MultiChoice and Canal+ can form an African pay-TV giant


Earlier this month, MultiChoice announced that Groupe Canal+ had increased its stake in the company to 26.26% by acquiring shares on the open market.

Canal+ is the pay-TV arm of French media giant Vivendi, which has interests in television, film, video games, book publishing, and video hosting.

Over the last two years, Canal+ gradually increased its stake in MultiChoice – from 6.5% in October 2020 to its current level of over 26%.

The buying spree by Canal+ sparked speculation that a bigger deal may be on the cards as it makes sense for both companies.

MultiChoice would not comment on a potential deal, only saying it kept an open mind about its relationship with Canal+ and Vivendi.

MultiChoice CEO Calvo Mawela said they have monthly engagements with Vivendi and that the French media giant likes MultiChoice, its management, and its prospects.

Mawela added that their relationship with Canal+ is growing, and they are working together on many products, including content co-productions and sub-licensing content.

A deal would not come as a surprise. Vivendi tried to acquire MultiChoice Africa in 2017, but Naspers, the parent company of MultiChoice at the time, has reportedly rejected the $1 billion offer.

MultiChoice Africa, which has around 12.8 million subscribers, is particularly valuable for Vivendi and Canal+ as synergies could unlock value for both companies.

MultiChoice Africa is mainly operational in South and East African countries like Angola, Botswana, Ethiopia, Ghana, Nigeria, Kenya, Tanzania, Uganda, Zimbabwe, and Zambia.

Canal+, in turn, mainly operates in francophone countries of Central and West Africa, as well as some non-francophone countries like Sierra Leone, Nigeria, Ghana and Cape Verde.

Although there is some overlap, like in Nigeria and Ghana, the two companies focus on different parts of the continent.

The image below, courtesy of Dataxis, shows the market share of Canal+ and MultiChoice in African countries.

Market share by country, Q2 2022

Richard Cheesman, a senior investment analyst at Protea Capital Management, said the benefits of a tie-up include lower content costs, better satellite leases, and the expedited use of MultiChoice Africa’s tax losses.

Merging Canal+ and MultiChoice Africa’s subscriber bases will give a new entity better negotiation rights on satellite costs, rights on sports and movie rights, and channel distribution agreements.

Combining Canal+ and Multichoice Africa’s advertising sales teams will extend their reach and improve efficiency.

A combined advertising offering reaching most countries on the continent will appeal to many global and African brands.

MultiChoice’s expertise in online streaming – DStv Now and Showmax – can also assist Canal+ in its online endeavours.

Sa Eva Nebie, head of research at Dataxis, said that although the two companies are still managed independently, an operational merger would create an undisputed pay-TV leader in Africa.

Nebie said it would leave the Chinese operator Star Times far behind. The strong complementarity of their locations could also avoid any risk of cannibalisation.

It also falls within Canal+ Group’s internationalisation strategy, which is one of the three pillars initiated by Vivendi in 2016 to support the transformation of its model:

  • Move from a French group to a global group.
  • Move from a French content creator to an international creator of European essence.
  • Move from a linear television channel to a key digital player.

Nebie highlighted that Canal+’s ultimate intentions remain undetermined.

However, its investment in and closer ties with MultiChoice give it more control over the African market, which will count more than 1.3 billion people by 2027.

“This strengthened collaboration would make it all the more difficult for new entrants to penetrate an already concentrated market with success,” Nebie said.