South Africa’s regulator approves MultiChoice’s $3 billion Canal+ merger

The South African Competition Committee has approved the planned acquisition of MultiChoice by French Canal+ following decisions that the $3bn deal is unlikely to substantially lessen or prevent competition in the country’s broadcasting market.

According to a statement released on Wednesday, the committee said that it has recommended to its sister regulator, the Competition Tribunal, that the $3 billion broadcasting mega-deal be permitted based on certain conditions.

“However, in recognition of the important role played by [MultiChoice] within the broader audiovisual ecosystem in South Africa, and to address public interest concerns raised by various stakeholders, the commission has recommended approval of the merger subject to a number of conditions.”

In a long list of conditions required by the Competition Committee for the deal to finally scale through, include an increase in the shareholding of historically disadvantaged persons (HDPs) and workers in several MultiChoice companies, addressing employment concerns, supplier development commitments, and that the merged entity must continue operation from South Africa. 

Others are the promotion of South African content in new markets, spending commitments on local content, enhancement of procurement targets from small and black-owned companies, plurality of television news, and export promotion.

Also Read: $3bn deal: Multichoice’s signal distributor Orbicom seeks to transfer licenses to Canal+. 

As the French media giant holds legal rights to acquire Multichoice, the deal has witnessed several regulatory hurdles, such as securing approvals from the Financial Surveillance Department, the Competition Committee, the Tribunal Committee, and the Icasa. Regulators also requested that the companies find a way to continue limiting Canal+’s voting rights to 20 per cent, a requirement for broadcasting licences under the Electronic Communications Act (ECA). 

In addition, the deal must also meet the Broad-based Black Economic Empowerment (BBBEE) rules set out by Icasa, which stipulate that licensees must be 30 per cent owned by HDPs. This is a major regulatory hurdle that has stalled Elon Musk’s Starlink official launch in South Africa.

If the deal set to be finalised by October 2025 materialises, it will see MultiChoice carved out as an independent entity under a distinct company – LicenceCo, which will hold South African operating licences. LicenceCo will also contract with MultiChoice’s South African subscribers, and the remainder of the group’s video entertainment assets will remain with the Group.

While the Competition Commission has signalled the deal a green light, it is now left for the Independent Communications Authority of South Africa to consider the proposed acquisition and the DStv owner’s restructuring proposals. 

MultiChoice and Canal+ have no issue with South African local laws

Unlike Elon Musk’s Starlink, which has for a while tried to circumvent the traditional local laws in South Africa – especially the 30% BEE ownership rule- the Canal+ acquisition of MultiChoice presents an opposite situation.

According to the Competition Committee, the merger parties have agreed that LicenceCo will be majority owned by HDPs and workers and will also continue certain corporate social responsibility initiatives, such as skills development in the audiovisual industry and sports development, most especially for the less privileged communities.

“In addition, Canal+ has undertaken that MultiChoice Group will remain incorporated and headquartered in South Africa, endeavour to promote exports, and will pursue a secondary inward listing on the securities exchange operated by the JSE,” the statement reads.

It added that the parties have agreed to suspend retrenchments for three years following the merger implementation date. Notably, the total value of public interest commitments made by the merging parties and based on past spending by MultiChoice is projected at $1.4 billion over the next three years.

“In large mergers, the commission is required to assess and to ultimately make a recommendation to the tribunal. The commission is satisfied that the conditions attached to this merger sufficiently address the concerns raised during the investigation. The matter is now before the tribunal for a final determination,” said Deputy Competition Commissioner Hardin Ratshisusu in the statement.

In a joint statement, the Canal+ and MultiChoice CEOs, Maxime Saada and Calvo Mawela, welcomed the news, stating that it represents a significant development in the deal.

Canal+ initially showed interest in MultiChoice in 2020 when it wanted to create a pan-African broadcasting giant by combining its dominance over French-speaking Africa with MultiChoice’s dominance over English-speaking Africa. The company has insisted that the acquisition would allow it to challenge big international players in the media and entertainment industry.