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MULTICHOICE GROUP LIMITED - Abridged Pre-listing Statement

Release Date: 21/01/2019 17:50
Code(s): MCG     PDF:  
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Abridged Pre-listing Statement

MULTICHOICE GROUP LIMITED
(formerly MultiChoice Group Proprietary Limited and K2018473845
(South Africa) Proprietary Limited)
(incorporated in the Republic of South Africa)
(Registration number: 2018/473845/06)
JSE Share Code: MCG ISIN: ZAE000265971
("Company")
 
ABRIDGED PRE-LISTING STATEMENT
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION OR REQUIRE THE COMPANY TO TAKE ANY FURTHER ACTION.

This abridged pre-listing statement ("Abridged Pre-listing Statement")
relates to the Admission of the issued Shares of the Company, by introduction
and as a primary listing, in the "Broadcasting and Entertainment" sector of the
Main Board of the exchange operated by the JSE Limited ("JSE"), with effect
from the commencement of trading on Wednesday, 27 February 2019, subject
to the proposed unbundling by Naspers Limited ("Naspers") of 438  837  468
Shares in the share capital of the Company to Naspers's Shareholders
("Unbundling") becoming operative and the Company obtaining the
requisite spread of shareholders required by the Listings Requirements of the
JSE ("Listings Requirements").

The information in this Abridged Pre-listing Statement has been extracted,
in summarised form, from the full Pre-listing Statement issued by the
Company on Monday, 21 January 2019. This Abridged Pre-listing Statement
is not complete and does not contain all of the information that investors
should consider in relation to the Admission and Unbundling. This Abridged
Pre-listing Statement is issued in compliance with the Listings Requirements
for the purpose of providing information to selected persons in South Africa
and other jurisdictions with regard to the Company.

Capitalised words and expressions used in this Abridged Pre-listing Statement
shall, unless expressly defined herein or indicated otherwise by the context,
bear the meanings given to them in the Pre-listing Statement.

1.  Background and introduction

    As announced on SENS by Naspers on Monday, 21 January 2019, the
    Naspers Board intends to implement the Unbundling by way of a pro rata
    distribution in specie of ordinary shares of no par value in the Company
    ("Shares") for no consideration to Shareholders in terms of section 46 of
    the Companies Act and section 46 of the Income Tax Act. Naspers intends
    to distribute 438 837 468 Shares (being 100% of the issued Shares and all
    of the Shares held in the Company by Naspers) to Shareholders recorded
    on the Naspers securities register on Friday, 1 March 2019.

    It is expected that Shareholders will receive one Share for every one
    Naspers "N" Share held and one Share for every five Naspers "A"
    Shares held.

    Pursuant to the Unbundling, the Company will be an independent publicly
    traded company.

    The Company was incorporated as a wholly owned subsidiary of MIHH
    for purposes of implementing the Admission and Unbundling. In order
    to facilitate the Admission, Naspers has undertaken a restructuring in
    order to transfer the Business to the Company and will have finalised the
    restructuring steps prior to the Admission. The Restructuring involved
    a number of steps, described in the Pre-listing Statement at "Part VII -
    Restructuring and Formation of the Group".

    Subsequent to the Restructuring, the Group includes MCSA, Irdeto SA,
    Main Street 484, Irdeto B.V., Showmax B.V., MAH B.V., DMT, MultiChoice
    Botswana, MultiChoice Namibia and NMS (and any of the subsidiaries,
    associates and/or affiliates of such entities as at the date on which the
    Restructuring is implemented).

    The JSE has conditionally approved the Admission of all of the issued
    Shares in the "Broadcasting and Entertainment" sector of the Main
    Board of the JSE under the abbreviated name "MC GROUP", share code
    "MCG" and ISIN: ZAE000265971, subject to the Unbundling becoming
    operative and the Company obtaining the requisite spread of shareholders
    required by the Listings Requirements. Following the Admission, all the
    issued Shares of the Company will be listed on the exchange operated
    by the JSE in compliance with the Listings Requirements and the laws of
    South Africa.

    The Company's issued share capital comprises 438 837 468 Shares, with
    a stated capital of R0 as at the Last Practicable Date and is expected to
    comprise 438 837 468 Shares with a stated capital of R0 on the Admission
    Date. No Shares are, or on the Admission Date are expected to be, held
    in treasury by the Group.

    The Shares will only be traded on the JSE in Dematerialised or
    Uncertificated Form and accordingly all holders of Shares who hold their
    Shares in Certificated Form will have to dematerialise their Shares should
    they wish to trade on the JSE.

2.  Overview of the Company, its subsidiaries and affiliates ("Group")

    The Group is the leading Pan-African video  entertainment platform,
    offering DTH and DTT, as well as online services, in 50 countries across
    sub-Saharan Africa. As at 31 March 2018, the Group serviced 13.5 million
    subscribers, generated more than R47 billion in revenue, with a Trading
    Profit of over R6 billion and core headline earnings of over R1 billion. Having
    invested in and established operational and technology infrastructure
    across the continent for both linear and online services coupled with its
    high-quality, diverse content, the Group believes that it is prepared to
    maintain this leading position as video entertainment grows and evolves
    in Africa. Building on its focus on the customer and further investment in
    its online platforms are expected to provide further growth opportunities
    in the Rest of Africa and Connected Video on the back of healthy cash
    flows in South Africa.

    As the market for video  entertainment develops in Africa, the Group
    has sought to expand its subscriber base by acquiring quality content,
    including sport and local content, for significant periods of time. This
    includes the rights to broadcast live sporting events (through the
    Group's SuperSport Channels) such as the English Premier League,
    Premier Soccer League in South Africa, UEFA Champions League, and
    international rugby and cricket, as well as (through the Group's General
    Entertainment Channels) movies and series with major US and European
    studios. The Group also continues to focus on the development of its
    own original local content through wholly owned subsidiary M-Net in
    key markets across the continent. During the year ended 31 March 2018,
    the Group invested R2.8  billion in local general entertainment content
    (in addition to R1.3 billion on local sport) and improved the ratio of spend
    on local content to total general entertainment content from 34% to 38%.

    The value strategy in the Rest of Africa, of which cost control is a key
    component, is important as the Group looks to return its loss-making Rest
    of Africa operations to profitability. The key pillars of this strategy focus
    on the review of pricing to make content affordable to more consumers,
    accelerating subscriber acquisition through competitive set-top box
    offers, investing in a world-class retention capability and on customer
    service and delivery across the value chain. This strategy has shown
    positive results to date, stimulating subscriber growth, while losses are
    now stabilised, positioning the Business to return to profitability in the
    medium term.

    Connected Video provides the Group's online services through Showmax
    (its subscription video-on-demand division) and DStv Now brands.
    Showmax, launched in August 2015, offers a wide selection of movies and
    television series from leading Hollywood as well as local African studios.
    Showmax is fully localised in South Africa, Nigeria and Kenya, and is
    positioned to expand further when the market opportunity presents itself.

    DStv Now provides subscribers an online experience on any streaming
    device and includes the majority of content available on the linear service.
    Through its subsidiary, Irdeto, the Group also provides content protection
    solutions, gaming security, connected transport security technology
    and software security to content owners, platform operators, device
    manufacturers and other providers of digital content. These products and
    services are used to secure and enable the delivery of valuable content
    and access to systems in the Group.

3.  Summary financial information and operating data

    This section should be read in conjunction with Annexes 1 to 9 of the
    Pre-listing Statement.

    In the past two fiscal years, the Group has grown its subscriber base by
    14% compound annual growth rate ("CAGR"), and generated resilient
    organic revenue growth, while its profitability has improved. For the
    financial year ended 31 March 2018, the Group's subscriber base was
    13.5  million, which represented a 13% increase over the financial year
    ended 31 March 2017. The Group's revenues were R47.5 billion compared
    to R47.7 billion the year before. The table below is replicated from the
    Pre-listing Statement and summarises the Group's subscriber base,
    revenue, and Trading Profit over the past three years.

MultiChoice Group Financial Performance Summary             
                         Unit                FY15/16   FY16/17   FY17/18   
Pay-TV subscribers       '000                 10 411    11 942    13 476   
Revenues                 R million            46 797    47 708    47 452   
South Africa             R million            29 116    31 849    32 702   
Rest of Africa           R million            16 005    14 208    13 106   
Technology               R million             1 676     1 651     1 644   
Organic Revenue Growth   %                      n.a.      7.3%      6.6%   
Trading Profit           R million             9 108     5 251     6 321   
Trading Profit Margin    %                     19.5%     11.0%     13.3%   


As a pioneer in the African pay-TV ecosystem, the Group has played an
important role in making information and entertainment easily accessible
to the people of Africa. As a leading business in the region, the Group's
investments have brought both social and economic benefits to the
communities in which it operates. Today, the Group employs more than
9 000 people in Africa and indirectly creates economic prosperity for over
20 000 more who are employed by its various partners and suppliers across
the continent. The Group remains committed to broad, socio-economic
transformation in South Africa, most notably through its Phuthuma
Nathi share schemes, that are aimed at empowering local communities.

4.    Directors
      The details of the Directors are set out below:
                                                                     Occupation/
      Name, age and nationality          Business address            function

      Patel, Mohamed Imtiaz (54),        Dubai Media City,           Chairperson
      South African                      Shatha Tower, 18th Floor,   and executive
                                         Office 1805-08, Dubai,      Director
                                         UAE
      Pacak, Stephan Joseph Zbigniew     MultiChoice City,           Lead independent
      (63), South African                144 Bram Fischer Drive,     and non-executive
                                         Randburg, South Africa,     Director
                                         2194
      Mawela, Calvo Phedi (42),          MultiChoice City,           CEO
      South African                      144 Bram Fischer Drive,
                                         Randburg, South Africa,
                                         2194
      Jacobs, Timothy Neil (49),         MultiChoice City,           CFO
      South African                      144 Bram Fischer Drive,
                                         Randburg, South Africa,
                                         2194
      Eriksson, Donald Gordon (74),      MultiChoice City,           Independent
      South African                      144 Bram Fischer Drive,     non-executive
                                         Randburg, South Africa,     Director
                                         2194
      Moroka, Kgomotso Ditsebe (63),     MultiChoice City,           Independent
      South African                      144 Bram Fischer Drive,     Non-executive
                                         Randburg, South Africa,     Director
                                         2194
      Stephens, Louisa (42),             MultiChoice City,           Indepenedent
      South African                      144 Bram Fischer Drive,     Non-executive
                                         Randburg, South Africa,     Director
                                         2194
      Letele, Francis Lehlohonolo Napo   MultiChoice City,           Non-executive
      (68), South African                144 Bram Fischer Drive,     Director
                                         Randburg, South Africa,
                                         2194
      Masilela, Elias (54),              MultiChoice City,           Non-executive
      South African                      144 Bram Fischer Drive,     Director
                                         Randburg, South Africa,
                                         2194    
      Volkwyn, John James (60),          MultiChoice City,           Non-executive
      South African                      144 Bram Fischer Drive,     Director
                                         Randburg, South Africa,
                                         2194                                                                            

5.    Salient dates and times
                                                                         Time and/or
      Event(1)                                                               date(2)

      Publication of the Pre-listing Statement and                           Monday,
      declaration information                                        21 January 2019
      Abridged Pre-listing Statement published on SENS                       Monday,
                                                                     21 January 2019
      Pre-listing Statement posted to Shareholders                           Monday,
                                                                     21 January 2019

      Finalisation announcement expected to be released on SENS             Tuesday,
                                                                    19 February 2019
      Last day to trade in order to participate in the Unbundling           Tuesday,
                                                                    26 February 2019
      Admission to listing and trading of Shares from                     Wednesday,
      commencement of trade (MCG ISIN: ZAE000265971)                27 February 2019
      Naspers Shares trade "ex" entitlement to receive Shares(3)          Wednesday,
                                                                    27 February 2019
      Announcement to be released on SENS on the cash proceeds           By 11:00 on
      in respect of fractional entitlements of Naspers "A" Shares(4)       Thursday,
                                                                    28 February 2019
      The ratio of apportionment of expenditure and market value           Thursday,
      in respect of the Unbundling released on SENS                 28 February 2019

      Unbundling Record Date and Time                               17:00 on Friday,
                                                                        1 March 2019
      Unbundling Operative Date                                     09:00 on Monday,
                                                                        4 March 2019
      Dematerialised/Uncertificated Shareholders' CSDP and/or                Monday,
      Broker accounts expected to be updated and credited with          4 March 2019
      Shares
      Dispatch of share certificates for Shares to Certificated              Monday,
      Shareholders                                                      4 March 2019
      Bank of New York Mellon, as depositary, expects to receive             Monday,
      credit of Shares at its custodian banks in South Africa for       4 March 2019
      proportion allocated to ADS and to issue ADSs to holders of
      Naspers ADSs

      Notes:

      1. The expected dates and times listed above may be subject to change. Any material changes
         will be announced on SENS.
         
      2. All references to times are to South African standard time, unless otherwise stated.

      3. There may be no rematerialisation or dematerialisation of Naspers Shares between Wednesday,
         27 February 2019 and Friday, 1 March 2019, both days inclusive.
         
      4. The Unbundling will result in certain Naspers "A" Shareholders being entitled to fractions of
         Shares. Any fractional entitlements to Shares to which a Naspers "A" Shareholder is entitled will
         be dealt with in accordance with the Naspers Unbundling Announcement.

6.  Copies of the Pre-listing Statement and other documents relating
    to the Admission and Unbundling
    The Pre-listing Statement is only available in English and copies thereof
    may be obtained by Shareholders between 09:00 and 17:00 from Monday,
    21  January  2019 until Friday, 1  March  2019 from the Company and the
    Sponsor at their respective registered physical addresses which appear
    in "Part I - Corporate Information" of the Pre-listing Statement.
    
    The Pre-listing Statement will also be made available on the Company's
    website at www.multichoice.com on Monday, 21 January 2019.

Randburg
Monday, 21 January 2019

DISCLAIMER

Shareholders that are (i) non-South African natural persons ("Foreign Persons"); or (ii) associations, businesses,
close corporations, companies, concerns, enterprises, firms, partnerships, trusts, undertakings, voluntary
associations or other similar entities ("Entity") and are incorporated, established or formed in any country other
than South Africa or in which any Foreign Person, directly or indirectly, has a financial interest (as defined in
section 1 of the Electronic Communications Act, 36 of 2005 ("ECA")) or has any interest in either voting Shares
or paid-up capital of the Company, as contemplated under the ECA, and includes any Entity controlled by Foreign
Persons ((i) and (ii) collectively, "Foreign Shareholders") should take note of the variable entitlement to exercise
voting rights attaching to Shares held by Foreign Shareholders in certain circumstances in order to ensure
compliance by the Group with the restrictions placed on it by section 64(1) of the ECA, which restricts the ability
of a Foreign Shareholder to, directly or indirectly, exercise control over a holder of a commercial broadcasting
service licence in terms of the ECA, and have a financial interest or an interest in voting Shares or paid-up capital
in a holder of a commercial broadcasting service licence in terms of the ECA, which restriction is currently placed
at 20%. In particular, if at a meeting of Shareholders Foreign Shareholders hold in excess of 20% of the voting
rights attaching to the Shares, the Foreign Shareholders will be entitled to exercise only a pro rata portion of
the aggregate voting rights attached to the Shares held by all Foreign Shareholders at such time such that the
aggregate voting rights entitled to be exercised by Foreign Shareholders will not exceed 20% of the aggregate
voting rights entitled to be exercised by Shareholders. Please refer to "Part XIII - Incorporation and Share Capital"
of the Pre-listing Statement which contains a summary of the variable voting rights attaching to Shares held by
Foreign Shareholders and Annexe 16 to the Pre-listing Statement setting out the salient provisions of the Company
MOI, including the terms attaching to Shares and the variable voting rights in relation to Foreign Shareholders.

The release, publication or distribution of this Abridged Pre-listing Statement in jurisdictions other than South
Africa may be restricted by law and therefore persons into whose possession this Abridged Pre-listing Statement
may come should inform themselves about, and observe, any such applicable restrictions or requirements. Any
failure to comply with such restrictions or requirements may constitute a violation of the securities laws and
regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the Company disclaims
any responsibility or liability for the violation of such restrictions or requirements by any person. This Abridged
Pre-listing Statement has been prepared for the purposes of complying with the JSE Listings Requirements
and the information disclosed may not be the same as that which would have been disclosed if this Abridged
Pre-listing Statement had been prepared in accordance with the laws and regulations of any jurisdiction outside
of South Africa.

This Abridged Pre-listing Statement does not constitute an offer or form part of any offer or invitation to purchase,
subscribe for, sell or issue, or a solicitation of any offer to purchase, subscribe for, sell or issue, any securities
including Shares (whether pursuant to this Abridged Pre-listing Statement or otherwise) in any jurisdiction,
including an offer to the public or section of the public in any jurisdiction. This announcement does not comprise
a prospectus or a prospectus equivalent announcement, nor does it constitute an advertisement of an offer as
envisaged in the Companies Act.

This Abridged Pre-listing Statement may include forward-looking statements including those about the Group, its
prospects and/or the Unbundling and/or the Admission, which are based on current expectations and projections
about future events. These statements may include, without limitation, any statements preceded by, followed by
or including words such as "target", "believe", "expect", "aim", "intend", "may", "anticipate", "estimate", "plan",
"project", "will", "can have", "likely", "should", "would", "could" and other words and terms of similar meaning
or the negative thereof. These forward-looking statements are subject to risks, uncertainties and assumptions
including the Group, the Unbundling and the Admission. In the light of these risks, uncertainties and assumptions,
the events in the forward-looking statements may not occur or occur in the manner suggested by the forward-
looking statement. No representation or warranty is made that any forward-looking statement will come to pass
and, in particular, no representation or warranty is made that the Unbundling or the Admission will be implemented
(either wholly or in part). No one undertakes to publicly update or revise any such forward-looking statement. The
information contained in this Abridged Pre-listing Statement is provided as at the date of this Abridged Pre-listing
Statement and is subject to change without notice. The Group expressly disclaims any obligation or undertaking
to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change
in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such
statements are based.

As set out in the Pre-listing Statement, pursuant to a provision of the Company MOI, the Company is permitted to
reduce the voting rights of Shares (including Shares deposited in terms of the ADS facility) so that the aggregate
voting power of Shares that are presumptively owned or held by foreigners to South Africa (as envisaged in the
Company MOI) will not exceed 20% of the total voting power in the Company, in order to ensure compliance
with certain statutory requirements applicable in South Africa. For this purpose, the Company will presume in
particular that all Shares deposited in terms of the ADS facility are owned or held by foreigners to South Africa,
regardless of the actual nationality of the ADS holder. For further information in relation to the variable voting
structure in place in respect of the Company, please see the Pre-listing Statement.

Sponsor
Rand Merchant Bank
(a division of FirstRand Bank Limited)

Joint Financial Adviser to Naspers
Citigroup Global Markets Limited

Joint Financial Adviser to Naspers
Morgan Stanley & Co International plc

Transfer secretaries
Singular Systems
Proprietary Limited

South African legal adviser to
Naspers and the Company
Webber Wentzel

Auditor and independent
reporting accountant
PricewaterhouseCoopers Inc.

WWW.MULTICHOICE.COM



Date: 21/01/2019 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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