DSTV and other Pay As You Go operators (PAYG) may have a new set of operational guidelines to work with as the House of Representatives considers a new bill to regulate the prices of PAYG entertainment services. The bill is sponsored by Rep. Unyime Idem (PDP-Akwa Ibom).
The bill seeks to amend Section 2(1) of the Principal Legislation and give the NBC power to regulate and review through its broadcasting codes, the tariff being charged by the Digital Satellite Television Services and other broadcasting outfits in Nigeria and subscription policy for subscribers.
The bill further states that “The Commission, shall further oversee the operations of the operators in the industries in the following manners: guarantee openness and competition in the industry favourably for the participation of all and sundry; promote efficiency and expand opportunities for participation of local investors in the industry, without downplaying the active foreign investment, assist local operators in the industry to attain and compete favourably.”
Pay-TV operators in Nigeria including DSTV, GOTV, TSTV, Startimes and others will be directly affected by the bill. In 2020, DSTV increased its prices 2 times within the space of 3 months. Startimes also increased its subscription fee by about 22% in August 2020, around the same time as the DSTV price hike.
NBC control may affect Pay-TV operators revenue
Startimes explained that the hike was necessary because of the increase in VAT from 5% to 7.5% as well as the increase in operating costs. DSTV gave similar reasons, stating that it was only able to refrain from hiking prices when external factors such as the VAT rate and naira depreciation were kept at a bearable level.
Thus, to mitigate the cost of operations and maintain a positive cash flow, pay-TV operators increased the prices of subscription even though there was general kickback from the people and the House of Reps. This will change as the companies will no longer be able to alter the prices of subscription packages at will.
It, however, does not mean that price hikes or changes will not occur. Service providers will intimate the NBC with intended changes in packages and prices and the commission will then review and act as it considers appropriate.
DSTV and GOTV are both owned by Multichoice. Multichoice recorded gains of N164.51 billion within the second half which it attributed largely to a reduction in foreign exchange losses. The price hikes for its subscription packages in Nigeria, South Africa and other parts of Africa also contributed to its positive financial growth in 2020, despite the harsh economic effects of the Covid-19.
The bill could therefore reduce the volume of additional profit the operators will make going forward. This may significantly affect the profit margins if a strong focus is not placed on reducing operating cost and minimizing losses due to foreign exchange.
Pay-TV prices are regulated in Angola as well
Nigeria is not the first country to propose a bill that regulates the prices of DSTV and other Pay-TV service providers. In Angola, operators have to seek regulatory approval from the Angolan Institute of Communications (Inacom) before asking subscribers to pay a higher fee.
In March 2019, Inacom blocked a move by Multichoice to hike DSTV fees by about 20%. The move was then reviewed by both parties until the service provider received approval to move ahead with a reviewed fee hike. A framework similar to that of the proposed bill in Nigeria is already in place in Angola and has allowed for price hikes that are considered fair by both parties.
The Botswana Communications Regulatory Authority (BOCRA) attempted something similar but failed. BOCRA asked that Multichoice submits any proposed tariff or tariff hike for approval before it can be implemented. Multichoice rejected the regulation and contended against it in the court of appeals.
The judges ruled in Multichoice’s favour and agreed that it should be able to hike prices at will and that put an end to Botswana’s attempt to regulate pay-TV prices in the country.
The Nigerian process is quite different from Botswana because the bill before the House of Reps, if signed into law, will give NBC the power to regulate the pricing of Pay-TV operators in Nigeria. Once it is signed into law, it will be upheld in every court of law and unlike Botswana’s case, Pay-TV operators will have to comply or cease servicing subscribers in the country.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!