MultiChoice considers life without Naspers

Discarded by Naspers after more than three decades, MultiChoice is facing an uncertain future.

The broadcaster will be spun off by Naspers in Johannesburg next year, creating a newly listed company.

Naspers shareholders receiving stock in the new company will be hoping MultiChoice can continue to find subscribers willing to pay R959 a month in SA, as streamers such as Netflix tar- get similar customers with good broadband connections.

There’s also the challenge of stabilising and improving the business in the rest of Africa, which has dragged down profit in recent years as economies struggle.

“At the right valuation, investors will want to hold MultiChoice,” Peter Takaendesa at Mergence Investment Managers, said. “It’s still generating cash and the business has the potential to grow more over the next decade or so.”

MultiChoice’s DStv service holds a special appeal for sports fans. However, its success depends on customers having enough disposable income to justify the cost of the subscription, and even in SA the most expensive premium segment is experiencing slowing growth.

Netflix gained approval to operate throughout the continent in 2016. It charges R129 a month plus data costs in SA and competes with MultiChoice’s own video-streaming service, Showmax.

“We have stabilised our African business outside SA and expect it to return to profitability,” MultiChoice CEO Imtiaz Patel said. “There is still an enormous opportunity for growth – if we keep acting as efficiently and focused as we have been in the past two and half years.”