Multichoice recently outlined the company’s potential structure following a proposed merger with French broadcasting giant Canal+.
Last year, Canal+ made a mandatory offer to acquire all the issued shares of MultiChoice Group not already owned by the group. The companies approached South African regulatorsregarding the proposed deal in October 2024.
Multichoice has assured customers that a proposed transaction with Canal+ will not disrupt their services, despite the changes it will bring to the company's structure in South Africa. The proposed merger, valued at R55 billion (approx. $2,9 billion), will see Canal+ acquire the remaining shares of Multichoice that it does not already own. However, this transaction is subject to a variety of regulations and must navigate a complex set of government rules, including those set out by South Africa's Electronic Communications Act (ECA) and competition regulators.
The deal would see Multichoice and Canal+ combine their resources, which Multichoice says will lead to improved content and technology for its subscribers. The company reassured its customers that, even if the deal goes through, they will continue to access their services as usual. Over time, the merger could also lead to better offerings, driven by the combined investments of both companies.
However, navigating South Africa’s regulatory landscape poses significant challenges for the merger. The ECA imposes strict ownership rules, including a limitation on foreign control of broadcasting licenses. A foreign entity like Canal+ cannot directly control a South African broadcaster like Multichoice, and no more than 20% of the directors of a commercial licensee can be foreigners. This creates a hurdle for the French broadcasting giant in acquiring full control of Multichoice.
To address these restrictions, Multichoice has proposed creating an independent entity called LicenceCo, which would hold the broadcasting license in South Africa. This entity would also handle subscriber contracts and would be majority-owned by Historically Disadvantaged Persons (HDPs). This includes the group’s Phuthuma Nathi BEE scheme, which will ultimately hold a 27% economic interest in LicenceCo, two black-owned and managed companies, Identity Partners Itai Consortium and Afrifund Consortium, and a Workers’ Trust (ESOP).
Currently
Proposed Structure
The remainder of Multichoice’s video entertainment assets would then remain part of the Multichoice Group, which would hold a minority 49% economic interest and—crucially—20% voting rights in LicenceCo. The company would also retain 75% of Multichoice South Africa – excluding LicenceCo – while Phuthuma Nathi would keep its 25% stake. Following this complex process would allow Canal+ to acquire the Multichoice Group fully while meeting the regulatory requirements of the ECA.
Despite the complexity of this structure, Multichoice remains confident that the transaction will not affect customer services. The companies are now waiting for approval from South Africa’s regulatory bodies, including the Financial Surveillance Department, the JSE, and Icasa.
The article was originally published by Brics Competition SA and Business Tech
