DStv-owner MultiChoice is technically insolvent


MultiChoice’s financial statements for the year ended 31 March 2024 showed that it recorded a R4.1 billion loss and has become technically insolvent.

MultiChoice suffered a 9% decline in active subscribers, mainly due to a 13% decline in the Rest of Africa business and a 5% decline in South Africa.

Showmax, which re-launched in February, recorded a 16% growth in paying subscriber base from the migrated base.

The combination of foreign exchange headwinds and a lower subscriber base resulted in a 5% net decline in group revenues to R56 billion.

Weaker subscriber trends and foreign exchange pressures affected group trading profit, which was down 21% to R7.9 billion.

These numbers only tell part of the story. The company’s latest income statement and balance sheet revealed a truly dismal performance.

MultiChoice’s loss for the year increased from R2.9 billion to R4.1 billion – a 42% decline. It is its worst performance on record.

Even more concerning is that the DStv owner has become technically insolvent.

MultiChoice’s total assets declined from R47.6 billion to R43.9 billion, while liabilities increased to around R45 billion.

This leaves MultiChoice with a negative equity of R1.068 billion, which means it is technically insolvent.

Simply put, MultiChoice cannot settle all its liabilities if all its assets are liquidated. This is a dismal state for a company.

One of MultiChoice’s biggest problems is its long-term loans, which increased from R8 billion to R12 billion over the last year.

MultiChoice explained that it concluded a R12.0 billion syndicated term loan to fund the group’s working capital requirements.

In the 2023 financial year, R8 billion of this loan had been drawn down. During October 2023, it completed the second drawdown amounting to R4.0 billion.

The loan has a five-year term and bears interest at three-month Johannesburg Interbank Average Rate (JIBAR) + 1.44%.

“The capital portion will be settled via bullet payments five years from each of the drawdown dates,” MultiChoice said.

Despite its poor financial performance, MultiChoice put on a brave face and painted a picture of a company on the cusp of a turnaround.

It said it had acted quickly to “optimally position the business to weather the foreign exchange crisis that has developed across its core markets”.

This was done while “simultaneously ensuring that its long-term strategic initiatives are not compromised”.

“In the short term, the group has prioritised cash generation over growth,” MultiChoice told investors.

It added that it had accelerated its multi-year cost reduction programme with the target for FY25 increased to R2 billion.

“These targets have been embedded in the group’s budgets and within the personal objectives of key executives to drive delivery,” it said.

“The group will also continue its efforts to drive growth in focused areas, notably Showmax, Moment, SuperSportBet, DStv Insurance, DStv Internet and DStv Stream.”

It added that it will do this while retaining its DStv and GOtv customers and supporting their activity rates through the next year.