MultiChoice Group, the South African media powerhouse behind DStv, SuperSport, and Showmax, has warned investors in its Phuthuma Nathi Black Economic Empowerment scheme of a likely reduction in dividends.
The announcement, made in a voluntary operational update on Friday, underscores the severe financial pressures facing the company amid declining subscriber numbers and a strained economic environment.
The broadcaster’s outlook remains guarded as it braces for the fiscal year ending March 31, 2025. Rising inflation, persistently high interest rates, and constrained household spending in key markets are expected to exert significant pressure on revenue growth. In South Africa, a challenging consumer environment compounded by high personal debt has led to a decline in subscribers and limited earnings expansion. MultiChoice noted that even improvements such as lower interest rates and a stable exchange rate against the US dollar will take time to bolster disposable incomes.
Across other African markets, the company confronts additional headwinds, including severe macroeconomic challenges, disruptions in power supply, and pronounced currency depreciation. These factors have contributed to an overall deterioration in performance, prompting the company to prioritize capital preservation despite a recent return to a positive equity position.
The Phuthuma Nathi scheme, which enables Black South Africans to invest in MultiChoice South Africa, is set to absorb the impact of these economic challenges. Although the board has yet to finalize the dividend for the 2025 financial year, indications suggest that any payout will be significantly lower than in previous years.
On the market, MultiChoice shares closed at $5.85, reflecting a modest decline of 1 percent. The share price, however, is supported by a mandatory acquisition offer from France’s Groupe Canal+, which is prepared to pay $6.62 per share in cash. To facilitate the deal, the companies have agreed to extend the long-stop date to October 8, 2025, to allow for additional regulatory approvals, with the possibility of further extensions if required.
As MultiChoice navigates these turbulent economic conditions, both investors and industry observers await signs of recovery. The broadcaster faces a protracted period of adjustment as it seeks to stabilize operations amid an array of external challenges.
