Naspers to list video entertainment unit MultiChoice on JSE
NASPERS has announced its intention to list its video entertainment business, MultiChoice, separately on the Johannesburg Stock Exchange (JSE) and simultaneously to unbundle the shares in this business to its shareholders.
This as MultiChoice is facing increased pressure from that over-the-top players. MultiChoice SA CEO Calvo Mawela recently told ITWeb that Netflix and OTT players such as Netflix, Amazon Prime, Google and Facebook present a serious threat to local players as they are not subject to the same regulations.
In a statement, Naspers says the new company will be named MultiChoice Group and will include MultiChoice South Africa, MultiChoice Africa, MultiChoice Botswana, MultiChoice Namibia, NMS Insurance Services, the African division of Showmax, Irdeto and Irdeto South Africa.
According to Naspers, this marks a significant step for the Naspers Group as it continues its evolution into a global consumer Internet company.
It believes listing MultiChoice Group via an unbundling is expected to unlock value for Naspers shareholders and at the same time create an empowered, top 40 JSE-listed African entertainment company.
Naspers adds that MultiChoice Group will remain committed to broad, socio-economic transformation in SA, most notably through its Phuthuma Nathi (PN) Investments and Phuthuma Nathi Investments 2 share schemes.
In addition to the value created to date, the Naspers board believes the unbundling transaction will create further value for PN shareholders. This is due to Naspers’ intention to allocate, for no consideration, an additional 5% stake in MultiChoice South Africa (MCSA) to PN shareholders prior to the unbundling to increase MultiChoice Group’s BBBEE shareholding.
This means the PN shareholders’ interest in MCSA and its dividend flows is expected to increase by 25%. The additional 5% stake in MCSA is designed to reinforce MultiChoice Group’s commitment to black economic empowerment, increase PN’s upside in future value creation and ensure the continued compliance with regulatory requirements post unbundling. Further, post-listing and subject to obtaining the necessary PN board and shareholder approvals, it is the ambition of MultiChoice Group to enable 25% of the PN shareholders’ original shareholding (i.e. before the allocation of the additional 5%) to be exchanged for MultiChoice Group shares that will be freely tradeable, thereby unlocking incremental value for PN shareholders, the company says.
The listing and unbundling are intended to create a leading entertainment business listed on the JSE that is profitable and highly cash generative (today, it is one of the fastest growing pay-TV operators globally and its multi-platform business entertains 13.5 million households across Africa.
In the last financial year, the business added 1.5 million subscribers, and generated revenue of R47.1 billion and trading profit of R6.1 billion. It employs more than 9 000 people in Africa and indirectly creates economic prosperity for over 20 000 more who are employed by its various partners and suppliers across the continent.
Naspers points out that MultiChoice Group will continue to offer “an unmatched selection of local and original content, as well as a world-class sport offering. The business is also positioning itself for the future, and for changes in technology by offering online streaming services, including Showmax and DStv Now. The combination of MultiChoice’s reach, Showmax’s cutting-edge internet television service, and Irdeto’s 360 Security suite will provide a unique offering”.
MultiChoice Group is expected to be unbundled with limited leverage, providing it with the necessary financial flexibility to pursue growth opportunities in African video entertainment. Africa is one of the fastest-growing continents by both GDP and population, its middle-class is rapidly expanding, and the penetration of video entertainment is still relatively low.
The Naspers board expects that the listing and unbundling will deliver value to the South African economy and Naspers and PN shareholders. Naspers will continue to invest in South Africa through its interests in ecommerce businesses such as Takealot, Mr D Food, PayU, OLX, Property24, and AutoTrader SA, among others, it notes.
It adds that in SA, over the past three years, Naspers has invested a total of R6.9 billion in mergers and acquisitions activity and in developing its existing businesses. In the past financial year alone, R3.3 billion was allocated to its internet businesses. Naspers will also retain its primary listing on the JSE as well as its interests in Media24.
MultiChoice Group is anticipated to list on the JSE in the first half of 2019, subject to the approval of the requisite regulatory authorities.