Naira devaluation: Multichoice records $72.4m net loss

Bisola David
Bisola David

MultiChoice Group Ltd. has announced a third straight semi-annual loss of 1.32 billion rand ($72.4 million) for the six months that ended on September 30

The biggest pay-TV provider in Africa blamed the financial setbacks on ongoing power disruptions in South Africa and problems with foreign exchange in Nigeria in a filing on Wednesday.

The company claimed 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.

According to Multichoice, “Subscriber growth in the rest of Africa was more subdued in the first half of FY24, following 1.4 million new signups 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 end of the term, there were 13.0 million 90-day active members, having recruited 0.1 million new users. With 8.9 million active users, the subscriber base remained rather stable, while subscription income increased by 14% naturally. With a weaker ZAR versus the USD during conversion, the impact of weaker local currencies compared to the USD was offset, resulting in revenue of ZAR10.5bn that was flat (+13% organic).”

It added that “Weaker currencies continued to pose a serious obstacle to profitability improvements, as average first-half exchanges declined significantly in relation to the US dollar.

“A significant amount of the losses on cash remittances that were previously reported are now recorded 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.”

A 5% decrease in the number of active days per subscriber was caused by rolling blackouts in South Africa in addition to the country’s monetary problems. During the designated time, MultiChoice’s financial performance was further impacted by this exacerbation.

The 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.

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