Multichoice, the parent company of DSTV, has announced plans for further price increases across all its African subsidiaries in 2024.
In an interview with Daily Investor, MultiChoice CFO Tim Jacobs referred to the upcoming hike as “inflationary,” citing the company’s financial challenges in maintaining a healthy balance sheet. Jacobs emphasized that these inflation-level price adjustments are essential for sustainable growth and the continuous delivery of high-quality content.
Read Also: MultiChoice Losses $50.2M from April to September
Multichoice and its Decreasing Revenue Trend
The decision to raise prices stems from concerns about the company’s financial standing, particularly after its latest financial results reflected a downturn. Multichoice experienced a 1% drop in overall revenue to $1.53 billion (R28.33 billion) for the six months ending on September 30, 2023. Additionally, the South African revenue saw a 3% decline. The company reported a loss of $49.2 million (R911 million), a significant decrease from the $3 million (R55 million) profit recorded during the same period the previous year. These financial challenges occurred despite a 4.3% subscription rate increase for DStv packages earlier in the year.
While some markets responded positively to the price hikes, the South African subsidiary struggled, leading to a 3% decline in revenue, exceeding the overall average decline of 1%. Jacobs attributed the poor South African performance to factors such as load-shedding.
Acknowledging the need for financial discipline, Jacobs stated that the company aims to recover costs to ensure it can continue delivering quality content. He emphasized the importance of balancing efficiency in business operations with the factors within the company’s control.
Nigeria, Multichoice’s largest market, experienced multiple price hikes in 2023. The most significant increase occurred in December, with a 20% rise in all DSTV products. This followed a $72 million loss reported for the third quarter of the year. The loss was attributed to challenges such as the continuous devaluation of the naira, taxation, logistics, and other factors.
Conclusion
With the anticipated “inflationary hike” set to impact Africa in 2024, observers are keen to see how markets, particularly Nigeria, will respond to these adjustments.
