African pay-TV operator MultiChoice Group said its revenue increased by 2 percent to ZAR 26.1 billion in the six months to 30 September. Subscription revenues for the first first half reached ZAR 22.2 billion, up 5 percent year-on-year, while ad revenues were impacted by the coronavirus crisis and fell by ZAR 0.6 billion, mainly due to a lack of sports and lower economic activity. Commercial subscription revenues were ZAR0.3 billion lower as a result of most hotels, restaurants and other commercial customers remaining closed during lockdowns.
Excluding the impact of Covid-19, revenue would have grown 6 percent, Multichoice said. The group added 1.2 million 90-day active subscribers year-on-year, to close the period at 20.1 million households, exceeding the 20 million subscriber milestone for the first time. The customer base is split between 11.4 million households (57%) in the rest of Africa and 8.7 million (43%) in its home market South Africa.
Core headline earnings were up 41 percent on the prior period at ZAR 2.7 billion, with the strong growth attributable to a 38 percent improvement in organic trading profit and lower net realised foreign exchange losses. The trading profit impact of Covid-19 was largely neutral, as a ZAR 0.9 billion revenue loss relating to lower advertising income and subscription revenues from commercial customers was offset by ZAR 0.8 billion in delayed content costs.
The group continued its strategic focus of investing in local content and produced 1,870 additional hours, despite disruptions caused by strict early Covid-19 lockdown measures. The local content library is now close to 59,000 hours. To keep customers entertained, informed and educated, the group has launched nine new channels across sub-Saharan Africa since the start of the year and another 13 channels as part of the Ethiopian relaunch strategy.
In Nigeria, it recently concluded another successful season of Big Brother Naija and South Africa saw the launch of several local productions such as Inconceivable, Gomora and Legacy. In addition, the reporting period saw two major international content agreements renegotiated to Rand and three new co-productions signed with global content producers.
With revenues holding up and a strong focus on costs, the group’s trading profit rose 19 percent to ZAR 5.7 billion. Overall costs decreased by 2 percent compared to the prior year and resulted in the group maintaining its target of delivering positive operating leverage by keeping the organic growth rate in costs below that of organic revenue growth.
Free cash flow of ZAR 2.1 billion was down 13 percent compared to the prior period. This was mainly due to some normalisation in the base due to the transponder lease payment holiday in South Africa coming to an end, with current period foreign exchange movements on lease payments as well as an increase in capital expenditure related to the multi-year investment programme to future proof the group’s customer service, billing and data capabilities.
