South Africa

OPERATIONS

The MultiChoice Group continues to be the largest benefactor of sport in South Africa and plays a meaningful role in upholding the film and production industry. This year, the group invested ZAR6.2bn in local general entertainment and sport content across the continent, a substantial share of which was spent in South Africa.


OUR CONTRIBUTIONS TO SOUTH AFRICA

  • 3 521 fulltime employees (FY19: 3 976)
  • ZAR7.4bn total tax contribution (FY19: ZAR6.9bn),
    paid ZAR3.4bn and collected ZAR4bn
  • ZAR211m spent on CSI initiatives(1) (FY19: ZAR149m)
  • ZAR10.4bn contribution to preferential procurement
    (FY19: ZAR10.3bn)

OUR OPERATING PERFORMANCE

In FY20, the South Africa segment accounted for 66.5% (FY19: 67.3%) of group revenues and 43.2% (FY19: 42.8%) of our group 90-day active subscriber base at year-end.

This year was characterised by a tough operating environment for consumer-facing businesses in South Africa, most notably during the second half of the year. While our business has historically been relatively resilient through economic downcycles, we are not immune to their impact. Notwithstanding these macro challenges, we produced solid subscriber growth, adding 0.5m to our subscriber base.

Some of this growth is attributable to COVID-19, with the lockdown in South Africa fuelling increased demand for our product in the last few weeks of the financial year. Nonetheless, we are seeing ongoing underlying demand for both our traditional pay-TV services and OTT products in South Africa, which bodes well for potential growth when the economy turns.

We were pleased to grow our mass market segment by 16%, despite an inflationary price increase at the beginning of the year. This was our first price increase in our Access package since its launch nine years ago.

Our Compact base remained flat for the year, a reflection of the high level of indebtedness and consequent pressure on disposable income in this particular segment of the South African population.

In the Premium segment, our decision not to increase Premium prices, coupled with a strong performance in the Compact Plus package, served to somewhat stabilise the Premium base, with the decline of 4% more muted compared to the prior year’s 7%. Retention is just as important as growth. As such, customer satisfaction, and in particular satisfaction with our core content offering, is critical to success. This year, we improved channel satisfaction across all packages and enhanced the catch-up experience with box sets and additional movies; and better VOD compression technology resulted in 30% more on-demand content available on our DStv Explora decoders.

Our intention is to build a loyal customer base that delights in our product and presents future upsell opportunities. This extends to our OTT services such as Showmax and DStv Now. This year we temporarily opened 1Magic, our flagship Compact Plus channel, to the Compact base, which, together with targeted offers successfully enticed customers to upgrade to Compact Plus once the open period ended. Similarly, our Family package exceeded expectations, demonstrating an ability to upgrade Access subscribers into this more complete entertainment offering. As upgrades support an improved ARPU performance, they form an important part of our business strategy. We have a healthy base of 4m mass market subscribers representing a future ARPU uplift opportunity in more buoyant economic times.

This year, ARPU decreased by 4% from ZAR302 to ZAR290, mainly due to our pricing strategies and the ongoing shift in subscriber mix owing to faster growth in lower-tier packages.

Active days, a measure of the proportion of the year that our customers are actively connected to our services, finished on 284 days. This was six days lower than the prior year, indicative of the depressed consumer environment.

In the area of advertising sales, our DStv Media Sales team managed to maintain our market position despite a tough operating environment that saw many customers scaling back on their marketing budgets. Nevertheless, the team continued driving sales, and introduced numerous digital products into their offering that will lessen reliance on traditional linear TV advertising in the future.

These included the introduction of advertising on our digital properties and YouTube channels.

We continue driving operational efficiencies and digital agility. In digital customer service, our efforts continue yielding results. Our WhatsApp self-service platform and DStv self-service application, both launched in FY19, saw strong uptake. Our self-service channels overall account for 66% of all customer interactions, reducing the need for in-person contact. As a result of these changing dynamics, we restructured our customer care division. This was achieved with minimal forced retrenchments.

We embarked on several initiatives to streamline our business, such as discontinuing our printed magazine guides (while providing an improved digital experience instead), discontinuing legacy packages and migrating customers to new ones, closing the VAST Networks business and launching new simplified packages for our business customers. This helped to narrow the focus of the team and reduce complexity, while positioning us well for the future.