MultiChoice Africa investors reportedly lose 32 billion South African rands

* One of MultiChoice’s biggest problems is South Africans continue to dump their DStv subscriptions, especially in the Premium and mid-market segments

* DStv Premium subscriptions declined by 6% over the last year, and mid-market subscriptions declined by 3%. Many DStv subscribers also downgraded their packages

* The impact is clearly seen in DStv’s average revenue per user, which declined from R269 to R256 year-on-year

* MultiChoice is searching for new revenue streams to address the high-end subscriber decline and compensate for lost revenue

Maravi Express

Investors of MultiChoice are reported to have lost ZAR32 billion in six months as the DStv owner struggles to hold on to high-end subscribers and find new revenue streams, writes online publication, Daily Investor on Wednesday, September 13.

The report adds that “early March this year, MultiChoice was trading at over R147 per share as investors were upbeat about the pay-TV operator’s prospects.”

“It changed on 13 March 2023 after MultiChoice released a trading statement, warning that revenue growth in its South African business would be below expectations,” continues the Daily Investor. “Its fixed cost base and additional Showmax costs also caused its trading margin to shrink well below the market guidance.

“This news sent the share price plummeting to around R120 per share. That was the start of a six-month decline, which shaved billions off the market cap.

“When MultiChoice released its results for the year ended 31 March 2023, it showed a 7% revenue increase to R59.1 billion but a 48% decline in free cash flow. The board also did not declare a dividend due to a cautious outlook on the South African and Nigerian currencies.”

The report further said “one of MultiChoice’s biggest problems is South Africans continue to dump their DStv subscriptions, especially in the Premium and mid-market segments”.

“DStv Premium subscriptions declined by 6% over the last year, and mid-market subscriptions declined by 3%. Many DStv subscribers also downgraded their packages. The impact is clearly seen in DStv’s average revenue per user, which declined from R269 to R256 year-on-year.

“MultiChoice is searching for new revenue streams to address the high-end subscriber decline and compensate for lost revenue,” said the Daily Investor report.

Here in Malawi, MultiChoice Africa is at loggerheads with Malawi Communications Regulatory Authority (MACRA) over regulatory misunderstandings that is being contested in the High Court.

This comes after it raised tariff for DStv in the country through its agent, MultiChoice Malawi but before MACRA could authorize, the company went ahead to announce the tariff adjustment, which the regulator indicated it was illegal.

When MACRA tried to effect regulatory enforcement, MultiChoice Malawi took to the court for legal mediation and as the wrangle dragged on, MultiChoice Africa announced its withdrawal of DStv services in Malawi.

After further engagement, MACRA announced last week that — following a meeting it had with MultiChoice Malawi on September 4 in Lilongwe, the DStv service was to resume on Friday, September 8.

On the day, MACRA notified MultiChoice Malawi that having considered and reviewed its subscription adjustment as made in June 2022 and July 2023, the Authority approved both tariffs for implementation.

MACRA also asked MultiChoice to notify customers of the subscription fee changes before implementation, saying “now that the said tariffs have been submitted and considered, the Authority expects DStv service in Malawi to resume”.

MACRA emphasized that the “decision is made without prejudice to the ongoing negotiations and/or litigation”.

But MultiChoice Africa Holdings issued a conflicting public notice indicating that the potential return of DStv in Malawi was dependent on the outcome of the judicial dispute between MultiChoice Malawi and MACRA, which is in court pending judgement.

Throughout the impasse, which involved the Court process that made other stakeholders — including Minister of Information and the Parliamentary Committee on Media, Information & Communications to intervene — MACRA had been stressing that as an institution that upholds the rule of law, it was willing to resolve the issue peacefully outside court and welcomed reasonable suggestions that align with relevant laws and the licence.

First, it was MultiChoice Malawi itself that dragged the regulator to the High Court challenging its determination that the service provider “had breached its statutory and licence obligations by raising DStv tariffs without prior approval from MACRA”.

The dispute started in June last year, after MultiChoice Malawi officially sent an application to MACRA for GOtv and DStv tariff adjustment pursuant to section 74 of the Communications Act but before the regulator had decided on the tariff revision request, MultiChoice Malawi went ahead to announce to its customers — to what MACRA described as unilateral adjustment.

MACRA informed MultiChoice Malawi that it was in breach of licence and section 74 of the Communications Act and was called to a hearing but the service provider refused to appear before it and opted to pursue legal action by seeking an injunction to restrain MACRA from implementing the determination that it had made.

As the issues dragged endless till July 2023, MultiChoice Malawi still went ahead to announce the tariff adjustment even before the Court had yet made any determination on the matter.

And as MACRA stood its ground — coupled with the High Court’s order on August 8, 2023 directing MultiChoice Malawi to comply with the order of injunction which restrained it from implementing any changes or modifications to the DStv services tariffs — MultiChoice Africa Holdings withdrew its services from Malawi with immediate effect.

A statement from MultiChoice Africa Holdings’ group executive-corporate affairs & stakeholder relations, Keabetswe Modimoeng, maintained that MultiChoice Malawi “does not offer the DStv service to the public and, therefore, cannot set or adjust tariffs for this service, a point repeatedly made to MACRA”.

As a result, MultiChoice Africa Holdings said the Court order handed down to MultiChoice Malawi was “incapable of being implemented by them but carries with it grave consequences for the directors and management of MultiChoice Malawi, including imprisonment”.

MultiChoice Africa Holdings further said as its supplier, MultiChoice Malawi was given “an increasingly adverse regulatory environment”, and was “left with no option but to terminate the DStv service indefinitely”.

Customers were requested to halt payment for the DStv service but those who had already paid their new subscription had their services honored until after 30 days of viewing cycle that was to end on or before September 10, 2023.

Thus the Minister of Information and the Parliamentary Committee coming in to try and mediate on the two parties to resolve the issues amicably in the interest of the customers.