MultiChoice, mini dividends

MultiChoice is warning investors to expect a much smaller dividend this year, and that’s bad news for shareholders in its Phuthuma Nathi scheme.

Phuthuma Nathi is a black economic empowerment (BEE) investment fund that allows South Africans to own a stake in MultiChoice South Africa—a total of 25%. It has been a strong performer in the past, paying out good dividends to its investors. Phuthuma Nathi has paid R19.1 billion ($1 billion) in dividends from 2006 to 2023, with annual payouts reaching R1.5 billion ($81.4 million) in 2020. But now, MultiChoice says those payouts will drop sharply.

The company is struggling. Fewer people are paying for DStv—which led the pay-TV to increase prices in its key market—and outside South Africa, the business is battling weak currencies and unreliable power in key African markets.

MultiChoice hasn’t said exactly how much smaller the dividend will be, but it will finalise the decision in June. This comes as the company is in the middle of a takeover bid from Canal+, the French media giant. Canal+ is offering R125 ($6.78) per share, and its deal with MultiChoice has been extended to October while regulators review it.

MultiChoice’s stock price dropped to R11,060 ($600) on Friday, declining by 0.81%. In the past month, it has held steady because of the Canal+ offer. But for Phuthuma Nathi shareholders, who rely on dividends rather than stock price movements, this year’s payout will be disappointing.

It’s a tough time for South Africa’s biggest pay-TV company, and shareholders are feeling the pinch.

How much power should one company have?

The answer is simple: not too much—or at least enough to ensure it plays fair, allowing participation (and innovation as a by-product) in the industry. But when the power becomes unchecked, that company is said to display “anti-competitive” behaviour. Companies do this by showing monopolistic tendencies, cartel behaviour, or worse, undercutting competitors through unfair or predatory pricing strategies. Anti-competitive behaviour locks out smaller players, limits consumer choice, and slows industry growth—which is why competition watchdogs keep a keen eye for these trends across industries. 

Five months after blocking the Vodacom-Maziv merger deal, South Africa’s Competition Commission is standing firm on its decision to prevent the country’s second-largest telecom operator’s attempt to acquire a co-controlling stake in Maziv, the parent company of Vumatel and Dark Fibre Africa. In a 350-page document released on Friday, the anti-competition watchdog argued that allowing Vodacom to take control would cement its dominance in mobile and give it undue influence over the fibre market—an industry where it previously had limited control.

Owning a co-controlling stake in Maziv would let it dictate business decisions affecting independent internet service providers (ISPs)—some of which rely on Vumatel and Dark Fibre Africa. Here's what makes it worse: Vumatel partly owns Herotel, a South African ISP. Think of this Vodacom-Maziv deal as MTN acquiring ipNX—only Maziv is bigger, and there's a whole web of ownership entanglements that benefits Vodacom.

Another complication for the telecom operator is that it does not have any precedent to make an argument. Telecom operators with fibre businesses have created their vertical businesses from scratch. In 2015, Telkom spunned off Openserve as its subsidiary fibre provider, instead of buying an existing player. MTN also launched Supersonic, its fibre-to-the-home (FTTH) business in 2018.

A potential compromise for Vodacom could be to consider building a fibre business from scratch or reduce its stake in Maziv to a non-controlling position. That way, it could invest in fibre without wielding unchecked power over the market. 

That said, a Vodacom-Maziv merger is expected to open doors to more deals in South Africa’s telecoms market. But for now, the Competition Commission is holding its ground. The case will go before the appeal court in July.

Cleva, the Y Combinator-backed startup offering USD accounts to Nigerians, has secured an International Money Transfer Operator (IMTO) licence from the Central Bank of Nigeria (CBN). The licence allows Cleva to facilitate inbound remittances—money sent from outside Nigeria into local accounts.

Until now, Cleva focused on helping users—primarily freelancers and remote workers—receive USD payments and hold the funds in virtual accounts. With the IMTO licence, it can now process these international transfers directly rather than rely on third-party intermediaries. That move could lead to faster transfers, lower fees, and more control over the user experience.

The IMTO licence is not easy to get. Companies must meet strict requirements, including a minimum share capital (₦1 billion for local firms or $1 million for foreign ones) and compliance with anti-money laundering standards. But it’s a crucial licence in Nigeria, which remains one of Africa’s top destinations for diaspora remittances.

Cleva joins a short but growing list of startups with the IMTO licence. Flutterwave got its licence in 2022. Interswitch and Paga are also licenced. For these companies, IMTO access not only allows legal operation in the remittance space, but it also opens up opportunities to build financial products around cross-border payments—a pain point for many Nigerians.

Cleva’s move comes amid renewed CBN scrutiny of the fintech space. Earlier this month, the apex bank asked all institutions facilitating remittance transfers to verify their licencing status. Cleva’s new badge puts it on the right side of the regulator—and one step closer to becoming a one-stop-shop for global payments.

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