Pay TV operator MultiChioce has witnessed growth in its over-the-top (OTT) services.
This afternoon MultiChoice announced its maiden results following its successful listing on the Johannesburg Stock Exchange on 27 February.
The MultiChoice Group (MCG) reported a 12% increase in its subscriber base to 15.1 million.
Revenue increased 6% to R50.1 billion and trading profit 11% (or 27% organically) to R7 billion. This was underpinned by solid subscriber growth, as well as an ongoing focus on cost containment.
Core headline earnings, the board’s measure of sustainable business performance, was up 10% to R1.8 billion and consolidated free cash flow doubled to R3.3 billion.
The company says this year also marks the first time that the Rest of Africa (RoA) subscriber base of 7.7 million exceeded the 7.4 million households in SA.
It adds that sustained efforts to grow the connected video segment and position the business for the future, resulted in good uptake in Showmax and DStv Now services – as a result, online [OTT] subscribers doubled year-on-year (YoY).
“Our growth is exceptionally pleasing, especially in the current economic climate, and a clear indication that our strategy is working. We continue to believe in the growing appetite for video entertainment across the African continent,” says Calvo Mawela, MultiChoice Group chief executive officer.
The company says it increased its spending on local content (excluding sport) as a percentage of total general entertainment spend to 40%, in line with its target of 45% by FY2022.
Over the past year, it added a further 4 600 hours to take its local content library to nearly 50 000 hours. It produced 20 new local dramas, while Uganda became the seventh country in the RoA to introduce a channel dedicated to locally made content.
Locally generated content, such as My Kitchen Rules and The Bachelor South Africa, is now being sold internationally, and the pipeline for next year includes 52 new local film productions and 29 new local dramas, including the much anticipated and renowned “Shaka Ilembe”, MCG says.
Strong customer growth resulted in subscription revenues increasing 7% YoY (8% organically) to R41.2 billion. This represents an acceleration in growth from previous years, driven by the continued success of the group’s value strategy in RoA and a healthy contribution from SA.
As part of an ongoing cost optimisation programme, a further R1.3 billion in costs were removed during the year. As a result, overall costs were contained at an increase of 5% (2% organic) and the group achieved its target of keeping the growth in costs below revenue growth.
Capital expenditure of R1 billion increased marginally YoY due to additional investments in information technology infrastructure to improve customer experience, as well as the renewal of our digital terrestrial television licence in Nigeria, the firm says.
The cash conversion ratio (EBITDA-capex/EBITDA) remains positive at 90%.
MCG paid direct cash taxes of R3.7 billion, in line with the previous year. Cash and cash equivalents at year-end amounted to R6.7 billion up from R4 billion in the previous year.
“Our strong balance sheet positions us well for the future. It provides financial flexibility to fund our business plan and the agility to enhance returns to shareholders,” says Mawela.
MultiChoice’s subsidiary Irdeto continued to add critical value to the group through its technology solutions and anti-piracy activities, the company says.
It notes that this segment delivered steady results, contributing R1.6 billion in revenue and R0.6 billion to group trading profit. Despite the loss of non-recurring project revenues, tight cost controls resulted in trading profits increasing 18% (21% organic) YoY.
During the past year, Irdeto had some key customer wins in providing media security, including Tata Sky and Bharti Airtel in India, MCG says.
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