MultiChoice BEE shareholders to score R20bn

Naspers recently announced the unbundling of MultiChoice (MCG), which will be separately listed on the JSE.

SA’s largest company, a R1.3 trillion global behemoth, has evolved into cash generative African video entertainment and global technology investment businesses.

MCG is anticipated to be a top40 JSE share as analysts anticipate a market capitalisation exceeding R70 billion.

It has no debt and comprises MultiChoice SA Holdings group (MCSA), Iderto, Showmax Africa, MultiChoice Africa Holdings. Phuthuma Nathi (PN) doesn’t own a stake but owns 20% in MCSA.

As part of the unbundling transaction, PN will be gifted a further 5% in MCSA, worth roughly R2.5 billion.

This resounding broad-based black economic empowerment success story has generated a 20-times return on the original investment, so 85 000 shareholders have had about R20 billion in value created over 12 years.

This is despite the permanent trading restrictions of PN shares amongst black shareholders only.

The returns and value accruing could be further enhanced should the “once empowered, always empowered” approach be accepted, allowing shares to trade without restriction.

To partly address the impact of the restriction after listing, MCG will allow PN shareholders to exchange 25% of their pre-transaction shares for MCG shares, which have no trading restrictions. This should provide a further bonanza for PN shareholders.

MCG’s focus on local content, global content and sports set it apart from competitors.

Return on assets average revenue per user at R166 per month was half SA’s R335 per month.

As competitors will be more active in this market in future, shareholders need to consider the impact on future prospects.

No MCG dividends will be paid in 2019 with a dividend of about R7 to be considered in 2020.

MCG is due to list on the JSE on February 27.

Riaz Gardee is a mergers and acquisitions specialist and financial writer.