MultiChoice makes its JSE debut with R44-billion market cap

MultiChoice Group is now a listed company. It made its market debut in Johannesburg on Wednesday morning as a JSE Top40 company with a market capitalisation of about R44-billion shortly after 9am.

Well-known stockbroker David Shaprio tweeted after the market opened that the debut price for MultiChoice was “well below expectations”. At R100/share, most analysts recommend buying, he said. “Above R150, they would sell.”

The shares were changing hands at R101.40 apiece at 9.23am.

Some volatility is expected in the share price upon its debut as the market settles on a fair price for the stock and as some Naspers investors who inherited the shares through the unbundling take the opportunity to cash out. Naspers shares were trading down 2.5% at 9.12am in Johannesburg, less than the market value of MultiChoice, suggesting value has been unlocked through the unbundling for Naspers shareholders.

“Today is a proud day for Naspers. Listing MultiChoice Group through an unbundling unlocks value for Naspers shareholders by creating the opportunity for them to own a direct stake in MultiChoice Group, a top-40 JSE-listed African entertainment group,” said Naspers CEO Bob van Dijk in a statement.

The listed group consists of MultiChoice South Africa Holdings, MultiChoice Africa Holdings, MultiChoice Botswana, MultiChoice Namibia, NMS Insurance Services SA, the African division of Showmax, Irdeto Holdings and Irdeto South Africa.

Naspers announced in September 2018 that it would list its video entertainment business. It said at the time that MultiChoice Group was operating in one of the fastest-growing continents by both GDP and population with a rapidly expanding middle class and the penetration of video entertainment still relatively low.

Headwinds

However, the listing and unbundling comes as MultiChoice is facing serious headwinds in the form of tighter regulation in South Africa and competition from international streaming services such as Netflix, which have begun to erode its subscriber numbers in the lucrative premium segment.

“We are also very pleased to be able to create further value for Phuthuma Nathi shareholders, who, through MultiChoice South Africa, have already participated in one of South Africa’s most successful empowerment schemes,” Van Dijk said in Wednesday’s statement.

Phuthuma Nathi shareholders have been allocated an additional 5% stake in MultiChoice South Africa for no consideration, thereby increasing their indirect interest in MCSA from 20% to 25%, and resulting in a 25% increase in Phuthuma Nathi’s share of MultiChoice dividend flows.

“Today’s listing is an important milestone in our exciting journey of growth,” said MultiChoice Group CEO Calvo Mawela. “As one of the fastest growing pay-TV broadcast providers globally, our strong financial position at listing is backed by attractive long-term growth opportunities in both subscriber numbers and revenue. MCG has a highly cash generative core with no financial debt, and we are poised to deliver value to our shareholders over time.

“We are overwhelmingly positive about MultiChoice Group’s future. With the largest pay-TV footprint across Africa, we understand our customers and tailor our offering and services to suit market-specific video entertainment needs. This, coupled with a leading content offering, world-class technology and infrastructure, pan-African scale and strong in-country capabilities, positions us well to generate shareholder returns and future growth,” Mawela said.  — © 2019 NewsCentral Media