Watch this space - JSE MAGAZINE

Watch this space

MultiChoice Group CEO Calvo Mawela on providing a diverse range of entertainment options locally and on the rest of the continent

Watch this space

Kudos for being the first to list on the JSE this year goes to the MultiChoice Group (MCG), which has unbundled from Naspers, and whose chief executive, Calvo Mawela, says that its strategy is to leverage its unique African growth opportunities to deliver attractive returns to shareholders. ‘We believe the three pillars that underpin our financial profile are a healthy balance sheet; strong cash generation; and driving an ongoing turnaround in the rest of Africa [RoA]. The latter presents enormous opportunities and is a market that MCG has successfully tapped into many times.

‘Statistics indicate that people in Africa spend an average of 4.6 hours per person per day on video, almost double the global average. Viewing habits are shifting and business models evolving, which suits our innovative spirit,’ says Mawela. When the group launched pay TV in SA in 1986, it was one of only two regions in the world, outside of the US, to enjoy this service. Since then, MultiChoice has brought direct-to-home (DTH) satellite TV, digital terrestrial TV (DTT) and video-on-demand (VOD) services to Africa.

The group now provides video entertainment services to 15.1 million households across 50 countries on the African continent. According to Mawela, the multi-channel digital satellite and pay-TV operator is well-positioned currently, with 1.6 million customers added from across the continent in the past financial year, the second highest number of net additions over the past 10 years. The year also saw the 7.7 million subscribers in the RoA exceeding the SA base of 7.4 million for the first time.

Penetration of pay TV, especially over-the-top (OTT) services, in Africa still lags significantly behind other regions globally and therefore represents an attractive growth opportunity, he says. ‘Our connected video platforms Showmax and DStvNow are also gaining good traction in an early-stage market,’ says Mawela. ‘Over the past year, we doubled our monthly active OTT users and experienced a substantial increase in activity on our platforms.’

Embracing the African spirit is the differentiator that sets the group apart from its competitors, he says. ‘Our investment in local storytelling creates a talent pipeline for the sustainability of the video entertainment industry, creating jobs for scriptwriters, actors, producers, directors and other such sector players,’ says Mawela. This is why MCG is increasing its spending on local content. Over the past year it has added a further 4 600 hours to take its local content library to nearly 50 000 hours; created 20 drama series, and 20 telenovelas (to drive daily appointment viewing); and produced local versions of popular global reality formats, some of which were sold to international broadcasters. My Kitchen Rules, for example, was sold to SKY in the UK.

MultiChoice is not only about making great entertainment more accessible, it also focuses on contributing to the economy through tax revenues, enterprise development, local procurement and supplier networks, and it invests significantly in the growth of local sport and general entertainment. Partnerships and development initiatives include the MultiChoice Diski Challenge, SuperSport Rugby Challenge and Let’s Play, which provides access to professional sport in local communities, encourages physical activity in schools, and develops future presenters and production crews that will grow the local video entertainment industry.

Also growing is the group’s successful BEE scheme, Phuthuma Nathi. ‘We are proud to be delivering on our promises made to shareholders of Phuthuma Nathi, which has witnessed exceptional growth since launching in 2006 and delivered more than R9.1 billion in gross dividends to shareholders,’ says Mawela. ‘We are now offering our Phuthuma Nathi shareholders the opportunity to obtain a stake in MCG, providing them with an additional dividend stream and more freely tradable shares.’

MultiChoice’s shares opened at R95 on listing, and increased to R133 at the time of its maiden financial results published in June, which showed revenue up by 6% year-on-year to R50 billion, and trading profit 11% higher at R7 billion. Delivery of its cost-containment strategy resulted in cost savings of R1.3 billion and its free-cash flow almost doubled to R3.3 billion.

‘In the year ahead, we plan to continue investing in local content and expand our OTT offering,’ says Mawela. ‘In South Africa, our focus will be on delivering growth in the mass market, retention in the premium segment, stable margins and strong cash flows. In the RoA, we will continue to drive scale to return the business to profitability. We also look forward to increasing our market share in media security and connected industries through the platform Irdeto.

‘Overall we reaffirm our commitment to continue to innovate and provide consumers with products they value via channels they prefer.’

By Kerry Dimmer