MultiChoice sets R2.5bn aside for maiden dividend
MultiChoice Group, which will be directly listed on the JSE after the pay-TV operator parts ways with parent company Naspers, has set aside R2.5bn for dividends to shareholders for the year to March 2020.
Naspers said after the market’s close on Monday it would hand its stake in the DStv operator to its shareholders with effect from March 4, thus completing its transformation into an internet-only behemoth.
As Africa’s largest public company, Naspers mostly was a publishing and pay-TV business until its 2001 investment in China’s Tencent.
MultiChoice funded that deal and a large portion of Naspers’ subsequent internet ventures, but will soon go it alone at a
time when internet rivals are threatening the traditional pay-TV market.
MultiChoice finance chief Tim Jacobs told Business Day on Monday the board did not plan to pay a dividend for financial year 2019, but aimed to declare an inaugural dividend of R2.5bn for financial year 2020.
Jacobs said he is confident MultiChoice would flourish as a standalone entity. The company is growing subscriber numbers and revenues, and is debt-free with R4bn in cash on its books.
Some of that cash would go towards the rest-of-Africa business, which was in the midst of implementing its turnaround strategy, he said.
"The second thing is that we’ve identified that the pay-TV market in Africa which we can target is about 40-million households, of which we currently only have 14-million, so there’s a significant opportunity for growth in the rest of Africa in pay-TV."
At the same time, MultiChoice plans to invest more behind Showmax, its online offering and answer to global streaming giant Netflix.
"As consumer habits move from traditional pay-TV towards online, we want to make sure that we capture that transition onto our platform as well," Jacobs said.
The company is betting on local content giving it an edge over foreign rivals.
Showmax will premier its first original drama, an eight-part series called The Girl From St Agnes, on January 31.
Jacobs said he and other MultiChoice directors had
joined Naspers at recent meetings with investors in the US and Europe.
"Some shareholders have indicated that they might have additional funds that might be interested in picking up the mandates where existing mandates don’t allow," he said.
MultiChoice would go on its own roadshow in coming weeks, Jacobs said.
MultiChoice Group CEO Calvo Mawela said the company offered "an excellent opportunity to invest in the leading provider of video entertainment on the African continent".
The group is "one of the fastest-growing pay-TV broadcast providers globally".
"With strong financials, the flexibility of an ungeared balance sheet and deep local knowledge, we hope to deliver excellent returns to shareholders over time."
Naspers plans to give MultiChoice SA’s black economic empowerment investors another 5% stake in the local
pay-TV business at the time of the unbundling.