Multichoice Group, the South African pay-TV operator, has reported a 243,000 subscriber loss in its Nigerian unit for the six-month period between April and September 2024. This decline impacted both its DStv and GOtv services. The loss comes as Nigeria continues to grapple with high inflation exceeding 30%, driven by soaring costs of food, electricity, and fuel. According to the company, these economic pressures forced many Nigerians to cancel or downgrade their subscriptions, leading to a significant dip in subscriber numbers.
Impact of Inflation on Multichoice Nigeria
Multichoice’s Nigerian unit has struggled with inflation and rising living costs, which have made entertainment options like DStv and GOtv less affordable for many households. The company previously reported in its financial year 2024 results that it lost 18% of its Nigerian subscribers, and now, for the first half of FY25, it has lost an additional 243,000 subscribers. This is the largest contributor to the company’s overall subscriber loss in the Rest of Africa region.
Regional Losses
The company’s total subscriber loss across its Rest of Africa operations amounted to 566,000 subscribers for the six-month period under review. This was a decrease compared to the 803,000 subscribers lost in the previous half-year. Notably, Nigeria and Zambia accounted for the majority of this decline, with Zambia seeing a 298,000 drop, primarily attributed to power outages caused by drought.
Meanwhile, other African markets saw only a minor decline of 25,000 subscribers, highlighting that the downturn was mostly concentrated in Nigeria and Zambia, both facing severe local challenges.
CEO Comments on Economic Challenges
In his statement, Calvo Mawela, CEO of Multichoice Group, acknowledged that the company was navigating its most challenging operating conditions in nearly 40 years. He pointed out that while the company traditionally faces challenges related to currency fluctuations across Africa, the past 18 months have been particularly harsh due to abnormal currency weakness and the broader economic downturn affecting consumer spending power.
This economic environment, which has lowered disposable incomes across the continent, has had a direct impact on subscriber growth, forcing Multichoice to adjust its cost base. Mawela stated that these measures were necessary to stabilize the company’s finances and that progress was being made towards addressing its technical insolvency caused by non-cash accounting entries in the previous fiscal year. The company expects to return to a positive net equity position by the end of November 2024.
Response to Consumer and Market Trends
In addition to cost-cutting measures, the company is also responding to the broader shifts in consumer behavior, notably the rise of streaming services and social media as entertainment alternatives. Mawela highlighted Showmax, Multichoice’s streaming platform, which reported a 50% growth year-on-year in its paying customer base. This growth positions the company well to capitalize on the ongoing streaming revolution in Africa.
To support this growth, Multichoice increased its investment in Showmax by an additional ZAR1.6 billion during the interim period, signaling its commitment to expanding its digital presence and adapting to the changing landscape of entertainment in Africa.
Price Increases Amid Inflation
Despite the difficult economic environment, Multichoice Nigeria implemented multiple price hikes for its DStv and GOtv packages, which added to the financial burden on subscribers. Over the past 12 months, the company raised prices three times—once in April 2023, again in November 2023, and a third time in April 2024, with the latest increase taking effect in May 2024.
These price hikes have been controversial and were met with legal challenges. A Nigerian customer filed a case against the price increases, leading to an order by the Competition and Consumer Protection Tribunal (CCPT) in Abuja that temporarily restrained the company from implementing the new prices. However, Multichoice ignored the court’s order and proceeded with the price hike, which led to the tribunal imposing a N150 million fine and ordering the company to offer one month of free subscriptions to Nigerian subscribers of DStv and GOtv as compensation.
Looking Ahead
Despite the challenges, Multichoice Group remains committed to navigating the turbulent market conditions. The company is focused on maintaining its strong liquidity position, with over ZAR10 billion in available funds, and continues to adapt to the changing consumer preferences in Africa. The group’s ability to grow its streaming business through Showmax may be crucial in securing its long-term future in a region increasingly dominated by digital entertainment platforms.
However, the ongoing inflationary pressures, coupled with the economic challenges in Nigeria, suggest that Multichoice may continue to face difficulties in growing its subscriber base in the region unless it can find ways to adjust its pricing and service offerings to meet the financial realities of its customers.
