Losses ballooned by 42% to a staggering R4.1 billion as the company reported a 9% decline in active DStv subscribers and got hit by unfavourable foreign exchange rates.<\/p>\n
The subscriber losses were felt across all markets, with DStv\u2019s South African and Rest of Africa businesses experiencing a drop.<\/p>\n
In addition to this dismal performance, MultiChoice\u2019s balance sheet shows its assets have shrunk from R47.6 billion to R43.9 billion, while liabilities rose to around R45 billion.<\/p>\n
With negative equity of R1.068 billion, MultiChoice cannot settle all its debts if forced to sell its assets and is technically insolvent.<\/p>\n
However, Mawela said there is a mismatch between what IFRS accounting rules stipulate they must show on their balance sheet and the reality reflected in their bank account.<\/p>\n
As an example, Mawela said Comcast has a put option against MultiChoice that it could theoretically exercise and must be accounted for.<\/p>\n
A put is a derivative instrument that gives the holder the right to sell an asset to the writer of the option at a specified price by a specified date.<\/p>\n
In this case, MultiChoice holds a R2.7 billion liability for Comcast\u2019s put option against its share price.<\/p>\n
Comcast subsidiary NBCUniversal acquired a 30% stake<\/a> in Showmax last year.<\/p>\n Besides Comcast\u2019s put, Mawela said they also decided to amortise the investment in their technology section.<\/p>\n However, these are all non-cash amounts being reflected on their balance sheet.<\/p>\n \u201cThere is no cash that is flowing out. We are still very strong in term of our cash position,\u201d Mawela told MyBroadband.<\/p>\n MultiChoice illustrated the impact of foreign exchange losses, the Comcast put, and its technology modernisation impairment in the chart below.<\/p>\n While Mawela maintained that MultiChoice was on a solid foundation with its R2.8 billion in net available cash, analysts have sounded the alarm.<\/p>\n All Weather Capital chief investment officer Shane Watkins has said that MultiChoice\u2019s results were truly appalling and might even be worse<\/a> than the numbers suggest.<\/p>\n \u201cThere are lots of profits in the numbers which are artificial,\u201d Watkins said.<\/p>\n \u201cMultiChoice pushed between R1 billion and R2 billion of Showmax costs to next year, and decoder subsidies are R2.2 billion less than last year,\u201d he said.<\/p>\n The lower decoder subsidies are because MultiChoice pulled back on them due to poor trading conditions.<\/p>\n There is also another R1.5 billion in once-off foreign exchange contract profits, which is unlikely to be repeated.<\/p>\n Watkins said if it weren\u2019t for French media giant Groupe Canal+ propping up MultiChoice\u2019s share price with its mandatory acquisition offer, it would be trading at around R60 per share.<\/p>\n He said investors should take their money and run as there was no guarantee the Canal+ deal would succeed.<\/p>\n The deal is still subject to several regulatory approvals, including from the Financial Surveillance department, the Competition Tribunal, the JSE, the Takeover Regulation Panel, and other government authorities.<\/p>\n Watkins also said no one knows whether Canal+\u2019s offer to MultiChoice includes a clause to terminate the deal if there is a \u201cmaterial adverse change\u201d \u2014 like the results the company just published.<\/p>\n Canal+ was forced to offer to buy MultiChoice after hitting a 35% ownership threshold stipulated in the Companies Act.<\/p>\n The French media conglomerate had steadily bought up MultiChoice stock on the open market since October 2020 and hit the threshold at the start of 2024.<\/p>\n After the Takeover Regulation Panel reprimanded Canal+ for exceeding the threshold and making a buyout offer without permission, Canal+ offered R125 per share, valuing MultiChoice at over R55 billion.<\/p>\n The buyout will cost Canal+ over R30 billion in cash, and the company has continued buying MultiChoice shares while its offer is being considered. Its last disclosed trades had Canal+\u2019s shareholding at 45.2%.<\/p>\n![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2024\/06\/MultiChoice-FY24-negative-equity-reconciliation.jpg\")
<\/a><\/p>\n
![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2024\/06\/MultiChoice-FY24-cash-position.jpg\")
<\/a><\/p>\n