MultiChoice forks out R4.4bn for larger slice of booming BetKing

MultiChoice, which grew profit by more than a quarter in the 12 months ended March 31, has increased its stake in sports betting platform BetKing as it seeks to cash in on the buoyant industry and boost the number of its subscribers.

MultiChoice said on Thursday it paid $281.5m (about R4.4bn), taking its ownership of BetKing, a digital and sports entertainment platform that focuses on Africa, to 49%. It initially bought a 20% stake in October 2020.

The purchase is the biggest by the continent’s largest pay-TV operator since it was spun out of Naspers and listed on the JSE in 2019.

CEO Calvo Mawela said the deal makes sense given that the group also owns SuperSport, the continent’s largest sporting broadcaster, and that similar models involving Sky Bet and Fox Bet are proving successful in the UK and the US.

“The more that people bet, the more they’re likely to watch the games,” Mawela said in an interview with Business Day. “We’re building an ecosystem that will help to accelerate our revenues.”

He would not give details about integration with MultiChoice’s existing platforms, but hinted at new features that would come with the SuperSport app.

BetKing’s business grew 43% in the past financial year and CFO Tim Jacobs expects this to continue, which adds to the attractiveness of the deal.

Africa accounts for just 2% of global sports betting revenue, and MultiChoice believes the industry “is poised for significant momentum as it begins to play catch-up.

“Sports betting creates a natural extension to the MultiChoice video entertainment platform to further enhance its product set,” the group said in a statement.

The sector is set to grow more than $134bn between 2020 and 2024, representing a compound annual growth rate of 10%, according to market research firm Technavio.

MultiChoice also reported on Thursday that it had added 1.4million customers in the year to March and increased its total subscriber numbers to 21million. Of these 8.9-million are based in SA, and the balance in the rest of Africa.

Subscriber growth was driven by increased demand for video entertainment, continued penetration of the mass market and an easing of electricity shortages in southern Africa, MultiChoice said.

Group revenue rose 4% to R53.4bn, with subscriptions accounting for R44.7bn.

Despite the overall revenue growth, MultiChoice said income from advertising and commercial subscriptions “were significantly affected by Covid19”. Advertising revenue, which was down 34% in the first six months, declined 11% to R2.8bn for the full year, thanks to the easing of lockdown restrictions in the second half, coupled with the resumption of live sport.

Commercial subscription revenues experienced a similar trend. But the hospitality industry “remains intermittent in its recovery due to lockdowns and is expected to take some time to normalise”.

Group trading profit rose 28% to R10.3bn partly as a result of a R1.5bn reduction in losses from the rest of Africa and 9% growth in the SA business.

Tax amounted to R4.1bn, “slightly more than the prior year” due to higher profits.

A dividend of 565c per share, making for a total payout of R2.5bn, was declared for the period, unchanged from a year earlier.

MultiChoice shares have risen almost 32% over the past 12 months, but were down 1.57% on Thursday afternoon.

THE MORE THAT PEOPLE BET, THE MORE THEY’RE LIKELY TO WATCH THE GAMES. WE’RE BUILDING AN ECOSYSTEM