MultiChoice’s half-year loss doubles as Nigerian subscribers quit

South Africa’s cable television operator MultiChoice Group reported a more-than-double surge in net loss for the six months through September as its operations outside its base and Africa’s most industrialised faced multiple macroeconomic headwinds that eroded earnings.

Subscription fees, which account for 81.6 per cent of the pay TV provider’s revenue, faced tremendous strain during the period, with as many as 243,000 Nigerian and 298,000 Zambian subscribers ditching the company’s services.

That laid the foundation for an 11 per cent decline in turnover to 24.8 billion rand, compared to a year ago, according to MultiChoice’s interim earnings report issued on Tuesday.

Subscriber “loss in the Rest of Africa has been primarily due to the significant consumer pressure in Nigeria, where inflation has remained above 30% for the majority of the last 12 months and, more recently, due to extreme power disruptions in Zambia,” MultiChoice said.

Apart from inflationary pressures, MultiChoice operations in Nigeria were further strained by exchange rate volatility as the local currency shed a great deal of its value against the dollar.

The significant slide in the value of the naira largely caused a spike in MultiChoice’s foreign exchange losses on a USD-denominated intergroup loan. The FX loss stood at 2.1 billion rand.

Recent years have been particularly challenging for South African businesses in Nigeria as the operating environment turns harsher from a mixed bag of factors, including irrepressible price levels, exchange rate headwinds, and galloping energy costs, among others.

MTN Nigeria, the local subsidiary of Africa’s largest mobile operator MTN Group, reported a net loss of N904.9 billion in the nine months to September on the back of steep currency devaluation in the country in January.

Shoprite, the continent’s biggest retailer, announced its exit from Nigeria in 2020, later selling the business to a group of domestic investors after opting for a franchise model.

Last month, another grocery retailer, Pick n Pay, announced its exit plan as it proposes to sell its 51 per cent stake in a joint venture with AG Leventis. Pick n Pay said the move is part of its strategy to restructure its operations outside its home market.

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Beyond macroeconomic factors, MultiChoice’s troubled operations in Nigeria during the period were compounded by its transactions with Heritage Bank, whose operating licence was revoked by the Central Bank of Nigeria.

The group wrote off $21 million receivable relating to the cash it held with the bank before liquidation, taking its write-off of cash and cash equivalents to 378 million rand.

Loss before tax stood at 391 million rand in contrast to a pre-tax profit of 980 million rand a year earlier.