MultiChoice’s technical insolvency is a worrying sign for the company’s financial trajectory — but it has even bigger concerns to address.
In its latest results, MultiChoice has fallen into technical insolvency, a serious concern. However, the media giant has even bigger problems, including declining subscriber numbers and poor capital allocation.
This means a technically insolvent company cannot settle all its liabilities if all its assets are liquidated. However, Urquhart Partners’ Richard Cheesman told Daily Investor that the company has bigger problems to contend with, and technical insolvency is not a major concern for MultiChoice.not concerned about being technically insolventHe said MultiChoice has liabilities they are accounting for, including “the put option that Comcast can do to us”.
Cheesman told Daily Investor that technical insolvency does not necessarily reflect the full state of a company’s financials and operations. In turn, the year following a major sporting event tends to see muted subscriber growth and even a decline due to people unsubscribing as they no longer see a need to pay for the service.
DStv’s premium subscriber base was particularly hard hit, declining by 15% over the financial year from 2.7 million to 2.3 million subscribers. Its mass-market offering showed more resilience, with a 5% decline. Aside from declining subscriber numbers, Cheesman said the company’s capital allocation over recent years has been a drag on the group’s returns.
For example, it is pumping billions into Showmax, hoping to capture a large chunk of the growing African streaming market.However, there are many investments that did not have the impact the company thought it would, costing it billions.
Dstv Groupe Canal+ Headline Multichoice Richard Cheesman Investing
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Cheaper to buy DStv decoders from other retailers than DStv itselfDStv is one of the most expensive places to buy its own decoders.
Read more »
DStv owner in serious troubleMultiChoice is in serious trouble and had to start selling the family silver to get money to fund its operations.
Read more »
DStv’s owner in deep troubleA top analyst warned that MultiChoice is only worth around R60 per share and current shareholders should take their money and run.
Read more »
DStv owner bets the farm on ShowmaxMultiChoice is planning to grow Showmax’s subscribers and revenue by 1,800% over the next four years.
Read more »
DStv explains why it runs ads before streamsPre-roll ads are the short promotional videos that play before a streaming viewer can watch the content they selected.
Read more »
Sanlam to buy 60% of DStv insurance businessSanlam will buy a 60% stake in MultiChoice South Africa's insurance business for an upfront cash amount of R1.2-billion.
Read more »