MultiChoice Reports $222m Loss, Declares Technical Insolvency

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MultiChoice’s financial statements for the year ending 31 March 2024 has revealed a significant downturn, with the company recording a R4.1 billion (about $222 million) loss and becoming technically insolvent. This marks the worst financial performance in the company’s history.

MultiChoice suffered a 9% decline in active subscribers, mainly due to a 13% decline in the Rest of Africa business and a 5% decline in South Africa.

Despite MultiChoice’s overall subscriber decline, Showmax, the company’s streaming service which re-launched in February, experienced a positive trend of 16% increase in paying subscriber base from the migrated base.

The company faced a decline in subscribers and unfavorable foreign exchange rates resulted in a 5% net drop in group revenues, bringing the total down to R56 billion.

The impact went beyond revenue. Weaker subscriber trends and currency pressures significantly squeezed group trading profit, which fell by 21% to R7.9 billion.

The company’s latest income statement and balance sheet revealed a truly dismal performance.

MultiChoice’s loss for the year increased from R2.9 billion to R4.1 billion – a 42% decline which is its worst performance on record.
Even more concerning is that the DStv owner has become technically insolvent.

MultiChoice’s total assets declined from R47.6 billion to R43.9 billion, while liabilities increased to around R45 billion.
This leaves MultiChoice with a negative equity of R1.068 billion.

One of MultiChoice’s biggest problems is its long-term loans, which increased from R8 billion to R12 billion over the last year.

In an attempt to address its working capital requirements, MultiChoice revealed that it secured a R12 billion syndicated term loan to fund the group’s working capital requirements.

The company had already drawn down R8 billion of the loan during the 2023 financial year. In October 2023, they accessed an additional R4 billion.

The loan has a five-year term and bears interest at three-month Johannesburg Interbank Average Rate (JIBAR) + 1.44%.

“The capital portion will be settled via bullet payments five years from each of the drawdown dates,” MultiChoice said.

Despite its poor financial performance, MultiChoice put on a brave face and painted a picture of a company on the cusp of a turnaround.

It said it had acted quickly to “optimally position the business to weather the foreign exchange crisis that has developed across its core markets”.

This was done while “simultaneously ensuring that its long-term strategic initiatives are not compromised”.
“In the short term, the group has prioritised cash generation over growth,” MultiChoice told investors.

It added that the company has set a more ambitious target of R2 billion in savings by the end of the 2025 fiscal year (FY25).

“These targets have been embedded in the group’s budgets and within the personal objectives of key executives to drive delivery,” it said.

“The group will also continue its efforts to drive growth in focused areas, notably Showmax, Moment, SuperSportBet, DStv Insurance, DStv Internet and DStv Stream.”

It concluded that it will cut cost while retaining its DStv and GOtv customers and supporting their activity rates through the next year.

From Daily Investor 

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