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Shares of DStv owner MultiChoice crashed almost 15% on Tuesday morning, wiping out almost R8 billion in a value, a move which comes after it flagged pressure on its SA margins as a result of load shedding and deteriorating economic conditions.
MultiChoice, valued at over R54 billion at market open, saw its shares fall to as low as R119.21 in morning trade, but at 10:20 its losses had eased a little and it was down 12.19% to R122.56.
Click here for details on MultiChoice's shares as well as other info.
The company warned shareholders after the JSE closed on Monday that its margins in SA are expected to slip below guidance.
"Although the [FIFA] World Cup delivered subscriber numbers broadly in line with expectations, the operating environment in South Africa has deteriorated beyond expectations over the past few months," it said.
Indications are that second-half revenue growth in the SA business will be below expectations. Given a largely fixed cost base, as well as the additional Showmax costs incurred in relation to the recently announced agreement with Comcast, this will result in the segment's full-year trading margin being between 23% and 28%, which is below the market guidance of 28% to 30%.
MultiChoice had 22.1 million subscribers as of September, 9.1 million of which were in SA - which accounted for almost 60% of its subscription revenue. The company had announced in early March that it inked a deal with US media giant Comcast, that will see the owner of NBCUniversal and Sky take a 30% stake in its streaming platform Showmax.
A new version of Showmax with US technology and a plethora of new content will be launched, with the aim to compete with US giant Netflix, and become Africa's leading platform, it said.
READ | With new US co-owners and live soccer, Showmax wants to be Africa's go-to streaming platform
The company, however, on Monday also said it was seeing success in its cost-containment drive, while due to the positive impact of increased scale, supported by good second-half subscriber growth over the festive season - especially in Nigeria - the Rest of Africa business remains on track to return to trading profitability.
