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MultiChoice Group, the South African entertainment giant behind DStv, SuperSport, and Showmax, has cautioned shareholders in its Phuthuma Nathi Black Economic Empowerment (BEE) scheme to brace for a substantial reduction in dividends.
The warning comes as the broadcaster grapples with a challenging economic environment marked by declining subscriber numbers, economic headwinds, and ongoing cost-of-living crises.
The announcement, made in a voluntary operational update on Friday, paints a stark picture of the company’s financial landscape.
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MultiChoice highlighted that market conditions have not improved since the disappointing interim results released in November 2024. The company’s financial results for the year ending March 31, 2025, are expected to reflect the severe impact of rising inflation, high interest rates, and constrained household spending in many of the markets where it operates.
In South Africa, MultiChoice is facing a “challenging consumer environment”, resulting in a decline in subscribers and limited revenue growth. The broadcaster attributed these challenges to the high levels of personal debt in the country.
The company emphasised that positive changes, such as lower interest rates and a stable exchange rate against the US dollar, would take time to translate into higher disposable income for South African consumers.
In other African markets, the group is contending with “unprecedented external adversities”, including macroeconomic challenges, power supply disruptions, and severe currency depreciation. These challenges have created a perfect storm, weighing heavily on the group’s overall performance.
The Phuthuma Nathi BEE scheme, which enables Black South Africans to invest in MultiChoice South Africa, is set to face a significant dividend reduction. While the board is yet to finalise the MultiChoice South Africa dividend for the 2025 financial year, a statement from MultiChoice indicated that any dividend payment would likely be “significantly lower than prior years”.
The company acknowledged a return to a positive equity position but stressed that capital preservation remains a priority in the current environment.
MultiChoice shares ended Friday’s trading session at $5.85 per share, reflecting a 1% decline. However, the share price is being propped up by a mandatory offer from France’s Groupe Canal+, which is seeking to acquire MultiChoice. Canal+ is offering $6.62 per share in cash, a premium over the current market price.
To facilitate the acquisition, MultiChoice and Canal+ recently agreed to extend the long-stop date for the transaction by five months, pushing it to October 8, 2025. The extension is intended to provide more time for regulatory approvals. However, the deadline could be extended further if necessary.
MultiChoice’s outlook for the 2025 financial year remains bleak, with persistent economic challenges across Africa expected to weigh on performance. As the broadcaster navigates these turbulent waters, shareholders, particularly those in the Phuthuma Nathi scheme, will be hoping for a turnaround—though the road to recovery may be a long one.
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