MultiChoice – the pan-Africa Pay TV – has warned of a significant decline in the operations environment in the South African market that is set to harm its trading results for the second half of its 2023 financial year.
The warning sent its shares plunging lower in Johannesburg, with the counter down more than 15 per cent.
In a trading update, MultiChoice said the operating environment in South Africa has “deteriorated beyond expectations”, mainly due to intensified power shortage situation, known locally as “load-shedding”.
The dire outlook comes despite an uptick in subscribers driven by the 2022 Fifa World Cup broadcast.
“When MultiChoice reported first-half results on 10 November 2022, it cautioned on the ongoing economic challenges facing various markets, but it was looking forward to second-half subscriber growth and activity being buoyed by the broadcasting of the Fifa World Cup (FWC) from November to December and festive season momentum,” it said.
“Although the FWC delivered subscriber numbers broadly in line with expectations, the operating environment in South Africa has deteriorated beyond expectations over the past few months. Sustained high levels of loadshedding is having a significant impact on the activity levels of the customer base.
“Combined with the negative effect of a weak economy on consumer spending, and thus on the group’s customer mix, indications are that second-half revenue growth in the South African business will be below expectations. Given a largely fixed cost base and the additional Showmax costs incurred with the recently announced agreement with Comcast, this will result in the segment’s FY23 trading margin being between 23 per cent and 28 per cent, below the market guidance of 28-30 per cent.”
However, the Rest of the Africa segment is still on track to return to trading profitability in the 2023 financial year, it said.
