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ZARc 6888 -1.87%Investor briefcase Business model
Investor briefcase Business model
(1) Excludes operations in South Africa where our GOtv signal is distributed by Sentech.
| (1) | Showmax partnership with Comcast, NBCUniversal and Sky effective from April 2023 i.e. falls into FY24. |
| (2) | General entertainment content. Numbers exclude religion, specialist, free to air (FTA) 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. |
| (3) | Channel count includes regional variations for Africa and Nigeria. |
| (4) | Also includes our DStv Business packages and add-on packages such as our French, Indian, Portuguese and Chinese channel packages on DStv in Rest of Africa which are not shown in the graphic above. |
| (5) | Irdeto also provides services to external customers outside of the group. |
| (6) | Moment was in early start-up phase in FY23. |
New products and services added to our ecosystem to enhance our value proposition to customers in the home include:
| (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. |
DURING FY23:
DURING FY23:
DURING FY23:
DURING FY23:
AT THE END OF FY23:
DURING FY23:
DURING FY23:
| (1) | Decrease driven by net loss and dividend paid in FY23, partially offset by exchange gains on translation of foreign operations and fair value gains in the hedging reserve. |
| (2) | Relates to 90-day active subscribers. |
| (3) | Includes non-cash advertising contributions of ZAR106m in FY23 (FY22: ZAR123m). |
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 expense of others. When deciding how best to create, preserve or erode value we are often required to make trade-offs between capitals and stakeholders, and between short and long-term value creation.
Some areas where we made these trade-offs in FY23 are described below:
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 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 affordability) when necessary. For example, in FY23 we passed low single digit price increases for the Premium and Compact Plus packages in SA that were well below inflation but put through inflationary or slightly below inflation pricing in the bulk of our key markets outside of SA.
We aim to deliver positive operating leverage (i.e. organic growth in our cost base lower than the organic growth rate in our revenues) through cost savings and efficiencies. In FY23, cost saving measures delivered ZAR1.3bn (FY22: ZAR1.2bn), which protected our financial capital by generating positive organic operating leverage of 0.39%, but required a trade-off as some of our suppliers were impacted by these difficult decisions. Loadshedding and ongoing economic pressure in South Africa negatively affected customer activity and revenue generation, which negatively impacted cost recovery.
As part of our culture of driving efficiencies, we carefully monitor content viewership. Where content is not performing, we may remove it from our platform if we can’t agree on commercial terms that fairly reflect its value to our viewers. This may impact some of our customer relationships, but this trade-off is typically balanced by reinvestment elsewhere in our content portfolio.
Our shareholders have varying requirements in terms of returns, with some expressing a desire for steady or higher dividend payments relative to annual free cash flow generation, while others are supportive of reinvestment into existing and new business opportunities. Dividend payments require a number of trade-offs:
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.
Our leverage could be increased further from current levels, but 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.
We are also cognisant of the upward trend in the interest rate cycle and the tax deductibility of interest on borrowing costs.
In an increasingly connected world with global content giants offering broader choice through direct-to-consumer streaming options at lower average ARPUs and no upfront costs to consumers, our traditional linear pay-TV business model is impacted in a number of ways which requires us to make trade-offs between our financial capital, our customer relationships, and our supplier relationships.
The net effect of this on content (original vs licensed) is that we are:
The net effect of this on distribution is that we are:
Supporting DTH, DTT and OTT broadcasting and streaming infrastructure as the industry evolves.
| (1) | Relates to 90-day active subscribers. |
