Multichoice losses $72.4 million attributes loss to Naira depreciation

November 22, 2023
Lawrence Blessing
Economy
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The corporation claims that the weak performance of the naira against the dollar is the cause of the declared loss. The move in mid-June to allow the Naira to trade more freely against the dollar, which led to a 40% devaluation, was the cause of Nigeria’s problems. MultiChoice suffered foreign exchange losses as a result of having to revalue intergroup loans.

This is the third straight semi-annual loss recorded for MultiChoice Group Ltd. The company further attributes these financial troubles on ongoing power outages in South Africa and foreign exchange difficulties in Nigeria.

The Africa’s largest biggest pay-TV provider reported a net loss of 1.32 billion South African rand ($72.4 million) for the six months that ended on September 30. Multichoice’s statement was:

Subscriber growth in the rest of Africa was more muted in the first half of FY24, following 1.4 million new additions in FY23.” This was brought on by the effects of inflationary pressures in important markets like Nigeria and by patterns resembling those of earlier eras that followed a FIFA World Cup or the football off-season in the northern hemisphere.

At the conclusion of the period, there were 13.0 million 90-day active subscribers, having added 0.1 million new users.” With 8.9 million active users, the subscriber base remained rather steady, while subscription income increased by 14% naturally. With a lower ZAR versus the USD during conversion, the impact of weaker local currencies compared to the USD was mitigated, resulting in revenue of ZAR10.5bn that was unchanged (+13% organic).

A trading profit of ZAR330 million (+ZAR2.2 billion YoY on an organic basis) was generated by the RoA (return on assets) segment, and it was supported by particular cost interventions related to decoder subsidies and content expenses. A major barrier to profitability improvements continued to be weaker currencies, with average first-half exchanges falling precipitously versus the USD.A significant amount of the losses on cash remittances that were previously recognized are now reported as trading profit due to the steep decline in the value of the naira. The segment’s trading profit for the period was negatively impacted by these FX moves to the tune of ZAR1.6 billion
– Multichoice

Multichoice company’s stock dropped as much as 3.6% to a record on Wednesday, although it closed the day down 0.6% in Johannesburg.

Following the success of a comparable product in Nigeria, MultiChoice intends to relaunch its Showmax streaming service in the second part of its fiscal year and introduce a sports betting service in South Africa.

Finance

Lawrence Blessing

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