reports
- Charl Wolmarans
- Kevin Mattison
MultiChoice | Africa turning
MultiChoice delivered commendable results in a challenging SA and African consumer environment. A 47% y/y decrease in the Rest of Africa trading losses and deceleration of the reduction in the South African premium subscriber base to -2.9% y/y (FY'19: c.-5.3% y/y) illustrated a deliverance on our investment case for a return to profits in Africa and a stable SA business. Following the results, we upgraded our FY'20 core HEPS estimate by 10% to ZAR7.44 and downgraded our FY'21 estimate by 2% to R...
- Charl Wolmarans
- Kevin Mattison
MultiChoice | Entertaining ESG
We rank MultiChoice Group's (JSE: MCG) corporate governance as ‘good' with a score of 3.65 out of 5. SA peer rankings: FY '19: VOD: 3.67, TKG: 3.49 and MTN: 3.11. Based on our ESG risk framework, MCG's ESG risk exposure is ‘moderate', with a residual risk rating of 2.6 out of 5. Following the listing and unbundling of MultiChoice by Naspers in Feb ‘19, MultiChoice's inaugural integrated annual report provides the first analysis of the Group's governance and remuneration practices. A det...
- Charl Wolmarans
- Kevin Mattison
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 ...
- Charl Wolmarans
MultiChoice | Regulatory Boundaries
Regulation is a fact of the pay-TV industry. However, we view ICASA's market inquiry into subscription pay-TV in South Africa to be one of overreach. The draft report suggests that ICASA is looking to regulate the terms of MultiChoice's commercial contracts without a broad enough definition of the marketplace to include OTT services such as Netflix. Accordingly, while ICASA is looking to regulate the industry, we expect MultiChoice to challenge the findings through South Africa's high court. ...
- Charl Wolmarans
- Kevin Mattison
MCG | The African Turnaround
Naspers will be listing the Multichoice Group (MCG) on 27 February 2019 and unbundling the MCG shares to Naspers shareholders on 4 March 2019. We view this as a milestone event, with Multichoice SA providing over USD3.6bn of dividends to Naspers over the past ten years, enabling Naspers to invest into international internet assets. We estimate that MCG will report core HEPS of 517cps for FY'19. However, the core HEPS number understates the longer-term profits of MCG due to historic interest char...
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