• Friday, June 21, 2024
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Do the numbers justify DStv’s third rate hike in one year?


A third tariff increase for DStv and GOtv packages in less than a year is a bitter pill to swallow for many Nigerians amid a raging cost-of-living crisis, but do the numbers actually justify the incessant hikes?

These hikes, about 25 percent for some subscriptions, come at a time when Nigerians are already battling high inflation and a weaker currency.

The latest price review, the company’s first in 2024, is the third since April 2023.

From May 1, 2024, the DStv Premium package will cost 25.42 percent more, with prices moving to 37,000 from 29,500. Similarly, the DStv Compact+ will cost 26.26 percent more (N25,000 from N19,800), while the Compact package will increase by 25.6 percent to N15,700 from N12,500.

Other packages also recorded increases. For GOtv, its Supa+ packages are now worth N15,700 against N12,500; the Supa package has increased to N9,600 from N7,600; and Max subscribers will now pay N7,200 from N5,700.

About a year ago, the company increased the prices of its DStv and GOtv packages and followed up with another increase in November 2023.

Nigerians have kicked against this latest increase because it will further increase hardship and strain their already depleted disposable income. People have taken to social media platform, X, to voice out their frustrations with many planning to cancel their subscriptions altogether.

MultiChoice, the parent company for DStv and GOtv, blames rising business operation costs for the price hikes. It points to currency depreciation, with the naira’s value dropping significantly, and high inflation ballooning its operation expenses.

An email announcing its latest hike said, “We understand the impact this change may have on you – our valued customer, but the rise in the cost of business operations has led us to make this difficult decision.”

While the company didn’t disclose more, data from its financial reports suggests that the naira’s tumble may have contributed to its price reviews.

In its financial report for the period ending March 2023, MultiChoice Nigeria Limited reported losses of 4.56 billion rand ($242.50 million at 18.8 rand/$), an increase of 265.89 percent from the 1.25 billion rands reported in the corresponding period of 2022 ($66.28 million).

While giving reasons for the loss, the company said, “MultiChoice Nigeria Limited includes losses of ZAR2.3bn (FY22: ZAR1.1bn) due to differences between the Nigerian I&E rate used by the group for translation of results and the Nigerian parallel rate at which cash has been extracted, losses of ZAR1.2bn (FY22: ZAR0.1bn) on the translation of inter-group quasi loans and losses of ZAR1.9bn (FY22: ZAR0.2bn) on the translation of inter-group non-quasi loans.”

The naira only depreciated by six percent in the financial year, the company said. For the six months ended 30 September 2023, its foreign exchange translation adjustments on cash and cash equivalents included a loss of 518 million rands ($55 million) “primarily incurred in Nigeria, within the Rest of Africa segment, due to differences between the I&E rate used by the group for translation and the parallel rate at which cash has been remitted.”

It posted a third consecutive semi-annual loss and blamed it on foreign exchange difficulties in Nigeria and persistent power outages in South Africa. It had a net loss of 1.32 billion rand ($72.4m) in the period, and inflationary pressures in key markets like Nigeria impacted its customer acquisition drive.

The company highlighted that with ongoing challenges impacting the cost of living across the continent, especially in Nigeria, it continues to implement actions to protect the economics of its business. It hinted that it was implementing inflationary pricing adjustments in many of its markets.

The company noted that the naira had weakened to an average remittance rate of N794/$ in the period from N634/$ in the corresponding period of 2023. When the company implemented a price review in South Africa earlier this year, Marc Jury, MultiChoice SA’s chief executive officer, blamed the fall of the rand.

He said: “We believe these adjustments are reasonable considering the significant 16 percent year-on-year depreciation of the rand against the US dollar, and our commitment to securing long-term broadcast sports rights and international studio deals, which are priced in US dollars.”

The combined effect of inflation, devaluation, and high energy costs is squeezing businesses while weakening Nigerians’ purchasing power. Experts say that record-high inflation, reaching 33.2 percent in March 2024, and the naira’s devaluation have forced many companies to adjust prices.

Examples include Nigerian Breweries Plc, which raised prices twice between February and March 2024 because of rising production costs. Similarly, Guinness Nigeria Plc and International Breweries Plc announced an upward increase in the prices of their beer, malt, and other products in March. Netflix also recently reviewed its prices in the country to “respond to local market changes.”

Nigeria’s Federal Competition and Consumer Protection Commission (FCCPC) has said it will review these latest price hikes to ensure that subscribers receive fair value.

“The recent price increases by MultiChoice will be thoroughly examined by relevant stakeholders,” said Adamu Abdullahi, acting CEO of the FCCPC, during an interview on Channels Television’s current affairs show: ‘Dateline Abuja’.