MultiChoice Nigeria has taken its battle to the appeals court, contesting a recent ruling by the Competition and Consumer Protection Tribunal. The tribunal had imposed an N150 million fine and mandated the company to provide a free monthly subscription for disobeying the tribunal’s interim orders against a planned price hike.
According to Nairametrics, which cited sources familiar with the development, a “notice of appeal” has been lodged against the Tribunal’s recent decision. The tribunal had previously restrained MultiChoice from increasing its subscription rates pending the hearing and determination of a motion on notice filed by Barrister Festus Onifade.
The Backstory
Tekedia Mini-MBA edition 15 (Sept 9 – Dec 7, 2024) has started registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
The controversy began when Onifade filed a lawsuit against MultiChoice Nigeria Ltd and the Federal Competition and Consumer Protection Commission (FCCPC), accusing the Pay-TV operator of unfairly increasing subscription fees without giving the required one-month notice to customers. A three-member tribunal chaired by Saratu Shafii ruled in favor of Onifade, restraining MultiChoice from proceeding with its scheduled price hike on May 1, 2024.
On the other side, MultiChoice’s legal counsel, Moyosore J. Onibanjo (SAN), argued that similar cases had been previously settled in favor of MultiChoice and urged the tribunal to dismiss the suit. However, Onifade maintained that the issue at hand was not the price increase itself but the inadequate notice given to subscribers.
Justice Thomas Okosu, leading the three-member panel, upheld that the tribunal had jurisdiction over the matter, focusing on the legality of MultiChoice’s 8-day notice rather than the price hike. Consequently, MultiChoice’s preliminary objection was dismissed, leading to the imposition of a N150 million fine and a one-month subscription order.
Economic Pressures and Operational Losses
MultiChoice Nigeria’s decision to increase subscription rates cannot be fully understood without considering the broader economic pressures it faces. The Nigerian economy has been grappling with hyperinflation, a devaluing currency, and widespread poverty, affecting both businesses and consumers.
In a bid to manage escalating operational costs, MultiChoice announced new price adjustments on April 24, 2024, informing subscribers of an impending increase across all DStv and GOtv packages from May 1, 2024. The company cited rising business costs as the driving force behind this difficult decision.
“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 continuing to deliver high-quality content and unparalleled service,” the company communicated to its subscribers.
The price hike resulted in a 25% to 26% increase across various packages, stirring dissatisfaction among customers and catching the attention of regulatory bodies. The Federal Competition and Consumer Protection Commission (FCCPC) noted it would review the reasons for the price increase and might involve other regulatory bodies such as the National Broadcasting Commission (NBC).
Declining Subscriber Base
MultiChoice Group has been vocal about the challenges posed by Nigeria’s economic conditions, which have significantly impacted its operations. The company reported an 18% decline in active DStv subscribers in Nigeria, attributing this to the economic hardships that limit consumer spending power. The declining subscriber base has compounded MultiChoice’s financial struggles, pushing the company to adjust its pricing strategy in an attempt to sustain operations.
Sources within the company revealed that MultiChoice has been operating at a loss in Nigeria, struggling to balance the cost of delivering high-quality content with the revenue generated from subscriptions. This financial strain has made it imperative for the company to re-evaluate its pricing models, even as it faces backlash from both consumers and regulators.
Following the tribunal’s ruling, MultiChoice’s legal team expressed their intention to appeal, arguing that their right to a fair hearing was compromised.
“The matter was adjourned to 7th June 2024 for ruling on our application challenging jurisdiction; however, surprisingly, rather than just ruling on its jurisdiction, the Tribunal went ahead to pronounce us guilty of disobedience of its orders and issued severe sanctions against us all without hearing us on the matter in breach of our constitutionally guaranteed rights to a fair hearing,” the legal team told Nairametrics.
In the face of these challenges, MultiChoice has formally filed an appeal, seeking to overturn the tribunal’s decision. The outcome of this appeal will likely set a precedent for future disputes involving consumer protection and corporate regulation in Nigeria.