Multichoice targets 40m additional subscribers in the middle income and mass market

Pan-African pay-TV company, MultiChoice, plans to aggressively expand its viewership in Africa as it embarks on a new era of independence. Already, it has identified over 40 million additional subscribers that could be signed on in the middle income and mass market.

Chief Financial Officer, Tim Jacobs, disclosed in an interview at the Johannesburg Stock Exchange  (JSE) following its debut listing on Wednesday, February 27, 2019.

“We have identified about 40 million additional subscribers that could be signed on in the middle income and mass market,” Jacobs said. About half the company’s current customer base is in South Africa, and the focus after listing will be to accelerate growth on the rest of the continent, he said.

The fresh forays come against the backdrop of a spin off by technology giant, Naspers Limited. Naspers is seeking to realize value from its myriad of assets to help narrow the difference between its $129 billion stake in Tencent and the lower value of the company as a whole. The spinoff of MultiChoice is also an attempt to reduce its dominance of Johannesburg’s stock exchange, where it made up about 18 percent of the benchmark index before the listing. The stock has declined 5.3 percent in past 12 months, valuing the company at 1.4 trillion rand.

MultiChoice’s valuation could eventually settle at about $5 billion to $6 billion, according to Bloomberg Intelligence analyst John Davies. The company has about 4 billion rand in cash and 4 billion rand in undrawn facilities, so didn’t need to raise cash from the listing, Jacobs said.

MultiChoice is widely viewed in Nigeria on account of numerous popular programmes, including the broadcasting of live sport such as English Premier League soccer, global hit dramas like Game of Thrones and locally produced content, and services about 14 million households.

Following the listing, Multichoice Group Limited’s shares soared 16 percent in debut trading in JSE. The shares traded at 111.12 rand as of 11 a.m. local time on Wednesday, valuing the company at almost 50 billion rand ($3.5 billion). That’s the biggest listing in the city since Steinhoff International Holdings NV unbundled its Africa retail operations, now known as Pepkor Holdings Ltd., almost 18 months ago. The shares first traded at 95.5 rand.

“We are happy with where the share opened and how it is trading,” Jacobs said.

The move creates an Africa-focused company free from Cape Town-based Naspers, which has expanded around the world since making a blockbuster early investment in Chinese giant, TenCent Holdings Limited in 2001.

MultiChoice faces challenges from cheaper online alternatives — including Netflix Inc. — which have sprung up alongside rising African household incomes and faster internet speeds. To compete, the company is pushing its own video-on-demand service, Showmax, and a mobile app for the TV footage, the CFO said.

Source: Agency reports