MultiChoice Begins Trading in South Africa, Valued More Than Any Nigerian Bank

MultiChoice Begins Trading in South Africa, Valued More Than Any Nigerian Bank

MultiChoice, the brand behind DStv and GOtv, is now trading in the Johannesburg Stock Exchange, hitting a market cap of $3.5 billion on its debut. In other words, MultiChoice is bigger than the market cap of Nigeria’s largest bank by market capitalization, GTBank. I am yet to understand why South African firms are valued way higher than Nigerian entities despite our economy being larger [sure, I understand rule of law, maturity of economy, etc but those cannot explain all]. The Nigerian Stock Exchange has a total market cap in the region of $35 billion while Johannesburg Stock Exchange is in the north of $400 billion.

The shares traded at 111.12 rand as of 11 a.m. local time on Wednesday, valuing the company at almost 50 billion rand ($3.5 billion). That’s the biggest listing in the city since Steinhoff International Holdings NV unbundled its Africa retail operations, now known as Pepkor Holdings Ltd., almost 18 months ago. The shares first traded at 95.5 rand.


The move creates an Africa-focused company free from Cape Town-based Naspers, which has expanded around the world since making a blockbuster early investment in Chinese giant Tencent Holdings Ltd. in 2001. MultiChoice broadcasts live sport such as English Premier League soccer, global hit dramas like Game of Thrones and locally produced content, and services about 14 million households.

MultiChoice has a challenge ahead of it with Netflix, iROKOtv and others battling Showmax and its TV app. Bloomberg analysts believe that the company could “eventually settle at about $5 billion to $6 billion”. Yet, that will be for a while before a deceleration of value due to competition, not just from Netflix but from YouTube, Facebook, or anything that engages user’s time.

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The first question to address is, how integral is Nigeria’s Stock Exchange market to the overall economic value? I do think everything in Nigeria operates in silos, a lot of people don’t even know if the NSE here adds any value or not.

Again, larger aspect of our economic activities are informal, so it makes valuations very tricky. Even the banks in question, what is their revenue and growth model like? It’s not enough to declare big profits, so many things remain fuzzy in our economic space.

Until we learn to calibrate rightly, and also tie outputs to productivity; I am not sure how we can grow past the circles we have been drawing for ages.

Nigeria is a strange place, not just in politics, its economy is even stranger. So the key players in the economy cannot be totally decoupled from the fuzzy environment.

Why Naspers Unbundled MultiChoice (DStv, GOtv, etc) As A Separate Company


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