We actively evaluate and cultivate a pipeline of opportunities aligned to our purpose and broad strategic priorities and that serve to enhance our customer
experience. This approach has allowed our group to grow through organic reinvestment in our businesses and periodic shifts in focus through greenfield
projects such as the launch of various new services in the past (e.g. our digital DTH satellite business in 1995, DTT business in 2010 and OTT business in 2015).
Going forward, we will also consider targeted investments and other strategic partnerships as illustrated by our minority investment in BetKing.
OUR TOP 10 OPPORTUNITIES
1
Large and growing addressable market
We see an opportunity to drive
subscriber growth in our core business
as we target an addressable market of
49m households in sub-Saharan Africa,
growing to 56m by 2025 (+12%).
We take a long-term view and are
comfortable with supporting our
businesses through the cycle.
We have increasingly focused on
growing penetration in the mid
and mass market segments, e.g.
through our value strategy in the
Rest of Africa where we lowered
pricing, increased upfront set-top
box subsidies, and improved the
content value proposition across
packages to reposition the
business for longer-term
sustainable growth.
2
Fast growing OTT market
We see an ongoing OTT growth
opportunity as technology resolves
access and cost barriers.
We are accompanying our
subscribers on their journey into
an increasingly online
environment. Our connected
Explora Ultra device and DStv
streaming and Showmax services,
are aimed at either extending our
traditional linear service online or
introducing new user experiences
such as our third-party SVOD
partnerships.
This creates a foundation for us to
scale our OTT offerings and
launch innovative services.
3
Sizeable and engaged subscriber base
We had a base of 20.9m 90-day active
subscribers as at 31 March 2021 (2020:
19.5m). This creates an opportunity to
roll out complementary services.
Our subscriber base provides
economies of scale that allow us
to continuously enhance our
customer value proposition by
developing a broader ecosystem
of video entertainment and related
products and services. Our scale
and reach also allow us to invest
in adjacent industries (e.g. sports
betting) to provide an even wider
array of entertainment options.
We monitor trends in offshore
markets regarding vertical
integration, converged service
offerings and aggregator
distribution partnerships. While
our markets require a nuanced
and often different approach, we
selectively apply these principles
if and when relevant.
4
Deep understanding of
customer entertainment needs
With 36 years’ experience in
understanding the needs and
preferences of our subscribers across
an extremely diverse base (nationality,
language, culture, economic status, age
and gender), we are well placed to meet
their evolving entertainment needs.
We aim to offer our customers
a full service content mix with
appropriate tiering to suit their
circumstances. Our strong
international entertainment
offering and SVOD relationships
complement our points of
differentiation, i.e. local content
and sport.
Our increasing investment in local
content enables us to tell great
stories that our customers love
and develop proprietary
intellectual property and formats.
Our ongoing focus on sport
enables us to maintain a
best-in-class offering by global
standards.
5
Deep understanding of the customer journey
Given that we provide an uninterrupted
24/7, 365-days-a-year service, we have
numerous touchpoints with our
customers beyond our broadcast and
streaming signals. This creates an
opportunity for us to seek continual
improvements in customer satisfaction.
We aim to continuously improve
each touchpoint in the customer
journey, including direct
experiences such as customer
onboarding, billing and technical
support, as well as indirect
experiences through partners like
our installer network or payment
service providers.
The benefits that accrue from
such an approach are reflected in
retention/churn rates, upgrade/
downgrade pathways, customer
satisfaction scores and customer
acquisition costs (word of mouth).
6
Clear path to returning Rest of Africa to profitability
A sustained turnaround in the Rest of
Africa business will alleviate market
concerns. It will also improve our overall
group margins and enhance cash flows,
which can then be reinvested in the
business and/or returned to
shareholders.
Scaling our subscriber base while
managing our largely fixed-cost
base (including targeted cost
reductions) supports our path
back to profitability.
In the interim, we have to navigate
a challenging economic and
foreign exchange environment
using hedging programmes
(where available and cost effective)
and close liquidity
management to help manage our
cash flow risks.
7
Ability to make strategic investments
Our historic growth has been mainly
organic rather than acquisitive, but with
the unbundling from our previous
parent, the Naspers Group, a robust
balance sheet, capacity for prudent
gearing as and when circumstances
warrant, and strong free cash flow
generation, we have an opportunity to
explore value-accretive investments to
further our strategic ambitions.
Our ambition is not to become an
investment holding company, but
rather to source, evaluate and
potentially execute on investment
opportunities that (a) add value to
our ecosystem and customer
experience, and (b) create explicit
value through expected returns
that exceed our cost of capital.
8
Ability and willingness to partner
Our ultimate objective is to provide a
comprehensive entertainment offering
to our subscribers, supported by a
seamless experience. Given our scaled
base, we have an opportunity to pursue
partnerships that are mutually beneficial
and customer friendly.
While we already partner with
many service providers across our
business, we have an opportunity
to focus on optimising current or
introducing new partnerships for
the benefit of the customer or
business.
These can take the form of explicit
add-on services, as with our
recent SVOD partnerships; implicit
service points, as with payment
service providers; or background
partnerships, as with content
co-productions.
9
Entrenched position in media security
Irdeto’s technical pedigree, 51 years’
experience and prominent market
position in the media security space
enable us to sustain our momentum in
gaining market share.
We focus on gaining new
customers and expanding the
scope of services with existing
customers in our traditional linear
broadcasting security business.
At the same time, we are
expanding our presence in less
developed but growing areas
of the media entertainment
market, such as OTT security
services, as well as online and
mobile gaming security.
10
Growing set of markets in connected industries
The internet of things (IoT) continues
expanding at an exponential pace. A
generally limited focus on digital
security on an industrywide basis
presents an opportunity for us to
underpin these innovations.
Focusing on industries where
security meets safety and the
stakes are high (loss of life,
sensitive data, extreme brand
damage, critical financial impact,
etc.), Irdeto sees opportunities for
growth in areas such as
connected transport, connected
home and healthcare, as well as
data protection.
Cybersecurity regulations also open up new areas for growth where we can provide compliance solutions for our customers.
How we manage and mitigate risks
At MultiChoice, decision-making is supported by a robust risk
management process that identifies and seeks to address potential risks.
We align our risk management processes to our strategic planning and
budgeting cycles. Risk plans are compiled annually and continuously
updated to consider changes in the external environment and
organisational developments.
The risk profile reflects our risk appetite as determined by the board. The risk committee is
responsible for monitoring risk factors and how these are managed. Results from the
enterprise-wide risk management process are integrated into the business’s strategic, operational,
compliance monitoring and reporting activities. Management is tasked with managing risk and
delivering financial and operational performance aligned with our risk tolerance.
OUR TOP 10 RISKS
1
Regulatory and licensing
Description
We operate in a highly regulated industry
where changes in regulatory policy and
legislative frameworks can have a
significant impact on our business and
operating model.
Risk mitigation
Our focus remains on full compliance with existing regulations.
We continue engaging with regulators and industry
bodies proactively.
We conduct ongoing regulatory reviews and maintain
contact with regulatory authorities and public industry
bodies.
Our dedicated, experienced teams (internal and
external experts) assist with regulatory engagements,
responses to inquiries and other projects/
submissions.
We promote active engagement with management,
government and regulatory authorities about how the
proposed regulations could impact the industry.
2
Economy
Description
Macro-economic challenges, such as
currency depreciation and volatility, the
commodity slowdown, electricity
shortages and, more recently, the impact
of the COVID-19 pandemic, place
pressure on the economies of the
countries where we operate.
Consumers are affected by the
consequent pressure on disposable
income, which potentially affects our
addressable market, and growth and
retention prospects.
Risk mitigation
We understand the pressure our customers face and we remain focused on customer-centricity and affordability. This is reflected in our pricing decisions, which in many cases are below inflation.
We continue focusing on reducing costs and
improving efficiencies.
We hedge our foreign exchange exposures for a
minimum of 18 months, up to 36 months in terms of
our treasury policy.
We continue moving more costs into local currency.
We offer customers various options suited to their
circumstances, supporting value for money with the
flexibility to adjust to their unique and changing
circumstances.
We continue investing in new products, services and
businesses to diversify revenue streams into the
future.
3
Disruption and competition
Description
The landscape remains increasingly competitive with strong
global and local competitors and new entrants. Consumers
have credible alternatives from multiple sources in terms of
video entertainment. Further, there is aggressive
competition for content rights when contracts are up for
renewal and content providers may choose to go directly to
consumers, withdrawing rights from us.
Risk mitigation
We understand entertainment and technology are evolving, as are consumption
habits. As such, we continuously invest in product and service innovations, and
we focus on better products, value and customer service.
Retaining attractive content rights is a priority, as is investing in our platforms and
partnerships to maximise mutual benefits.
We are diversifying our product portfolio and service offering by investing in
opportunities in areas adjacent to video entertainment to provide a wider array of
products and services to our customers.
We continue exploring opportunities for relationships with telcos and other platforms
to enhance our value proposition.
4
Cybersecurity
Description
The security of our information assets, including content,
and customer and employee information, is critical. Failure
to protect these assets poses a legal and reputational risk.
Risk mitigation
We continuously invest in systems and technology to identify vulnerabilities and
prioritise the remediation thereof to enhance systems security and reduce business
interruptions.
We employ a chief information security officer and chief data officer to ensure
appropriate management attention to this critical risk.
Controls over information assets are continuously tested, and focus on the content
value chain and protection of customer and employee information.
International studios undertake security assessments from time to time in support of
their agreements with us.
We achieved international content protection certification from the Content Delivery
and Security Association (CDSA) certification during the year.
5
Securing content
Description
Access to quality content at the right price is a major
business consideration. Content rights, for both general
entertainment and sport, are highly sought after.
Further, currency fluctuations and renewals can lead
to increased costs.
Risk mitigation
Rights are regularly reviewed with due consideration for the economic value of each
set of rights, and bids are tabled accordingly.
We bid for and secure sporting rights, according to rights cycles as determined by
sport rights owners.
We continue to aggressively increase our investment in local content.
We maintain our relationships with rights owners to maximise mutual benefits.
We offer customers various options suited to their circumstances, and support value
for money with the flexibility to adjust to their unique and changing circumstances.
6
Technology
Description
Technology is integral to our strategy and operations.
For example, the availability and stability of the billing
system is critical to the achievement of our strategic
objectives. In addition, the stability and scalability of the
DStv streaming and Showmax platforms are imperative
to drive our OTT initiatives.
Risk mitigation
We invest in improving our existing systems and platforms, and monitoring,
innovating and collaborating to offer increased value to customers, which are all a
key part of our business plan.
Our IT controls framework was developed and is being implemented throughout the
group. The framework’s robustness is regularly reviewed.
Significant improvements to simplify billing and business rules were implemented
during the year, and we have standardised our billing system across all African
markets.
Rigorous testing programmes are implemented for all software updates and rollouts
for our internal systems and platforms.
Redundancy in key equipment and platforms was built at the disaster recovery site
at our Samrand and Isando operational facilities.
We expanded our European technical facility and redundancy for the Rest of Africa
business by adding a secondary business continuity technical site.
7
Third-party risk management
Description
We work with many third parties, and weaknesses and
inadequacies in their management could potentially expose
our business to a wide range of risks, such as reputational,
information security, legal compliance, business interruption
and other operational risks.
Risk mitigation
Significant progress is being made regarding the management of third parties. A
detailed third-party risk management (TPRM) framework was approved in FY20 and
has been implemented.
All third parties with whom we do business are subject to this risk management
framework, which results in a firm foundation for their effective management.
Annual ongoing monitoring of all third parties with which we do business is a key
part of the TPRM framework.
In addition, standard anti-bribery and anti-corruption clauses are added into
third-party contracts wherever possible.
8
Business continuity management
Description
The
group must be able to anticipate, prepare for, respond to
and
recover an appropriate level of service in the event of
an interruption. This includes technology failures in
broadcasting/digital playout, customer service, billing/
payment systems and payroll. The business continuity
management programme is focused on people, processes,
systems and information.
Risk mitigation
Business continuity management is well established in the group and continuously
improved. All operational and functional areas in the group have documented and
tested business continuity plans.
The business continuity management programme is well governed through internal
executive committees, with regular reporting to the board and its committees.
9
Piracy
Description
The
illegal retransmission and piracy of content, including
illegal connections, file sharing, illegal internet streaming of
sporting content and the piracy of local content remain key
risks to the business.
Risk mitigation
We continuously invest in our platform and application security division, Irdeto,
which offers cybersecurity and anti-piracy solutions in media and gaming.
During the year, illegal entertainment services to 0.7m households were
disconnected.
10
Talent and skills scarcity
Description
To move into the next generation of media services,
we
require talent and competence to operate in a
data-driven world of big data, machine learning and AI;
all areas with skills shortages globally. However, the focus
on talent and competence is not limited to these areas.
Risk mitigation
The group’s reward structures are aimed at retaining employees in key areas and
include bonuses and share schemes.
We identify the scarce skills and competencies required.
Focused recruitment of scarce skills remains a priority.
This is supported by programmes designed to develop a pipeline of talent.
We partner with vendors for skills transfer and programmes.
