MultiChoice Nigeria has attributed the recent price hikes for its DSTV and GOTV services to the depreciation of the naira, rising taxes, and other economic factors. This explanation comes amidst a legal dispute that has resulted in a tribunal ruling against the company, leading to significant fines and mandated free subscriptions for affected customers.
Background and Legal Dispute
The controversy began when MultiChoice announced price increases for its services, which were met with public outcry and legal challenges. Barrister Festus Onifade filed a case against MultiChoice Nigeria Ltd and the Federal Competition and Consumer Protection Commission (FCCPC), arguing that the price hikes were implemented without the required one-month notice to customers. The Competition and Consumer Protection Tribunal, led by Thomas Okosu, ruled in favor of Onifade, fining MultiChoice 150 million naira and ordering a one-month free subscription for customers due to non-compliance with interim orders.
MultiChoice’s Justification for Price Hikes
MultiChoice has appealed the tribunal’s ruling, citing increased operational costs and the challenging economic environment in Nigeria. In its counter-affidavits, MultiChoice explained that the price hikes were necessary due to several factors:
- Depreciation of the Naira: The naira weakened significantly, impacting the cost of imported content and operational inputs, which are paid for in dollars.
- Rising Taxes and Levies: Increased taxes and levies have added to the operational costs.
- Inflation: Nigeria’s inflation rate soared to 31% in November 2023 from 22.4% in May 2023, further increasing costs.
- Removal of Fuel Subsidies: The government’s removal of subsidies on petroleum products led to a sharp increase in logistics and transportation costs.
- Increased Electricity Tariffs: The Nigerian Electricity Regulatory Commission (NERC) announced a 230% increase in electricity tariffs for band A customers, significantly raising the cost of maintaining a constant power supply for MultiChoice’s transmission infrastructure.
Notification and Regulatory Compliance
MultiChoice insists that it duly notified customers and regulatory authorities before implementing the price increases. The company argues that the price adjustment, which took effect on May 1, 2024, was essential to mitigate the economic challenges it faces. The adjustment was a 14% increase, which MultiChoice claims was the minimum necessary to cope with escalating costs.
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Tribunal Ruling and Ongoing Legal Battle
The tribunal’s ruling, which dismissed MultiChoice’s preliminary objection and imposed a 150 million naira fine, was based on the company’s failure to comply with interim orders to halt the price increases. MultiChoice’s lawyer, Moyosore J. Onibanjo (SAN), filed an appeal against the ruling, arguing that the tribunal erred in its judgment.
Broader Economic Impact
MultiChoice emphasized that the price hikes were a reluctant but necessary measure to sustain its operations in Nigeria’s harsh economic climate. The company highlighted that it has avoided laying off employees or reducing salaries, despite the economic challenges. MultiChoice believes that reducing its investment in service quality would negatively impact the Nigerian economy and the creative industry.
Consumer and Regulatory Reactions
The FCCPC has stated that it will review MultiChoice’s reasons for the price increase and may involve other regulatory bodies such as the National Broadcasting Commission (NBC). Meanwhile, the tribunal has adjourned the hearing to July 29, 2024, allowing time for responses to the counter-affidavits from Onifade and the FCCPC.
Conclusion
The situation underscores the broader economic difficulties faced by businesses in Nigeria, including currency depreciation, high inflation, and increased operational costs. As MultiChoice continues its legal battle, the outcome will have significant implications for both the company and its customers, as well as for regulatory practices in the Nigerian market.
