MultiChoice’s latest results revealed that South Africans continue to dump DStv Premium and Compact Plus packages in preference for more affordable services.
MultiChoice’s results for the year ended 31 March 2023 showed a 7% revenue increase to R59.1 billion but a 48% decline in free cash flow.
The low free cash flow resulted from lower trading profit, content prepayments, and working capital timing due to a systems upgrade investment.
The board did not declare a dividend due to a cautious outlook on currencies in South Africa and Nigeria.
Other reasons include a challenging environment in South Africa, exacerbated by the energy challenge and an anticipated increase in investment in Showmax.
Positives for MultiChoice included returning its Rest of Africa business to profitability and further expanding its consumer services ecosystem.
The group added 1.7 million 90-day active subscribers, representing 8% year-on-year growth, to close the year with 23.5 million subscribers.
The 90-day subscriber base comprised 14.2 million households (60%) in the Rest of Africa (RoA) and 9.3 million households (40%) in South Africa.
Users of the DStv app and Showmax services continue growing as online consumption increases, supported by rising broadband connectivity and more affordable pricing.
The online user base increased by 12% year-on-year, with a 26% growth rate for paying Showmax subscribers.
Showmax Pro, which includes live sport, enjoyed strong growth and doubled its subscriber base in the last financial year.
South African performance
The South African consumer-facing business environment faced severe challenges during the last financial year.
Higher interest rates, elevated inflation, high levels of unemployment, and load-shedding put pressure on people’s finances.
These factors negatively impacted the South African pay-TV subscriber base and activity levels, with a noticeable increase in churn when load-shedding reaches stage 4 and above.
Many South Africans dumped their DStv subscriptions, especially in the Premium and Mid-market segments.
DStv Premium subscriptions, which include Premium and Compact Plus packages, declined by 6% over the last year.
Mid-market subscriptions, which include Compact and Commercial packages, declined by 3% year-on-year. Many DStv subscribers also downgraded their packages.
The impact is clearly seen in DStv’s average revenue per user (ARPU), which declined from R269 to R256 over the last year.
MultiChoice felt this impact on its top and bottom line. Its South African revenue declined 2% to R35.0 billion due to a 3% decline in subscription revenues.
The image below shows the decline in DStv Premium and Mid-market subscribers and the lower ARPU.