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Rest of Africa operations

We operate in 49 markets across Africa. We aim to entertain and inspire with our growing slate of local language content and this year we added dedicated local content channels in two new markets to bring the group total to 10. We also supported local football across the continent, including our partnership with the Ethiopian Premier League this year.

Our contributions to Rest of Africa

2 342 full-time employees (FY20: 2 460)

ZAR3.3bn total tax contribution FY20: ZAR3.8bn), with ZAR1.2bn paid and ZAR2.1bn collected

ZAR26m spent on CSI initiatives(1) (FY20: ZAR34m)

(1)  Includes non-cash advertising contributions of ZAR11m in FY21 (FY20: ZARnil).

Our operating performance

In FY21, the Rest of Africa segment accounted for 32.3% (FY20: 30.1%) of group revenue, by generating reported and organic revenue growth of 11% and 14% respectively YoY.

11.9m

90-day active subscribers

The segment ended the year with 11.9m (FY20: 11.1m) 90-day active subscribers, up 8% YoY (FY20: 4%). The Rest of Africa accounted for 57.2% (FY20: 56.8%) of our group 90-day active subscriber base at year-end. Macro-economic conditions across sub-Saharan Africa generally remained challenging this year, with numerous country-specific factors impacting our major markets.

COVID-19 negatively affected most countries’ GDP, while country reserves and currency markets faltered. In certain markets, we saw governments pursue additional revenue streams by raising existing taxes (e.g. increasing VAT rates) or introducing additional taxes which negatively affected disposable income.

COVID-19 affected our business in many ways during the year, with varying levels of lockdown imposed by governments. This impacted our ability to come to work, keep our branches open, sell and take payments through our dealer and direct sales force networks, and serve our customers from our call centres. Despite increased demand for our products from home-bound families, these lockdowns also caused economic hardships which resulted in increased disconnections at the start of the year, and a lack of live sport led to some customers downgrading their subscription packages.

However, we were able to respond to these effects by enabling working from home and employee rotation for the majority of our employees. It was critical for us to continue serving our customers and we enabled our inbound and outbound call centre employees to work from home through our technical solutions.

We focused heavily on growing our digital assets, to use them as service channels and, as a payment method. We also managed to restore our sales channels and, as a result of strong execution, we added 0.8m 90-day active subscribers during FY21 and delivered our strongest festive season growth ever.

ZAR115

ARPU

We experienced significant pressure on ARPU at the start of the year due to package downgrades and currency depreciation. We managed to counteract this through a combination of customer value management campaigns which allowed us to keep subscribers on our base and increase their YoY activity by three active days; implementing inflation-based price increases in most of our markets; and making significant improvements to our payment ecosystem through an increased vendor footprint and reduced vendor, system and customer error rates. Ultimately, ARPU for FY21 increased by 5% to ZAR115 (FY20: ZAR110).

The underlying growth trends per package were somewhat distorted by prior year initiatives to incentivise subscribers to upgrade, with the 23% growth we experienced in our Premium segment last year reverting to normal levels (-22%). We saw significant growth in the mid market and mass market segments of 28% and 9% respectively.

The Nigerian market experienced even more severe economic pressures this year. Inflation increased for the 19th straight month to 18.17% in March 2021 and the economy was in recession for most of the year. Food inflation hit a nearly 16-year peak at 22.95%, which placed pressure on our subscribers’ disposable income. The country also experienced mass protests against police brutality occurring throughout major cities in Nigeria, which affected our ability to operate freely.

By executing our regionalisation strategy, we were able to activate new subscribers at a similar rate to the prior year, despite restrictions on our ability to sell. This led to Nigeria’s 90-day active subscriber base growing by 9%. A combination of subscriber growth, the introduction of more tailored packages at the beginning of the year and some price increases later on, resulted in subscription revenue growth of 20% YoY.

The liquidity situation worsened mainly due to the drop in the oil price that accompanied the COVID-19 pandemic. The Central Bank of Nigeria no longer funded the investors and exporters market, which had been the main source of liquidity over the past two years. Despite this, we were able to repatriate US$207m in FY21, compared to US$209m in FY20, with US$156m remaining trapped at year-end. We continue to actively manage our exposure to this market.

Our Porto region continued to experience significant competition, with a new entrant in the Mozambican market impacting subscriber numbers. The Angolan economy continued contracting, with lower oil prices and exports that resulted in ongoing currency depreciation and high inflation. We implemented cumulative price increases of 23% with the necessary regulatory approval. Against this backdrop, our 90-day active subscribers in Angola declined by 5% YoY. Further to this, we were able to renegotiate the majority of our Portuguese content contracts to obtain either price reductions or contract clauses to share in local currency devaluation with suppliers going forward.

Our southern markets partially recovered; Zambia and Zimbabwe are still more than 180 000 90-day active subscribers behind their peaks and we continue steadily rebuilding those bases. This was off the back of good rains over the past year, which led to increased power generation. The Zambian market also experienced significant inflation, currency depreciation and hard currency liquidity shortages during FY21. The general economic collapse and hyperinflationary environment in Zimbabwe remains. However, we were able to win back subscribers on the lower end. Our Zambian and Zimbabwean 90-day active subscriber bases grew by 4% and 52% YoY respectively.

In September 2020, we refocused our Ethiopian business. This included investing in upscaling our teams on the ground, bolstering our call centres, and significantly expanding our distribution footprint. We relaunched our package offering with local currency pricing and new content, including an Amharic local content channel, onboarding 11 local FTAs, as well as acquiring the rights to and producing the Ethiopian Premier League. The Ethiopian 90-day active subscriber base grew by 143% YoY.

Overall, the COVID-19 pandemic affected our DTT base more than DTH, as eroding disposable income significantly affects subscribers with lower incomes. This was especially true in East Africa, which also remains a highly competitive region particularly for DTT, and where our DTT 90-day active subscriber base remained flat for the year. In Kenya, we saw DTH growth of 10% YoY off the back of our price level rebasing in the prior year.

We continue driving our local content strategy by reducing non-performing international spend and adding local content channels in most of our markets. This included new channels in Ethiopia (Abol TV), Ghana (Akwaaba Magic), Uganda (Pearl Magic Plus), Kenya (Maisha Magic Plus) and a pan-African lifestyle channel (Honey). The return of football was very well received and Big Brother Naija drove record engagement as measured by voting through the MyDStv and MyGOtv apps.

During FY21, our CSAT score improved slightly, and we achieved a score of 72% for DStv and 70% for GOtv (FY20: 71% and 70% respectively). Our ability to move our call centre agents to work remotely improved the sustainability and flexibility of our customer service function. We also improved our DStv and GOtv websites and dedicated applications, and successfully rolled them out to almost all our markets.

Our monthly digital help interactions more than doubled YoY – digital interactions make up 73% of all interactions in the business.

73%

Digital interactions

We added the ability to make online payments directly through our websites, WhatsApp platform, MyDStv and MyGOtv applications, and our improved USSD service, with revenue collected digitally increasing by 2.6 times YoY. We performed a deep review of all our payment providers across the continent and renegotiated more favourable rates and service levels.

This process was one of many undertaken to drive efficiencies in our business and bring the Rest of Africa segment back to profitability. We remain on track to do so in the medium term.