South Africa's Naspers is making Multichoice a standalone entity to battle Netflix

The new company will be named MultiChoice Group and will include MultiChoice South Africa, MultiChoice Africa, Showmax Africa, and Irdeto.

Satellite dishes connect township residents to South Africa's DSTV television network, owned by telecommunications giant Naspers, in Khayelitsha township, Cape Town, May 19, 2017.

The new company will be named MultiChoice Group and will include MultiChoice South Africa, MultiChoice Africa, Showmax Africa, and Irdeto.

Bob van Dijk, Naspers CEO, while commenting on the transaction, said, “This marks a significant step for the Naspers Group as we continue our evolution into a global consumer internet company. Listing MultiChoice Group via unbundling aims to unlock value for Naspers shareholders and at the same time create an empowered, top 40 JSE-listed African entertainment company.”

What does this mean?

This will allow Africa’s biggest pay-TV business by subscribers, Multichoice, to free up cash for the unit to compete with fast-growing Netflix and other streaming services.

MultiChoice’s DSTV boasts of strong fans in Sports – football, cricket and Formula One.

In the last financial year, the business generated revenue of R47.1 billion and trading profit of 6.1 billion.

Imtiaz Patel, Video Entertainment CEO, said, “Listing and unbundling MultiChoice Group is intended to create a leading entertainment business listed on the JSE that is profitable and cash generative. We offer an unmatched selection of local and original content, as well as a world-class sports offering. Our leadership team is diverse, experienced and well-positioned to take the company forward. I am particularly pleased that this transaction will further enhance the value for Phuthuma Nathi shareholders.”

MultiChoice Group is expected to be unbundled with limited leverage, providing it with the necessary financial flexibility to pursue growth opportunities in African video entertainment.

Tough times ahead with Netflix

In July 2018, the African cable TV asked the South African government to ensure level playing field among pay-TV operators to compete with over-the-top players. It lost about 41,000 high-end subscribers who use its premium offer last year owing to threats posed by online streaming giants.

Regulatory hurdles on subscription rates

In Nigeria, Multichoice is also facing consumers' hard stick on the recently increased subscription rates.

The Consumer Protection Council (CPC) sued the company for violating the agreement it reached with the Nigerian government after an initial price hike in 2015.

Also from Business Insider Sub-Sahara Africa:

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