MultiChoice no longer technically insolvent

MultiChoice is no longer technically insolvent after its liabilities reduced so they no longer exceed its assets.

South Africa’s pay-TV giant became technically insolvent last year, but MultiChoice Group CEO Calvo Mawela said at the time that they were not concerned about it, as they remained in a strong cash position.

“To non-financial people, they will just see negative equity and get a shock,” Mawela told MyBroadband.

“But we have been in discussions with our lenders, and they are still comfortable with the underlying business. They will only get worried if they see the cash being burned, but so far, so good.”

In its annual results for the year ended 31 March 2025, published on Wednesday, MultiChoice said it returned to a positive equity position through a combination of several factors.

These included cost savings, a stabilisation in currencies, and the accounting gain on selling 60% of the group’s shareholding in its insurance business (NMSIS) to Sanlam.

An analysis of MultiChoice’s balance sheet shows that its assets and liabilities both decreased during the past year, with its liabilities decreasing more.

Specifically, MultiChoice reported improvements in its lease liabilities, long-term loans, and tax liabilities.

The lease liabilities decrease related primarily to lower clearing receipts due to higher remittances in the Rest of Africa segment, the utilisation of tax security deposits in Nigeria, and the realisation of prepayments.

MultiChoice explained that its long-term loans decreased when, in February 2025, it made an early repayment of R927m on the R12-billion syndicated term loan concluded in the 2023 financial year.

This was possible thanks to R1.2-billion in after-tax upfront proceeds from the NMSIS sale.

Regarding the improvement in its outstanding tax liabilities, MultiChoice explained this was primarily due to the resolution of a number of tax matters and the rand appreciating against the dollar.

In addition to improvements in liabilities, MultiChoice reported a 10.5% decrease in assets, mostly driven by a 17.6% reduction in current assets.

The two most significant contributors to the decrease were programme and film rights, and a reduction in cash and cash equivalents.

“At year-end the group held R5.1bn in cash and cash equivalents and retains access to R3.0bn in undrawn general borrowing facilities,” MultiChoice stated.

MultiChoice explained that the decrease in programme and film rights related primarily to the group’s continued content cost savings initiatives.

It also included the realisation of content prepayments pertaining to sporting events that took place during the 2025 financial year.

Big profit swing

In addition to becoming technically solvent, MultiChoice also reported a net profit of R2.02 billion, representing a R4.54-billion swing from the R2.52-billion loss it reported in 2023/24.

This can also primarily be attributed to MultiChoice’s sale of a majority stake in its NMSIS insurance business to Sanlam.

Analysing MultiChoice’s income statement also revealed that improvements in foreign exchange translation losses and fair value adjustments contributed to its bottom line.

Therefore, currency stabilisation and the sale of NMSIS have had an outsized influence on MultiChoice’s profitability and balance sheet during its 2024/25 financial year.