MultiChoice shrugs off Netflix threat, delivers strong full-year results

MultiChoice Group has reported a 14% improvement in trading profit to R8-billion for the year ended 31 March 2020, despite a tough economic environment and the growing threat of Netflix and other streaming video providers.

Core headline earnings rose by 38% to R2.5-billion, while free cash flow was up 59% to R5.2-billion, leaving the group, which owns DStv, SuperSport, Showmax and Irdeto, with R9.1-billion of cash on its balance sheet at year-end. The strong cash flow was the result of an improvement in the trading results from markets outside South Africa, a focus on cost containment and a reduction in working capital.

Revenue growth was fairly muted at just 3%, bringing the total to R51.4-billion, of which R42.8-billion was from subscriptions. The 90-day active subscriber base rose by 5% to 19.5 million. South Africa contributes 8.4 million households to the base, with 11.1 million coming from the rest of Africa.

CEO Calvo Mawela said in a statement that the group’s strong balance sheet “positions us well to weather the uncertainties in our markets”.

The South African business delivered subscriber growth of 6% year on year. The Covid-19 lockdown saw an uplift in subscribers at the end of March. However, full-year revenue growth of 1% to R34.2-billion was muted as healthy subscriber growth in the mass market was negated by the “strategic decision” not to increase prices on the Premium bouquet.

Trading profit in South Africa increased by only 1%, to R10.3-billion, due to modest revenue growth and the cost impact of broadcasting three major sporting events in the reporting period. However, the trading margin remained stable at 30%.

‘Solid traction’

“Showmax, the group’s standalone over-the-top (streaming) service, gained solid traction this year following the launch of a mobile-only offering, improved marketing, and further enhancements to the user interface and the content slate. The platform now boasts more than 50% local content,” MultiChoice said.

MultiChoice declared a dividend of R2.5-billion. It also executed about R1.7-billion worth of share buybacks during the financial year.

Capital expenditure was R800-million in the 2020 financial year, slightly down on the prior period, and included a R200-million investment in the group’s customer service, billing and data capabilities.  — © 2020 NewsCentral Media