Multichoice To Make Profits After Increasing Subscription Fee

By Eddyson Lugangwa Posted 09 April 2006 @ 05:44 pm EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - As local prices for consumer goods skyrocket, the pay TV monopoly, Multichoice Africa, has joined the fray and increased its subscription fees for its Digital Satellite TV (DStv) service. Multichoice increased its prices on April 1, blaming the move on escalating operating costs.

Tshepo Maphanyane, spokesperson for Multichoice Botswana confirmed the adjustments, but defended the move, saying they had been able to cushion the costs of the BWP devaluation last year. "It is however encouraging that Multichoice Africa absorbed substantial costs in delaying the price increase so long after the 12.5 percent devaluation", Maphanyane explained. Under the new price adjustments, DStv customers in Botswana will now pay P335 from P305 for the premium bouquet, while they pay P170 for compact bouquet.

Maphanyane explained that Multichoice price adjustments were motivated by the fact that the company like any other business has input costs. These costs include technical infrastructure costs, satellite lease costs, programming costs and other operational costs. She explained that in determining the price increase, Multichoice took into account many factors including, amongst others, the impact on the subscriber, the 12.5 percent devaluation of the Pula last year, the current high rate of inflation, and efficiencies effected within the company. Botswana's national inflation rate stands at over 17 percent.

"Unfortunately, it has been necessary to effect this price increase due to the rising costs which have been mentioned," she said. Maphanyane said the company absorbed costs linked to devaluation and "had limited as much as possible associated costs that were included in this year's annual subscription increase".

The price adjustment comes at a time when there are developments in the pay TV market, with local regulators having offered a new entrant a licence. The National Broadcasting Board (NBB) offered a licence to Multichoice rival, Black Earth Communications (BEC), which is still subject to BEC meeting certain conditions. BEC have promised to operate a cheap operation Black Entertainment Satellite Television (BEStv) that will compete with Multichoice-DStv. BEStv plans to charge a monthly subscription of about R100 (or P89) for five to 10 channels. Equally, the Multichoice move comes at a time when broadcasters like Btv have secured rights to air the World Cup.

However, BEC's spokesperson Andrew Jones has hinted that with BEC getting a licence, the Multichoice monopoly was coming to an end. "The days of monopoly rule are over and I take Multichoice's words at face value when they say they welcome competition. I think we both agree that with competition comes many benefits for the market and the consumer. I believe that most consumers will opt to add on our service to whatever service they already have, rather than eliminate one service for the other, but they do need a choice and that is what we are going to bring," Jones said.