DStv in trouble in South Africa

MultiChoice’s results for the half year ended 30 September 2022 revealed that rich South Africans continue to dump DStv in preference of streaming services.

DStv’s premium segment – Premium and Compact Plus packages – declined 3% year-on-year from 1.4 million to 1.3 million subscribers.

Most of the subscriber decline came from a significantly higher loss of DStv Compact Plus subscribers.

DStv’s mid-market segment – Compact and Commercial packages – declined by 4% year-on-year from 2.8 million to 2.7 million subscribers.

MultiChoice explained that its premium and mid-market segments came under pressure due to a tough consumer environment.

The decline in DStv’s premium and mid-market subscribers is only one part of MultiChoice’s problem in South Africa.

An even bigger concern is that the average revenue per user (ARPU) in all of DStv’s segments is declining.

Despite price increases across the board in April, mass-market ARPU declined by 3%, mid-market by 2%, and premium by 4%.

The decline in the premium segment’s APRU from R587 to R566 is particularly interesting.

MultiChoice said the most expensive service, DStv Premium, showed slight growth over the reporting period. DStv Compact, in turn, experienced a 10% decline.

It means that DStv’s premium segment is not only shrinking, but its subscribers are paying significantly less than before.

MultiChoice did not explain why a higher percentage of expensive DStv Premium packages in its premium segment resulted in an ARPU decline.

The result of the lower ARPU was MultiChoice’s revenue in South Africa decreased 2% year-on-year – from R17.8 billion to R17.4 billion.

MultiChoice blamed a weaker-than-normal first quarter, where a challenging consumer climate exacerbated the football off-season.

There was better news in the rest of Africa which helped to increase MultiChoice’s linear pay-TV subscriber base by 1.0 million to reach 22.1m households.

MultiChoice now has 9.1 million subscribers in South Africa and 13.0 million in the Rest of Africa (RoA).

The Rest of Africa’s revenue increased 28% from R8.3 billion to R10.6 billion, and trading losses narrowed to R0.3 billion.

MultiChoice’s technology segment is still facing shortages in silicon supply and disruptions in global supply chains.

Irdeto’s revenues were down 13% year-on-year to R0.7 billion, but it still contributed R0.4 billion to group trading profit as strong cost containment resulted in healthy margins.

The Rest of Africa’s growth helped to offset South Africa and the technology segment’s poor revenue performance and increase MultiChoice’s revenue by R1.8 billion to R28.6 billion.

MultiChoice CEO Calvo Mawela said they are well positioned given their content slate.

“In the second half of the financial year, a focus will be broadcasting the 2022 FIFA World Cup and producing more local content that resonates with customers”, he said.

MultiChoice will also look to grow its online offering and further scale its Showmax paying subscriber base.

Their streaming ambitions will be supported by the recent launch of the Streama and the introduction of more bundled services.

“Given strong growth momentum, we are also confident about returning the Rest of Africa segment to profitability in the current financial year,” he said.