The Finance Ghost: The lowdown on MultiChoice’s missteps, Bell’s regrets and Barloworld’s future

30 Mar 2025

MultiChoice is struggling with poor execution in South Africa and a risky expansion into Africa, leaving investors and customers frustrated. Bell Equipment shareholders, who rejected a take-private offer last year, are likely regretting it as the share price has tumbled nearly 30% since. Meanwhile, Barloworld could face a similar fate after shareholders turned down a buyout offer, with key pressure points emerging in its business.

MultiChoice has multiple problems

If you’ve ever suffered through using the DStv app for a smart TV, you won’t be surprised at all by how poorly the company is performing. I’ve asked before on platforms such as X and the feedback is practically unanimous: the product is absolutely awful. At a time when MultiChoice should be ensuring that as many customers as possible can transfer from satellite to streaming, they are instead doing a great job of chasing people away.

If the money and management attention hasn’t been going into the South African business, then where has it been going? Aside from trying desperately to get the Canal+ deal across the line, it’s clearly gone into the African operations. MultiChoice has just about bet the farm on this one, as we know from the likes of Netflix and Disney+ that it takes years for streaming businesses to turn profitable. To do so in Africa will be even harder, given obvious constraints like access to fast and affordable internet, as well as general consumer spending power. None of this has deterred MultiChoice from running headfirst into Africa, leaving the South African business to tread water in the deep end.

In a monumental surprise to absolutely no one, this hasn’t worked. MultiChoice is bleeding customers in South Africa. The best part of the business is SuperSport and, unless there’s a Rugby World Cup, many households are happy to do without it. You can have Netflix and a pretty decent internet connection for the same price as DStv. It’s not the kind of expense that goes unnoticed in the household budget.

Until now, investors in the BBBEE scheme Phuthuma Nathi thought they were safe from the group-level suffering. After all, Phuthuma Nathi is invested into MultiChoice South Africa, the cash cow for the broader group. In order to get dividends up to the mothership, MultiChoice would have to allow Phuthuma Nathi to get its share of the spoils. In an announcement that came as quite a shock on Friday, MultiChoice announced that the MultiChoice South Africa dividend would be significantly lower. It is having to retain capital in the group as a result of the financial pressure that it is facing. The Canal+ deal still has some major regulatory hurdles to overcome, so the board has to act on the assumption that it falls over. In that case, MultiChoice would be in huge trouble and would need every cent it can get.

The frustration is that this situation feels like it was completely avoidable. MultiChoice didn’t need to throw everything at Africa. It certainly didn’t need to hurt its business with such poor execution in South Africa. At this stage, if the Canal+ deal fails, there’s no guessing where the bottom for the MultiChoice share price might be. The Phuthuma Nathi share price lost over half of its value on Friday after the announcement, so that certainly gives you a clue.

Bell Equipment: could’ve, would’ve, should’ve?

Recently, we saw shareholders say no to the Barloworld take-private offer. It wanted a better price and it wasn’t forthcoming. It’s amazing how similar this situation is to the Bell Equipment take-private that was voted down by shareholders in 2024. The companies operate in similar industries and, in both cases, it was a group of insiders who wanted to take it off the market.

The Bell offer was at R53 per share and, at the time, I felt that investors should take the money and run. Instead, activist shareholders blocked the deal, a position made possible by how small the voting class was – remember, only unconflicted parties that aren’t involved directly in the deal are allowed to vote. Today, Bell is trading below R38 per share. That’s nearly 30% off the offer price.

Regret is surely sinking in by now, compounded by the recent trading performance at Bell that has been less than exciting, to say the least. Cyclical businesses are exactly that: cyclical. Good times and bad times. Feast and famine. Often, the reasons are beyond the company’s control, impacted by factors such as commodity pricing. Unless you take a narrow view on commodities and look at areas such as gold, 2024 actually wasn’t a great story for the sector at all.

When there’s uncertainty and times are tough, mining groups tend to pull back on their capex spend. They need to be cautious, as commodity prices can (and often do) remain depressed for a long time. It’s not that easy to scale back on major construction projects at mines; it’s a lot easier to simply not order another fancy truck from Bell Equipment.

This is why Bell’s revenue fell by 13% in 2024 and headline earnings per share took a 42% dive. Headline earnings per share came in at 465 cents, which means that the almost-forgotten offer price of R53 would’ve been a forward multiple of 11.4x. Sure, hindsight is perfect, but there’s also that old story about greed and how the pigs in the market get slaughtered.

Will the same thing happen at Barloworld in the aftermath of the offer that was turned down by shareholders? With some key pressure points in that business like the Equipment Mongolia order book that is much lower than it was a year ago, it’s quite possible that we will see a similar story to Bell. Barloworld is trading at R106 per share. The offer price was R120 per share and the major shareholder that led the downfall of the deal wanted R130 per share. DM

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Business Maverick

MultiChoice has multiple problems

Bell Equipment: could’ve, would’ve, should’ve?