MultiChoice posts solid results but takes hit from World Cup investment

South African pay TV operator MultiChoice has posted solid subscriber growth and earnings for its fiscal first half but took a hit from investing in new set-tops ahead of the FIFA World Cup.

MultiChoice’s linear pay TV base grew 5% to reach 22.1 million subscribers, made up of 9.1 million in South Africa and 13 million in the rest of Africa.

The company said it had seen growth in the rest of Africa thanks to local content productions, while growth in South Africa improved in the second half of the six months to September despite economic pressure.

Revenue was up ZAR1.8bn to ZAR28.6 billion. Trading profit amounted to ZAR6.1 billion, up 6% organically, despite a ZAR0.7 billion investment in decoders ahead of the upcoming World Cup.

Headline earnings were up 2% YoY to ZAR2.0 billion, thanks to reduced losses in the rest of Africa and positive foreign exchange movements.

Revenue in South Africa decreased 2% to ZAR17.4 billio due to a weaker than normal first quarter, when the impact of the football off-season was exacerbated by the challenging consumer climate.

The Rest of Africa business benefited from the popularity of local content such as Big Brother Naija and popular sports such as European football and WWE.

Revenue of ZAR10.5 billion was up 28% or 13% organically. Helped by the weaker ZAR when translating the segment’s dollar revenues. Trading losses narrowed to ZAR0.3bn, a 79% improvement year-on-year on an organic basis,

Free cash flow was lower at ZAR1.8bn, a result of prepayments and the increased investment in decoders ahead of the World Cup.

“After a slower than usual start to the year, with global fuel and food price shocks negatively impacting consumer sentiment, our business regained momentum due to our engaging local content slate and strong local capabilities” says Calvo Mawela, CEO.