DSTV Owner Multichoice Navigates “Difficult” Economies, Leaps Into Big League

PRETORIA – Johannesburg Stock Exchange (JSE) listed DSTV owner, MultiChoice South Africa is leveraging on its strong cash collection abilities in Africa’s often “difficult” markets to build a world class pay-TV operation that has joined the region’s biggest companies, according to a report by African Business.

MultiChoice, unbundled by Naspers-Africa’s biggest company by market capitalisation at US$104 billion-was among new entrants into the continent’s top 250 listed firms, according to the report released recently.

In ranking Africa’s Top 250 biggest companies, the report looked at the market capitalisation of shares listed on a stock exchange.

This was then expressed in United States dollars as at March 31, 2019.

MultiChoice’s main business is pay-TV, which currently sits on 13,9 million subscribers across Africa.

This figure is at least four times that of the Chinese owned Star Times, its nearest rival in the market, according to the report.

“(Multichoice Group) is skilful at collecting cash in difficult economies and commissions programmes in 17 languages,” said the report.

“The top new entrant is Multichoice Group, which was spun off as part of Naspers’ slimming campaign and listed on the JSE in early March,” it noted.

And the growth is expected to continue in the coming year, according to Multichoice spokesperson Joe Heshu.

He says this will be underpinned by robust demand for its service in developing markets that are usually affected by high data tariffs in their jurisdictions.

“Africa and Middle East are expected to grow four times the global average in pay-TV subscriptions between 2018 and 2022,” says Heshu.

“Heshu sees big potential, with Multichoice’s DSTV Now and Showmax channels set to benefit as penetration grows from the current 0,1 percent towards the 41 percent level seen in the US,” says the report.

High data tariffs across Africa have been holding back growth in streaming videos directly to mobile phone and tablets, the biggest platforms for delivering entertainment and news products in the past few years.

This is projected to unlock huge opportunities for investments like MultiChoice South Africa. “Another new entrant to the top 250 is troubled Tanzanian miner Acacia Mining, listed in London and Dar es Salaam, which joined the list at #110, although temporary difficulties may have been the reason it was not on the list last year. Acacia has been locked in a dispute over royalties with the government of Tanzania, and a ban on exports in 2017 collapsed the share price. Parent company Barrick Gold Corporation has been negotiating with the government and in February 2019 announced progress towards a resolution, but three employees are under investigation by the corruption bureau,” said the report.

It said another new entrant at #157 was Cement Co of Northern Nigeria (CCNN), which trades as Sokoto Cement.

Sokoto Cement is one of the biggest players in north-western Nigeria.

In December last year, CCNN finalised a merger with Kalambaina Cement by issuing and listing 11,9 billion new shares, which was a big change from the previous 1,26 billion shares in issue.

The market seems to take the dilution in its stride, although the share price has fallen by 37 percent since its July peak, after 18 previous months of strong gains. 

The report said Egypt’s Cleopatra Hospital is another new Top 250 Company, entering the ranking at number 161.

It is Egypt’s largest private hospital group by number of hospital beds and holds majority stakes in four leading hospitals in Greater Cairo.

Results to December 2018, published in March, show revenues up 29 percent on the previous year to US$84 million and net profit up 167 percent to US$17 million, for market capitalisation of US$627 million.

“The company served 924,904 patients during 2018. The share price on the Egyptian Exchange has been climbing steadily since September 2018. Other arrivals include Zambian Breweries, (market cap US$536 million), Cervejas de Mozambique (US$392 million), Zimbabwean food companies Padenga and National Foods and Egypt’s Citadel Capital. Telekom Networks Malawi says profits have risen well during 2018 and the share price has climbed sharply since March 2018, boosting it into the ranking with market capitalisation of US$348 million,” said the report.