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MultiChoice Group Ltd (MCHOY) (FY 2025) Earnings Call Highlights: Strategic Growth Amidst ...
Release Date: June 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
MultiChoice Group Ltd (MCHOY) achieved 3.7 billion rand in cost savings, surpassing their target and nearly doubling the previous year's savings.
The company reported encouraging growth in new revenue lines such as DSTV Internet, DSTV 3, Kingmakers, and Showmax.
Showmax saw a 44% growth in active paying subscribers, gaining market share despite initial challenges.
The company maintained a healthy cash balance of 5.1 billion rands, with access to additional undrawn banking facilities.
MultiChoice Group Ltd (MCHOY) is strategically positioned to benefit from the long-term growth potential of the African continent, with a focus on expanding streaming and interactive entertainment services.
The company experienced an 8% decline in its linear customer base, with active subscribers dropping to 14.5 million.
Foreign currency depreciation, particularly in Nigeria, led to a 5.2 billion rand currency impact on the top line.
Showmax's growth lagged initial targets, and the company is critically reviewing its business plan due to slower than expected demand.
The South African economy's challenges, including high unemployment and low economic growth, negatively impacted MultiChoice's discretionary services.
The company's reported trading profit was materially down year on year, impacted by foreign currency pressures and investment in Showmax.
Warning! GuruFocus has detected 8 Warning Signs with MCHOY.
Q: How are you thinking about price increases across your customer segments for South Africa and the rest of Africa given the pressure you're seeing on the subscriber base? A: Our view is to align price increases with inflation. We believe there is good value in our product at various price levels. However, due to high inflation in many markets, we expect these increases to impact subscriber data. We are seeing stability in foreign currency, which should help consumers adjust to current pricing levels.
Q: Can you explain the difference in decoder purchases between South Africa and the rest of Africa? A: In the rest of Africa, particularly Nigeria, we reduced subsidies to offset currency impacts and consumer distress. In South Africa, we are balancing economic outcomes while moving towards removing subsidies, especially with alternatives like DSTV stream available.
Q: Can you provide insight into the cost trajectory for Showmax this year? A: There is an element of startup costs, with $70 million invested in platform development. The rest are ongoing costs. Subscriber growth hasn't met expectations, and we are working on initiatives to reduce costs materially. Price increases will depend on market take-up and competitor actions.
Q: After increasing prices for Showmax, did you see any change in subscriber activity? A: The trend has been cyclical as expected, with no material change in subscriber activity following the price increase.
Q: Can you expand on group subscriber trends and whether attrition will continue or stabilize? A: Year-on-year, this year is better than last. However, the end of the English Premier League season typically sees a decline. Higher decoder prices mean fewer subscribers, but those who pay tend to stay longer, which is favorable during this period.
Q: What are the expectations for Showmax subscriber growth, and why hasn't it met initial expectations? A: Broadband pricing assumptions haven't materialized, slowing subscriber growth. Macroeconomic conditions have also impacted us. We are revising our business plan to align with market realities.
Q: What is the status of regulatory approvals for the proposed acquisition by Canal Plus? A: We need approvals from several countries, and things are progressing as expected. We anticipate receiving the necessary support before the long-stop date of October 8th.
Q: Why was the MultiChoice South Africa dividend reduced despite profitability? A: The macroeconomic situation necessitates a cautious approach to capital preservation and debt management. Despite cost reductions, the South African business has lost subscribers and revenue. We need to support the balance sheet and ensure long-term sustainability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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