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27 February 2019

Dear Valued Phuthuma Nathi Shareholder

Today the MultiChoice Group (MCG) begins its official journey as a listed company on the JSE Limited. We are profoundly proud to continue building Africa’s number one video entertainment business with you, our valued Phuthuma Nathi (PN) shareholders.

The listing and unbundling further reinforces our commitment to broad, socio-economic transformation in South Africa. As one of South Africa’s most successful empowerment transactions, MultiChoice South Africa (MCSA) has consistently provided growth to individual and institutional PN shareholders, showing a return on investment of approximately 17 times since inception. With this listing, our 90 000 Phuthuma Nathi (PN) shareholders will be allocated an additional 5% stake in MCSA by way of an additional share issue from MCSA to the two PN companies in proportion to the relevant PN company’s original shareholding in MCSA. It means that the PN shareholders’ indirect interest in MCSA will increase from 20% to 25%, resulting in a 25% increase in PN’s share of any approved future MCSA dividend inflows for as long as the PN companies hold 25% in MCSA.

As a PN shareholder, you are not required to do anything now. Your indirect interest in MultiChoice South Africa will increase proportionally without additional shares being issued to you. This means that PN shareholders will not receive any additional shares in the PN companies. For example, if you own 100 shares in PN and a 100 shares in PN2, your shareholding number will remain the same, it is your underlying interest in MCSA that will increase.

However, as stated in our letter of 21 January 2019, it has been recommended that PN shareholders will have the opportunity to exchange 25% of their MCSA shares for MCG shares (before the issue of the additional 5% MCSA shares to the PN companies). This is subject to board and shareholder approvals and we will communicate any further developments in the next couple of weeks.

If this happens and you do decide to exchange 25% of your MCSA shares for MCG shares you will be proportionally invested in the MultiChoice Group with its good growth prospects, as outlined below.

MultiChoice - A valuable investment with good growth prospects

As Africa’s most loved storyteller, our work brings unrivalled local and international entertainment and sport content to around 14-million households in 50 African markets. We give viewers access to 8 out of 10 major international studios (excl. sports) and produce over 4500 hours of local content in 10 studios across Africa. Showmax has 17,500 hours of content with half being local content. We are the home of champions and fans get to be part of the world’s most iconic sport events with access to 700 live sport productions on 37 dedicated channels every year. Very importantly, we are serious about investing in local industry and grooming talent in our African markets.

As one of the fastest growing pay-TV broadcast providers globally, we are in a strong financial position at listing and this is backed by a confident subscriber and income growth forecast with no financial debt. While we will continue to drive mass-market growth in our South African base, our business on the rest of the continent also has excellent growth prospects.

The market strength of Irdeto, our technology company further supports our competitive position. Irdeto provides important support functions to our Group and as a global leader in content, platform and software security, they are independently profitable with more than 500 global clients including Comcast, Google and Apple. Owning Irdeto helps us rapidly deploy technology for global customers and generate a healthy revenue stream.

The outlook for MultiChoice is very positive. We are the largest pay-TV footprint in Africa, operating in 50 out of 54 countries, we understand our customers and we tailor our offering and services to suit every market. This, coupled with our unmatched content offering, world-class technology and good growth prospects makes us a force to be reckoned with in the global video entertainment industry.

As a shareholder, we hope you are as optimistic by our listing as we are. We are very pleased to be on this journey with you to build Africa’s number one entertainment platform.

If you have any questions, please visit the Phuthuma Nathi website or call the contact centre at 0860 116 226.

Calvo Mawela, CEO, MultiChoice Group
Nolo Letele, Executive Chair, MultiChoice SA Holdings