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Multichoice Goes Technically Insolvent As Company Incurs Massive Losses



MultiChoice Faces Record Losses and Technical Insolvency Amid Economic Turbulence

MultiChoice Group, the owner of DStv, reported a staggering R4.1 billion loss for the fiscal year ending March 31, 2024, marking the worst financial performance in the company’s history. The South African pay television company announced on Wednesday that it had swung into a R706 million ($38 million) pre-tax loss, attributed to currency volatility and weakened consumer spending.

The company’s financial distress was exacerbated by growing debt issues in various African nations and risk aversion among investors buying African exports, which have pressured foreign currency reserves and increased volatility. This adverse environment led to a 42% increase in losses compared to the previous year.

MultiChoice’s revenue suffered due to a 9% decline in active subscribers and unfavorable foreign exchange rates. This resulted in a 5% net decline in group revenue to R56 billion and a 21% drop in group trading profit to R7.9 billion. The decline in subscribers affected all markets, with significant drops in DStv’s South African and Rest of Africa segments.

The company’s balance sheet reveals a grim picture of technical insolvency. Total assets have decreased from R47.6 billion to R43.9 billion, while liabilities have risen to approximately R45 billion. With negative equity of R1.068 billion, MultiChoice is unable to settle all its debts if forced to liquidate its assets.

Despite these challenges, MultiChoice has maintained a confident outlook, describing its operational performance as “resilient” and signaling potential for an imminent turnaround. The company is prioritizing cash generation and has accelerated its cost-reduction program, aiming to save R2 billion by the 2025 financial year.

“Clear strategic milestones were reached, with the group successfully launching Showmax 2.0, SuperSportBet, and Moment,” MultiChoice stated. “All of these are now revenue-generating and supporting the group’s future growth prospects.”

CEO Calvo Mawela highlighted that, four years after establishing a strategy to become Africa’s entertainment platform of choice, MultiChoice’s three core segments—video entertainment, interactive entertainment, and fintech—are now fully operational.

“Our focus now shifts to building on these solid foundations to drive growth in these new areas and further enhance business efficiency across our operations,” Mawela said.

The group is committed to driving growth in targeted areas, including Showmax, Moment, SuperSportBet, DStv Insurance, DStv Internet, and DStv Stream. Additionally, MultiChoice is dedicated to retaining its DStv and GOtv customers and supporting their activity rates through the upcoming financial year.

Source: GhanaFeed.Com


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