MultiChoice Group Limited (MCG) Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the MultiChoice Group's First Half FY '21 Results Call. [Operator Instructions] Please also note that this call is being recorded. I would now like to turn the conference over to Meloy Horn. Please go ahead.

Thank you, Chris. Good morning and good afternoon, everyone, and thank you for joining us today. And I'm keeping my fingers crossed for a Friday the 13th call that everything kind of goes on track. So our interim results for the 6 months ended September 2020 were released yesterday. For those of you registered on our database, you would have received our investor e-mail with all the information. And you can view today's presentation on the webcast. And for those of you that dialed in, you can find these slides in the Investors section of our website under Reporting. Before we start our presentation, let me quickly introduce you to the speakers for today. Calvo Mawela, our CEO, will present the highlights and strategy and will also provide you with an operational update. Thereafter, Tim Jacobs, our CFO, will discuss the interim financials. Calvo will conclude with comments on our outlook for the remainder of the year where after, we will take some questions. Calvo, over to you.

Thank you, Meloy. Good day, everyone, and welcome to our results call. To start today's presentation, I would like you to turn to Slide 3. This slide shows a brief summary of our performance over the past 6 months. Despite operating in the eye of the COVID-19 storm with lockdowns, production stoppages and the like, I'm pleased to report that our teams rolled up their sleeves to take on the challenge, and we delivered on all key metrics. We achieved 6% subscriber growth, and our base now exceeds the 20 million milestone for the first time. The OTT user base increased by a pleasing 26% year-on-year. We delivered solid financial results, with trading profit up 19% and core headline earnings increasing by a healthy 41%. As Africa's most loved storyteller, our ongoing focus on local content yielded almost 1,900 hours despite disrupted production in the early days of COVID-19. Our focus on managing costs continues. We delivered another ZAR 1 billion in cost savings and achieved our target of maintaining positive operating leverage. Losses in the Rest of Africa narrowed by ZAR 0.5 billion as we drive this business towards profitability. We also launched several new products and services and continued the enhancement of our ecosystem, specifically, by expanding into the higher growth area of sports betting. We are also able to renew key football rights. We'll share more about this in the next few slides. Turning to Slide 5. We'd like to remind you of our dual-pronged approach to growth. Across Africa, pay-TV penetration is still low, and satellite remains the cheapest way of distributing long-form video content to the mass market. This is likely to remain the case for some years to come, which means we still have good growth prospects for our traditional broadcasting services with an addressable market of some 50 million households. We are also well aware of the opportunity that premium services represents once Africa can cross the digital divide and consumers can get access to affordable high-speed broadband. Our Connected Video business is well positioned to leverage this opportunity and add incremental growth to our business over time. The ability to offer great content supported by value-add services really matters. Slide 6 shows how we think about our business and the future opportunities. Underpinned by our world-class technology, our emphasis is on offering great content across different platforms and building an ecosystem which keeps customers engaged. We believe that whether organically or through third parties, offering our customers not just a TV package but an ecosystem of entertainment options will be fundamental to our long-term success and to making our customers' lives more convenient. Over the years, we build our entertainment ecosystem which includes BoxOffice, Showmax and music streaming via Joox. More recently, we have accelerated this build-out with the launch of several new products and services as well as through strategic partnerships with international SVOD providers, such as Netflix. Our subscriber base of more than 20 million customers provides considerable scale and gives us a meaningful base to continuously add more products and services and drive network effects. We feel confident about our ability in this regard, with sports betting but one example of new products and services that can be added when one has scale. We will continue to look for new opportunities to further expand our ecosystem, thereby enhancing our customers' experience and, at the same time, growing our revenues. Our interim results include some exciting news in this regard, which we will discuss in more detail shortly, but let's first revisit our key objectives for the financial year '21, which we shared with you in June. Turning to Slide 7. Our strategy is mainly focused on 3 key aspects. Our aim is to lead in content and specifically invest more in local content to drive new opportunities, to leverage our scale and expand our entertainment ecosystem; and to deliver subscriber growth and accelerate the uptake of our OTT products; we also task ourselves with pursuing global digital security leadership in our technology business and to keep driving operational efficiencies and reduce costs. Over the past 6 months, we have made great progress across the Board. So let's look at a few specific highlights. Slide 8 highlights some of our innovative new products and services announced at the end of August. The array of new technology and product enhancements has seen us further expand our wealth of value and choice for customers, allowing them to watch what, how and when they want to. We are excited about the release of our streaming sports offering, Showmax Pro. Stokvels are a big part of South African society. And with the launch of DStv Communities, we hope to tap into the concept of collected payments to improve active days and retention by offering benefits that reward good customer behavior, such as regular and timely payments. Rewards programs are popular in our markets. We launched our DStv Rewards program in South Africa at the end of September with a very simple plan of rewarding customers for tenure and the number of MultiChoice products they use. Add Movies, which launched in October, allows subscribers in our lower-tier bouquets to top up their current movie offering and gain access to dedicated movie channels previously only available to premium subscribers. We believe this will be particularly popular during the festive season and school holidays. It is early days but so far, the traction is exciting. Our recent agreements with SVOD players, such as Netflix, and the integration of their services onto our platform adds further depth and breadth to our entertainment offering. The DStv Explora Ultra launched in this month makes it easier than ever before for DStv customers to enjoy content from third-party streaming services, with everything conveniently available on the DStv platform. And the DStv Streama, which will be available in a few months, will allow customers to enjoy all the DStv and partner content they love without the satellite dish and its associated cabling. Our plan is not only to expand our ecosystem with new pay-TV products and services, we are also looking at adjacent sectors to drive revenue growth going forward. On Slide 9, we share some exciting news in this regard. Effective the 1st of October, we made a 20% investment in pan-African sports betting business, BetKing, enabling us to indirectly add sports betting to our entertainment ecosystem. The sports betting industry is an attractive, high-value sector, which has seen a surge in growth and activity in recent years. It has been a particularly attractive market for media and content companies who have also entered into sports betting partnerships, all launched their own betting business in anticipation of increased brand engagement, revenue stream diversification and improved viewership. The slide shows some examples of this tie-up, including Sky, Fox, Turner and CBS. But it is not only traditional pay-TV companies that are investing in sports betting, we have also seen Internet companies such as Tencent and Alibaba, making selective investments in this space. For us, the strategic fit is very strong. Not only do we anticipate similar retention and viewership benefits for our pay-TV business, but we see this as an opportunity to invest in high-growth business to drive future revenues. We also see opportunities to enhance returns through our subscriber reach and trusted sport brand. We are very excited about BetKing's prospects and look forward to providing further feedback on this investment over time. As ours is a scale business, driving sustained subscriber growth is another important strategic objective for us, and Slide 10 reflects that trend. We are extremely pleased that we are able to sustain growth momentum in the first half despite a challenging consumer environment. We added 1.2 million customers year-on-year, and our subscriber base now exceeds the 20 million milestone, which make us one of the top 10 pay-TV platforms based on the number of subscribers outside of China. Given our strong underlying growth prospects, we believe we can soon become one of the top 5 global pay-TV operators based on the number of customers. Let's now talk in more detail about our operations, and kindly turn to Slide 12 where I will start with some of our content highlights. Content is at the core of our business. And as usual, there are no shortage of highlights over the past 6 months. I will select a few to tell you about. As you know, local content is a key differentiator for us. Despite some disruptions during the first few weeks of lockdown, we produced almost 1,900 hours of local content over the past 6 months, taking the number of local content hours in our library to 59,000. Our increased investment in local content not only delights our customers, it also benefits the industry as we create opportunities for new production houses to partner with us as was the case with highly successful Gomora. With customers spending more time at home, especially during the lockdown, we saw an increase in content viewership. Although some of this since has normalized, we were able to sustain the average viewing time at higher levels than before. One of our biggest lockdown successes was the Big Brother Nigeria Lockdown (sic) [ Big Brother Naija Lockdown ] edition, which drove a record 915 million votes over the duration of the season. The show gained popularity, not only in Nigeria but attracted 25% of its viewership from other countries. It allowed us to keep customers connected and engaged and to promote our digital platforms. 38% of our general entertainment spend during this period was on local content, somewhat lower than prior years due to COVID-19-related production stoppages and ongoing travel restrictions affecting production in the Rest of Africa. We signed deals for 3 new co-productions, including a safari film -- feature film entitled Kenya in partnership with Capstone and production giant, Lionsgate. We see significant benefit in the core production business model as it supports high-quality content while, at the same time, bringing cost savings and revenue potential. In our efforts to bring customers the best entertainment, we continuously launch new channels and make use of temporary pop-up channels to trial different genres to see what resonates. We recently launched Turkish novela channel; action channel, KIX; education channel, ZooMoo; and safari channel, WildEarth. At the onset of COVID-19, we committed to reducing our exposure to foreign currency content costs by renegotiating our supplier contracts into rands wherever possible. We are pleased to report that we have successfully secured local currency deals with 2 major studios, and we will continue to drive this agenda going forward. Moving to Slide 13. In the absence of live sport during COVID-19, SuperSport did a tremendous job adapting their lineup to keep subscribers entertained. When the eagerly awaited return of live sport finally arrived, it did so with a host of new developments from SuperSport. This included the replacement of the channel numbering system with a thematic channel offering around individual sports codes, the release of a new, more personalized SuperSport app and the launch of 2 ESPN channels onto the platform. With the start of the new PSL season a few weeks ago, we kicked off an exciting new sponsorship agreement, and the league is now branded the DStv Premiership. We are also -- we also extended our local sporting footprint through acquisition of broadcast rights to the Ethiopian Premium League, which will commence in December. And in keeping to our promise of offering the world's greatest football, we are pleased to announce that we have renewed the rights to the English Premier League and UEFA Champions League for another 3 years after the current agreements concluded. On Slide 14, we provide some key operational details on our South African business. We again achieved strong growth in the mass market whilst also passing on an average of 4% price increase in April. We remain excited about the mass-market opportunity and regard our access base as a springboard for future revenue growth and ARPU uplift as income levels of consumers improve over time. We are already seeing some of this materialize through upgrades within the mass segment driven by intentional campaigns and upgrades of activities. Moving to the middle segment. Our new PSL sponsorship is a significant development, especially for the compact base. It provides us with a platform to market not only our DStv brand but also our compelling local content offering. New shows like Gomora have kept desire for Mzansi Magic very high. We continue to drive the growth in the middle and mass segments as we have identified growth potential in these markets. Our premium subscribers have declined. This is as a result of lack of sports and the economic conditions. The mass and middle segment growth provides a customer base to upsell into premium as the economic circumstances change for the better in our markets. As mentioned earlier, we have introduced several new products and services, such as DStv Rewards, Add Movies and DStv Communities as important tools to improve retention and ARPU. Due to COVID-19 lockdown, we are able to accelerate some of our digital plans. While our call center is now fully functional off-site, we have seen a marked reduction in call volumes and have encouraged our customers to utilize our digital customer care options. The launch of a new self-service app, MyDStv, further enhance the digital customer experience. Slide 15 reflects the key performance metrics for the South African business. We were pleased to grow our subscriber base by more than 0.5 million subscribers year-on-year despite challenging times. Growth in premium was impacted by the loss of live sport for most of the reporting period, with some key codes such as rugby only fully returning after the period end. The year-on-year decline of 9% was exacerbated by an elevated prior year base as a result of the Rugby World Cup. Our detailed pricing research informed our decision not to process a price increase in the compact bouquet this year given the heightened level of indebtedness and consumer pressure in this segment of the market. This has allowed us to grow the middle segment by 2%. As mentioned, our mass-market segment grew a strong 17%. ARPU in this segment was up 8% year-on-year as we benefited from bouquet upgrades within the segment. Overall ARPU declined 5%, partly due to the mix effect, with the base shifting towards the mass market but also as a result of lower commercial subscription revenue due to COVID-19 and the regulated closure of the hospitality sector for some time. Customer active days is also down 1% year-on-year because of the change in subscriber mix. Now turning to Slide 16. The Rest of Africa team executed very well despite an operating environment that remained challenging. The almost 300,000 net additions in the first half was at a 5-year high if you exclude the FIFA World Cup here as the graph shows. We are particularly excited about the relaunch of our Ethiopia service, the latest iteration of our localization strategy, which includes enhancement of -- to local language and sport content and the introduction of local currency payment options. As part of navigating the COVID-19 pandemic, we have also taken several steps to support and improve the customer journey, including a successful "We've got you" campaign to support retention and reconnections during a difficult period for customers; a renewed focus on our digital payment channels to improve customer convenience while reducing failure rates and costs for the business; and ongoing self-service enhancements to improve the quality of our customer relationship. We have also moved our call center into the cloud to allow our call center agents to continue servicing our customers from home when necessary. Slide 17 provides a quick snapshot of development in some of our largest markets. In Nigeria, our largest market outside South Africa, we grew subscribers by 8% year-on-year, with our regionalization strategy enhancing customer reach. We successfully migrated the base to new localized bouquets, resulting in some revenue uplift, and we are able to implement formal price increases ranging from 5% to 13%. Although the naira has held up well year-to-date, liquidity has been tighter than usual, resulting in in-country cash buildup. At the end of September, this balance amounted to USD 166 million, of which around 50% is attributed to the liquidity constraints. While this situation is not new to us and remittances have flowed from time to time, it does provide a challenge, and we are monitoring the situation closely. In Kenya, subscriber growth amounted to 6% year-on-year with a healthy 10% growth in DTH. Zambia's performance has been affected by the power crisis. We have seen some recovery in our base year-to-date. We are hopeful that the additional capacity to be added to the electricity grid imminently truly improve trading conditions. Although the Angolan economy contracted further and currency depreciation remains problematic, we are able to offset a weaker exchange rate through a 19% price increase this year, in addition to a 47% increase last year. And losing only 7% of our subscribers in these conditions is, in our view, quite a commendable performance. Another significant success in this market was our ability to renegotiate our content contracts down by almost 30% while also incorporating a more equitable sharing of ForEx risk going forward. In Zimbabwe, we have seen a surprisingly strong recovery of subscriber numbers, mainly driven by reconnections during the lockdown period. Combining the impact of the many moving parts across the 49 markets that make up our rest of Africa footprint, Slide 18 shows solid subscriber growth year-on-year of 6% to 11.4 million households. The loss of live sport affected the subscriber mix, resulting in pressure on the premium segment, which remains flat. The return of football has since triggered renewed growth in the middle segment, which ended up 13% year-over-year, while the mass segment grew a more modest 6%. Price increases, which were processed in all markets except Zimbabwe, averaged 8%. Incorporating the impact of the migration to new bouquets in Nigeria results in a positive effect of 16%. Blended ARPU was up 7% year-on-year in South African rand, supported by a healthy traction of the higher-priced Family and GOtv Max bouquets and benefiting from translation at a weaker South African rand. Turning to Slide 19. Our Connected Video business, which provides streaming services under the Showmax and DStv brands, continues to enjoy solid user growth, increased viewing time per user and strong growth in play events. Following its success in South Africa, we introduced Showmax' Add to Bill in Nigeria and Kenya. We will shortly be rolling this service out in other key markets across the Rest of Africa, too, as it not only allows us to drive growth of the Showmax paying base but also to improve retention of the overall pay-TV base. We recently launched a free, ad-supported tier to Showmax, which will enhance the experience of trial users and encourage customers to upgrade as they get hooked on our local shows. The release of Showmax Pro from July was a key highlight for us. This service, which features all EPL, La Liga, Serie A and PSL games amongst other live sport events from SuperSport, is unparalleled in the OTT space on the continent and is a key differentiator for us. To recap on our current footprint and service offering, our Showmax offering is available across 46 markets in Rest of Africa. Together with Showmax Pro and cheaper mobile plans, we see value in the rollout of localized offerings, which provide local currency billing, localized payment options and a more dedicated local content strategy. We now have 4 localized versions of the product, including recently launched Ghana. Slide 20 provides an update on Irdeto, our technology business, which continues to pursue global digital security leadership. In financial year '20, we flagged 2 large automotive OEM customer wins, one of them Beijing Hyundai is incorporating Irdeto's Keystone technology into all new models with 50,000 manufactured vehicles already in the market to date. Having launched our Trusted Home product this year, it was extremely gratifying to be recognized as Most Innovative Product at the Cyber Security Awards in September. Our objective is to leverage ongoing successes like these in connected industries to grow revenues from our new line services. In first half of financial year '21, new service lines accounted for 31% of Irdeto's revenues, up from 28% in the first half of 2020. Meanwhile, in our core media security business, Irdeto continues to gain market share with customer wins in both traditional broadcasting and streaming segments. And while we can't comment publicly on all our OTT customers, we are proud that Irdeto has now grown to become a security partner to 5 of the 6 largest global OTT players. This concludes the operation sections. I would like now to hand over to Tim for the finance section.

Thank you, Calvo. We will start our financial highlights on Slide 22. COVID-19 provided some specific challenges to the business, with our subscriber mix, advertising revenue and commercial subscription fees being the most impacted. Despite this, we are able to grow our revenues, while tight cost control and reduced losses in the Rest of Africa underpinned margin expansion. This led to substantial growth in core headline earnings, and we generated solid cash flows. Our balance sheet remains strong, which provides us the financial flexibility to drive growth and shareholder returns. Slide 23 provides a quick look at the financial synopsis of the group. The percentages that are shown in brackets are the organic growth numbers, which excludes the impact of currency translation and M&A. We delivered revenue of ZAR 26.1 billion for the 6-month period, representing 2% nominal growth but a 1% organic decline from the prior period. Operating profit grew to 19% to ZAR 5.7 billion or 38% organically. Our core headline earnings were up a significant 41% year-on-year to ZAR 2.7 billion. And while free cash flow was down 13% to ZAR 2.1 billion due to the strategic CapEx investment in our billing systems, it remains healthy. On Slide 24, we take a deeper look at our revenue numbers starting with subscription revenue, and it's a key driver of subscriber growth. Just to remind everybody how the graphs work, if we start with the graphs on the left-hand side, we present 90-day active subscribers with the bottom of the stack in South Africa and Rest of Africa above. The corresponding subscription revenue numbers are presented in the graph on the right-hand side. As we had mentioned, COVID-19 has had an impact on our revenue performance for the 6-month period. While we have continued to see strong demand for our product, even with the easing of lockdown restrictions in most markets, the subscriber mix was affected by the absence of live sport for the majority of the period, some of which, especially our premium sports offerings, such as rugby, only fully returned in October. In addition, a loss in subscription fees from commercial customers, such as hotels, restaurants and gyms, who are unable to trade for most of the reporting period due to lockdown restrictions, has weighed on revenue growth. Despite these challenges, we grew subscription revenue a solid 5% for the group. Subscription revenue in South Africa increased a modest 1% to ZAR 14.3 billion, with a strong 7% subscriber growth and price increase processed in the mass market and, again, by the factors mentioned above. In the Rest of Africa, we saw subscription revenue growth of 12% to ZAR 8 billion, some of which was attributable to the weakening of the rand relative to in-market currencies. Although not presented on the graph, if we strip out this currency effect, the segment still achieved organic subscription revenue growth of 6%. The benefits of price increases in the Nigeria bouquet migrations was somewhat negated by the impact of COVID-19 on the subscriber mix. Turning to Slide 25. Here, we look at the total revenue numbers for the group, with the graph on the left-hand side also incorporating our technology business Irdeto. I will talk mainly to the graph on the right-hand side, which looks at revenue by nature, as the trends seen here had largely been the drivers of our segmental revenue performance. Firstly, we see that 85% of our total revenue is derived from subscription revenue, which grew 5% overall and has kept our top line somewhat resilient during the pandemic. Our technology revenues declined slightly year-on-year to ZAR 900 million. While Irdeto benefited from new customer wins, as Calvo mentioned earlier, year-on-year performance was impacted by one-off project revenue of $8 million generated in the prior period as well as deferrals of certain revenue due to COVID-19 as customers tended to delay decision-making on project-type work. Advertising revenue was the hardest hit by COVID-19 given the lack of sport advertising and a generally softer advertising market as a result of lower economic activity. It declined 34% compared to the prior period to ZAR 1.1 billion. However, this is beginning to stabilize, with revenues for the month of August and September approaching pre-COVID levels. The impact of advertising revenue is more pronounced in the larger South African market and was a key driver of the 3% decline in total revenues in this business segment. Other revenue remained relatively flat year-on-year despite a loss of sublicensing revenue due to sporting delays. Slide 26 reflects our operating leverage on an organic basis. Our target is to keep organic growth in operating expenditure below revenue growth. This year, we were able to reduce our operating costs by 9% organically, some of which was driven by changes in the timing of content amortization that should normalize for the full year, while the rest was off the back of tight cost control and the early implementation of cost-cutting initiatives. Compared to organic revenue, which was down 1% year-on-year, this resulted in an improved operating leverage of 8 percentage points. We have stepped up our cost-saving focus again as a means of protection against potential impacts of COVID-19. This is bearing fruit with ZAR 1 billion in cost savings recorded for the first half of the financial year. This amounted to 5% of our total cost base. And while annualizing this number is not an indicator of full year expectations, we are well on track to repeat the ZAR 1.4 billion in cost savings achieved in financial year 2020. Although our cost-saving program still spans the entire business and a broad range of initiatives contributed, content savings accounted for around 65%, with refunds negotiated as many of the sports feeds were either curtailed or competed in a more condensed time period reducing the broadcasting benefit for us. We also renegotiated certain content contracts, which resulted in bankable savings. Slide 27 provides detail on our profitability. The group increased its trading profit by 19% or 38% organically to ZAR 5.7 billion. This resulted in a 3 percentage point expansion in margins from 19% to 22%. Considering the trading environment, this was a very strong performance and was underpinned by our cost-saving efforts, whilst shifting the timing of content amortization, we're able to offset the revenue impact of COVID-19. The graph on the right-hand side shows each of the different business segments. South Africa's trading margin improved from 30% to 35% driven by 3 main factors: a doubling down on cost-saving initiatives, the nonrecurrence of the 3 major sporting events that drove additional content and marketing spend in the prior period and the temporary shift in content amortization due to the delays in the commencement of certain sporting [ events ]. In the Rest of Africa, we saw a strong improvement in operating results with a ZAR 492 million reduction in losses year-on-year or ZAR 1.2 billion organically. Consequently, the negative margin narrowed from minus 11% to minus 4% for the 6-month period. The Technology segment saw its trading margin normalized to 28% given the benefit of high-margin, one-off project revenue earned in the prior period. Moving to Slide 28. By now, you will be familiar with our trading profit bridge for the Rest of Africa, showing our progress towards moving this business back to sustainable profitability. So starting on the left-hand side of the graph, we show the ZAR 830 million trading loss for the prior period. We estimate that COVID-19 had an impact of around ZAR 650 million on the business driven by the change in subscriber mix and loss of commercial and advertising revenues. However, this was more than offset by content savings of ZAR 754 million during the period. And during the last 6 months, we generated an incremental ZAR 528 million from subscriber wins and ZAR 608 million of other gains through price increases and cost-saving initiatives. This resulted in Rest of Africa reaching profitability on an organic basis with an organic trading profit of ZAR 411 million. While we acknowledge that the first half of the year is seasonally strong for the Rest of Africa, this is still a significant milestone for us on our path towards profitability. Our translation performance still faced points of currency volatility during the period. We incurred a net foreign exchange loss of ZAR 749 million driven primarily by the depreciation in the Angolan kwanza, Nigerian naira and the Zambian kwacha against the U.S. dollar. Although the results of these currency movements was a ZAR 338 million net loss for the period, it still reflects a significant ZAR 492 million or 59% improvement on the prior year. We have consistently delivered in narrowing the losses at each reporting period. We believe we are still on track to return the Rest of Africa business to profitability over the medium term and are still fighting a good fight. However, the uncertain longer-term impact of COVID-19 on African economies and currencies may cause a 6- to 12-month lag in reaching breakeven relative to our initial expectations. Our turnaround strategy factors in normal currency depreciation and the hedging of remittances 12 to 13 months out in certain markets. We continue to monitor currency trends carefully to determine whether they present short-term fluctuations, which our business plan can absorb; or a new normal, which may require us to recalibrate. Slide 29 shows our core headline earnings, which is up a significant 41% year-on-year at ZAR 2.7 billion. On the right-hand side, we show the segmental drivers of this performance, noting that strong trading profit in South Africa and the narrowing of losses in the Rest of Africa were the drivers of the growth. Lower realized foreign exchange losses contributed ZAR 226 million to the core headline earnings growth. Looking at Slide 30. While down 13% on the prior year, we still generated healthy free cash flows of ZAR 2.1 billion. The graph provides some insights into the key movements. So starting from the left-hand side, in the comparative period, we generated ZAR 2.4 billion in free cash flow. Cash EBITDA improved by ZAR 1.1 billion. We then saw a ZAR 417 million normalization of working capital given the lighter working capital cycle experienced during financial year 2020. Working capital can be lumpy as it is dependent on the timing of events and content right payments. Some of our EBITDA gains were offset by higher lease payments that were impacted by foreign exchange movements and the ending of our payment holiday on our South African transponders from October 2019. Lastly, our CapEx spend increased this year given the multi-year investment program we have embarked on to future-proof the group's customer service, billing and data capabilities. On Slide 31, we look at the strength of our balance sheet. Despite the settlement of ZAR 4 billion of dividends to MCG and minority shareholders, cash and cash equivalents are still a meaningful ZAR 7.3 billion. Coupled with available facilities of ZAR 4.5 billion, this gives us total funds available of ZAR 11.8 billion. Our facility is reduced by ZAR 500 million at the period end as a result of short-term working capital facility that we arranged during the period but has subsequently been repaid. Looking forward, our priority use of capital remains funding the rest of our business and opportunities like the BetKing investment. Our strong balance sheet is welcome in this time of uncertainty as the full impact of COVID-19 is still largely unknown. We have not declared an interim dividend and believe that the uncertain economic environment renders it imprudent to commit to a full year-end dividend at this stage. However, our intention remains to return excess cash to shareholders when circumstances allow. This concludes the finance section. I'll now hand back to Calvo to share some thoughts on our outlook for the next financial year.

Thank you, Tim. Moving on to Slide 33. Slide 33 recaps on our strong performance to date, despite the challenging environment. We have made good progress on all our strategic objectives by continuing our investment in bringing customers great content and further leveraging our ecosystem through new products and services whilst also investing in sports betting and exciting high-growth adjacency to our core entertainment offering. We continue to drive growth across our platforms. We reached the 20 million subscriber mark for our broadcasting services and delivered 26% growth in users on our streaming platforms. Irdeto added 18 new customers in its pursuit for global security leadership. And despite everything on the [ call ], we managed to maintain operational excellence and delivered another ZAR 1 billion in cost savings. In conclusion, let's turn to Slide 34. We believe we are well positioned despite somewhat uncertain times. Our product is geared towards people spending more time at home. We have a large diversified customer base and footprint and strong growth prospects with an addressable market of around 50 million households. We offer great content. We recently strengthened our offering by concluding agreements with third-party SVOD suppliers and by extending key football rights for another couple of years. We have a robust business model with a healthy annuity income and a low reliance on advertising, and our healthy balance sheet provides us with great financial flexibility. While the fallout from COVID-19, potential macroeconomic implications and regulatory challenges are largely uncontrollable, we are taking steps wherever we can to counter potential headwinds. We are enjoying good momentum and certainly remain excited about the future. This concludes today's presentation. We are ready to take questions.

[Operator Instructions] Our first question is from Omar Sheikh of Morgan Stanley.

I have 3 questions, if I could, please. The first is on the Rest of Africa. Back on Slide 28, you talked about about ZAR 750 million of cost savings in the quarter, which contributed to the narrowing of the loss. I wonder whether you could maybe tell us how much of the content savings were because of the deferred content amortization that you referred to earlier in the presentation. That would be helpful. And then also on Rest of Africa, could you let us know where we are in the path towards breakeven, if that's still something you're anticipating in the next few years? That's the first question. Secondly, I wanted to ask about the South African premium subscribers. It looks like you're currently -- the run rate of attrition on the premium is still around 100,000 a quarter. Should we expect that to improve in the second half as sports comes back? Or do you think that might worsen because of the current sort of second wave of lockdowns? That's the second question. And then thirdly, just on Vivendi. Have they requested any Board seats as of now? And if they were to request them, would you be open to granting them?

Yes. Maybe let me start, Tim, and respond to the Vivendi question. To be specific, no, they have not requested any Board seat. I think when it comes to requesting a Board seat, the Board will sit and consider the request if it comes through, but it will also be subject to what kind of shareholding they have in the business at that particular point in time. So we'll see how this evolves over time. And then I'll hand over to Tim to respond to the other 2 questions.

Okay. So if I understood the first question, it was in the content savings, how much of that is the timing savings. If I recall correctly, it should be around about half of that number will be timing. Remember that we managed to secure some kind of really good savings in markets like Angola where we had got some significantly price downs, I think it was 30% on the local content. So some of that is kind of hard banked and some of that is timing that will roll over. Then the second question, I think, was relating to the timing of the return to breakeven. So as I mentioned, I think the timing is -- we're still on track with the original guidance, which was the medium term that we gave when we came to the list -- when we first came to listing. But we are starting to flag that if we continue to see currency losses like we have seen in the past 2 years that, that might be pushed out by anything from 6 to 12 months. So not a significant pushout, but we are now starting to kind of -- the time gap to that medium term is now starting to narrow. Were those the 2 questions? Or was there another question?

Yes. Those are the 2 questions on the Rest of Africa. Tim, I was just wondering also about the South African premium subs, whether you expect the attrition, 100,000 or so run rate quarterly to half year, rather to improve or worsen in the second half.

Okay. So the prime -- look, I mean we've been fairly consistent with premium churn in the last couple of years at kind of between minus 3% to minus 4%. You've seen in the first half, that has accelerated to minus 9%. Now not all of that was churn off the base, some of that was simply downgrading because we didn't have a sports offering. In particular, rugby wasn't being shown. So in the second half of the year, we can't -- I mean it's difficult to predict, but we would like to think that if the resumption of sports, like we've seen football in the Rest of Africa, we've seen how the mix has started to shift back towards where it was originally, that there will be a slowdown in that kind of churn that we've seen in the premium in the first 6 months as subscribers that specifically want to watch rugby start to kind of shift back up to the premium package again. So we think that there will be a slowdown in the second half of the year from the churn rates that we've seen in the first half.

Okay. Great. That's very clear. And just to follow up, if I may, Calvo, on the Board seat point you made. What is the level, what is the threshold for shareholders to normally be able to request a Board seat?

Yes. Usually, they start requesting Board seat just over 20% of shareholding, so more or less, it would be around that, I think. Yes, even for us.

The next question is from Jonathan Kennedy-Good of JPMorgan.

Just 2 questions from me. I hear you refer to returning excess cash to shareholders when talking about the dividend. Do you have -- can you kind of define what you see as excess now that we have the BetKing investment and a significant amount of cash in Nigeria? What is your kind of benchmark that you need to -- you see yourself comfortable running the business on? And then just on the South African mass market's ARPUs. I think for the last 2 consecutive years, it seems like those ARPUs are moving 7%, 8% up a year, even though it's kind of twice the average price increase, I think. Is that all to do with kind of bouquet enhancements or upgrades in there? Or are you pushing product that you see driving pricing and ARPU up in that 7%, 8% range in the medium term?

Yes. I'll respond to the second question, and Tim will take the first question on excess cash. Yes, so what's happening with regard to the improvement in ARPU, you are right, we still have some pricing power in the mass segment. The second thing that is also helping in the ARPU is our focus on the upgrades from the Access bouquet onto the Family bouquet. And I think we have found the right mix in content offering in the Family bouquet. What normally happens is that once we have found the right mix in terms of our offering and as more and more people start joining, word-of-mouth spreads very nicely and as people start talking about it on social media or the content on social media, then you see a nice uptick of people going into the higher bouquet within the mass segment. So we think that is working very well for us, and we should continue on that strategy.

Thanks, Calvo. If I can take the first question then. So it's not -- we tend to be a little bit conservative about when we call what -- where and what is excess cash. There are a number of moving parts in our business. And one of the big moving parts at the moment is the liquidity issues in Nigeria. So we've seen from the beginning of the financial year, first 3, 4 months, we really struggled to get any cash out of the country. We then saw a period when we were able to get about $20 million a month out of the country. And now it's tightened up again. So I think what we're going to do in the next 6 months is we're going to -- one of our priority uses of capital is the funding of the Rest of Africa business. And fundamental to that is not any operational performance but also how much cash we can extract because the less cash we can extract from Nigeria, the more funding the group needs in order to buffer that until the money comes out. So I think when we get closer to the financial year-end, we'll have a better view, firstly, of what that liquidity position looks like on both a monthly basis and a feel for how much forward we need to look at in terms of what kind of buffers we need on the balance sheet. So I think when we come to the financial year-end, we'll be in a better position to give you a steer on that.

The next question is from John Kim of UBS.

Congrats on a good set of numbers. Three very unrelated questions here. How should we think about investment into local and regional content? Currently, you've got about 60,000 hours of content. Is there a critical mass in this space? Or should we think of it more as continual OpEx? That's question one. Question two, how aggressively do you plan to market OTT-related services? So in future days, call it, 5 years, what is the mix between OTT and DTH distribution in your premium segment, best guess? And then third question, if we think about the excess cash in Nigeria that's about $8 million today, can you give us a sense of perspective what would that number have been, call it, 6 -- 3 or 6 months ago? I'm trying to figure out whether you're accruing faster than you're getting out.

All right. Tim, I'll start on investment in local content. So our strategy is to continue to ramp up our local content investment. And we have seen that it works really well for us. It increases appointment viewing and, therefore, subscribers keep coming back. If you look at the number of markets wherein we have launched local content, there are still a few others that we should be looking -- that we are looking at in terms of launching local content, and it helps us in terms of the cost structure. It's denominated in local currencies. And Africans just love watching themselves on television, so we are continuing on that strategy. And that's why we are saying we are doubling down on making sure that we have local content in many of our jurisdictions. I hope that helps. In terms of how aggressive are we going to push OTT, we are positioning ourselves as a platform that is going to embrace OTT because we know, further down the line, broadband prices are going to improve. And when people then get into OTT, we should be a product that is top of mind in all the markets that we operate in. There is a lot of work that [ Lisa ] and the team are putting in to make sure that the product is as best as possible, the content offering is as good as possible, the recommendation engine is as fast as possible. And we are not going to slow down our OTT offering. In terms of how the mix is going to shift, I think in Africa, you'll still have a big number of the population that will still rely on traditional linear television for the foreseeable future just because OTT comes with pricing in terms of consumption on the broadband side, and many people will not be able to do both -- to afford both. So that's where we see it. We think the mix will still be a larger population, especially in the mass market, wherein people are still going to rely on the linear traditional broadcasting to access audio/visual services. Tim, the one on excess cash?