MultiChoice reports strong subscriber growth but premium segment suffers - TechCentral

MultiChoice reports strong subscriber growth but premium segment suffers

Netflix and other streaming video providers may be a long-term threat to MultiChoice, but the pay-television operator isn’t seeing too much of a challenge just yet, an analysis of the latest financial numbers from parent Naspers suggests.

Naspers revealed in its interim results for the six months to 30 September 2018, published on Friday, that its video entertainment business (read: MultiChoice) managed to grow its subscriber base by 400 000 households compared to a year ago.

The video entertainment segment now has 13.9 million subscribers.

Revenue increased by 3% (7% in constant currency) to US$1.8-billion, while trading profit rose by 6% to $211-million.

“The value strategy, aimed at growing the subscriber base and reducing costs, delivered a further $15-million in cost savings,” the media and Internet group said. The South African video entertainment business delivered “solid trading profits and generated meaningful cash flows”.

Subscriber growth was strong in the middle-income and mass-market segments. There was, however, “churn” in the premium segment. Naspers attributed this to a strain on disposable income, not to competition from the likes of Netflix.

The ongoing change in the subscriber mix resulted in average revenue per user reducing from $27 a year ago to $25 now as consumers favoured lower-priced bouquets over DStv Premium.

“The focus of the South African business remains retaining premium subscribers while driving subscriber growth in the mid- and mass-market tiers.”

Rest of the region

In sub-Saharan Africa, outside South Africa, subscriber growth accelerated and the business generated 9% (16%) growth in revenues to $524-million. Trading losses were stable, with a decline in losses measured in local currency. This improvement would have been stronger if it wasn’t for a Fifa World Cup promotional drive, Naspers said.

Results were affected by the 42% devaluation of the Angolan kwanza since January 2018. Despite ongoing economic and currency volatility, efforts to return these operations to profitability are gaining traction.

“The Fifa World Cup provided a significant opportunity to drive growth on the back of significant investment in content and subscriber acquisition (mainly through set-top box subsidies). This investment in the review period skews the year-on-year comparison and masks the improvement in operating performance, particularly in sub-Saharan Africa,” Naspers said. “Customers added by this promotion will contribute to second-half revenues and profitability, driving year-on-year improvements.”  — © 2018 NewsCentral Media

Comments are closed.

© 2009 – 2019 NewsCentral Media