MultiChoice | Proving resilience

MultiChoice delivered on our investment case, with the mature SA business growing revenues at 1%, despite adverse economic conditions and a 19% decrease in the Rest of Africa's (ROA) trading loss. MultiChoice reported an 11% gain in trading profits with its maiden results as a JSE listed company. MultiChoice's strategic focus of local content investment and expanding the mass market subscriber base increased subscribers by 12% y/y in a pressured consumer environment. We expect core HEPS to grow at a 33% five-year CAGR with the ROA to break even during FY '22. In our view, the historic investment in DTH and DTT in the ROA provides MultiChoice with the platform to expand the subscriber base in a low penetrated region (Africa pay-TV penetration <10%) relative to peer regions (India >60%, Latam >40%). The SA business is in a mature stage and provides a solid stream of cashflow. The solid cash flows allowed MCSA to declare a ZAR6bn dividend (c.7% dividend yield on our fair value for MCSA) to the MultiChoice Group and Phuthuma Nathi shareholders. The SA business provides a base for the investment in MultiChoice, while the ROA segment provides growth as the turnaround strategy vests.