MultiChoice: Dual-listing on the NSX not planned

Naspers believes the planned listing of MultiChoice on the JSE is the “most suitable” option at present and isn’t considering listing on other stock exchanges too.

Asked whether a secondary listing on the Namibian Stock Exchange (NSX) is being considered, Shamiela Letsoalo, Naspers’ media relations director, told Market Watch: “We believe the proposed structure as an integrated business with a listing on the JSE is the most suitable at present. Other listings, whilst not currently being contemplated, remain a future option.”

Naspers earlier last week announced its intention to list its video entertainment business separately on the JSE and simultaneously to unbundle the shares in this business to its shareholders. The new company will be named MultiChoice Group and will include MultiChoice South Africa, MultiChoice Africa, Showmax Africa, and Irdeto.

Naspers will retain its primary listing on the JSE. MultiChoice Group is anticipated to list on the JSE and simultaneously unbundle in the first half of 2019, subject to the approval of the requisite regulatory authorities.

Reuters reports that Naspers' plan to spin off MultiChoice, Africa's biggest pay TV business by subscribers, will free up cash for the unit to compete with fast-growing Netflix and other streaming services.

The group, which owns a US$155 billion one-third stake in Chinese technology giant Tencent, unveiled plans last Monday to hive off MultiChoice to help close a more than 60% discount in its share price to the value of its holding in Tencent.

This leaves Multichoice free to fend for itself in an increasingly competitive market where Netflix is already supplying thousands of viewers with original TV content and Hollywood hits such as "Stranger Things" and "House of Cards".

"The intention is to basically have absolutely minimal debt going to MultiChoice to provide them with flexibility to make any strategic move they want to make," said Naspers' chief executive Bob van Dijk. "We're not going to suck any cash out of MultiChoice."

Showmax

Although streaming is still rare on a continent hobbled by slow internet speeds, reaching fewer than 2 million of sub-Saharan Africa's billion citizens, it is increasingly challenging more popular satellite-TV services.

MultiChoice's fledgling internet-streaming service, Showmax, is betting a blend of Hollywood blockbusters and local content such as "Real Househelps of Kawangware" and "The Bachelor South Africa" will set it apart from rivals. It launched Showmax in 2016.

Naspers does not provide subscriber numbers for Showmax, but London-based Digital TV Research estimates it had 334 000 at the end of last year, fewer than half as many as Netflix and mostly in South Africa.

Multichoice had R7.5 billion cash at the end of the latest financial disclosure period in March, generated largely from subscription fees of as much as R809 a month from some of its 13.5 million households across the continent.

"The listing of Multichoice Group will create a leading entertainment business on the JSE that is profitable and cash generative," the chief executive of MultiChoice, Imtiaz Patel, said in e-mail reply to questions.

The company did not provide details on how it would deploy the money but said its balance sheet would allow it to pursue growth opportunities in African video entertainment and pay a "meaningful dividend" to shareholders. Analysts also expect it to scale up Showmax. – Own report and Nampa/Reuters