MultiChoice blames Naira devaluation for $72.4m net loss

MultiChoice Group Ltd. has reported its third consecutive semi-annual loss, attributing the financial challenges to foreign exchange difficulties in Nigeria and persistent power outages in South Africa.

In a filing on Wednesday, Africa’s largest pay-tv company disclosed a net loss of 1.32 billion rand ($72.4 million) for the six months ending Sept. 30.

According to the company, the recorded loss is due to the poor performance of the naira against the dollar. The challenges in Nigeria stemmed from the mid-June decision to allow the Naira to trade more freely against the dollar, resulting in a 40% devaluation. This compelled MultiChoice to revalue inter-group loans, leading to foreign exchange losses.

“After adding 1.4m new subscribers in FY23, subscriber growth in the Rest of Africa was more subdued in 1H FY24. This was due to the impact of inflationary pressures in key markets like Nigeria, and similar trends to previous periods which followed a FIFA World Cup or northern hemisphere football off-season.

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“A total of 0.1m subscribers were added to end the period at 13.0m 90-day active subscribers. The active subscriber base was broadly stable at 8.9m subscribers and subscription revenues grew 14% organically. Revenue of ZAR10.5bn was flat (+13% organic) with a weaker ZAR against the USD on conversion, offsetting the impact of weaker local currencies relative to the USD.

“The RoA (return on assets) segment delivered a trading profit of ZAR330m (+ZAR2.2bn YoY on an organic basis) which was underpinned by specific cost interventions around decoder subsidies and content costs.

“Weaker currencies remained a significant impediment to improvements in profitability, with average first-half exchanges falling sharply against the USD.

“The sharp fall of the naira resulted in a large proportion of the previously recognised losses incurred on cash remittances now being recorded in trading profit. The net effect of these forex movements was a negative ZAR1.6bn impact on the segment’s trading profit for the period.”

In addition to the currency woes, South Africa experienced rolling blackouts, contributing to a 5% decline in the number of active days per subscriber. This exacerbation further impacted MultiChoice’s financial performance during the specified period.

The company’s shares fell 0.6% in Johannesburg at close on Wednesday after plunging as much as 3.6% to a record.

MultiChoice plans to relaunch its Showmax streaming service in the second half of its financial year and a sports betting service in South Africa following the success of a similar offering in Nigeria.