Tariff Review: What Option Does MultiChoice Have?
By Poju Ibileke
Until late Wednesday afternoon when I got a text message announcing new prices on MultiChoice’s DStv and GOtv packages from the service provider, I did not know that StarTimes, another Pay television company, increased its tariff in September. I got to know when a friend, who is a customer to both providers, called to lament how bad things have become in the country. My friend is a man given to few-holds-barred griping discussions on cost of living.
“This is the second time these people (MultiChoice) are increasing prices this year. Did they have a meeting with StarTimes, which increased in September. Do they want to kill us?” he asked angrily, generously sprinkling the rest of the conversation with vitriol for the providers and government.
I did not reply until he had exhausted his supply of bile. I asked him if there is a commodity or service with the same price as at six or seven months ago. “Even if there is none,” he batted back. I asked how he expects the pay television companies to afford the current costs of other goods and services in addition to the ones crucial to their operations if they do not increase prices. “You sound like you have money,” he taunted. I told him he knows I do not. He was still seething. The conversation ended because we had to move on to other things. While alone, I thought my friend was right to be bitter. I was also chagrined after thinking about what I will start paying as DStv subscription from 6 November, the date the new tariffs take effect.
I thought about how the price of cooking gas moved from N8,500 in my neighbourhood last month to N11,550 last week. After a while, my mind swivelled to inflation figures from the National Bureau of Statistics (NBS), stuff I never like to read because they have been depressing for some time. Inflation for July 2023, according to the NBS, came in at 24.08%, 25.8% in August and 26.72% in September. Those figures sure have implications for consumers and businesses. This year, inflation rose for nine months on the bounce and it is expected that prices will keep outrunning incomes till the end of the year. There is the optimistic projection that there will be a dip in inflation next year. I do not believe that, I have to say.
The main drivers of inflationary pressures, according to experts, are expansionary monetary and fiscal policy, naira depreciation and petrol subsidy removal, which have all resulted in the hike in food/commodity prices. I reached a conclusion that when prices spin out of control, they affect just about every area of a business, forcing changes in the pricing of product/service among other strategic steps. Changes in pricing, expectedly, is never well received by the consumer.
I am a consumer and I am often seized by the unrealistic belief that certain businesses are bullet-proof. Seriously, there is none and certainly cannot be a business that is heavily reliant on the health of the Naira in relation to the Dollar. It is safe to assume that pay television service providers must be gasping at this moment because of the cost of content (they are mostly vendors of other people’s content), costs of satellite and other utilities, energy (diesel, petrol, etc.) and technological upgrades among other things.
With soaring operating expenses, particularly driven by a limp Naira and jump in energy costs, it is unlikely that a business like MultiChoice is aiming for some grand profit margin. There is no chance of that, as the kite-high cost of living in the country is forcing customers to curtail their planned spending. This implies loss of business opportunities.
Customers yoked with food inflation, which climbed to 30.64% in September from 29.34% in August, and much higher transportation costs, say, will spend less on non-essentials. The NBS reported that the headline inflation rate for May was 22.41% and 22.79 % for June. The same inflation rate was 15.68% in 2016 and 9.01% in 2015. Though cost-of-living and inflation crises are typically global, the impact is more on the African continent. Inflation in Ghana, for example, reached 42.50% in July, the highest level in two decades. Ghana has had over 100% increase in food prices and transportation costs. The energy costs have risen dramatically. Inflation is running at 44.81% for Sierra Leone as of June 2023, the highest in recent times, driven by food and fuel inflation and the depreciation of the Leone. Inflation has risen to 36 years high in Congo and many African countries are under growing pressure of high inflation and an unbearable cost of living.
Businesses in these countries, whatever type they are, cannot freeze prices. To do so is to die, throwing staff into the unemployment market and denying the government of tax revenue. It is the same with businesses in Nigeria. There is no option than to review prices upward for the same quality of goods or service. None. Painful as it is.