positive impact of increased scale, supported by good 2H2023 subscriber growth over the festive season, especially in Nigeria.
Furthermore, the company expects to exceed its FY2023 cost savings target of R0.8bn, while its hedging policy’s benefits should also positively impact earnings in a weaker rand environment.
MultiChoice’s financial year ends on 31 March 2023, and it will announce its annual results on 13 June 2023.
Its trading update came at the close of JSE trading on Monday.
At around 09:30 on Tuesday, 14 March 2023, the price of a MultiChoice share on the JSE had dropped 14.58% to R119.21.
It rebounded somewhat to R123 (still 11.87% down from market open) but quickly traded back down to around R120 per share.