The leading video entertainment platform in Africa
Important information/forward-looking statements 2
MCG FY19 results call presenters Imtiaz Patel Calvo Mawela Tim Jacobs Group Executive Chairman Group CEO Group CFO 19 years in company 12 years in company 4 years in company 29 years industry experience 18 years industry experience 8 years industry experience 3
1 Overview 2 Strategic update 3 Operational update 4 Financial update 5 Outlook 4
Solid results, delivered on FY19 objectives FY19 Objectives FY19 Highlights Increased subscriber base by 12% to 15.1m active households Drive subscriber growth Net additions of 1.6m, well above historic average Doubled monthly active Connected Video (OTT) users Revenue up 6% YoY to R50bn; trading profit up 11% YoY to R7bn Deliver solid financials Core headline earnings up 10% to R1.8bn Free cash flow doubled to R3.3bn Stepped up production of local content to 4 600 hours Invest more in local content Increased local content to 40% of total GE content spend (+2pp YoY) Local content library now ~50 000 hours Delivered further cost savings of R1.3bn Optimise cost base Strong operating leverage (cost growth < revenue growth) Reduced losses in RoA by R0.9bn Note: Refer to Glossary of terms page for explanation of acronyms 5
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The leading video entertainment platform in Africa 1 Offering exceptional content 2 Unlocking long-term growth opportunities 3 Returning RoA to profitability 4 Laying solid foundations for long-term OTT strategy 5 Delivering attractive financials and strong dividend prospects 7
1 | | Substantial investment in quality local content Local content: FY19 highlights FY20 pipeline Uganda became 7 th market in RoA Started selling local content Produced 20 new local dramas Co-productions with global partners internationally to introduce local channel 52 new local movies Aired 2 nd Showmax original production Launched a new reality format 29 new local dramas 40% ~50 000 4 600 Total hours in content library Hours of local content produced Local content as % of GE content spend (1) (1) GE content spend refers to general entertainment content spend, excluding sport 8
1 | | The best sport and international content FY19 highlights FY20 pipeline Leveraged FIFA World Cup Continued to support local sport ~7 500 Sport Live events broadcast ~700 Productions annually Secured great international content and enhanced content discovery Created 5 movie pop up channels International 9
2 | | Strong growth into large, addressable market Net subscriber additions (m) (1) , above historic average With potential for more growth (3) 2.2 Addressable payTV households (3) (2018) 1.6 1.5 1.5 1.3 South Africa: Active MCG subscribers (1) 1.1 Average: 1.1 1.8 0.9 1.1 1.0 1.0 0.8 7.4m 13m 0.3 0.7 0.7 0.7 0.6 0.2 0.2 0.2 Addressable payTV households (3) (2018) 0.2 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.4 0.3 -0.1 RoA: Active (2) (2) FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 MCG subscribers (1) 7.7m 27m South Africa Rest of Africa (1) Based on active subscribers, i.e. all subscribers that were active on the measurement day. This is typically lower than the number of subscribers when measured over a period of time (e.g. 90 days) (2) FY15 growth fuelled by analogue switch off in Kenya as well as full year impact of DTT roll out in FY14 (10 markets). FY16 reflects impact of significant economic headwinds (end of commodity cycle, substantial FX depreciation) (3) Based on TV households adjusted for affordability criteria (R2 000 income per month in SA and ~USD150 in RoA). Number of payTV households for RoA reflects combined total across MCG’s 49 markets of operation 10
3 | | Driving RoA back to profitability Strong subscriber growth Revenue growth accelerated Reduced RoA losses Subscribers (m) (1) Trading loss (ZARbn) (2) YoY organic growth (%) 17% 17% -35% -25% YoY growth Trading margin 13% 7.7 6.6 -2.7 41% 8% -1.0 FX impact 4% -3.7 -4.6 +0.9 FY18 FY19 FY17 FY18 FY19 FY18 FY19 (1) Based on active subscribers, i.e. all subscribers that were active on the measurement day (2) Trading loss includes an amount of R0.7bn relating to the FIFA World Cup investment. This has not been shown separately as the investment was repaid through additional subscriber growth generated in FY19 11
4 | | Laying solid foundations for long-term OTT strategy Strong growth in user base Increased activity on platforms Maintained competitive position Relative size in active users Connected Video active users (1) Play events (2) 2.0x ~50x 1.6x +58.8% (3) FY18 FY19 FY18: 1.6x FY16 FY17 FY18 FY19 (1) Connected Video active users includes unique Showmax, DStv Now and connected Explora PVR users that have been active with a play event in the past 30 days. Users on multiple platforms are only counted once (2) Play events are logged each time a user presses the play/watch button on either the DStv Now or Showmax platform. There is no minimum duration required (3) MCG estimate of Netflix users 12
5 | | Financial profile remains compelling 1 2 3 Ongoing RoA turnaround Strong cash generation Financial flexibility Reduced RoA trading loss Doubled free cash flow R6.7bn in cash and by R0.9bn to R3.3bn R3.5bn in undrawn facilities 13
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South Africa: Substantial mass market growth in tough economy Premium (2) Mid market (2) ARPU (3) and key drivers Subscriber growth (m) (1) Mass market (2) +8% Price increases (4) Active days (5) Subscriber mix -2 7.4 FY18 FY19 FY20 6.9 292 290 20% 22% Premium 4.2% 2.7% 0.3% 1.5 -7% 38% 41% 1.6 Mid 5.8% 5.5% 3.6% Mainly due to affordability 42% 37% Mass 0.9% 0.6% 5.2% FY18 FY19 FY18 FY19 2.8 2% 2.8 ARPU (ZAR per month), FY18 vs FY19 FY18 +2% FY19 647 Mix shift to 638 3.1 mass market 23% 2.5 +3% -4% 326 316 335 322 +2% 89 91 FY18 FY19 (2) (2) (2) Premium (2) Mid market (2) Mass market (2) Mass market Mid market Premium Blended (1) Refers to active subscribers, i.e. all subscribers that were active on the measurement day. Note: From FY20 our primary metric for reporting subscribers will change from active subscribers to 90-day active subscribers. Refer to slide 40 for more details (2) Premium includes Premium and Compact Plus bouquets; mid market includes Compac t and Commercial bouquets and mass market includes Family , Access and Easyview bouquets (3) ARPU calculated by dividing average monthly subscription fee revenue for the period by the average number of subscribers at the beginning and at the end of the period (4) Price increases represent the weighted average increase per segment, based on the number of subscribers at the effective date of the increase (1 April of each year) (5) Active days considers all customers that were active at any point in the last 12 months, and measures the average number of days that the customers were active in the period out of the total days they could potentially have been active 15
South Africa: Focusing on growth and upsell in the mass segment Target fast-growing mass market segment • 0.6m net additions in mass segment (+23% YoY) • Strengthened Family bouquet by adding new entertainment and selected sports • Strong traction in Access bouquet allowed for first price increase (FY20) since launch • Enabled lower tiers to access DStv Now and CatchUp • 6m households still addressable 16
South Africa: Expanding ecosystem to drive retention Attract and retain customers with full entertainment offering • Scaling DStv Now and Showmax (OTT) - Doubled monthly active OTT users - Enhanced recommendation engines and content discovery - Expanded DStv Now channels to mirror the full satellite selection - Regular cadence of product improvements • Converted 19 channels to HD (67 in total) • Launched new DStv Business packages • Introduced Joox (music streaming service) 17
South Africa: Maintaining operational excellence and digital agility Other operational developments • Ongoing regulatory interaction: - Sport broadcasting review - PayTV market inquiry • Improved operational efficiencies: - Enhanced self-service solutions - Discontinued print magazine, converted users to digital - Launched new Explora PVR - Closed legacy M-Net analogue and DStv Mobile broadcast businesses 18
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