MultiChoice (MCG) stands as a prominent entertainment company in Africa, recognized as one of the fastest-growing pay-TV broadcast providers globally, boasting 21.1 million subscribers across 50 countries. The subscriber base is divided into 42% (8.9 million) in South Africa and 58% (12.2 million) in the rest of Africa. Originally part of Naspers, MultiChoice was spun out and separately listed on the JSE on February 27, 2019. It presents an attractive prospect for private investors due to its primarily annuity income structure derived from debit orders and a diverse clientele. With its service-oriented nature, MultiChoice requires minimal working capital and does not rely on maintaining significant stock levels. Moreover, it maintains a relatively small unskilled or semi-skilled workforce, despite past union issues.
While the potential for pay-TV in Africa appears substantial, it may face challenges from emerging technologies like 5G internet access and the availability of free online content platforms. Regulatory changes by Icasa (Independent Communications Authority of SA) aimed at increasing competition may impact MultiChoice, particularly in the area of sports coverage, which has been a significant draw for the company. Potential alterations to rules governing dominance in sports content could affect MultiChoice's ability to secure exclusive sports contracts.
MultiChoice operates in the home entertainment sector, which received a boost during the COVID-19 lockdowns. On March 2, 2023, the company announced an agreement with Sky News and NBC Universal to enhance its Showmax service and strengthen its presence in Africa.
In its financial results for the six months ending on September 30, 2023, MultiChoice reported a 1% decrease in revenue and a 5% decline in headline earnings per share (HEPS). Load shedding in South Africa significantly impacted the business, with 43% of the reporting period affected by stage 4 to 6 load shedding.
MultiChoice remains a solid blue-chip share but faces competition from alternative entertainment products available to its subscribers. On February 5, 2024, MultiChoice reported that Canal+ had increased its stake in MCG to 35.01%, triggering a mandatory offer at R105 per share to the remaining shareholders. However, the company rejected the offer as too low. From a technical perspective, the share was in a declining trend since March 6, 2023, and we recommended waiting for a breakout above the 65-day exponential moving average before considering buying. This breakout occurred on December 19, 2023, at a price of 7440 cents, and since then, the share has risen to 9130 cents.
While the potential for pay-TV in Africa appears substantial, it may face challenges from emerging technologies like 5G internet access and the availability of free online content platforms. Regulatory changes by Icasa (Independent Communications Authority of SA) aimed at increasing competition may impact MultiChoice, particularly in the area of sports coverage, which has been a significant draw for the company. Potential alterations to rules governing dominance in sports content could affect MultiChoice's ability to secure exclusive sports contracts.
MultiChoice operates in the home entertainment sector, which received a boost during the COVID-19 lockdowns. On March 2, 2023, the company announced an agreement with Sky News and NBC Universal to enhance its Showmax service and strengthen its presence in Africa.
In its financial results for the six months ending on September 30, 2023, MultiChoice reported a 1% decrease in revenue and a 5% decline in headline earnings per share (HEPS). Load shedding in South Africa significantly impacted the business, with 43% of the reporting period affected by stage 4 to 6 load shedding.
MultiChoice remains a solid blue-chip share but faces competition from alternative entertainment products available to its subscribers. On February 5, 2024, MultiChoice reported that Canal+ had increased its stake in MCG to 35.01%, triggering a mandatory offer at R105 per share to the remaining shareholders. However, the company rejected the offer as too low. From a technical perspective, the share was in a declining trend since March 6, 2023, and we recommended waiting for a breakout above the 65-day exponential moving average before considering buying. This breakout occurred on December 19, 2023, at a price of 7440 cents, and since then, the share has risen to 9130 cents.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.