Multichoice has announced plans to carve out its South Africa unit and make it an independent entity that will be called LicenceCo. According to the pay-TV company, this move is to comply with local broadcasting regulations regarding ownership and control regarding the ongoing acquisition move by France’s Groupe Canal+.
In a notice today, the parent company of DStv, GOtv and Showmax informed shareholders that MultiChoice (Pty) Ltd, will be carved out of MultiChoice Group and become an independent entity. The remainder of the group’s video entertainment assets will remain part of the MultiChoice Group.
“MultiChoice Group will be restructured so that the current holder of the broadcasting licence in South Africa and the entity that contracts with South African subscribers, MultiChoice (Pty) Ltd, will be carved out of the Group and will become an independent entity. The remainder of the group’s video entertainment assets will remain part of the Group,” both Canal+ and MultiChoice said in the joint statement.
The statement further clarified that the South African broadcast licence holder will “continue to hold the subscription broadcasting licence in South Africa” and will continue to “contract with South African subscribers”. It will be majority-owned by “historically disadvantaged persons”.
The move will allow Canal+ to proceed with the acquisition of MultiChoice without falling foul of the Electronic Communications Act, which prohibits foreign entities from owning more than 20% of a South African broadcasting licensee.
“Canal+ and MultiChoice are confident that the envisaged structure meets the requirements of all applicable laws, including the restrictions on foreign ownership and control of broadcasting licences contained in the Electronic Communications Act”, the statement said.
According to insiders, if this proposal gets the go-ahead from regulators, new investors in the South African licensee will include former Telkom CEO Sipho Maseko’s Afrifund Investments and businesswoman Sonja de Bruyn’s Identity Partners. MultiChoice Group, which Canal+ intends to acquire, will have a 49% economic interest and a 20% share of the voting rights.
This will allow Canal+ to deal with the legislation that prevents foreign entities from controlling more than 20% of a local broadcaster.
“MultiChoice Group will also retain its existing 75% direct interest in MultiChoice South Africa, which will exclude LicenceCo,” the company said. “Phuthuma Nathi will similarly retain its existing 25% interest in MultiChoice South Africa,” it added.
Both companies also clarified that LicenceCo will enter into various commercial agreements with MultiChoice Group subsidiaries about the services currently provided to LicenceCo by other Group entities. “These relate to, among other things, the provision of content, technology, subscriber management, support and other functions.”
In addition, the transaction will not lead to any disruption for LicenceCo’s South African viewers, who will continue to access its services as normal. In time, those subscribers will benefit from the additional content and technology investments envisaged by the MultiChoice Group, in its capacity as supplier to LicenceCo.”
Canal+ CEO Maxime Saada said the transaction was an opportunity to create a unique global media company. “A company with a strong presence across Africa, with the scale, expertise and creativity to compete and partner with the largest players within the media sector and beyond,” he said.
MultiChoice Group CEO, Calvo Mawela said they were very pleased about the progress that has been made about the transaction. “In a fast-evolving industry that is becoming increasingly competitive, the opportunity to combine our efforts to increase scale and bring our subscribers an even better offering is something that continues to excite us,” Mawela said.
Canal+ X Multichoice: An acquisition that is long-time-coming
Recall that in April 2024, French media company, Groupe Canal+ announced that it had acquired 3,653,492 additional shares in media giant, MultiChoice to bring its total ownership of the South African company to 40.83%.
In a notice to shareholders, Canal+ claimed it acquired the additional shares from 12 to 17 April for R115.95 ($6) and R117.50 ($6) per share. This was exactly one week after Canal+ increased its shareholding in MultiChoice to 40.01%.
The month before, the French media conglomerate made its formal mandatory offer after exceeding the 35% threshold stipulated in South Africa’s Companies Act. When its shareholding exceeded 20%, analysts raised concerns that the company could be violating South Africa’s Electronic Communications Act (ECA). The ECA is a stringent Black economic ownership requirement on foreign media ownership that caps voting rights at 20%.
Canal+’s bid to takeover the pay-tv company began in 2020 with the French media group making clear its intention to create a pan-African broadcasting powerhouse with about 31.5 million subscribers across over 50 countries.
The French media company has a broad reach in French-speaking African nations, while MultiChoice has a stronger presence in English-speaking countries, including South Africa, Nigeria and Kenya.
Canal+ said it believes the competitive landscape for Africa’s media and entertainment industry will undergo further profound changes as the continent rapidly adopts broadband and mobile internet. Smartphone adoption is also rising.
Analysts believe that the emerging media platform will put African content to global audiences and position them to compete internationally.
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