MultiChoice and French media giant Groupe Canal+ have proposed changes to the corporate structure of South Africa’s pay-TV giant to comply with local broadcasting regulations regarding ownership and control.
In a notice to shareholders on Tuesday, the companies announced plans to restructure MultiChoice Group, creating an independent entity, “LicenceCo,” to hold its South African operating licenses.
This move follows Canal+’s acquisition of a 35% stake in MultiChoice, triggering a mandatory offer under South African takeover regulations.
Canal+ has steadily increased its shareholding in MultiChoice since 2020, reaching 45.2% as of May 2024. To comply with regulations limiting foreign ownership of broadcasting licenses to 20%, Canal+ and MultiChoice have devised a structure where:
- LicenceCo will be majority-owned by historically disadvantaged persons (HDPs): Phuthuma Nathi, a prominent Broad-based Black Economic Empowerment (BBBEE) scheme, will hold a 27% economic interest.
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- Two black-owned and managed companies, Identity Partners Itai Consortium and Afrifund Consortium, will also hold significant stakes.
- A Workers’ Trust (ESOP) will be established to benefit employees
- MultiChoice Group will retain a 49% economic interest in LicenceCo with 20% voting rights.
LicenceCo will continue to contract with MultiChoice South African subscribers, while the remainder of the group’s video entertainment assets will remain part of the MultiChoice Group.
The transaction requires approvals from the Financial Surveillance Department, Competition Tribunal, JSE, Takeover Regulation Panel, and Independent Communications Authority of South Africa (Icasa).
The structure aims to meet BBBEE rules set by Icasa, requiring 30% ownership by HDPs.
The companies assure that the restructuring will not disrupt service for South African subscribers.
“In time those subscribers will benefit from the additional content and technology investments envisaged by the MultiChoice Group, in its capacity as a supplier to LicenceCo,” they said.
“Canal+ and MultiChoice are confident that the envisaged structure meets the requirements of all applicable laws, including the restrictions on foreign ownership and control of broadcasting licences contained in the Electronic Communications Act.”
Canal+ CEO Maxime Saada stated that this transaction creates an opportunity to build a global media company with a strong African presence.
“A company with a strong presence across Africa, with the scale, expertise, and creativity to compete and partner with the largest players within the media sector and beyond,” said Saada.
MultiChoice Group CEO Calvo Mawela emphasised the importance of maintaining BBBEE participation and the company’s commitment to enhancing the subscriber experience.
“In a fast-evolving industry that is becoming increasingly competitive, the opportunity to combine our efforts to increase scale and bring our subscribers an even better offering is something that continues to excite us,” Mawela said.
This restructuring aims to facilitate Canal+’s acquisition of MultiChoice while ensuring compliance with South African broadcasting regulations. It represents a significant development in the African media landscape, with potential implications for other multinational acquisitions in regulated markets.
