MultiChoice Group Ltd., Africa’s largest pay-TV company, has reported its third consecutive semi-annual loss, attributing the financial challenges to foreign exchange difficulties in Nigeria and persistent power outages in South Africa. Despite securing a significant gain in the African streaming market, effectively overtaking Netflix as the leader, the company faced substantial setbacks in its financial performance.

In a filing, MultiChoice disclosed a net loss of 1.32 billion rand ($72.4 million) for the six months ending Sept. 30. The company cited the poor performance of the Nigerian Naira against the dollar as a primary cause for the recorded loss. The challenges stemmed from Nigeria’s mid-June decision to allow the Naira to trade more freely against the dollar, leading to a 40% devaluation. This compelled MultiChoice to revalue inter-group loans, resulting in substantial foreign exchange losses.

Despite adding 1.4 million new subscribers in the previous financial year, subscriber growth in the Rest of Africa slowed down during the specified period. Factors contributing to this slowdown included inflationary pressures in key markets like Nigeria, following previous patterns seen after major football events such as the FIFA World Cup or northern hemisphere football off-season.

While the Rest of Africa segment’s active subscriber base remained stable at 8.9 million subscribers, subscription revenues witnessed a 14% organic growth. However, revenue of ZAR10.5 billion remained flat, with a weaker ZAR against the USD offsetting the impact of weaker local currencies.

The RoA (Return on Assets) segment delivered a trading profit of ZAR330 million, a significant increase on an organic basis, attributed to cost interventions around decoder subsidies and content costs. However, weaker currencies significantly hindered profitability, with substantial negative impacts due to sharp falls in exchange rates against the USD.

In addition to currency challenges, South Africa experienced rolling blackouts, contributing to a 5% decline in the number of active days per subscriber. This exacerbation further impacted MultiChoice’s financial performance during the specified period.

The company’s financial statement reads partly: “After adding 1.4m new subscribers in FY23, subscriber growth in the Rest of Africa was more subdued in 1H FY24. This was due to the impact of inflationary pressures in key markets like Nigeria, and similar trends to previous periods which followed a FIFA World Cup or northern hemisphere football off-season.

“A total of 0.1m subscribers were added to end the period at 13.0m 90-day active subscribers. The active subscriber base was broadly stable at 8.9m subscribers and subscription revenues grew 14% organically. Revenue of ZAR10.5bn was flat (+13% organic) with a weaker ZAR against the USD on conversion, offsetting the impact of weaker local currencies relative to the USD.

“The RoA (return on assets) segment delivered a trading profit of ZAR330m (+ZAR2.2bn YoY on an organic basis) which was underpinned by specific cost interventions around decoder subsidies and content costs.

“Weaker currencies remained a significant impediment to improvements in profitability, with average first-half exchanges falling sharply against the USD.

“The sharp fall of the naira resulted in a large proportion of the previously recognised losses incurred on cash remittances now being recorded in trading profit. The net effect of these forex movements was a negative ZAR1.6bn impact on the segment’s trading profit for the period.”

Following these challenges, the company’s shares fell 0.6% in Johannesburg, after a plunge of as much as 3.6% to a record low. MultiChoice plans to relaunch its Showmax streaming service in the second half of the financial year and introduce a sports betting service in South Africa, inspired by a successful offering in Nigeria.

Despite financial woes, MultiChoice’s Showmax presently holds 40% of the continent’s streaming market, as per Omdia Research, showcasing its continued influence in the African entertainment landscape amid recent setbacks.

Peter Obi, the Labour Party’s presidential candidate for the 2023 elections, has urged the Federal Government to unveil the true financial state inherited from the previous administration led by ex-President Muhammadu Buhari.

This call comes in response to recent statements made by President Bola Tinubu, indicating that his government inherited both assets and deficits from the preceding administration; and the National Security Adviser, Nuhu Ribadu, who claimed that the terrible economic situation that Nigerians are crying about, was bequeathed to the present administration by the past government.

In a statement released on X on Thursday, Obi challenged the government’s lack of transparency regarding the assets and deficits passed on to them. He highlighted the importance of accountability in governance, emphasizing that the disclosure of inherited deficits is crucial for the public to comprehend the nation’s current financial standing and future trajectory.

“One major characteristic of responsible governance is transparency and strict accountability. This demands that the government disclose exactly the degree of deficit they inherited. What is inherited should be disclosed to enable the public to know where we are and where we are headed,” he said.

Obi criticized the present administration’s claim of inheriting a financially distressed nation without providing specific details that justify the alleged bankruptcy status. He underscored that responsible governance necessitates transparency, insisting that the government should openly declare the extent of the deficits they inherited.

Drawing a parallel to the transition from the APC-led government in 2015, Obi criticized the lack of detailed disclosure regarding the inherited situation back then.

The former Anambra State governor also spoke about the alarming escalation of Nigeria’s debt profile during the previous administration, highlighting the increase from N12.6 trillion in 2015 to N87 trillion in 2023 without significant improvements in developmental indices such as education, healthcare, poverty alleviation, and security. He lamented the deteriorating state of the country across various vital sectors, leading to the prevailing grim situation faced by Nigerians on a daily basis.

Obi stressed that Nigerians seek actionable steps and tangible improvements rather than mere statements on the state of affairs.

“Nigerians know things are bad, and they experience it daily. What they now want to hear regularly are measurable and verifiable steps to improve the situation. Also, the alarm raised by the government about the bad state of our finances raises questions about the rationale behind some expenditure items in the supplementary budget recently signed into law,” he said.

Obi questioned the justification behind certain expenditures outlined in the recently signed supplementary budget in light of the government’s claims of financial distress.

Moreover, the presidential candidate reiterated his longstanding stance on the exorbitant cost of governance, advocating for a substantial reduction. He suggested that a financially strained nation should prioritize investing available resources into critical sectors like security, healthcare, education, and poverty eradication, particularly by tackling youth unemployment.

Obi said there is a need for measurable and verifiable strategies aimed at uplifting the country from its current economic challenges, rather than allocating resources to non-essential areas.

“The present revelation also goes to buttress the argument that I have made since electioneering season that the cost of governance is too high and must be drastically reduced,” he said.

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