Africa's leading pay-TV operator, MultiChoice, is facing stiff economic drawbacks in Nigeria, a crucial market. Currency devaluation, soaring inflation exceeding 30%, and the removal of fuel subsidies have impacted consumer spending and slowed down the company’s local earnings. 

The harsh reality has translated to an 18% decline in active DStv subscribers, which is a chief contributor to the 13% drop in MultiChoice's overall Rest of Africa (RoA) subscriber base. An annual $217 million (ZAR 4 billion) has been forfeited in the process. 

Many Nigerian households now prioritise basic necessities over entertainment. The culminating decrease in subscriptions is a major contributor to the overall decline in the service’s Rest of Africa (RoA) segment, which saw its subscriber base drop from 9.3 million in 2023 to 8.1 million in 2024,  per its financial results for the year ending March 31, 2024.

The headwinds have had a noticeable impact on its revenue. The country’s contribution to the RoA inflows fell from 44% to 35%, in what mirrors the broader economic distress affecting consumer spending in a market experiencing a 24-year high inflation. 

Additionally, the volatility of the FX market resulted in remittance losses of $59 million during the year in view. This is a reduction from the $132 million loss incurred in FY 2023, yet it is an unputdownable financial burden.

MultiChoice Group CEO Calvo Mawela told the media that it has taken an FX hit quadruple the size of what it has in the last 4 financial years put together. Nonetheless, he seemed hopeful for a turnaround regulated by positive policy changes by the country’s current administration. 

“This is short-term pain for long-term gain. Provided they [Nigerian government] continue with these reforms, it will pay off. We think the worst should be behind us. There is some stability now in terms of currency depreciation. If they continue with the removal of the oil subsidy, the fiscus will benefit and there will be investment into infrastructure,” Mawela explained to TechCentral. 

Despite the subscriber decline, MultiChoice remains committed to the Nigerian market. The company, having taken strategic cost-saving measures, looks to navigate the difficult economic landscape. 

Measures include a significant 46% year-on-year reduction in decoder subsidies and cuts in selling, general, and administrative expenses. These interventions have helped to increase the RoA segment's trading profit by 48%.

Its focus on cost efficiency and strategic resilience will be crucial. Though duly considering the macroeconomic issues, it remains dedicated to quality entertainment. Its ability to weather these challenges will depend on its continued adaptability and commitment to understanding and addressing the unique needs of its Nigerian subscribers.

Regulatory hurdles add another layer of complexity. The decision to raise DStv and GOtv package prices three times in the past year sparked controversy. The company defied a court order from the Competition and Consumer Protection Tribunal restraining the hikes, resulting in a fine and a mandate to provide a free month of service to customers. 

MultiChoice plans to appeal this judgment, as it demonstrates the operator’s intent to navigate the complex regulatory environment.