MultiChoice, the pay-TV conglomerate, will pocket R1.2 billion ($67 million) in cash by the end of November after finalising the sale of its insurance subsidiary, NMS Insurance Services (NMSIS), to Sanlam Life.
The deal, announced in June has now been approved by South African regulators. As part of the deal, Sanlam Life, an insurance company, will continue to sell long-term insurance policies to MultiChoice customers.
The deal will also likely get bumped to R2.7 billion ($150 million) based on performance targets agreed upon by the two companies. The additional payment depends on how much gross premium NMSIS earns Sanlam by the end of 2026.
For the 2023 fiscal year ending in March 2024, NMSIS’ gross written premium grew by 36% year-on-year to R970 million ($54 million), and profit after tax increased by 51% to R296 million ($16 million).
NMSIS provided policies like device insurance for decoders and equipment used by MultiChoice customers. The transaction will provide MultiChoice with additional liquidity after the group announced mixed results last Tuesday.
Despite slightly growing revenue in H1 2024 on a constant currency basis, MultiChoice took a hit as devaluation chopped its profits in several key markets like Nigeria and Zambia.
The pay-TV company is also struggling with subscriber churn across its streaming businesses.
Selling off its insurance product allows MultiChoice to focus on its other value-added services. Moment, its fintech product, and KingMakers, its sports and entertainment arm, were some positives from its last announced results.
Multichoice is also betting heavily on Showmax, its local streaming platform. It grew its subscriber base by 50% year-on-year, and will continue to invest resources on streaming, where it hopes to compete with global giants.
