Multichoice Group Repatriates $184 Million from Nigeria Amid Challenging Economic Conditions

Pay-TV operator Multichoice Group has announced that it repatriated $184 million (approximately N192.09 billion) from Nigeria during the financial year ending March 2024. This information was disclosed in the company’s consolidated financial statements released on Wednesday.

The repatriated amount marks an increase from the previous year’s $132 million. The group managed this at an average exchange rate of N1044:USD, compared to the prior year’s rate of N684:USD. In this process, Multichoice incurred remittance losses of $59 million, a notable improvement from the $132 million loss the previous year, which was due to a larger disparity between official and parallel exchange rates.

“The group remitted $184 million from Nigeria during FY24 (FY23: $132 million) at an average rate of N1044:USD (FY23: N684:USD). In the process, it incurred remittance losses of $59 million, compared to $132 million in FY23, when there was a greater divergence between the official and parallel exchange rates,” the report stated.

By the end of the financial year, Multichoice held $39 million in cash in Nigeria, down from $104 million at the end of FY23. This reduction resulted from the company’s consistent efforts to remit cash and the impact of converting the balance at the weaker naira exchange rate.

The financial year was marked by a 13 percent drop in subscribers across Nigeria, Angola, Kenya, and Zambia. Local currency depreciations in these markets, including Kenya, negatively impacted the group’s USD revenues by 32 percent. South Africa, in contrast, experienced only a five percent decline due to effective retention initiatives.

Blaming the economic situation for the decline in its Nigerian subscriber base, Multichoice highlighted that “The group’s nine percent decline in active subscribers was mainly due to a 13 percent decline in the Rest of Africa business as mass-market customers in countries like Nigeria had to prioritize basic necessities over entertainment.”

The economic conditions in Nigeria during FY24 were the most challenging since 2016. The official and parallel naira exchange rates peaked at N1600:USD and N1900:USD respectively in February 2024, with significant foreign exchange depreciation observed in several other African markets. These factors, combined with high double-digit inflation in many of Multichoice’s core markets, placed immense pressure on consumer spending power.

The group also reported that the subscriber growth typically seen after events like the FIFA World Cup did not materialize in FY24. Instead, there was a notable decline in subscriber numbers due to the deteriorating macroeconomic environment. The active subscriber base fell by 1.2 million to 8.1 million at the end of FY24.

Additionally, Multichoice highlighted the impact of power reliability issues and inflation on its subscriber growth. Despite the resilience of pay-TV services during economic downturns, many potential customers found it difficult to consistently afford the service or chose not to subscribe due to unreliable power supply.

To address these challenges, Multichoice has focused on its 90-day subscriber metric since its listing, providing shareholders and market observers with a metric that accounts for monthly volatility in the subscriber base. Moving forward, the group plans to focus more on active subscribers to optimize retention and activity rates in a low-growth environment.

In February 2024, Multichoice reached a settlement with Nigeria’s Federal Inland Revenue Service (FIRS) concerning tax assessments raised in 2021. The settlement, agreed upon without prejudice or precedent, concluded all matters in dispute, with Multichoice agreeing to pay a total tax amount of N35.4 billion ($37.3 million).

In response to economic pressures, Multichoice increased its DStv and GOtv bouquet prices three times over the past year. Furthermore, a recent ruling by a Competition and Consumer Protection Tribunal in Abuja mandated that Multichoice provide Nigerian customers with a one-month free subscription, following the company’s non-compliance with an order to halt new price implementations.

The ongoing inflationary trend in Nigeria, with food inflation remaining high, continues to impact the economic situation. As of April, the inflation rate stood at 33.69 percent, further affecting consumer spending power and the business environment in the country.

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