Patrice Motsepe, the president of the Confederation of African Football (CAF) and one of Africa’s richest persons, is reportedly in talks to join Canal+’s bid for MultiChoice. Motsepe’s involvement could impact the deal in numerous ways as Canal+ looks set to traverse the numerous business and regulatory hurdles standing in its way.
According to companies’ regulations in South Africa, a foreign entity cannot have more than 20% of voting rights in a South African broadcasting company. Mpumelelo Ndiweni, CEO of Colmin Group, an African markets advisory and investment company, told TechCabal that the CAF president’s involvement could help Canal+, a French company, to bypass this requirement. “The coming on board of [Motsepe] would ensure Multichoice remains in South Africa and meets the threshold of local ownership required by authorities,” he said.
Sherilyn Kamga, a senior strategic finance analyst, also states that a partnership with local players like Motsepe via a holding company structure would address this regulatory requirement. Motsepe would likely hold a majority stake in the holding company. “This way, it could exert indirect influence over the company’s management without exceeding the 20% voting rights limit,” she said.
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Where there’s interest, there’s conflict
CAF, Africa’s football governing body, usually invites bidders for broadcasting rights to some of the continent’s premier football competitions including the African Cup of Nations (AFCON) and other inter-club competitions. Supersport, wholly owned by MultiChoice, bids for these rights. For Motsepe who owns Africa Rainbow Capital (ARC), having an ownership stake in MultiChoice could mean that he would have an impact, directly or indirectly, on which broadcaster gets the lucrative rights.
According to Jimmy Moyaha, founder of investment firm Lebowa Capital, although the conflict of interest is a potential issue, it would largely depend on the ownership structure that Motsepe and Canal+ would agree on. “Motsepe isn’t directly involved in the management of ARC, his investment vehicle, and I doubt he would be involved in the management of Multichoice,“ he told TechCabal.
Moyaha also noted that ARC’s position as an investment firm could easily be limited to a shareholder with minority voting rights which would address this conflict of interest.
Additionally, Motsepe’s tenure at the helm of African football’s governing body ends next year. He could easily decide to step down from the position should he desire to have a more active role in the entity which would come about as a result of the partnership with Canal+.
For Motsepe’s ARC, an investment company whose portfolio companies include mobile network operator Rain and neobank TymeBank, having MultiChoice on its portfolio could help with diversification.
The company, which is listed on the Joburg Stock Exchange, has stated that it invests in companies with an established market position, a demonstrable track record, and strong cash flow generation, among other qualities. MultiChoice—with its 22 million subscribers in Africa, its 30-year presence on the continent, and R3 billion (~$156 million) cash flow, per its latest financial results—ticks most of these boxes.
“For ARC, [the investment into] MultiChoice would diversify the business into media, further strengthening its operating model and investment strategy as an [investment vehicle],” Moyaha added.
