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ZARc - -0.42%Investor briefcase Business model
Investor briefcase Business model
(1) Excludes operations in South Africa where our GOtv signal is distributed via Sentech.
| (1) | General entertainment content. Numbers exclude religion, specialist, free-to-air and audio channels. Proprietary channel count includes channel brand variations for different regional or cultural preferences and/or dialects. International channel count excludes specialist Indian, French and Chinese language channels. |
| (2) | Irdeto also provides services to external customers outside of the group. |
| (3) | Channel count includes regional variations for Africa and Nigeria. |
Existing and new products and services enhance our value proposition to customers in the home, including:
| (1) | Certain markets have package structures and package names tailored for in-market preferences, (e.g., Nigeria, Angola and Tanzania) and therefore differ slightly from our typical package tiering. Rest of Africa pricing in US dollars varies by market due to exchange rates and in-market pricing dynamics – averages for core markets excluding Portuguese markets shown. |
| (2) | Measured across South Africa and 11 core Rest of Africa markets. |
| (3) | Measured across eight Rest of Africa GOtv markets, excluding South Africa which has a small subscriber base serviced through the Sentech network. |
FY24 update:
FY24 update:
FY24 update:
FY24 update:
FY24 update:
FY24 update:
| (1) | Decrease and negative equity position driven largely by non-cash IFRS accounting adjustments, notably the recognition of a ZAR2.7bn fair value liability for the Comcast put option over its 30% minority interest in Showmax, ZAR4.6bn in foreign exchange losses on non-quasi inter-group loans, and a ZAR1.2bn impairment charge on the group's Technology Modernisation programme. |
| (2) | Relates to active subscribers. |
| (3) | Includes non-cash advertising contributions of ZAR61m in FY24 (FY23: ZAR106m). |
We manage our capitals to create and sustain long-term value for our stakeholders. In the short term, it is not always possible for all capitals (or the stakeholders who provide them) to benefit equally, and some capitals may benefit at the temporary expense of others. When deciding how best to create, preserve or manage the erosion of value in a given area we are often required to make trade-offs between capitals and stakeholders, and between short and long-term horizons.
Some areas where we made these trade-offs in FY24 are described below:
We typically aim to deliver positive operating leverage (i.e., organic growth in costs below organic growth revenues) through cost savings and operating efficiencies.
In FY24, we delivered ZAR1.9bn in cost savings (FY23: ZAR1.3bn), which protected our financial capital by generating positive organic operating leverage of 4.26% (FY23: 0.39%). This required a trade-off as some of our suppliers were impacted by these difficult decisions.
Ongoing economic pressure in South Africa and a number of key Rest of Africa markets, compounded by issues such as sharp currency depreciation, power challenges and imported food and fuel inflation have negatively affected customer activity and revenue generation, which inhibits our ability to recover costs.
In the operating environment of FY24, where growth has been constrained by the macro-economic environment, we took the decision to materially reduce our set-top box subsidy spend by R2.2bn to protect margins and cash flows, with a trade-off of lower incremental subscriber growth.
Pricing decisions create a trade-off between customer relationships and financial capital.
We need to accommodate cost increases and reinvestment in our business, while also considering shifts in consumer spending. We achieve a balance by closely controlling costs and investment spend, and by making research-based pricing decisions which factor in price elasticities, consumer price inflation, exchange rate movements, etc.
We aim for price increases at or slightly below inflation, but seek to accommodate specific in-market dynamics, (e.g., pressure on discretionary consumer spending and affordability) when necessary.
Where we experience high inflation in certain markets, we do consider adjusting the timing and/or cadence of price increases in order to ensure that our revenues do not decline dramatically in real terms. In FY24, we had to carefully manage pricing decisions across several of our Rest of Africa markets given weakening currencies and high inflation rates.
In an increasingly connected world, global content giants are offering broad video entertainment options at lower cost-per-service to consumers via direct-to-consumer streaming. Our traditional linear pay-TV business model is negatively impacted and requires us to make trade-offs between financial capital, customer relationships, and supplier relationships.
In content, we are:
In terms of distribution, we are:
We lease our satellite transponder capacity to defray upfront capital costs and although we treat these lease payments as equivalent to an operating cost, lenders include our finance leases in our debt covenant calculations.
In terms of financial gearing, since our listing, we have demonstrated a propensity to use gearing to optimise our capital structure and enhance long-term shareholder returns through targeted investment in attractive opportunities. In this regard, we fully drew down our ZAR12bn term-loan facility in FY24 while announcing a transaction post year‑end to partially sell-down our insurance shareholding, which will enable the group to unlock capital to bolster the group balance sheet.
We have adopted a balanced approach to avoid adding undue financial risk to operational risk at a time when we are in the process of returning our Rest of Africa business to sustainable cash flow generation and building out our nascent Showmax business.
We are also cognisant of the upward trend in the interest rate cycle over the past 36 months, as well as the elevated risks related to the current macro-economic and foreign exchange environment.
Our shareholders have varying priorities in terms of returns, with some expressing a desire for steady or progressive dividend payments, while others are supportive of reinvestment into existing and new business opportunities. Dividend payments require the following trade-offs:
