CHAMWE KAIRA
MultiChoice has said currency depreciation reduced trading profit by close to N$7 billion over the last 18 months.
The company said it delivered various positive operational outcomes through active interventions for the six-month period ended 30 September.
The company said meaningful progress made on the Canal+ transaction with the merger control filing submitted to the South African Competition Commission on 30 September, and engagements with other regulatory authorities underway.
The group’s linear subscriber base declined by 11% or 1.8 million subscribers year to year to 14.9m active subscribers at 30 September.
“While this is indicative of the extremely hostile operating environment that the group has encountered over the past 12 months, subscriber trends on a sequential basis have improved,” the company said.
The loss in subscribers was skewed towards the Rest of Africa, which lost 15% of its base year on year vs. 5% in South Africa. The loss in the Rest of Africa has been primarily due to the significant consumer pressure in Nigeria, where inflation has remained above 30% for the majority of the last 12 months and, more recently, due to extreme power disruptions in Zambia.
The company said group trading profit declined by 46% on the back of the forex headwinds in the Rest of Africa business (N$2.3 billion) and the incremental investment in Showmax (N$1.6 billion), but a step-up in cost optimization across the group supported a marginal 1% decline in trading profit on an organic basis.
The company said stripping out Showmax, the group would have seen reported trading profit increase by 28% on an organic basis.
“Adjusted core headline earnings, the board’s measure of the underlying performance of the business, declined from N$1.5 billion in the prior period to N$7 million in the current period. In addition to the foreign exchange losses in Rest of Africa and the investment in Showmax which negatively impacted trading profit, the group generated realised foreign exchange losses in the South African business in the current period compared with profits in the prior year, offsetting the benefit of lower cash extraction losses from Nigeria year on year,” the company said.
The group operates in numerous markets across Africa and internationally, resulting in significant exposure to foreign exchange volatility.
“This can have a notable impact on reported revenue and trading profit metrics, particularly in the Rest of Africa where revenues are earned in local currencies while the cost base is largely US dollar denominated. Where relevant in this announcement, amounts and percentages have been adjusted for the effects of foreign currency, and exclude acquisitions and disposals, to better reflect underlying trends and sustainable operational performance,” the company said.
