MultiChoice is losing more premium customers of its DStv platform in South Africa but the mass market channels such as DStv Extra, Compact, Family and Access continue to retain and sign-up more subscribers.
Naspers, which is unbundling MultiChoice, said on Friday in its interim results for the six months to end-September that the video-entertainment segment had a steady six months, growing subscriber numbers by a sizeable 400 000 households to 13.9 million households.
Africa’s internet giant said video entertainment unit revenue rose 3% $1.8 billion and trading profit remained relatively flat at $211 million.
“The value strategy, aimed at growing the subscriber base and reducing costs, delivered a further $15 million in cost savings,” the company informed investors.
“The Fifa World Cup provided a significant opportunity to drive growth on the back of significant investment in content and subscriber acquisition (mainly through set-top box subsidies). “
The company said the South African video-entertainment business delivered solid trading profits and generated meaningful cash flows.
“Subscriber growth was strong in the middle- and mass-market segments, with some churn in premium subscribers as a number of households in this segment, appear to be experiencing strains on their disposable income,” said Naspers.
“The ongoing change in subscriber mix resulted in average revenue per user reducing from US$27 last year to US$25 this year.”
In sub-Saharan Africa, the video and entertainment unit’s subscriber growth accelerated and the business generated 9% growth in revenues to $524 million.
Naspers’ Video Entertainment business is one of the fastest growing pay-TV operators globally and its multi-platform business entertains 13.9 million households across Africa.
Africa’s largest internet and media firm Naspers to unbundle Africa’s biggest TV operator, MultiChoice.
MultiChoice, which broadcast to some 50 countries, will also be listed on the JSE.
The new TV operator company will be known as MultiChoice Group. Naspers will retain its primary listing on the JSE.
Bob van Dijk, Group Chief Executive, said in September, Naspers took a significant step in its evolution into a global consumer internet company, announcing our intention to list our video entertainment business.
“We believe this will unlock value for Naspers shareholders while creating an empowered, top 40 JSE-listed African entertainment company,” he said on Friday.
“It means in future, effectively 100% of our revenues and profits will come from online businesses. Throughout the period we continued to invest in growth, strengthening our online food-delivery, classifieds, and payments businesses.”
The new company will include MultiChoice South Africa, MultiChoice Africa, Showmax Africa, and Irdeto.
Black investors to benefit
Naspers intends to allocate – for no consideration – an additional 5% stake in MultiChoice South Africa to Phuthuma Nathi (PN) broad-based black economic empowerment (BBBEE) shareholders, prior to the unbundling, to increase MultiChoice Group’s BBBEE shareholding.
This means that the PN shareholders’ interest in MCSA and its dividend flows is expected to increase by 25%.
Last month, furthermore, Naspers announced that Calvo Mawela has been appointed Group chief executive officer of the newly established MultiChoice Group.
While Imtiaz Patel was appointed Executive Chairman of the MultiChoice Group and Tim Jacobs as Chief Financial Officer and Brand de Villiers as Group Chief Operating Officer.
The appointments were effective 1 November 2018.