• MultiChoice is selling a 60 percent stake in its insurance business for R1.2 billion up front.
• The company is looking to make as much money as quickly as possible after its latest results showed it had become insolvent.
• Sanlam will now be in control of DStv Insurance after purchasing the stake.

Last week, after announcing catastrophic financial results for the year ended March 2024, MultiChoice Group, Africa’s largest entertainment provider is now desperately looking to increase its cash flow as the company has become unable to pay off its debts.

On Tuesday, Reuters reported that the group sold a 60 percent stake in its insurance business, DStv Insurance, to local insurer Sanlam.

The report details that the deal will see Sanlam pay MultiChoice an upfront cash amount of R1.2 billion for the stake, with an additional performance-based cash earn-up to R1.5 billion. With MultiChoice owing just over R1 billion to put its insolvency behind, the move will likely balance the group’s sheets somewhat.

The sale forms part of MultiChoice’s plans to get more money fast. “In the short term the group has prioritised cash generation over growth,” it said in its financial results statement.

Adding that it would “continue its efforts to drive growth in focused areas, notably Showmax, Moment, SuperSportBet, DStv Insurance, DStv Internet and DStv Stream.”

“Through the strategic relationship with Sanlam, MultiChoice gains access to unparalleled insurance expertise, comprehensive financial services resources and access to Sanlam’s financial services operations across Africa to address MultiChoice client needs,” MultiChoice and Sanlam explained in a joint statement on Tuesday.

The 60 percent stake Sanlam now owns in the insurance business means that the insurer will be helming the division for the foreseeable future. It also frees MultiChoice to focus on its other business areas relating to its entertainment divisions.

As for DStv Insurance itself, MultiChoice shared that gross-written premiums were up 35 percent year-on-year, reaching almost R1 billion, while profits after tax increased by around 50 percent year after year. It launched its insurance business in 2022 to primarily cover the DStv devices of subscribers.