MultiChoice Group delivered a 41% year-on-year improvement in core headline earnings per share in the six months ended 30 September 2020, even as revenue barely budged at R26.1-billion.

The strong earnings growth was attributable to the improvement in trading profit and lower realised foreign exchange losses.

However, top-line momentum was significantly impacted by Covid-19, with a R600-million decline in advertising revenue a big culprit. That was driven lower by the lack of live sports and a “generally softer advertising market”.

Commercial subscriptions were R300-million lower, with hotels, restaurants and other commercial customers mostly closed during lockdown. “Although business in the hospitality industry has resumed in recent months, it is expected to take some time to fully normalise,” MultiChoice said.

Despite this, group trading profit rose 19% to R5.7-billion, benefitting from a R500-million reduction in losses in the rest of Africa, outside South Africa, and a “resilient performance” in South Africa.

“The trading profit impact of Covid-19 was largely neutral, as the R900-million revenue loss was offset by R800-million in delayed content costs.”

20 million customers

The group added 1.2 million 90-day active subscribers year on year to cross the 20 million line for the first time, through average revenue per user declined, with growth coming from mass-market consumers rather than in the premium segment, where the group continued to lose clients.

“Increased consumer demand for video entertainment services and an easing of electricity shortages in Southern Africa were offset by rising consumer pressure in many markets,” MultiChoice said. The subscriber base is split between 11.4 million households (57%) in the rest of Africa and 8.7 million (43%) in South Africa.

Aggressive cost-cutting measures also helped boost profit. The group cut a further R1-billion in costs in the six-month period. Overall costs decreased by 2%.

The group’s balance sheet remains strong, even after a R4-billion dividend payment to Phuthuma Nathi empowerment shareholders in September. It had R7.3-billion in cash and cash equivalents at the end of September as well as R4.5-billion in undrawn facilities.