Multichoice Group Limited

Good day, ladies and gentlemen, and welcome to the Multi-Choice Group First Half FY24 Annual Results Call. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the call. If you should need assistance on the conference call, please signal an operator by pressing star and then zero. Also note that this event has been recorded. I will now hand the conference over to Molloy Horn. Please go ahead.

Thank you, Chris, and hello, everyone. Our results for the six months end of September 2023 were released yesterday, and all of you who have registered on our database would have received an email with all the relevant results information. If you're not on the list, we would like to ask that you please register. It just makes life easier on our side. But in the meantime, you can find today's presentation and the latest results in the investor section of our website. As usual, We will start today's session with a presentation by our CEO, Calvo Moela, who will provide an overview and an update on the operations. This will be followed by our CEO, Tim Jacobs, who will be presenting the financials and outlook for the remainder of the year. Thereafter, we will also gladly take some questions. So let's start. Over to Calvo.

Good day everyone, and thank you for joining us. The past six months provided an opportunity for us to demonstrate our ability to adapt. The interim numbers which we released yesterday reflect our resilience and some excellent execution. In a very challenging environment, we have delivered a 31% trading margin in South Africa, which presents us well for the remainder of the year. We have been able to keep the rest of Africa business profitable. We have taken significant costs out of the system while keeping capacity, and we are driving additional future growth with the launch of SuperSportBed and the new ShowMax, showcasing our ability to stay ahead of the curve. As we show on slide five, The consumer challenges flag last year persisted into the first half of this financial year. Like many other South African businesses, low trading remains the most immediate challenge for us. This is due to a major increase in the number of days and the intensity of disruptions, as we show in the slide on the top left of the page. The bottom left of the slide shows its negative impact on our business. where significant rise in load shedding in May caused a drop in our active subscriber base. What is important to note, as September shows, is how things turn around as soon as electricity supply improves. The cost of living crisis is widely recognized, and the impact of high inflation and interest rate shocks have not escaped consumers on the African continent. In hard times, some households don't have a choice but to cancel their GSTV subscriptions and come back once things improve. But we are pleased that the quality of our entertainment has built resilience into this. The Naira, which weakened by 57% year-on-year, has certainly created serious headwinds for us. The currency has been quite volatile lately, but we are encouraged by potential government actions to address the issues. In the meantime, we are taking active steps to right-size the Nigerian business for the current economic reality. Overall, this is a tough economic climate, and like others, we are not immune. But we have shown that we are effective in managing this, and that our customers appreciate the quality of our offering. Turning to slide six, our multi-trials South Africa team has done a remarkable job in re-energizing and taking active steps to stabilize the business, given the impact of load sharing. We have seen some good initial progress, which we expect to continue. A key highlight for us was the premium customer base, which grew 5% year-on-year, and posted positive growth for the first time in many years. GSTV Stream enjoyed strong growth, mostly after its relaunch in July this year. It is worth highlighting that over 90% of GSTV Stream subscribers added in that period are new subscribers to GSTV who find the connected product without the need for hardware installation more appealing. ExtraStream, which solves the one-stream limitation via mobile, was launched with great success early this year. This gives us confidence for the launch of our new proximity control option, which offers additional streams within the household. The team also recalibrated the pricing and value proposition of the DSTV Business Play packages, which led to a 37% increase in month-on-month revenues in September 2023. This decision was taken to better monetize the GSTV content watched in pubs and clubs who pay the equivalent of only one-third of a premium subscription, a price point clearly out of line relative to value. GSTV insurance continues to enjoy healthy growth, with active policies increasing a healthy 18% to $3.1 million. This segment reported an impressive 31% increase in revenue, almost reaching the half a billion rand mark. We are also pleased with the ongoing traction of DSCV Internet, which more than doubled its revenues year on year. The rest of Africa team stepped up the challenge of achieving profitability by implementing growth initiatives and technical savings as we show on slide seven. Several initiatives were implemented to boost revenue. The launch of GoTV Super Plus in August provides DTC subscribers with a similar value proposition and price point to the GSTV Compact Service. This offering has gained great traction, and as we earn $6 more per subscription, it supports our pools and should lead to a $30 million revenue uplift. To account for a high inflation environment, we increase prices across the region by 14% on a weighted average basis. Although our general policy is to increase prices only once a year, cryptocurrency challenges sometimes prompt us to do so more frequently. This was the case in Kenya and Zambia, where we responded with price increases in April and August. More recently, we have pulled through another 19% price increase in Nigeria, to account for the further Naira weakness. The team also implemented specific initiatives to reduce costs, especially around decoder subsidies. Given the ramp up in decoder subsidies last year around the FIFA World Cup, and taking the macro situation into account, we felt this year called for a more measured approach. We also saved on content and SGMA, which allowed us to deliver a trading profit of 330 million rands in the rest of Africa, which is almost 600 million rands year on year. Turning to slide eight, as we explained at our Capital Markets Day earlier this year, we have always been focused on maximizing the value we can deliver as a business. Leveraging the scale of our leading entertainment platform and our daily access to more than 100 million individuals, we are well-positioned to drive future returns by delivering exponential growth through our expanded consumer offering. The launch of Supersport Bed and Showmax, two exciting new growth opportunities, will be a catalyst for us to double our customer base and generate more than a billion dollars in revenue in the coming years. Tim, our CFO, will get granular about the investment in Showmax later on and will provide more specifics closer to the launch. On the sideline, I would like to spend a moment reflecting on the imminent launch of Showmax 2.0 and why we are so excited about the potential of this offering. We believe streaming will be the critical next step for the African market and we are ahead of the curve with a scalable platform, leading content both local and international, and ready to benefit from fast-mover advantage. There has been a short period during the COVID years where global streaming operators invested aggressively in the scaling of their businesses. This resulted in some questions being raised about the economics of the streaming business model. Nonetheless, all evidence now suggests that streaming services will likely be profitable soon as operators have revised their content costs. Subscription prices are increasing everywhere and the financials of the streaming business are definitely improving. Consolidation in the streaming industry is likely to strengthen the hand of some existing operators while others that are non-profitable will likely close. It is therefore critically important that we make our move now before others reorganize themselves and make a play for Africa, which is seen as the last remaining growth of the market. There are currently just over 450 million smartphones in the hands of individuals across Africa, and at least 250 million football lovers on the continent. This represents a significant addressable market for our new Showmax product. Our EPL in your pocket mobile offering cannot be cast onto a TV screen and will be aimed at bringing the English Premier League games to individuals rather than households, as households tend to gather around the TV and are catered for by existing DTH and DTD offerings. The most exciting part of the new offering is that it will make the EPL available to a new market that loves the EPL but are unable to acquire a dish or want to watch while on the go. The EPL is super excited as this will be the first mobile standalone EPL offering globally and underlines our deep relationship. They've made some unique programming available to complement the live matches, and which is going deeper than ever before behind the scenes, while they are also making players like Drogba available to drive promotion. As for the core general entertainment offering, it will focus on leveraging our vast libraries of local content and access to leading international general entertainment content anytime, anywhere. Turning to slide 10. We have been hard at work over the past six months getting ready for the Showmax launch, which is scheduled for February 2024. Through this process, we are starting to see the benefits of our partnership with Comcast, especially as we leverage the power of the Peacock platform and its immense scalability. Not only do they employ more than 2,500 engineers who work on enhancing the platform on a daily basis, But every December, they live stream the NFL to more than 6 million peak concurrent users. This is simply not something that we could have built ourselves without incurring massive costs and execution risks. Streaming will be an evolving space, and our agreement also ensures that we are on Peacock's global roadmap, but incorporates the local capabilities, such as bitrate compression, which ShowMaps has pioneered. On the content side, we have capability to produce the African stories that everybody loves like nobody else. Through our substantial investment in local content, we now own a significant local content library of 80,000 hours that we are able to monetize. Complementing our unmatched local content will be great international content from our partners through the lives of NBCUniversal, Sky, and DreamWorks, as well as third parties such as HBO, Warner Brothers, and Sony. Payments and distribution is another important driver for our success and maximizes the economics of our business model. The fintech platform in which we have built a 27% stake has already integrated the key Showmax payment options with the aim of onboarding all 200 of our payment partners over the coming months. And to drive distribution, we have secured very valuable local partnerships which will reveal closer to the launch. We are certainly looking forward to Showmax changing content game in Africa and doubling our customer base. That concludes the overview. Let's now turn to slide 12 to discuss our operations. As demand for local content continues to exceed supply, and ahead of the showmix relaunch, we stepped up our investment in local content by 16%. As a result, our local content library is now at almost 80,000 hours, which for context is around nine years of continuous streaming content. Local content matters to our customers and is a true differentiator. It also means that multi-choice plays a vital role in supporting and developing the continent's wider video entertainment industry. Our target had been to spend 50% of our general entertainment budget on local content by FY24. But having achieved it a year early, the focus has now shifted to the number of hours of local content produced, the optimum allocation of those hours between the group's linear and streaming offerings, and the monetization of each hour of content produced. The undoubted highlight of the interim period for MNET was the premiere of Shaka Ilembe. The show delivered record views, with each episode averaging more than three million viewers, mostly through live viewing. We have renewed several studio deals during the period, and our core production state continues to expand, with six pro productions scheduled for release in the second half. As part of our ongoing cost optimization process, we have been able to reduce back-party costs. This has been through renewals that reduce fees or at the same rates, converting contracts into local currency, and adding forex protection mechanisms. Moving to Supersport on slide 13, we could not be more proud of DSTV, the home of the bokeh. Following on from the success of the FIFA World Cup last year, the interim period saw Supersport successfully broadcast three World Cup events, yet again reflecting our ability to source content from a wide variety of sports through the deep international partnership we have built. The FIFA Women's World Cup in July and August drew record television audiences. The Netball World Cup in Cape Town, hosted on the African soil for the first time and produced by an all-female crew, was shortlisted at the Sports Business Awards. Our Rugby World Cup production grew record viewers and served as a reminder that we can be stronger together. Now, we are rooting for the proteas at the Cricket World Cup. The past six months saw the SuperSport team increase the broadcast of live events by 21% to 17,000 hours, step up our investment in local sport by 8%, and increase our own local production by 57%. The broadcast of this year's Comrade Marathon was the biggest production in SuperSport's history. The team was also able to renew several sports rights as to continue to provide our viewers with a wide variety of choice. We remain committed to making school sports accessible to all levels of society through our Super Sports Schools platform. This user base grew by 69% over the last six months, providing a valuable stage for identifying the next generation of South African sports in sparse. And we have enjoyed great success in working with the PSL to re-energize the league through various initiatives. Our leading position in delivering sporting content is also key to broadening our ecosystem with some new strategic initiatives such as SuperSportBet and the English Premier League in your pocket, which I mentioned earlier. These complementary services will help us to drive subscriber adoption, expand market share, and deliver additional revenue streams. Slide 14 shows the key KPIs of our South African linear business. Outside of the ongoing impact of load sharing, which I've already explained, reported subscriber growth was impacted by the removal of 311,000 non-revenue generating customers from the base. This was due to our decision to end the short-term Surprise and Delight campaigns, which were launched to support customers badly affected by load sharing at the end of last year. While we try to support customers in adverse conditions, like we did during the COVID-19 lockdowns, we can only do so for a limited period of time. The effect of this decision is clearly highlighted in the graph on the left. The South African business reported a 5% deadline in 90-day active customers to 8.6 million, of which 3% can be added to this decision. We are particularly pleased with the 5% growth in our premium base, which showed positive growth for the first time in years. The performance of the overall premium segment was, however, dragged down by the pressure on the Compact Plus base, which is much more susceptible to macroeconomic pressures. More stable trends in the mid and upper segments of the customer base, along with inflation-leaked average price increases, helped limit the declining monthly average revenue per user to 2%. This was despite the ongoing negative impact of load shedding on the number of active days. After adding 1.4 million new subscribers in FY23, and similar to previous periods which followed the FIFA World Cup, subscriber growth in the rest of Africa was more subdued. And it's as we expected. Subscriber growth was also affected by the impact of inflationary pressures on consumers in key markets like Nigeria, as well as visibility factors around the northern hemisphere football seasons. On a 90-day basis, we added 100,000 customers to end the period at 30 million households, while the active subscriber base showed resilience despite the difficult macro conditions and was broadly stable at 8.9 million subscribers. Our objective is to pass through inflation-linked pricing, as that is typically what customers are prepared to absorb. As we mentioned earlier, we were able to increase prices on average by 14% across all our markets. Active days were down 4% due to challenging conditions in markets such as Zambia, which experienced power outages, and Nigeria, where the economy is taking strain. Due to currency weaknesses in several markets, the blended ARPU was negatively impacted upon conversion and came in just above $6.00. And although we finished flat in terms of customer growth, we delivered significant growth in profitability. Slide 16 reflects on the performance of Kingmakers, our 49% owned sport betting business. Although similarly impacted by the weaker Naira and challenging macro-environment in Nigeria, Kingmakers continued to deliver strong underlying operating momentum. The business delivered organic revenue growth of 22%, led by strong growth in its online sportsbook, which saw the active users increase 17%, and its revenue contribution grow by 40% year-on-year. The weaker Naira resulted in reported revenues increasing only 2% to $95 million, and or 1.8 billion rand. Encouragingly, the business delivered an EBITDA profit of $10 million, and the net loss has halved. The product and market expansion plans are fully funded, with Kingmakers having $134 million, or 2.5 billion rand of cash at period end. We were pleased with the South African launch of SuperSpotBet last week. To allow it to gain immediate traction and build market share, SuperSportBet will leverage the SuperSport brand and the ecosystem. There will be pre-game shows to build engagement and excitement around the product, as well as live odds integration into selected games, which shows the synergy of our platforms. As South Africa is under-penetrated in terms of sport betting, We believe the combination of the stressful kingmaker sport betting platform and the well-known super sport brand provides a great opportunity for the future revenue stream. On slide 17, we reflect on Ideto, our technology business. Ideto had a solid six months delivering market share gains in its core media security business through customer wins and additional work with existing customers, such as the provision of its managed service solutions. They also had success in combating piracy, somewhat of a rising challenge globally, resulting in over 33,000 streaming piracy services being disconnected. Outside of media security, e-datas connected industry initiatives continue to build momentum, most notably in the Keystone product line, where IDETO secured additional customer wins in the construction equipment space. IDETO further solidified its position as a market leader by joining the RDK Technical Advisory Board and by being recognized for its collaboration to enable the rollout of plug and charge, a seamless and streamlined electric vehicle charging solution across Europe. In conclusion on slide 18, We delivered a resilient operational performance in highly challenging macro environments by proactively implementing initiatives to protect the economics of our business. We have a compelling growth strategy in place to deliver sustainable long-term returns and navigate short-term headwinds. We are approaching an inflation point to deliver on this objective through our investment in both our streaming services and broader ecosystem of interactive entertainment and consumer services. All these positions ask well to capture long-term opportunities to expand our customer base to over 50 million in five years and deliver additional billion dollars in revenue in the medium term. This concludes my operational update. Let me now hand over to Tim to discuss our financial performance.