Multichoice Group Limited

Good day, ladies and gentlemen, and welcome to the Multi-Choice FY23 Results Conference. All participants are currently in listen-only mode and there will be an opportunity for you to ask questions later during the call. If you should need assistance during the conference, please signal an operator by pressing star and then zero. Please note that this event is also being recorded. I will now hand the conference over to Molloy Horne. Please go ahead.

Thank you, Chris. Hello, everyone, and thank you for joining us today. We released our results for the year ended 31 March 2023 yesterday. And for those of you registered on our database, you would have received an email with all the information. And if you're not on our list, we have uploaded the slides and the latest results in the investor section of our website. As usual, our presenters today, our CEO, Kalba Mwele, who will focus on our operations. and our CFO, Tim Jacobs, who will discuss the financials. After the presentations, we'll be happy to answer some questions. So with that, let me hand you over to Calvo to start today's presentation.

Thank you, Miloy, and good day to everyone. Let's turn to slide four to discuss the highlights of this year's results. We have grown our subscriber base by 8% or 1.7 million customers. which means we now serve 23.5 million households across the continent. The rest of Africa had a particularly strong year, adding 1.4 million subscribers to reach 14.2 million households, or 60% of the group's total base. As a result of revenue growth and cost control, the business reported a trading profit of 900 million rands, which is a 2.8 billion rent improvement from the previous year on an organic basis. Connected video users on the DSCV app and Showmax continue to grow, with paying Showmax subscribers increasing a healthy 26% year-on-year. The business is set for exponential growth as we look to relaunch it later this year in partnership with Comcast and by leveraging its world-class pick-up platform. Group revenue. increased 7% to 59.1 billion rands, underpinned by the strong rest of Africa performance, but offset somewhat by pressures in the South African business, caused by high levels of low trading, which hit subscriber activity in the final quarter of the year. The 17% trading margin was impacted by the lower earnings in South Africa, and an adverse 900 million rands foreign exchange impact mainly due to the weaker rent. Pre-cash flow was affected by lower profits in South Africa and some prepayments. The board took a prudent approach given the uncertain current environment and decided not to declare a dividend for FY23, and Tim will discuss this in more detail later. The past year saw us maintain our ongoing investment in local content and we delivered a record production of live sports events, which we'll discuss in more detail in the operations section. We were able to report positive organic operating leverage as cost increases were kept below that of our revenue growth. We banked 1.3 billion rands in cost savings, well ahead of our 800 million rand target. We used some of this savings to fund other aspects of the business, such as pricing offers, more local content, and new services. Kingmakers, our 49% owned sporting business, delivered strong growth with revenues up 51% to $198 million, or 3.4 billion rands. We've also had a busy year expanding our consumer services ecosystem. Let's turn to page five for more details. As we explained at our recent Capital Markets Day, we are focused on creating a world of more. We keep increasing the value that we offer our customers to drive additional revenue streams and to create long-term value for our shareholders. Aggregating content is a critical underpin to our video entertainment strategy. In the past year, we have added Disney Plus to our Explorer Ultra environment. We have offered customers cost-saving bundles to add to the convenience of accessing all their content in one place. We have enhanced our catch-up service with the addition of Universal Plus, and we have launched a dedicated linear channel for the extremely popular Super Sports Schools app. To ensure that our viewers can access our content in a way that best meets their needs, we have launched the streamer and plan to launch GSC with Lars in partnership with Sky in 18 to 24 months. When it comes to other affiliated services, we have extended our home security offering by buying the Namula app. We have strengthened our connectivity offering by expanding the DSPB internet service. We have expanded our FinTech activities by investing in Moment, a partnership with Rapid and General Catalyst. And where we joined forces with Comcast to drive Showmax to become the leading streaming platform on the continent. Last, but certainly not least, We have secured a license and are looking forward to the imminent launch of SuperSpotBed in South Africa. On the operations front, we have had a good year in terms of execution, and our teams did well in navigating the various macroeconomic challenges. Starting on slide seven, we share some of the highlights. As demand for local content continues to exceed supply, We sustained our investment in local content by producing over 6,500 hours this year. As a result, our local content library now exceeds 76,000 hours. Our target was to spend 50% of our general budget on local content by FY24. But we have raised this target in FY23, which is a year early. We have also launched five more local channels in South Africa, Uganda, Ethiopia, and Ghana. Our co-production slate continues to expand. We released four co-productions during the year and have another six co-productions in the pipeline for the year ahead. We have spent some time optimizing our third-party content channel slate, for example, replacing low-performing channels and enhancing the GE offering with more movies and lifestyle content. We keep refreshing our content slate and added a mix of the best of local shows, some blockbuster international content, and several pop-up channels. Finally, multi-choice studios continues to grow, selling 151 series and movies in FY23, and growing its revenue contribution 1.4 times. Moving to Super Sport on slide eight. As one of the best sports broadcasters globally, We bring our viewers the best events from around the world and the most popular sporting action on the continent. We are also spending more on local sports. The Super Sport Team had a bumper year and increased live broadcasts to almost 25,000 events, an all-time record and a 69% increase year-on-year. Our live broadcasting of all 64 FIFA World Cup matches included local language commentary in 11 languages across eight markets. We have also enjoyed great success in complementing our live broadcasting with local sport documentaries, including RISE and RASI for rugby fans, and Powers of a Nation for the local football lovers out there. During the year, we secured multi-year extensions for important sporting rights, such as the English Premier League and Formula One. We also increased our focus on women's sport and are very excited about the all-female broadcasting crew, which will be bringing you the Women's Netball World Cup from Cape Town at the end of July. The year ahead promises to be another great one for our sporting fans, with a total of not one, but four World Cups to look forward to. On slide nine, we look at our new investment to support local sports. with both supersport schools and the annual SA20 cricket league off to a great start. Bringing school sport closer to its supporters and communities, supersport schools now covers 37 sporting codes and has its own TSTV channel. This platform has allowed us to stream almost 34,000 hours of sports this year, an increase of more than five-fold. Due to its exponential growth, Super Sports Schools is gaining significant interest from advertisers and is expected to break even in FY24. And to complement the live action, we recently introduced a new short film initiative with the first story, Vlado, featuring St. John's popular water polo coach. To reignite interest in local cricket, we successfully launched the SA20 Cricket League in January this year. This venture in which we own 30% stake, was already free cash flow positive in its first year. Heading to slide 10, we look at the South African business, which added 300,000 customers in an exceptionally challenging environment. As the market is maturing, we have significantly stepped up our retention initiatives. This included more price lock offers, internet bundles for extra savings, and doubling the number of participants on the DSCV rewards program to 1.3 million. We have also expanded our compact offering by adding ESPN2, which showcases the NBA and NFL, and we have deepened our aggregation offering with the introduction of Disney Plus and Universal Plus. DSCV via streaming, or DVS, is showing promising traction and increased its customer base by more than two times year-on-year, while the DSCV Internet Active User Base has increased five-fold since last year. We are also very pleased with the continued momentum of our DSCV insurance business, which now has 2.8 million policyholders and increased its revenue contribution by 22%. Moving from the good work we are doing as a business to the key challenge we are facing as a business, which is load sharing. Many of you on the call today are living this reality and have seen the recent comments from the likes of Pepco, Tiger Brands, SPA, and Astral Foods, all calling for attention to this crisis. The graph on the left-hand side of slide 11 shows the significant ramp-up in load shedding activity from 40 days in FY22 to 211 days in FY23. It also shows the increase in the intensity of load shedding with the number of days where we had stages four to six load shedding, increasing from five to 104 days. In early March, we flagged that the unprecedented high levels of load shedding experienced in the fourth quarter of our financial year were having a significant impact on the activity levels of our South African customer base, and therefore also on revenue and profitability. Load shedding has resulted in a disconnect between our 90-day active subscribers which is up 2% as people still want our product, and our current active subscriber number, which is 2% down as people struggle to afford or connect to our product consistently every month. The chart in the middle of the page shows the average daily load-sharing level increased month on month during this period and the correlating pressure on our active customer base. It also shows how less load-sharing in March translated into an immediate uptick to our customer numbers, which bodes well for the future once the problem is fixed. The impact of load shedding on viewership is material, as ETV also flagged in their recent results. During Stage 6, industry viewership typically declines by 31%. We are somewhat insulated with a 12% deadline, but that's a material impact nonetheless. But we did not merely accept the situation. We have taken some extra steps to mitigate the impact of load sharing on the business, from equipping our installers with inverters and adding pop-up channels for our customers to catch up on their favorite shows if they have missed the show because of load sharing. On slide 12, we reflect on the key performance measures for the SA business. We deliver 3% aggregate growth with 10% growth in the mass market of certain pressures elsewhere. Negative premium segment growth was again largely a function of pressure in the Compact Plus package. The deadline in active days by 12 days is mainly due to the impact of load shedding and the current macro environment as already explained. Our pricing for the year has been known for some time and reflects price increases at or around inflation. The output deadline on a segmental basis is largely a reflection of the drop in activity levels, while on a blended basis, the ongoing change in mix also came into effect. On slide 13, we provide an operational update on the rest of Africa segment, where we now serve more than 14 million customers. We're able to increase prices on average by 11% in our core markets this year, in line with our objective of passing through inflation-linked pricing. Buoyed by the FIFA World Cup and a strong local content lineup, advertising revenues grew a healthy 44%. We continue to expand our distribution footprint, increasing our direct sales force to 10,000, our points of sales to 25,000, and our payment partners, 271. We broadened our product offering by launching TSTV via streaming in Angola, Kenya, and Zimbabwe, and we have plans to launch in other markets, too. To address issues around affordability of our satellite service, we launched service offerings in Ghana and Kenya at below $5 per price point. And following the success of the FIFA World Cup campaign, we're able to maintain momentum through to the new calendar year on the back of targeted First East campaigns and the Nigerian elections. Turning to slide 14, we provide more detailed commentary on some of the largest markets in the rest of Africa portfolio. Firstly, our Nigerian business continues to perform well with subscriber growth at 15% year-on-year. Both the DTH and DGT segments of the business are now profitable. High inflation and energy prices are affecting consumers, and liquidity remains a challenge. But we are heartened by comments from the new president and his plans to address these issues. Our Kenyan business turned profitable this year with price increases and cost management offsetting currency and growth pressures. The Zambian business saw its in-country profit double as it benefited from price increases and a stronger currency. The Angolan market also benefited from a stronger currency and a drop in inflation, and losses narrowed materially as the base continues to grow. On slide 15, we provide a summary of the key KPIs for the rest of Africa. The business delivered a healthy 11 percent subscriber growth with strong momentum in the median mass market. Premium growth was accepted by normalization and upgrade campaigns. Active days were seven days lower, reflecting challenges in markets like Zambia, which was affected by power outages, and Nigeria, where consumers are battling inflationary pressures. Blended ARPU was fled year-on-year in dollar terms on the back of inflation-linked pricing, offset by the low activity level. Turning to slide 16, where we unpack the impact of one of our flagship events, the FIFA World Cup. From a super sport and customer perspective, the event went exceptionally well. Our team successfully delivered their boldest and biggest World Cup to date. From a management perspective, we also evaluate the economics of the event. Everything considered, this World Cup delivered broadly in line with expectations and the previous iteration. As we show in the graph at the top right of the page, the event delivered a clear step up in net subscriber ads in the second half, over and above the strong seasonality we see every year, similar to the 2018 event. Although we opted to bid for exclusive rides for the 2022 event, the anticipated uplift in our customer mix was somewhat less than expected. a strong increase in advertising revenue offset over two-thirds of the increase in the rights costs. To help drive growth, we invested around 700 million rands in set-top-up subsidies ahead of the event. Given the current subscriber environment, we expect the payback period on this investment to be a month or two longer than before. Turning now to our connected video business on slide 17, The team delivered 12% year-on-year growth in total monthly active users across the combined Showmax and TSV app customer bases. Showmax paying subscribers increased 26% year-on-year, while the Showmax Pro user base grew 1.6 times. The Showmax team is leveraging our deep understanding of local content, which is resonating very well with our viewers. In the past year, Showmax added 31 new originals, such as Fine House, The Wife, and The Real Housewives. The team has been recognized by the industry for producing excellent content, winning 17 sub-towers. Showmax is also the top streaming app in the South African app store. Our technical team has worked hard to keep reducing the cost of streaming. We now offer the lowest data streaming option on the continent at just 50 megabytes per hour. We are also very proud of showcasing all 64 FIFA World Cup games in 4K and of handling almost half a million simultaneous views during the tournament without any hedges. Showmax's successes to date set us well for the next stage of its journey, as I'll explain on slide 18. In March this year, we announced our streaming partnership with Comcast's NBC Universal and Sky to relaunch Showmax. Powered by Peacock's leading globally-scaled technology, the new Showmax Group will be 70% owned by MultiChoice and 30% by NBC Universal. The new partnership will bring some of the world's best content to streaming customers in MultiChoice's 50-market footprint across sub-Saharan Africa. This includes our own local content, international content from Comcast Group, the second-largest content producer globally, the English Premier League, and great third-party content. We'll disclose more details about our offerings and pricing closer to the launch later this year, but we believe our strategy will result in far higher customer traction than what we previously envisaged, as we show in the graph on the bottom left of the page. The partnership with Comcast will also allow us to ramp up our production of Showmax Original quite significantly, as we show in the next graph. We have set ourselves a target of generating $1 billion in revenue after five years, and of reaching trading profit break-even in the next three to four years. At scale, we would expect the business to generate healthy EBITDA and cash flow margins. Going forward, we will be disclosing Showmax as a separate segment in our financials. On slide 19, we provide an update on the data, our technology business. Customer service by data face ongoing strategies in silicon supply and disruptions in global supply chains. The war in Ukraine also led to a group decision to exit the Russian market, which impacted both revenue and margins. In the meantime, the team remained focused on execution. They gained further market share in media security and won 17 new connected services customers. The new services segment now accounts for almost a third of external revenues. eData secured more than 61 billion streams during the past year, which is more than a 50% increase from the year before. They were recognized for their efforts and were named the best cybersecurity company at the recent industry event. In FY23, eData's gaming cybersecurity arm, DeNovo, unveiled new technology that can identify bots in real time with close to 100% accuracy. The business rolled out data control for multi-digital rise management, launched its cross-charge solution for electric vehicles, and took additional steps in connected health. Let's turn to slide 20 for an update on Kingmakers, our sports betting investment. The business reported strong growth momentum for the year, with active users increasing 20% while active agents were up 99% year-on-year. Stakes increased to $1.8 billion, which supported a 51% increase in revenues to $198 million, or 3.4 billion rands. The J curve remains shallow, and the business reported a $28 million loss after investing in operating capacity and absorbing some cash extraction losses from Nigeria. At its year end, the business had $166 million in cash, mainly held in the UK, which will be utilized to fund its expansion plans. The past year saw a change in management with new CEO Kim Reid, previously from Takealot, leading a group of experienced executives with deep industry expertise. The team decided to reprioritize its activities and focus on large, must-win markets like Nigeria and South Africa first, resulting in an exit from Kenya and Ethiopia. SupersportBed obtained a license in South Africa and will be launching soon. Turning to slide 21 to discuss the impairment of our investments, the kingmaker's business has grown exponentially over the past few years. Since our investment in 2020, They have delivered in line with the original U.S. dollar business plan investment. As the business is performing well, the impairment did not relate to operational performance. A roughly 7% increase in the U.S. dollar discount rate for the Nigerian market, driven by a macro shift globally, higher risk premium, and a material change in currencies resulted in us incurring an impairment charge of 112 million dollars. And while this represents a download adjustment of around 40 percent, it is in line with the average deadline in value of the peer group over the past two years. We know that the valuation reflects things at a point in time and could well increase again going forward. We remain convinced about the future upside of this business. Finally, we turn to slide 22 to briefly revisit our investment in moment. a FinTech startup which we announced at our Capital Markets Day. Moment, which represents a significant opportunity for the partners in the venture, is set to transition consumers and SMEs across Africa from cash to digital solutions. FinTech is a highly competitive and fast-moving space, but Moment will enjoy significant competitive advantages at launch. It will look to leverage multi-choice, 200-plus payment partner integrations, and our existing base loads of $3.5 billion in annual customer payments across 50 markets. It will also benefit from the proven technology and expertise of the rapid team and the resources and networks of the founding venture capital partners. Our initial capital investment was around $3 million, and the venture is unlikely to require further funding in the next 18 months. It is early days. but we believe that moment has a role to play in shaping the payment landscape in Africa for the better. We have received a lot of interest from the market about moment and how it will work. We look forward to unpacking more detail with you in future. This concludes my operational update. Let me now hand over to Tim to discuss our financial performance.