Multi Choice Sinks Into $72M Loss, Blames South Africa Energy Crises and Naira Devaluation

MultiChoice Group Ltd. has disclosed its third consecutive semi-annual loss, attributing the challenges to foreign-exchange difficulties in Nigeria and persistent power outages in South Africa.

Africa’s biggest pay-TV company posted a net loss of 1.32 billion rand ($72.4 million) for the six months to Sept. 30, MultiChoice said in a filing on Wednesday.

The difficulties in Nigeria arose from the mid-June decision to allow the Naira to trade more freely against the dollar, resulting in a 40% devaluation. This compelled MultiChoice to revalue inter-group loans, resulting in foreign exchange losses.

The company noted that after experiencing robust growth with the addition of 1.4 million new subscribers in the fiscal year 2023, subscriber expansion in the Rest of Africa was more moderate in the first half of fiscal year 2024.

“This was due to the impact of inflationary pressures in key markets like Nigeria, and similar trends to previous periods which followed a FIFA World Cup or northern hemisphere football off-season,” it said.

“Revenue of ZAR10.5bn was flat (+13% organic) with a weaker ZAR against the USD on conversion, offsetting the impact of weaker local currencies relative to the USD. Weaker currencies remained a significant impediment to improvements in profitability, with average first-half exchanges falling sharply against the USD,”

It added that “The sharp fall of the naira resulted in a large proportion of the previously recognised losses incurred on cash remittances now being recorded in trading profit. The net effect of these forex movements was a negative ZAR1.6bn impact on the segment’s trading profit for the period.”

In addition to currency challenges, South Africa faced intermittent power outages. This contributing factor further impacted MultiChoice’s financial performance during the specified period, resulting in a 5% decrease in the number of active days per subscriber.

Earlier in the month, it increased its subscription fees in Nigeria, the second price increase for its DStv and GOtv packages this year, with a raise of at least 19%.