MultiChoice, the owner of DStv, has disclosed a substantial R4.1 billion loss for the fiscal year ending March 31, 2024, leading to technical insolvency.
On Wednesday, the South African pay television company revealed a pre-tax loss of 706 million rand ($38 million) for the year up to March, citing currency volatility and sluggish consumer spending as contributing factors.
Debt troubles in numerous African nations and investor reluctance to purchase African exports have heightened pressure on foreign currency reserves, resulting in increased volatility.
This development marks the company’s poorest financial performance to date, with losses soaring by 42% compared to the previous year.
MultiChoice’s financial challenges stem from two main factors: a 9% decline in active subscribers and adverse foreign exchange rates.
Consequently, the group’s revenue dropped by 5% to R56 billion, with a corresponding 21% decrease in trading profit to R7.9 billion.
Subscriber losses were evident across all markets, impacting both DStv’s South African and Rest of Africa segments.
In addition to this dire financial outlook, MultiChoice’s balance sheet reveals the company’s technical insolvency.
Total assets have diminished from R47.6 billion to R43.9 billion, while liabilities have surged to approximately R45 billion.
With negative equity amounting to R1.068 billion, MultiChoice lacks the means to settle all its debts should it be compelled to liquidate its assets.
Despite the bleak financial picture, MultiChoice maintained a confident front and described its operational performance as “resilient” with signs of an imminent turnaround.
MultiChoice said it was prioritising cash generation and has accelerated its cost-reduction program, aiming to save R2 billion by its 2025 financial year.
“Clear strategic milestones were reached, with the group successfully launching Showmax 2.0, SuperSportBet and Moment,” MultiChoice said.
“All of these are now revenue-generating and supporting the group’s future growth prospects.”
MultiChoice Group CEO Calvo Mawela said that four years after establishing a clear strategy of building Africa’s entertainment platform of choice and investing in services to support a broader ecosystem, its three core segments are now fully operational.
These are video entertainment, interactive entertainment, and fintech.
“Our focus now shifts to building on these solid foundations to drive growth in these new areas, and on further enhancing business efficiency across our operations,” the company said.
“The group will continue its efforts to drive growth in focused areas, notably Showmax, Moment, SuperSportBet, DStv Insurance, DStv Internet, and DStv Stream.”
MultiChoice said it would do this while working hard to retain its DStv and GOtv customers and support their activity rates through the coming financial year.