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Rest of Africa operations

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We operate in 49 markets across Africa. We aim to entertain and inspire with our growing slate of local language content and this year we added dedicated local content channels in various new markets to bring the group total to 30. We also supported local football across the continent, including continuing our partnership with the Ethiopian Premier League.

Our contributions to Rest of Africa
3042

full-time employees

(FY22: 2 780)

ZAR5.1bn

total tax contributions

(FY22: ZAR3.7bn)

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Our operating performance
14.2m

90-day active subscribers

(FY22: 12.8m)

In FY23, the Rest of Africa segment accounted for 38.3% (FY22: 32.5%) of group revenue, by generating reported and organic revenue growth of 26% and 16% respectively YoY (FY22: 4% and 14%), respectively. The segment ended the year with 14.2m (FY22: 12.8m) 90-day active subscribers, up 11% YoY (FY22: 7%). The Rest of Africa accounted for 60.4% (FY22: 58.7%) of our group's 90-day active subscriber base at year-end.

Macro-economic conditions across sub-Saharan Africa generally became more challenging this year, with numerous global and country-specific factors impacting our major markets. Inflation was generally expected to soften post the COVID-19 pandemic, but loose monetary policies by global central banks and geopolitical developments like the Russia-Ukraine conflict have seen inflation ramp up across the world. Due to these developments, a strong US dollar and elevated oil prices, fuel and food inflation have increased in many of our core markets. Even basic staples have seen significant price increases, impacting all consumers, while the large increases in fuel prices are particularly problematic given many individuals' dependence on fuel for power generation beyond their basic transport needs. YoY inflation as of March 202 was 43% in Ghana, 34% in Ethiopia, 22% in Nigeria and 9% in Kenya. While many of our markets are seeing a rebound in GDP exiting the pandemic, country reserves and currency markets are under pressure due to increased fuel subsidies and the rising cost of imports, with weakening global demand hurting African hard commodity and other export markets at the same time. Angola has been something of an exception off the back of their general elections in August 2022 and the benefit they have extracted from the strong US dollar oil price (inflation has moderated from 27% in March 2022 to 11% in March 2023).

In some markets, governments have reduced or removed the temporary COVID-19 related taxes they had imposed during the pandemic, but this has not been sufficient to ease the pressure on disposable income across the continent. We have also seen a further increase in requests and investigations from sector regulatory bodies and tax authorities across the continent as cash-strapped governments seek ways to generate revenues and plug budget shortfalls. Due to the macro and consumer pressure points above, we saw a deeper churn in our base in the first quarter of FY23, beyond what is typical in a seasonally weak period where there is no European football. However, through the remainder of the first half, the popularity of Big Brother Naija and the return of the new European football season, the base had recovered nicely ahead of the FIFA World Cup.

90-day active subscribers (m)
active susbs
Subscription revenue by country (m)

% contribution to Rest of Africa subscription revenue

susbs revenue

We broadcast the FIFA World Cup Qatar 2022 over November and December. With Ghana having qualified the subscriber response was positive and exceeded our expectations in a market that has experienced significant challenges this year. However, strong promotional activity in the lead-up to the event with Nigeria's absence from the World Cup resulted in a muted initial subscriber response with limited growth in November. Momentum recovered into December with targeted campaigns and a number of exciting matches through the latter stages of the competition. Our other markets showed positive growth in line with our expectations and the net effect was another successful acquisition driver for the Rest of Africa business. We were able to add a further 1.4m 90-day subscribers to our base in FY23, broadly in line with the 1.6m 90-day subscribers we added to our base in FY19 when the 2018 FIFA World Cup aired.

ZAR126 ARPU

(FY22: ZAR110)

In the current year we saw significant currency depreciation in the bulk of our core markets that weighed on our reported ARPU. However, we were able to offset some of these currency pressures through inflation-based price increases across the majority of our markets which uplifted our organic ARPUs. The only material exception to our price increases this year was Angola due to a lack of regulatory approval for our price increase for FY23. However, a stronger Angolan kwanza YoY supported reported ARPUs in that market in the absence of pricing.

The underlying growth trends across our package tiers showed divergent trends and created a mix headwind to ARPUs. Our premium tier reported a 10% YoY decline, reversing the prior year's gains of 14% on the back of affordability challenges given the issues we've unpacked above as well as the timing and cadence of various subscriber campaigns and offers. However, we continued to make significant gains in the mid-market, with growth of 19% YoY (FY22: 17%), while our mass market segment was up by a slightly less 12% YoY (FY22: 5%).

The net effect of the above dynamics was that ARPU improved on the back of inflationary pricing, while ZAR weakness provided further support on translation, withARPU improving from ZAR110 in FY22 to ZAR126 in FY23.

The Nigerian market continued to face significant economic headwinds this year as our largest Rest of African market headed into its general elections in February 2023. Inflation increased steadily throughout the year to reach ~22% in March 2023. This was mainly due to fuel and food inflation with fuel prices in-country tripling during the year. The oil economy has also been unable to capitalise on higher oil prices due to oil theft and production challenges. Nigeria even faced fuel shortages, resulting in intermittent periods of severe scarcity and long queues at filling stations. The government also removed certain bank notes from circulation ahead of the elections in February, which created further consumer challenges in the absence of new notes issuance in a cash-based economy.

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zar126 arpu image

Ghana grew its 90-day subscriber base by

27% YoY

Uganda DTH outperformed expectations by growing

24% YoY

Despite the above, we were able to grow our 90-day subscribers by 15% YoY. This was off the back of strong subscriber activations in the first half, a record festive season performance and significant subscriber activity around the elections. A combination of subscriber growth and inflationary price increases in April 2022, resulted in subscription revenue growth of 29% YoY in ZAR terms (FY22: 5%).

The US dollar liquidity remained strained throughout the year, with funding in the Investors and Exporters market limited and the Central Bank of Nigeria only providing liquidity for essential goods. The inability of the country to capitalise on elevated oil prices and the material increase in cost to import fuel exacerbated the situation further and led to volatile and increasingly punitive unofficial parallel exchange rates. Despite this, we were able to repatriate USD235m in cash in FY23, compared to USD240m in FY22, with USD104m remaining in-country at year-end, of which around USD40m is generally held for ongoing operational purposes. We continue to actively manage our exposure to this market.

Off the back of its qualification for the World Cup, we saw significant subscriber gains in Ghana, which grew its 90-day subscriber base by 27% YoY (FY22: 10%). Our East Africa markets remain highly competitive, particularly at the lower end in DTT where subscribers are also feeling the most pronounced economic pressure. Tanzania managed to further leverage its launch of the DStv POA bouquet in the prior year, thereby attaining 90-day subscriber gains of 12% YoY (FY22: 22%). Uganda DTH outperformed expectations by growing 24% YoY, as we launched DStv Lumba, a DStv Lite equivalent package which is our most affordable DStv bouquet. Despite being an 'entry level' package, it includes all the local channels, including Pearl Magic, a taste of European football with select matches of the English Premier League, La Liga, and Serie A, a variety of kids' entertainment, including Nickelodeon and Jimjam, and whole family entertainment with enthralling telenovelas. The Kenya market was flat YoY overall, with DTH subscriber gains being offset by DTT subscriber losses.

We continue driving our local content strategy

The Zambian market has been performing well despite high inflation, exchange rate volatility and power shortages

Our Porto markets continued steady gains in the current year despite strong competition

Our Ethiopian business continues to perform well. The regional conflict in the Northern region has been largely resolved and the state of emergency imposed on the country has been lifted. Exchange rates have begun to stabilise. We have continued to invest in our local content offering, while upscaling the team on the ground, bolstering our call centres, and significantly expanding our distribution footprint. Price increases were implemented in April 2022 and we have managed to grow the 90-day active subscriber base by 79% YoY (FY22: 48%).

In our Southern region, the Zambian market has been performing well despite high inflation, exchange rate volatility and power shortages in the second half of FY23. We managed to grow the 90-day subscriber base by 7% and subscription revenues by 32% YoY in ZAR terms respectively. Zambia, Zimbabwe and Malawi have been experiencing severe power outages due to delayed seasonal rains, but these were of shorter duration than in prior years. In February 2023, Cyclone Freddy hit Malawi, causing damage and further power disruption. Furthermore, Zimbabwe’s macro-economic environment has remained challenging for all businesses. Due to the above, our Southern markets excluding Zambia experienced muted 90-day subscriber base growth of 2% (FY22: 6%) YoY.

Our Porto markets continued steady gains in the current year despite strong competition. The Angolan kwanza saw some weakness post-elections, but average exchange rates were still stronger than the prior year, supported by higher US dollar oil prices. Inflation rates also fell by more than 50% in the current year. While we did not put pricing through as hoped, we were able to grow the 90-day base for the second year in a row after three years of decline in a challenging macro-economic period. We successfully launched local channels for each of Angola and Mozambique at the end of last year and these have been performing well. In Mozambique, the analogue switch off was completed in the first quarter of FY23 and, helped by a stronger content lineup, drove a 6% YoY increase in the 90-day base.

87%

of calls migrated to self-service

(FY22: 76%)

We continue driving our local content strategy by reducing non-performing international spend and adding local content channels in most of our core markets. We believe we are very close to reaching the optimal level of internationally vs. locally sourced spend for the business. New local channels were launched in Ghana (Akwaaba Magic Abusua), Uganda (Pearl Magic Loko) and Ethiopia (Abol Duka). Big Brother Naija once again drove record engagement as measured by voting through the MyDStv and MyGOtv apps.

With our website live in 42 markets, Apps in 47, WhatsApp self-service across 12 markets and our USSD service in 13 markets, digital adoption across Rest of Africa is currently around 79%. We also continue to build on significant improvements to our payment ecosystem through an increased vendor footprint and reduced vendor system and customer error rates. This includes looking at our payment infrastructure to support activity rates over time. Our extensive third-party payment network now covers integrations with 171 vendors across over 40 countries including large retailers, fin-tech players, MNOs and banks and we collected USD143m over the course of the period under review. We achieved customer satisfaction ratings of 74% (against our target of 74%) for DStv and 70% (against a target of 72%) GOtv.

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