MultiChoice Group the parent company of DStv and GOtv has reported a significant decline in its subscriber base and financial performance for the six months ending September 30 2024. The company attributes these challenges to adverse economic conditions currency devaluations and shifting consumer behaviors.
Subscriber Base Decline
Overall Reduction
During the reported period MultiChoice experienced a net loss of approximately 1.8 million subscribers reducing its total customer base from 16.7 million to 14.9 million. This decline underscores the company’s struggle to retain its audience amid various external pressures.
Regional Breakdown
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South Africa: The subscriber base decreased by 5% dropping from 7.8 million to 7.4 million.
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Rest of Africa: A more pronounced decline of 15% was observed significantly impacting the company’s overall performance.
Financial Performance
Profit Decline
MultiChoice reported a 99% decrease in half-year profit with adjusted core headline earnings per share falling to 2 cents from 356 cents in the previous year. This sharp decline highlights the financial strain the company is under.
Revenue Impact
The company’s revenue dropped by 10% to 25.4 billion rand on a reported basis. However when excluding foreign exchange effects and mergers and acquisitions there was a 4% organic growth.
Contributing Factors
Economic Conditions
Several African countries notably Nigeria are experiencing high inflation rates exceeding 30% leading to reduced consumer spending on services like pay television. This economic pressure has resulted in many households disconnecting from MultiChoice services.
Currency Devaluation
The devaluation of local currencies particularly the Nigerian naira has adversely affected MultiChoice’s profitability. The company reported a $151 million loss attributed to the naira’s devaluation exacerbating financial challenges.
Competition from Streaming Services
The rise of global streaming platforms such as Netflix Amazon Prime Video and Disney+ has intensified competition. Consumers are increasingly favoring these alternatives over traditional pay-TV services impacting MultiChoice’s subscriber retention.
Strategic Responses
Investment in Showmax
To counter the competition MultiChoice has invested in its streaming service Showmax. Despite these efforts the company faces challenges in gaining significant market share against established global competitors.
Cost-Saving Measures
In response to financial pressures MultiChoice has accelerated its cost-saving initiatives achieving savings of ZAR1.3 billion over the past six months. The company aims for a total of ZAR2.5 billion in savings for the full year.
Future Outlook
The company anticipates continued challenges due to persistent economic headwinds and competitive pressures. However by focusing on digital transformation and cost optimization MultiChoice aims to stabilize its subscriber base and financial performance in the coming years.
MultiChoice’s recent subscriber losses and financial downturn reflect the broader challenges facing traditional pay-TV providers in a rapidly evolving media landscape. Economic instability currency fluctuations and the rise of streaming services necessitate strategic adaptations to sustain growth and profitability.
