{"id":541153,"date":"2024-06-16T13:04:19","date_gmt":"2024-06-16T11:04:19","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=541153"},"modified":"2024-06-21T15:30:12","modified_gmt":"2024-06-21T13:30:12","slug":"multichoices-year-to-forget","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/broadcasting\/541153-multichoices-year-to-forget.html","title":{"rendered":"MultiChoice’s year to forget"},"content":{"rendered":"

MultiChoice CEO Calvo Mawela told the Sunday Times<\/a> that the company can “still realise a lot of cost savings without retrenchments.”<\/p>\n

This follows MultiChoice’s total revenue declining by 5% year over year and the company’s after-tax loss increasing from R2.9 billion to R4.1 billion.<\/p>\n

To arrest the decline, the company has targeted R2 billion in savings by 2025 to improve its financials.<\/p>\n

While these savings will be made across the board, Mawela said there will be a particular focus on “big ticket” lines like satellite leases, where contracts will soon be up for renegotiations.<\/p>\n

Mawela also highlighted the company’s focus on building digital products that it can layer on top of its existing pay-TV base to increase revenue.<\/p>\n

“Our strategy to grow these additional revenues is no longer only a vision, it is gaining real traction,” said Mawela.<\/p>\n

The company’s insurance business, for example, grew by 19% to 3.3 million active policies over the past year, while its revenue increased by 35%.<\/p>\n

Showmax is another major focus for MultiChoice, and Mawela told MyBroadband the service is on track to achieve $1 billion in revenues in five years.<\/p>\n

Despite the growth of these products, MultiChoice continues to face major challenges \u2014 largely due to the company losing pay-TV subscribers in major markets like South Africa.<\/p>\n

The company blamed the loss of subscribers on load-shedding in South Africa and the fact that its other African businesses suffered due to double-digit inflation and currency depreciation \u2014 especially in Nigeria, Angola, Kenya, and Zambia.<\/p>\n

Peter Takaendesa, head of equities at Mergence Investment Managers, told the Sunday Times it has been “a year to forget” for MultiChoice.<\/p>\n

He said MultiChoice’s new revenue streams were currently not enough to offset the structural and cyclical pressures on the traditional pay TV business.<\/p>\n

Takaendesa said\u00a0MultiChoice’s most important business was its South African pay-TV operation and it continued to face major challenges.<\/p>\n

These were only compounded by the start-up losses it has incurred to fund Showmax.<\/p>\n

“MultiChoice remains a high fixed cost business and any revenue shortfall amplifies the pressure on profits and cash returns to shareholders,” said Takaendesa.<\/p>\n

However, Takaendesa said it is not all bad news for shareholders, as Canal+’s offer of R125 per share is now “the dominant factor” driving the share prices.<\/p>\n

“We think Canal+ was fully aware of these operational headwinds facing the business,” he said.<\/p>\n

\"\"<\/a>

Calvo Mawela, MultiChoice CEO<\/p><\/div>\n

MultiChoice takeover challenges<\/h2>\n

While Canal+ and MultiChoice have reached an agreement to buy the latter out for approximately R35 billion, both companies face significant regulatory hurdles before the deal can be completed.<\/p>\n

The takeover was confirmed in early June and now faces a plethora of approval processes across the Financial Surveillance Department, Competition Tribunal, JSE, Takeover Regulation Panel, and the Independent Communications Authority of South Africa (Icasa).<\/p>\n

MultiChoice and Canal+ hope the processes will be finalised no later than 8 April 2025.<\/p>\n

MyBroadband spoke with ICT policy legal expert Lisa Thornton, who said the deal’s success depends on its structure<\/a>.<\/p>\n

This includes limiting Canal+’s voting rights to 20%, which is required by the Electronic Communications Act (ECA) for broadcasting licensees.<\/p>\n

For example, Canal+ currently owns approximately 45.2% of MultiChoice but has its voting rights limited to 20% to align with the ECA. This 20% vote must remain even as Canal+ increases its ownership of MultiChoice.<\/p>\n

Another challenge will be meeting Icasa’s BBBEE rules, including the requirement that historically disadvantaged groups must own 30% of a licensee.<\/p>\n

“This might entail establishing a South African entity to hold the licensees in question and a partnership with local black entities\/persons,” said Thornton.<\/p>\n

Patrice Motsepe is reportedly one of the businesspeople engaging with Canal+ to help it meet its BBBEE requirements.<\/p>\n

Lastly, Thornton said MultiChoice and Canal+ would face a challenge from competition regulators, as Canal+’s vast resources and expertise could be perceived as increasing or cementing MultiChoice’s dominance in South Africa.<\/p>\n

However, this could be weighed against the rise of online video streaming services like Netflix.<\/p>\n","protected":false},"excerpt":{"rendered":"

MultiChoice CEO Calvo Mawela told the Sunday Times that the company can\u00a0“still realise a lot of cost savings without retrenchments.”<\/p>\n","protected":false},"author":341039,"featured_media":539773,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[24196,21383,35,475,32140],"class_list":["post-541153","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-broadcasting","tag-calvo-mawela","tag-canal","tag-headline","tag-multichoice","tag-showmax"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/541153"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341039"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=541153"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/541153\/revisions"}],"predecessor-version":[{"id":541155,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/541153\/revisions\/541155"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/539773"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=541153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=541153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=541153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}