DSTV, GOTV price hike is consequence of fallen value of naira, ever-increasing taxes in Nigeria – Multichoice tells Tribunal
Story Highlights
- MultiChoice Nigeria attributes the recent price hikes for DSTV and GOTV to the depreciation of the naira, rising taxes, and other economic factors.
- A legal dispute ensued, leading to a tribunal ruling, which fined MultiChoice and mandated a free one-month subscription for customers due to non-compliance with interim orders.
- MultiChoice has appealed the ruling, citing increased operational costs and economic challenges, and maintained that they duly notified customers and regulatory authorities before the price increase.
MultiChoice Nigeria has maintained that its DSTV and GOTV price hikes are a consequence of the fallen value of the naira and ever-increasing taxes in Nigeria, among other factors.
The legal team of MultiChoice disclosed this in its counter affidavits before the Competition and Consumer Protection Tribunal following a case alleging it unjustly increased subscription fees without one-month notice to customers.
Nairametrics first broke the news that a three-man panel of the tribunal, led by Thomas Okosu, had, while ruling on MultiChoice’s preliminary objection, fined Pay TV 150 million and ordered one month of free subscription for flouting its interim orders restraining DSTV and GOTV price hikes.
Facts of the case
The tribunal had restrained MultiChoice from increasing its subscription rates pending the hearing and determination of a motion on notice filed by Barrister Festus Onifade, who had sued MultiChoice Nigeria Ltd and the Federal Competition and Consumer Protection Commission (FCCPC) over the price hike.
A three-member tribunal chaired by Saratu Shafii had ruled in favour of Onifade by restraining MultiChoice in the interim, in the suit marked CCPT/OP/2/2024, from going ahead with the impending price increase scheduled to take effect from May 1, 2024, pending the hearing and determination of the Motion on Notice.
However, MultiChoice’s lawyer, Moyosore J. Onibanjo (SAN), had filed a preliminary objection urging the court to decline jurisdiction on the suit filed by Festus Onifade and strike it out because such a price dispute case had been decided before in favour of his client.
On his part, Onifade argued that the issue he placed before the court is whether MultiChoice Nigeria gave adequate notice in respect of the May 1, 2024, TV subscription price increase, and not about price regulation or increase.
In its ruling, the three-man panel chaired by Justice Thomas Okosu dismissed MultiChoice’s preliminary objection for disobeying its interim orders and subsequently imposed a 150 million administrative penalty on MultiChoice as well as a one-month subscription order against Pay-TV.
MultiChoice has filed an appeal against the ruling, arguing that the members of the tribunal erred in law in its ruling.
It then filed counter affidavits dated July 12, 2024, providing reasons for its price hike and requesting that the tribunal dismiss the case.
Alleged fallen naira and ever-increasing taxes
In its affidavits deposed by Damilola Olatunji, seen by Nairametrics on Monday, it was explained that in November 2023, the inflation rate soared to 31% from 22.4% in May 2023. Following the liberalization of the foreign exchange market, the naira weakened by 68% over the same period.
He added that the Federal Government removed the subsidy on petroleum products, which caused an astronomical increase in the cost of logistics and transportation for businesses in Nigeria. To mitigate the weakening exchange rate, MultiChoice was constrained to increase its subscription prices, but to the least affordable extent possible.
He insisted that MultiChoice duly notified its esteemed customers and regulatory authorities before the increment was effected.
“Contrary to paragraphs 6 to 9 of the affidavit in Support of the Originating Summons, the price increment did not create any apprehension in the Claimant as it is an inexorable consequence of the fallen value of Naira.
“The 1st Defendant pays for the right to broadcast each content and of the operational inputs in dollars.
“Multichoice implemented a 14% adjustment of its subscription prices on 01 November 2023. The adjustment was necessitated by escalating input costs, rising expenses of technical upgrades, ever-increasing tax/ levies, inflation and exchange rate fluctuations, including the ongoing increases in the company’s operational and ancillary costs.”
He further submitted that recently, the Nigerian Electricity Regulatory Commission (NERC) announced a 230% increase in electricity tariffs for band A customers, which consist mostly of companies. Most of MultiChoice’s offices and transmission infrastructures are in the Class A Band. Consequently, the cost of maintaining a constant power supply to their vast transmission network has vastly increased.
He further maintained that MultiChoice was one of the few companies to have endured economic hardships without having to lay off employees or reduce their monthly salaries. He added that it was not the best time to lay off employees, especially given the record-high unemployment rate in the country and the rising poverty rate.
He added that reducing investment portfolios and service quality is not an option MultiChoice is willing to consider, as this would greatly affect the creative industry and the Nigerian economy as a whole. Such a move would create a ripple effect on the economy, adversely impacting new investments, employment opportunities, and the development of new creative projects.
He stated that the defendant has already filed a notice of appeal dated 7th June 2024 and an application for a stay of execution of the orders of the Tribunal made on 7th June 2024, along with a prayer that all further proceedings before this Tribunal should be stayed pending the determination of the appeal.
What transpired in court
At the resumed hearing, Onifade queried why the tribunal would permit Multichoice to “bring this barrage of application.”
He argued that the first objective of the tribunal is to protect the interest of consumers, adding that the actions and inactions of the tribunal which tend to indulge any party that is on the wrong side of the law will be construed to be shielding those parties.
But the tribunal chair, Thomas Okosu, retrained Onifade from proceeding with such line of argument.
“I won’t let you sit down and indict this tribunal. I am telling you the truth. As you have a right, the other party have a right too. I think you should proceed on a different route, ” Okosu said.
Onifade then applied for time to respond to the counter-affidavits.
The legal team of the FCCPC also asked for time to respond.
The tribunal subsequently adjourned to July 29, 2024, for a hearing.
More insights
Multichoice announced new price adjustments on DStv and GOtv packages on Wednesday, April 24, 2024.
The email message to subscribers read, “On Wednesday, 1 May 2024 we will adjust our prices across all our packages on DStv and GOtv. We understand the impact this change may have on you – our valued customer, but the rise in the cost of business operations, has led us to make this difficult decision. It remains our mission to provide the best entertainment and viewing experience to you and we are committed to continue to deliver high-quality content and unparalleled service.”
- Nairametrics previously reported that the development had resulted in a 25% to 26% increase across Multichoice packages.
- But amid the subsisting ruling, the popular Pay TV provider proceeded with the upward adjustment of its prices for DStv and GOtv subscribers.
- On the part of the commission, it said it would review the reasons identified by Multichoice, noting that the agency could involve regulatory bodies such as the National Broadcasting Commission (NBC).
- Amid the development, the African Pay-TV operator, Multichoice Group, had blamed Nigeria’s harsh economic condition as active DStv subscribers in the country declined by 18%.
