Despite the hike in prices of subscription fees two times, BusinessDay reported that revenue decreased to $341.72 million from $493.59 in the prior year.
The company attributed this decrease to several factors, including increased fuel costs, historically high inflation that is above 33%, and the depreciation of the naira.
It stated:
“Higher fuel costs in local currency also hurting consumers. Power interruptions of 16 hrs /day. Official rate weakened 50% year-on-year versus the dollar, and liquidity remains tight, “parallel rate” closed N1600 vs. N1308 official rate,”
These economic challenges resulted in a 9% overall, primarily from a 13% decline in its Africa business, which was primarily felt in Nigeria, Angola, and Zambia.
In response to the strain on foreign exchange resulting from the depreciation of the naira versus the dollar, MultiChoice raised prices in April and November, bringing the annual rise to an average of 40%.
However, MultiChoice Nigeria suffered a $249.51 million foreign exchange loss as a result of these actions not being able to counteract the detrimental effects on income.
“The sharp NGN depreciation against the USD gave rise to ZAR4.6bn in foreign exchange losses on the nonquasi equity loan (intercompany) with MultiChoice Nigeria,”
Additionally, the company’s total revenue decreased by 5% to $3.04 billion (56 billion rands), mostly as a result of a 7% decline in subscription income brought on by the weaker naira.
The trading profit for the group decreased by 21% to $428.50 million (7.9 billion rands).
“The business in the Rest of Africa faced the toughest macro-economic conditions in its core markets with high, double-digit inflation and extreme depreciation of local currencies (especially in Nigeria, Angola, Kenya, and Zambia), which impacted USD revenues by 32 percent.
The active subscriber base declined to 8.1 million, but effective retention efforts contributed to an improved subscriber mix.”
Apart from its fiscal challenges, MultiChoice Nigeria is presently entangled in a legal dispute regarding its recent pricing hikes in Nigeria.
In addition, the operator was fined N150 million for contesting the authority of an Abuja-based court ruling that barred it from raising subscription costs.
MultiChoice, however, has expressed disagreement with the decision and plans to appeal it.
MultiChoice Nigeria has declared that it will appeal the Competition and Consumer Protection Tribunal’s decision to fine the company N150 million for contesting the court’s jurisdiction.
It was earlier reported that the tribunal had ordered the pay-TV company to provide Nigerian customers a one-month free subscription to its DStv and GOtv packages.
The tribunal gave the order on Friday, June 7, citing disobedience to its earlier order, which restrained Multichoice from increasing DStv, GOtv monthly subscription pending the determination of the suit brought before it.