MultiChoice has encountered significant challenges over the past two years, but CEO Calvo Mawela remains optimistic about a turnaround.
In the first half of the 2024 financial year, the company reported a 10% decline in revenue. However, on an organic basis, it saw a 4% increase, highlighting the adverse effects of foreign exchange fluctuations on its business operations outside South Africa and a stronger rand against the US dollar.
Mawela pointed out that unprecedented volatility in foreign exchange markets has seriously impacted the group’s interim financial performance. “In the last six months, we faced over US$123 million in forex-related challenges,” he stated.
In addition to currency issues, the company is grappling with broader macroeconomic factors that have hindered customer growth and overall performance. In South Africa, sluggish economic growth, high interest rates, and an increased cost of living have reduced household spending on discretionary products like DStv. This has compelled many consumers to cut or downgrade their subscriptions.
Despite these hurdles, Mawela believes MultiChoice has managed well through the turmoil and is positioning itself for future growth. “We are confident that conditions will stabilize and improve in the coming years,” he stated, expressing optimism, especially regarding operations in Nigeria and Zambia.
The company has made significant strides in its cost-cutting initiatives, resulting in US$123 million in permanent savings, with an aim to reach US$133 million in total savings by the end of the fiscal year. However, MultiChoice is not solely focused on reducing expenses; it is also ramping up its investment in Showmax to remain competitive in the burgeoning streaming market.
As streaming services gain popularity across Africa, MultiChoice intends to establish itself as the top choice through Showmax. “We are committed to investing in Showmax, having allocated US$86 million over the past six months to support its growth,” Mawela noted.
To ensure sustained progress, the company is concentrating on four key strategic priorities aimed at transforming MultiChoice from a conventional pay-TV service into a viable entertainment enterprise:
- Enhancing profitability and cash flow in the South African market.
- Streamlining costs in the Rest of Africa to restore profitability in that segment.
- Investing in Showmax to position it as the leading streaming platform on the continent.
- Supporting initiatives like KingMakers, Moment, and DStv Insurance to achieve greater scale.
Mawela concluded, “By effectively pursuing these objectives, MultiChoice will be well-placed to foster future growth and generate value.”
