DSTV’s parent company, Multichoice, has revealed that it is gearing up for further price hikes for all of its African subsidiaries in 2024. This was according to MultiChoice CFO, Tim Jacobs who described the anticipated increase as an “inflationary” one in an interview with Daily Investor.
Tim Jacobs revealed that the expected increase is due to mounting financial challenges as the company struggles to maintain a healthy balance sheet. According to him, inflation-level price increases for DStv are necessary to ensure sustainable growth and the continued delivery of high-quality content.
“For many years, especially in South Africa, we have priced our products at less than half of inflation. We’ve been concerned and watching the consumer’s wallet. The chances (now) are that we’re gonna be looking at inflationary price increases, both in the South African market and the rest of Africa.
The DSTV parent company finds itself under increased pressure to boost its revenue after the company’s latest results revealed a company suffering financial downside. The company suffered a 1 per cent drop in overall revenue to $1.53 billion (R28.33 billion) in its financial results for the six months ended 30 September 2023. On its own, its South African revenue fell by 3 per cent.
Multichoice declining revenue
In its last financial result, Multichoice also reported a loss of $49.2 million (R911 million). This represented a huge decline from a profit of $3 million (R55 million) recorded over the same period last year. This loss was coming despite the 4.3 per cent hike in subscription rate put in place for DStv packages that came into effect earlier this year for South Africa and its other subsidiaries around Africa like Nigeria, its biggest market which saw multiple price hikes in 2023.
While other markets appear to be responding to the increase, the South African subsidiary appears to be struggling still. This rightly explains why the market witnessed a revenue decline of 3 per cent, as against the overall average of 1 per cent. And the CFO, Tim Jacobs believes the poor South African numbers are a result of load-shedding.
“We are actually to the point now, with load-shedding and our revenue number coming under so much pressure, that we have to be a little bit more disciplined about recovering some of our costs,” he explained.
Jacobs also said the company would ensure that it can continue delivering great content to its customers because that’s actually why they’re buying its products. To do that though, the financial returns need to be adequate for the business to continue running.
“But to do that, we have to keep delivering financial results for our investors. We’re trying to balance the discipline of being super efficient in our business with the stuff that we can control,” he said.
DSTV price hikes in Nigeria
Multichoice’s largest market, Nigeria has witnessed multiple rice hikes in 2023. But arguably the most crunching of them was the December price hike which saw a 20 per cent increase in all DSTV products across the board. The price hike came days after the company announced a $72m loss in its financial statement for the third quarter of the year, and barely six months after the last price hike in May.
With the latest price hike, the DStv Premium package increased by 20.4 per cent, rising from N24,500 to N29,500. The DStv Compact Plus rose by 19.2 per cent from N16,600 to N19,800. The Compact package increased by 19 per cent, up to N12,500 from N10,500. The Comfam package moved up by 19.2 per cent from N6,200 to N7,400.
Per the last financial report, Multichoice blamed its $72 million loss on grappling with the devastating consequences of the continued devaluation of the naira, alongside a vast array of challenges including taxation, and logistics, among others.
According to a source within the company, “We have increased our rates. We buy content in dollars but earn in naira. If we take off a channel or stop acquiring content that our customers are used to, we will be slammed. We buy diesel. We pay taxes. Even before this year, with the dollar and fuel subsidy removal. We pay billions in licensing fees. We operate several offices. We have to pay staff.”
With the ‘inflationary hike’ expected to hit across Africa in 2024, it will be interesting to see how markets like Nigeria respond.
See also: Multichoice confirms Nigerians will pay more for DStv, GOtv subscription from May 1st
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