South Africa’s Naspers Limited, the country’s most valuable company, said its plan to exit Multichoice was part of its refocusing strategy.
With its freedom, there are indications that Multichoice will be betting big on Internet video streaming.
It would be recalled that Naspers had announced earlier this week that it plans to unbundle its video entertainment unit, Multichoice by listing the payTV company on the Johannesburg Stock Exchange.
Naspers is a tech giant with about $155 billion stake in China’s largest Internet company, Tencent Holdings.
The company said its decision was to give Multichoice the freedom to decide its next line of action.
“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.”
However, there are indications that Multichoice would focus to take on Netflix with its Showmax, a unit it floated in 2016 to take on the latter.
While Multichoice had in the last two years invested heavily in promoting Showmax, its subscriber base is still a far cry from Netflix’s 118 million users worldwide. Reuters quoted a London-based Digital TV Research which estimated that Showmax had 334,000 at the end of last year.
“We’re quite confident. The combination of Multichoice’s reach, Showmax and DSTV Now cutting edge internet television services will provide unique and unmatched offering,” said Multichoice Chief Executive Imtiaz Patel.
In the last few years many other video streaming providers have also floated and or entered Africa. Malaysia’s iFlix has eneterd major African markets such as Nigeria, South Africa and Kenya. The competitive roll-call has increased with other telecom giants such as Cell C’s Black and Vodacom’s VideoPlay.
Despite its incoming divorce from its deep-pocketed parent company, there are also good signals for Multichoice going forward. According to data compiled by Reuters, the listing of Multichoice is likely to fetch between 9 and 12 times its $627 million annual core earnings, or EBITDA, valuing it at least $5.6 billion. This means the company will have more cash to play around with in a continent where it has about 13.5 million subscribers as the largest player.