MultiChoice Group, a leading South African pay-TV operator, has revealed a steep decline in its Nigerian subscriber base, losing 243,000 customers across its DStv and GOtv services between April and September 2024.
The company attributed this downturn largely to Nigeria’s soaring inflation, which has exceeded 30%, spurred by rising food, fuel, and electricity costs. For the six months ending in September, MultiChoice noted that both Nigeria and Zambia were key contributors to its shrinking subscriber base across the African continent, with Nigeria facing inflationary pressures and Zambia contending with severe power outages due to drought conditions.
MultiChoice’s Nigerian unit has experienced notable losses recently. This year’s report adds to the previous disclosure from the financial year ending March 2024, where MultiChoice noted an 18% reduction in Nigerian subscribers, further highlighting the impact of high living costs on consumers.
Across its Rest of Africa operations, MultiChoice reported a total loss of 566,000 subscribers, a notable but improved decrease compared to the 803,000 subscribers lost during the second half of the previous financial year. Zambia and Nigeria together accounted for the majority of this downturn, with Zambia’s energy crisis contributing significantly.
MultiChoice CEO Calvo Mawela addressed the difficulties posed by the current economic environment, describing the situation as the “most challenging operating conditions in nearly 40 years.” Mawela explained that in addition to typical currency fluctuations, abnormal currency weakness over the past year and a half has drained profits by around R7 billion.
To stabilize, the company has been focusing on reducing operating costs and streamlining its business model. Mawela expressed optimism, stating, “We are making good progress in addressing the technical insolvency that resulted from non-cash accounting entries at the end of the last financial year.”
He further assured that the group is expected to return to a positive net equity position by November 2024, citing over ZAR10 billion in liquidity as a buffer.
Rising Streaming Competition and MultiChoice’s Strategic Shift
In response to increased competition from streaming platforms and shifting consumer habits, MultiChoice is recalibrating its strategy. Mawela acknowledged the challenge, noting that Showmax, MultiChoice’s streaming service, achieved a 50% year-on-year growth in paying subscribers, which positions the company to participate actively in the continent’s evolving streaming market.
To meet demand and expand its streaming presence, MultiChoice allocated an additional ZAR1.6 billion to support Showmax’s growth.
MultiChoice Nigeria’s response to inflation has included three price increases on its DStv and GOtv bouquets within the past year—first in April 2023, followed by another in November, and a third implemented in May 2024. This most recent price adjustment led to legal challenges; in April, the Competition and Consumer Protection Tribunal (CCPT) in Abuja issued a ruling against the price hike following complaints from a Nigerian customer.
MultiChoice, however, proceeded with the price increase, which resulted in the Tribunal imposing a fine of N150 million on the company and ordering it to grant a one-month free subscription to its Nigerian customers.
What This Means for MultiChoice and the Nigerian Market
MultiChoice’s ongoing struggle in Nigeria is attributed to broader economic challenges facing consumers across Africa. The rising cost of living has placed considerable strain on consumer purchasing power, particularly in sectors like entertainment, which can be considered discretionary.
Additionally, the increased presence of affordable streaming services has presented a significant challenge to traditional pay-TV, as viewers turn to more flexible and cost-effective options. For MultiChoice, this shift underscores the importance of its investment in Showmax, which may be vital to the company’s future growth on the continent.
While MultiChoice’s strategy to mitigate financial loss through price increases and cost-cutting measures is essential to maintaining stability, it also underlines the delicate balance required to retain subscribers. The company’s recent price hikes, combined with Nigeria’s inflationary pressures, indicate that MultiChoice may continue to face a challenging environment unless broader economic conditions improve.
