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Naspers Releases $1.4 Billion To MultiChoice Shareholders, According To Reports

Naspers recently announced that it was unbundling the shares of the MultiChoice Group (MCG), which will be listed separately on the Johannesburg Stock Exchange (JSE) later this month.

Naspers, South Africa’s largest company, has grown into a cash-generative African video entertainment entity and an international technology investment business.

MCG is forecasted to be a JSE Top 40 company, with analysts predicting a market capitalisation exceeding $4.9 billion. MCG has no debt and is made up of MultiChoice South Africa Holdings (MCSA), Showmax Africa, Irdeto and MultiChoice Africa Holdings.

As part of the listing deal, MultiChoice’s Black Economic Empowerment (BEE) investment organisation, Phuthuma Nathi – which owns 20% of MCSA (but not MCG) – will be ‘gifted’ an additional 5% in MCSA worth roughly $177 million, raising its shareholding to 25%.

MCG has over 14 million subscribers compared to Netflix’s four million. MCG’s subscribers are evenly divided between South Africa and the rest of Africa (RoA). However, the RoA divisions are making a loss and are expected to possibly break even in the “medium term”.

MCG has a broad, established footprint with more than $1 billion of investment in infrastructure over the past ten years. Additionally, its focus on sports, local content and global content sets it apart from competitors.

Expensive broadband costs also create a further obstacle for competitors.

Africa’s large population and relatively average TV consumption of fewer than five hours a day surpasses the world average of three hours per day. However, RoA generates an average of only $11.82 monthly per user, which is half of South Africa’s $23.85 per month.

MCG’s listing on the JSE is expected to begin on 27 February 2019.

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