Facts Behind MultiChoice’s Subscriber Numbers

Bonaventure Chukwuka

 It was not surprising to see which item captured media and public attention in the interim financial reports of pay television giant MultiChoice Group. The results, released on Tuesday, revealed a subscriber decline of 243,000 in Nigeria between April and September of this year.

Additionally, MultiChoice reported a decline in its Zambian operations, losing 298,000 customers during the same period. However, in its other markets in the Rest of Africa (RoA), the subscriber loss was relatively minor, at just 25 percent. The South African market showed more resilience, with only a five percent dip in subscribers.

In Nigeria, perhaps its largest market outside of South Africa, the decline in subscribers was interpreted as a sign of doom and gloom. It may seem so if other results are overlooked or inadequately considered. Although subscription fees, which provide a significant portion of revenue for the pay TV provider, faced pressure, the results indicated that measures implemented to reduce reliance on traditional pay TV proved to be beneficial. Showmax, its subscription video-on-demand (SVOD) platform, witnessed strong growth, reporting a 30 percent increase in paying subscribers. 

A significant portion of this growth is due to Showmax’s transition to the Peacock technology stack. This change has allowed it to form partnerships with major distributors like M-PESA in Kenya and Capitec in South Africa, helping to drive user adoption.

MultiChoice is expanding its operations beyond streaming services into the insurance and financial services sectors. Through a partnership with Sanlam, they are finalising a deal expected to generate an accounting gain of between $144.4 million and $182.9 million.

MultiChoice’s sports betting division has established a strong presence in Nigeria, where BetKing Nigeria has moved up to the second position in the online betting market. This achievement comes despite a challenging macroeconomic environment, which has led to a 48 percent decrease in net gaming revenue, bringing it down to $48.3 million due to a weaker naira. However, on an organic basis, revenue has increased by 10 percent. Meanwhile, SuperSportBet, the South African venture launched late last year, has experienced a tenfold increase in net gaming revenue over the past nine months.

MultiChoice’s sports betting division has established a strong presence in Nigeria, where BetKing Nigeria has moved up to the second position in the online betting market. This achievement comes despite a challenging macroeconomic environment, which has led to a 48 percent decrease in net gaming revenue, bringing it down to $48.3 million due to a weaker naira. However, on an organic basis, revenue has increased by 10 percent. Meanwhile, SuperSportBet, the South African venture launched late last year, has experienced a tenfold increase in net gaming revenue over the past nine months.

Moment, the company’s fintech venture, is now operational in 40 African countries. Since its launch last year, it has experienced significant growth, with total payment volumes reaching $242 million. Currently, it processes nearly 30 percent of the MultiChoice Group’s total payments.

All of the above elements are integral to MultiChoice’s overall strategy to capture a larger share of consumer spending beyond television. Additionally, Irdeto, the global technology division of MultiChoice, is making significant contributions, particularly as it expands its digital security services to meet the growing demands of online and streaming platforms.

“We have successfully been implementing our strategy over the past few years, achieving key milestones such as our investment in KingMakers (MultiChoice’s gaming division),” said Calvo Mawela, MultiChoice Group CEO.

MultiChoice explained that the decline in subscribers across the Rest of Africa is mainly due to significant consumer pressure in Nigeria, where inflation has stayed above 30 percent for most of the past year. Additionally, extreme power disruptions in Zambia have also contributed to this issue.

In addition to inflationary pressures, MultiChoice’s operations in Nigeria faced additional challenges due to exchange rate volatility, as the local currency significantly depreciated against the dollar. This substantial decline in the value of the naira led to a sharp increase in MultiChoice’s foreign exchange losses from a USD-denominated intergroup loan, amounting to 2.1 billion Rands.

MultiChoice’s operations in Nigeria faced significant difficulties during this period, worsened by its transactions with Heritage Bank, which had its operating license revoked by the Central Bank of Nigeria. The group wrote off $21 million related to the cash it held with the bank before its liquidation, bringing its total write-off for cash and cash equivalents to 378 million rand.

Recent years have been particularly challenging for businesses, as they are buffeted by high-velocity macroeconomic winds, which have yielded a harsher operating environment marked by stubborn inflation, exchange rate volatility and galloping energy costs, among others. These have, in turn, yielded a difficult consumer environment, with consumers placing the spending accent on essentials.

The Central Bank of Nigeria (CBN) recently released its “Household Expectations Survey,” which reveals that consumers prioritise spending on essential items such as food, household necessities, education, transportation, electricity, and medical expenses. The survey also shows that households are disinclined towards investing in vehicles or landed property during the months covered in the report.

“The Buying Condition Index for high-ticket items like consumer durables, motor vehicles, and real estate suggests that most respondents believe the current month is unfavorable for purchasing these items. Additionally, consumers do not anticipate the next three to six months will be ideal for acquiring such products,” the report stated.

Like MultiChoice, MTN Nigeria, a subsidiary of the MTN Group, was adversely affected by the significant devaluation of the naira, posting a net loss of N904.9 billion for the nine months ending in September. In addition to MTN, other companies such as Nestlé Nigeria Plc, Dangote Cement Plc, Dangote Sugar Refinery Plc, Nigerian Breweries Plc, BUA Foods Plc, and BUA Cement Plc reported a combined foreign exchange loss of N2.02 trillion for the half-year period ending June 30, 2024.

Due to the challenging operating environment, Shoprite, Africa’s largest retailer, announced its exit from Nigeria in 2020. The company later sold its Nigerian business to a group of domestic investors after deciding to adopt a franchise model. Similarly, Pick n Pay has recently announced its exit plans by proposing to sell its 51 percent stake in a joint venture with AG Leventis. This decision is part of Pick n Pay’s strategy to restructure its operations outside its home market.

It is tough for everyone and every business.

Chukwuka, a business analyst writes from Lagos