Opportunities and risks

We see an opportunity to drive subscriber growth in our traditional pay-TV business as we target an addressable market of 54m households in sub-Saharan Africa as of FY23, growing to 61m by 2028 (+13%).

• We take a long-term view and are comfortable with supporting our businesses through the economic and business cycles in our markets.
• We are focused on retaining subscribers in the premium and mid segments in SA, while growing penetration in the SA mass market and across our RoA footprint.

With 38 years’ experience in understanding the preferences of our diverse subscriber base, we are well placed to anticipate and meet their evolving needs through content aggregation.

• 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 hybrid satellite, terrestrial and streaming-only connected devices, our DStv via Streaming service, our third-party streaming service distribution partnership, and our Sky Glass syndication deal enhance our aggregation journey.

We see an opportunity to drive meaningful growth in SVOD as developments in technology resolve access and cost barriers for connectivity and connected devices.

• Our Showmax team has performed exceptionally well in recent years, across the platform’s backend technology stack, to its front-end UI and our local content offering.
• Our Comcast, NBCUniversal and Sky partnership provides us with the hyper-scalable technology and international content we need to scale our SVOD business to even greater heights.

Given that we provide an uninterrupted 24/7, 365‑days‑a year service, our numerous customer touchpoints across multiple platforms create an opportunity for us to drive innovation in customer experience to improve customer engagement and activity.

• We continuously improve each touchpoint in the customer journey e.g. customer onboarding, and billing and technical support, we ensure indirect experiences through partners like our installer network or payment service providers are up to our standards, and then innovate in areas such as digital self-service and value-added services.
• We leverage these improvements in customer experience to drive measurable improvements in activity rates, and upsell and cross-sell opportunities, while mitigating cost pressures.

We have an ‘installed’ customer base of 23.5m 90-day active subscribers as at 31 March 2023 (2022: 21.8m), which creates an opportunity for us to serve customer needs beyond entertainment.

• We enhance our consumer value proposition by developing new product and service offerings, including DStv Insurance and home services like our on–demand emergency response services through Namola and AURA, as well as broadband solutions through DStv Internet in partnership with fibre and fixed–wireless LTE wholesale partners.
• We also monitor trends in offshore markets and tailor relevant approaches to our markets as and when relevant.

As the continent becomes increasingly connected, our customers’ entertainment needs and preferences will continue to expand to include more interactive entertainment experiences.

• Our investment in KingMakers represents our first meaningful foray into interactive entertainment, with their sports betting services directly complimentary to our video entertainment services, as demonstrated by our first successful collaboration in the form of the SuperPicks free-to-play online game and our successful SuperPicks and Super Saturday magazine shows.
• We see significant scope to grow in this space, in terms of geographic footprint and service offering.

As the continent becomes more connected, consumers and business will increase the scope of their online activity and require a set of comprehensive solutions to support their ability to transact and interact with each other in financial terms. As fin-tech is beyond the scope of our core competencies we have partnered with a best-in-class global fin-tech platform in Rapyd and a best-in-class venture capital firm in General Catalyst to create a pan-African fin-tech startup.

• While our partners contribute capital and expertise, we bring a scaled customer base and an established payments business that processes over ZAR3.5bn in payments annually through more than 200 payment partner integrations and incurs in excess of USD60m in transaction and other fees annually.

Our historic growth has been mainly organic, and while innovation remains part of our growth playbook, we are also increasingly leveraging targeted investments and partnerships to build out our ecosystem. Our ultimate objective is to offer a compelling set of consumer services (underpinned by technology) to our customers as and where it makes sense for us to do so.

• Our ambition is not to become an investment holding company, but rather to source, evaluate and potentially execute on investment opportunities that (a) are underpinned by technology, (b) add to our customer value proposition, (c) are scalable, (d) leverage our existing platform/ customer base and (e) create explicit value through expected returns that exceed our cost of capital.
• While we already partner with many service providers across our business, we have an opportunity to focus on optimising current relationships e.g. with the telcos or introducing new partnerships e.g. with the global streaming operators for the benefit of our customers.

After achieving trading profitability in the Rest of Africa segment this year, our next target is positive free cash flow in the year ahead to diversify our free cash flow streams and alleviate market concerns around the return profile and sustainability of the business.

• Scaling our subscriber base, implementing inflation-linked price increases and closely managing our largely fixed-cost base (including targeted cost reductions) have supported our path back to profitability.
• We will pull the same levers to reach free cash flow breakeven, while continuing to navigate a challenging economic, foreign exchange, regulatory and tax environment.

Irdeto’s technical pedigree, 53 years’ experience and prominent market position in media security provide a strong foundation to pursue broader leadership in the cybersecurity space.

• We focus on gaining new customers, notably tier one customers, and expanding the scope of services with existing customers in the traditional linear broadcasting space while expanding our presence in growing areas of media entertainment such as streaming and gaming.
• We are also pursuing more nascent connected industry verticals where we can leverage our core cybersecurity competencies such as connected transport and connected healthcare.