MultiChoice listing: A risky punt for Naspers investors


MultiChoice listing: A risky punt for Naspers investors

Tough to decide whether to hang onto the new shares after unbundling, given uncertain prospects in Africa

Nick Hedley

MultiChoice’s unbundling presents a conundrum for Naspers investors, who will get shares in the pay-TV operator essentially for free at the end of February.
Valuing MultiChoice, and therefore deciding whether or not to hang onto those shares, is no mean feat. Part of the trouble lies in the rest-of-Africa operation, which is touted as the group’s next growth engine since the SA business is relatively mature.
While Africa was flying several years ago, declining commodity prices have weighed on growth since, and the continent has proven to be a tougher place to do business than many had expected.
Take MTN as an example: the mobile operator has lurched from one regulatory crisis to another. In Nigeria, where MultiChoice also operates, authorities have demanded massive sums from MTN, whose shares have slumped since. The mobile operator has had to deal with lofty licence-renewal fee demands, as well as dividend repatriation and tax claims.
MultiChoice is a smaller operation in that country, meaning it will probably fly under the radar of authorities for the time being. But if it builds scale in new African markets, it too could find itself in the crosshairs of revenue-hungry governments.
However, the company remains highly cash generative and could be an attractive dividend play. And Africa’s long-term potential remains intact even if the near-term outlook is not quite as bright as hoped.
Further, MultiChoice is doing what it can to adapt to the changing landscape in SA – its latest home-grown series, The Girl from St Agnes, seems to be hitting the right notes.

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