MultiChoice Nigeria has announced its intention to appeal a ruling by the Competition and Consumer Protection Tribunal in Abuja, which fined the prominent Pay-TV operator N150 million.
The fine was imposed on the company for disobeying the Tribunal’s order, which had earlier restrained MultiChoice from increasing the prices of its DStv and GOtv packages pending the resolution of a lawsuit brought by Abuja-based lawyer Festus Onifade.
In addition to the fine, the tribunal ordered MultiChoice to provide a one-month complimentary subscription to its DStv and GOtv customers in Nigeria. MultiChoice, in a statement issued on Saturday, expressed its disagreement with the ruling and confirmed its plans to appeal.
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MultiChoice acknowledged the tribunal’s recent ruling but said it does not accept the decision. The company confirmed that it would file an appeal against the judgment.
“MultiChoice Nigeria is aware of the recent ruling by the Competition and Consumer Protection Tribunal regarding its jurisdiction to entertain a price regulation matter. We disagree with the ruling, and will therefore file an appeal against the said ruling. As the matter is currently sub-judice, we are restrained from making further comments,” the company noted.
Backstory
The dispute began when MultiChoice announced on April 24, 2024, that it would increase the prices for its DStv and GOtv services starting from May 1. This announcement was met with legal action from Barrister Festus Onifade, who argued that the company had failed to provide adequate notice of the price increase to its customers.
In response to Onifade’s motion, a three-member tribunal led by Saratu Shafii issued an interim order restraining MultiChoice from implementing the price hike.
Despite the tribunal’s order, MultiChoice proceeded with the planned increase. This defiance led to further legal proceedings, culminating in the tribunal’s decision to fine the company N150 million and mandate a one-month free subscription for its customers.
During the hearings, MultiChoice’s lawyer, Moyosore J. Onibanjo (SAN), filed a preliminary objection, urging the tribunal to decline jurisdiction, arguing that price regulation is within the purview of the President of Nigeria. He also cited a previous case that had been decided in favor of MultiChoice, arguing that the issue could not be re-litigated.
However, the tribunal, chaired by Justice Thomas Okosu, dismissed this objection, affirming its jurisdiction over the matter and criticizing MultiChoice for ignoring the interim order.
“The jurisdiction of this tribunal extends to all business activities within Nigeria,” Justice Okosu stated. He further added, “I have come to the conclusion that this tribunal has the jurisdiction to preside over consumer rights as in the instant case and I resolve this issue against MultiChoice.”
The tribunal also noted that the claimant’s suit was not about regulating prices but about the insufficient notice given by MultiChoice for the price hike.
“The claimant’s instant suit is not questioning the MultiChoice price hike as claimed by Onibanjo but the illegality of his client’s 8-day notice to the customers,” Justice Okosu added.
Compounding MultiChoice’s financial burden
The financial impact of the tribunal’s ruling comes at a challenging time for MultiChoice. The company recently notified its shareholders of anticipated grim full-year results, citing difficult macroeconomic conditions and a significant foreign exchange loss from its Nigerian operations.
MultiChoice Group’s trading statement, published on Thursday, revealed expectations of a trading profit decline between 19% and 23% compared to the previous financial year, with a notable increase in headline loss per share.
The company attributed these financial setbacks to several factors, including the sharp depreciation of the Nigerian naira against the US dollar, which resulted in substantial foreign exchange losses. Additionally, the company reported a once-off impairment of IT systems and increased investment in Showmax, further impacting its financial performance.
“The group expects losses and headline losses per share to increase due to the negative impact of a weak macroeconomic and consumer environment, increased investment in Showmax, and the impact of the sharp depreciation in the Nigerian naira against the US dollar. This resulted in foreign exchange losses on the non-quasi intergroup loans with MultiChoice Nigeria of R3.6-billion (net of tax and non-controlling interest),” MultiChoice stated.
“The group’s expected loss per share has also been impacted by a once-off impairment of IT systems of R1-billion (net of tax and non-controlling interest), due to a reassessment of business needs in the context of an extremely challenging operating environment,” the company added.
An additional trading loss year-over-year of R1.4 billion is expected at Showmax, according to the company. The financial results for the year ended March 31, 2024, are expected to be published on June 12, 2024.