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MultiChoice to Retain 40% in $155.5 Million Deal Following Regulator’s Approval

October 8, 2024

MultiChoice to retain 40% in $155.5 million deal following regulator’s approval. This is coming after South Africa’s Competition Commission gave the green light for MultiChoice to sell 60% of its insurance subsidiary, NMS Insurance Services (NMSIS), to insurance and financial services provider Sanlam.

The deal, valued at a substantial R2.7 billion ($155.5 million), is set to reshape the landscape for both companies, opening up new opportunities for growth and collaboration.

First announced in June 2024, the deal involves an upfront cash payment of R1.2 billion ($69.1 million) from Sanlam, with the potential for an additional R1.5 billion ($86.4 million) earn-out based on performance. This earn-out is tied to NMSIS’s gross written premium for the financial year ending December 2026.

Beyond the immediate financial aspects, the deal enables Sanlam to expand insurance offerings across Africa, leveraging MultiChoice’s extensive subscriber base of 21 million households in 50 countries.

The two companies have agreed on a long-term commercial arrangement, allowing Sanlam to access MultiChoice’s diverse audience and integrated payment systems.

In a statement, MultiChoice CEO Calvo Mawela hailed the partnership as a “strategic milestone,” emphasising its potential to enhance value for subscribers while boosting innovation in insurance products across the continent.

NMSIS, a micro-insurance provider under the DStv umbrella, has been a key player in offering life insurance products such as funeral cover and subscription waivers to MultiChoice’s subscribers.

MultiChoice will retain 40% ownership in NMSIS

Despite handing over a majority stake to Sanlam, MultiChoice will retain 40% ownership in NMSIS, ensuring it remains invested in the business’s future growth.

Sanlam will oversee NMSIS’s operations through its fintech cluster, with plans to expand outside South Africa via SanlamAllianz.

While the transaction is seen as a growth move for MultiChoice’s insurance business, analysts have expressed concern over the broader financial health of the company.

MultiChoice’s recent financial results paint a grim picture, with losses growing from R2.9 billion ($170 million) to R4.1 billion (236.1) for the year ending March 2024.

The company also reported a 9% drop in active subscribers, significantly declining in its South and Rest of Africa markets.

Some have even warned that without significant improvement or a buyout from French media giant Canal+, MultiChoice may have to raise capital through a rights issue.

With Canal+ already holding a substantial stake in MultiChoice and offering shareholders R125 per share, the broadcaster’s future remains uncertain as it navigates regulatory hurdles and financial pressures.

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