In a joint press statement issued on Tuesday, the firms said the deal includes a long-term commercial arrangement to expand insurance and related financial service offerings into MultiChoice’s extensive African subscriber base.
In addition to the upfront cash consideration, a potential performance-based cash earn-out of up to a maximum consideration of R1.5bn is contingent upon the amount of gross written premium generated by NMSIS for the financial year ending 31 December 2026.
Multichoice said that the cash proceeds would be used for working capital purposes while retaining its 40 per cent interest in NMSIS.
Commenting on the deal, Sanlam Group Chief Executive Officer, Paul Hanratty, said “It affords us the opportunity to leverage our respective market footprints and technological capabilities that will support growth and market penetration, as well as provide opportunities to realise synergies for the benefit of all stakeholders.”
MultiChoice CEO, Mr Calvo Mawela, said, “This collaboration with Sanlam is a strategic milestone for MultiChoice. It not only allows us to increase the value we provide to our subscribers but also enables us to leverage Sanlam’s expertise to drive growth and innovation in our insurance offerings across the continent. It is a nod to the incredible work done by our teams.”
For the first quarter of 2024, NMSIS’s Gross Written Premiums increased by 36 per cent year-on-year as its profit after tax rose by 51 per cent.
In the year ending March 2024, Multichoice reported a 13 per cent drop in subscribers in Nigeria, Angola, Kenya, and Zambia.
The depreciation of local currencies in those markets, including Kenya, had a 32 per cent impact on the Group’s USD revenues.
Blaming the economy for the decline in subscriber base in Nigeria which is one of its biggest markets, Multichoice said, “The group’s nine per cent decline in active subscribers was mainly due to a 13 per cent decline in the Rest of Africa business as mass-market customers in countries like Nigeria had to prioritise basic necessities over entertainment.
“FY24 presented the toughest set of macro-economic conditions for the Rest of Africa business since 2016. The official and parallel naira exchange rates reached peaks of N1600:1USD and N1900:USD respectively in February 2024, with several other African markets also experiencing extreme foreign exchange depreciation.
“This resulted in a translation impact for the segment’s USD revenues of 32 per cent. High double-digit inflation in many of the group’s core markets has led to immense pressure on customer spending power.
“This, combined with the benefit of the FIFA World Cup and Nigerian elections in the FY23 base, resulted in the active subscriber base falling by 1.2m to 8.1m at the end of FY24.”
Meanwhile, the group has entered into a Cooperation Agreement with Groupe Canal+ SA (Canal+) concerning Canal+’s mandatory offer for the group.
That followed a ruling by the Takeover Regulation Panel of South Africa, which required Canal+ to pursue a mandatory offer after it acquired an interest of more than 35 per cent in MultiChoice Group.
Canal+ has also increased its shareholding in the group to 45.20 per cent.
