All you should know as MultiChoice Group announces a 50% decline in trading profit

MultiChoice Group has warned investors of a significant decline in its trading profit for the financial year ending March 31, 2025. In an update released on Thursday, the company projected a roughly 50% drop in reported trading profit, attributing the downturn to a combination of macroeconomic pressures, rampant piracy, intense competition from global streaming platforms, and substantial investments in its streaming service, Showmax. 

According to MultiChoice, the steep decline in reported trading profit is heavily influenced by foreign exchange (forex) volatility across its key markets in sub-Saharan Africa. Currency depreciation against the South African rand in countries such as Nigeria, Kenya, Zambia, and Angola has significantly eroded profitability.

For instance, in its 2024 financial results, MultiChoice reported a $217 million (ZAR4.3 billion) loss due to currency depreciation, with Nigeria alone accounting for a bulk of that due to a 50% decline in the naira’s value. Even when stripping out forex translation effects, the company’s “organic” trading profit is expected to fall by 7% to 11%, signalling underlying operational challenges.

Despite the grim profit outlook, MultiChoice anticipates an improvement in its earnings-per-share metrics for 2025. The company expects to swing from an R9.35 loss per share last year to a profit this year, driven by corporate actions rather than operational strength. Key among these is the sale of a 60% stake in NMS Insurance Services to Sanlam in November 2024 and a downward adjustment to a Showmax put option liability.

Headline earnings per share are also projected to rise by up to 66%, offering some relief to investors. However, MultiChoice emphasised that these gains do not reflect an improved core business performance.

MultiChoice described the operating environment as one of “unprecedented financial disruption” across sub-Saharan Africa, citing weaker exchange rates, elevated inflation, high interest rates, and persistent power supply issues as major hurdles. These macroeconomic factors have strained consumer budgets, leading to significant subscriber losses.

Reports indicate that MultiChoice’s subscriber base has plummeted from over 23 million to 19.3 million in less than two years, a decline of 3.7 million subscribers attributed to economic pressures. In South Africa, the subscriber base dropped by 5% to 7.6 million households, while the rest of Africa saw losses exceeding 800,000, with Nigeria and Zambia hit hardest.

The video entertainment industry’s structural shifts have compounded these challenges. The rise of piracy, competition from global streaming giants like Netflix, Disney+, and Amazon Prime Video, and the growing influence of social media platforms have disrupted MultiChoice’s traditional pay-TV model. The company’s flagship DStv service, which operates in 54 African countries, has faced declining subscriber numbers, particularly in its premium and mid-market segments, with an 8% drop in premium-tier customers and a 9% decline in the compact base.

Showmax investment still costing MultiChoice

A significant factor in MultiChoice’s profit decline is its heavy investment in Showmax, its subscription video-on-demand platform, which is still in an early stage of development and has yet to achieve profitability.

The company invested $90 million (ZAR 1.6 billion) in Showmax, which reported a trading loss of $146 million (R 2.6 billion) in the 2024 financial year but achieved a 50% year-on-year growth in its customer base. Despite these losses, MultiChoice views Showmax as a critical component of its future, aiming to position it as the leading streaming platform in Africa. The relaunch of Showmax on Comcast’s Peacock platform in 2024, with 88% of migrated customers reactivating their accounts, underscores this ambition.

To counter these headwinds, MultiChoice has implemented strategic measures, including inflationary pricing discipline, cost-saving initiatives targeting ZAR2.5 billion in savings for 2025, and the growth of new revenue streams such as DStv Stream (+71%), DStv Internet (+85%), and KingMakers (+53%).

The company also introduced price adjustments for DStv and Showmax packages effective April 1, 2025, with increases ranging from 2.1% to 7.9% for satellite DStv packages, though DStv Stream prices remain unchanged. Notably, the Showmax Premier League plan saw a 43.5% price hike, reflecting efforts to bolster revenue.

Canal+ takeover bid adds uncertainty

The financial struggles come as MultiChoice faces a takeover bid from Groupe Canal+, which has offered R125 per share, valuing the deal at about R55 billion. Canal+, the leading pay-TV operator in French-speaking Africa, aims to create a pan-African media giant by combining its 26 million subscribers with MultiChoice’s base.

The deal, initially set to close in April 2025 but delayed to October 2025, requires navigating South Africa’s regulatory restrictions on foreign ownership of broadcast licenses, which cap foreign voting rights at 20%. To comply, Canal+ plans to spin off MultiChoice’s South African broadcasting licence into a separate entity, with 51% economic interest held by local shareholders.

Canal+’s CEO, Maxime Saada, has criticised MultiChoice’s strategy, particularly its diversification into non-broadcasting ventures like insurance, sports betting (KingMakers), and fintech (Moment), as well as the separate branding of Showmax, which he believes competes with DStv rather than complementing it. If the takeover succeeds, analysts expect Canal+ to refocus MultiChoice on core pay-TV operations, potentially reshaping its strategic direction.

MultiChoice is set to release its full 2025 financial results on June 11, 2025, providing further insight into its performance and strategic responses. Despite the challenges, the company remains optimistic about its liquidity, with over ZAR10 billion available, and its efforts to “right-size” the business for current economic and industry realities.