Rest of Africa

OPERATIONS

We believe our communities represent film producers and sport stars of tomorrow. In FY20, 60 students graduated from our MTF academies, and over 400 filmmakers received online MTF masterclass training across 13 countries. The masterclass training was aimed at transforming passionate youth into skilled filmmakers and storytellers. We also supported local football across the continent.


OUR CONTRIBUTIONS TO OUR REST OF AFRICA MARKETS

  • 2 460 fulltime employees (FY19: 2 224)
  • ZAR34m spent on CSI initiatives (FY19: ZAR48m)
  • ZAR3.8bn total tax contribution (FY19: ZAR2.6bn),
    paid ZAR1.5bn and collected ZAR2.3bn

OUR OPERATING PERFORMANCE

In FY20, the Rest of Africa segment accounted for 30.1% (FY19: 29.6%) of group revenue, generating reported and organic revenue growth of 4% and 3% respectively YoY. The segment ended the year with 11.1m (FY19: 10.6m) 90-day active subscribers, up 4% YoY (FY19: 18%). The Rest of Africa accounted for 56.8% (FY19: 57.2%) of our group 90-day active subscriber base at year-end. Growth in subscribers was negatively affected by the impact of the drought, electricity shortages and economic distress in Zambia and Zimbabwe. Like in South Africa, we experienced an increase in subscribers at the end of March 2020 due to COVID-19 lockdowns introduced across many of our markets.

Our underlying growth trends per package were somewhat distorted this year by initiatives to incentivise subscribers to upgrade. Our ‘step-up’ campaign rewarded subscribers for reconnecting by providing temporary access to the package above the one they are subscribed to. As a result, the 23% YoY growth in our Premium segment is not comparable with the 1% and 3% growth rates we showed in our mid and mass market segments.

ARPU decreased by 4% to ZAR110 in FY20 (from ZAR114 in FY19) due to currency weakness, a pick-up in growth towards year-end, lower average engagement levels and specific pricing strategies. Active days declined by 6% YoY on the back of the non-recurring boost from the 2018 FIFA Soccer World Cup in the prior year and a softer consumer environment.

Macroeconomic conditions across sub-Saharan Africa generally remained challenging this year, with numerous country-specific factors impacting our major markets. In certain markets, we are seeing governments pursue additional revenue streams by raising existing taxes (eg using VAT rates) or introducing additional taxes which negatively affect disposable income. Late or non-payment of government employees further exacerbates the problem.

The Angolan economy continued contracting, with lower oil prices and exports resulting in ongoing currency devaluation and high inflation. We implemented cumulative price increases of 38% (ex-VAT) on the back of regulatory approval and in response to the introduction of a 14% VAT rate. Despite this backdrop, our 90-day active subscribers in Angola declined by only 2% YoY.

Droughts in Zambia led to severe electricity shortages (often exceeding 18 hours per day), which materially impacted our subscriber base in the market. Significant increases in electricity prices placed pressure on the disposable income of Zambian consumers. Zimbabwe was also impacted by the drought in southern Africa, which, combined with the general economic collapse and hyperinflationary environment, affected our business significantly. As a result, our Zambian and Zimbabwean 90-day active subscriber bases were down 11% and 41% YoY respectively.

Nigeria experienced a volatile year. Some months experienced record growth and others were negatively impacted by several uncontrollable factors. These included negative sentiment relating to South African companies and their services following xenophobic attacks; rising food inflation in the second half of the year as the government closed borders; and the banning of motorbike taxis in Lagos which resulted in an escalation in travel costs, job losses and longer commuting times. The net effect was a slower 8% YoY growth in our 90-day active subscriber base.

In Kenya, aggressive competitive activity at the lower end of the market initially affected our DTT subscriber growth. However, our price down campaigns stabilised our position and supported strong growth of 16% in our DTH business, resulting in our 90-day active subscribers being flat for the year. These campaigns are aimed at reigniting growth and improving our value proposition.

Despite these varying short-term challenges, we remained focused on capitalising on the significant market opportunity on the continent. Our festive campaign launched in November 2019 achieved higher growth over the holiday period than in any of the preceding eight years, confirming the appeal and demand that exists for our products.

We continued carefully managing and improving the value proposition of our package line-ups, introducing the successful Familia package in Angola, rolling out more tailored packages for the Nigerian market, and selectively introducing price downs in our East African territories. Football events performed well and Big Brother Nigeria drove record engagement as demonstrated by voting through the MyDStv and MyGOtv apps.

During FY20, our CSAT score further improved and we achieved a score of 71% for DStv and 70% for GOtv (FY19: 70% and 67% respectively), both ahead of target. We also successfully launched and/or improved our DStv and GOtv websites and dedicated applications, and our WhatsApp self-service and live chat services across several markets. We further improved user login, customer payments, viewer voting and other functionality, an ongoing process to enhance user experience. To improve efficiencies, we streamlined and automated certain processes pertaining to the maintenance of our customer-facing and other technology systems.