Multichoice believes Zimbabwe may prove a better market than Nigeria

Multichoice, which is banking on economic and monetary policy reforms in Nigeria to offset exchange rate losses, considers Zimbabwe an important market that is better than its West African counterpart in terms of repatriation of earnings.

The JSE-listed pay-television and streaming firm's rest of Africa segment swung back to profitability in the full year to the end of March. Its share price on the JSE has however been trending down, after JP Morgan Chase revised its rating from neutral to underweight.

The Multichoice share price shed 2.5% in yesterday's JSE session while it is down by 11% and 29% in the past seven days and in the year to date respectively.

On Tuesday, Multichoice plunged by about 12% on the JSE after the announcement of its downgrade by JP Morgan Chase.

The company has over the past year faced challenges in Nigeria, one of its biggest markets, in terms of repatriation of funds. Analysts however now expect some of these headwinds to ease, with new President, Bola Tinubu on a path of fiscal, monetary and wider economic reforms.

"Zimbabwe is an interesting business for us and we don't see the same challenges that we are facing in Nigeria. Zimbabwe is better than Nigeria as we are collecting revenue in foreign currency," chief finance officer Tim Jacobs said in a recent interview.

The operator of DStv in SA, and several others across Africa and GOTV in Nigeria as well as online streaming service, Showmax, recently said that its rest of Africa operations "delivered a trading profit for the first time" since listing in 2019.

Although the African segment, which now accounts for 60% of Multichoice's earnings, helped cover up for losses in South Africa, which has suffered load shedding and depressed disposable incomes, it was impacted by exchange rate losses.


The Nigerian Naira currency has been highly volatile in the past year while a bid to remove old currency notes resulted in cash shortages as well as payment and transaction hurdles earlier this year. This impacted Multichoice's ability to speedily remit its earnings from the African economic powerhouse.

Both Nigeria and Zimbabwe have removed tight foreign exchange controls in the past few weeks to try and eradicate some of the monetary distortions that have been eating into companies' bottom lines. Tinubu also sacked Central Bank of Nigeria governor, Godwin Emefiele.

Roberts said Multichoice is banking on such monetary reforms, as well as in the overall economic framework to ease financial challenges it has been facing in the West African country.

For example, owing to foreign currency shortages in the Nigerian market, companies have had to resort to the parallel market to purchase US dollars for repatriation of funds. This has also been the case for Zimbabwe, although Multichoice, owing to its ability to collect revenues in forex, is buffered against this.

Although Multichoice managed to repatriate cash from Nigeria throughout the year under review, it did so at a "premium" to the official exchange rate.

"The parallel exchange rate has been (volatile) compared to last year. We see the removal of the fuel subsidy, allowing the government to have some extra foreign exchange for the official market, and talk of bringing the exchange rates together should aid," Jacobs said.

The Showmax live-streaming segment, said Jacobs, had also shown strong growth. Multichoice has been under pressure to bump up its presence in the segment as competition from rivals such as Netflix and others has intensified.

Some analysts believe that investors in Multichoice are apprehensive over control of the company after French entertainment group, Canal+ bumped up its interests in the pay television platform to 31.7%, making it the biggest stockholder in the group.