Africa: Sliding Value of African Currencies Will Hit Pay TV Model Over Next Three Years

1 June 2022
Balancing Act (London)

London — With some exceptions, the loss in value of African currencies over the last 5-7 years has already made inroads both into the value of per subscriber revenues and the content buying power of pay TV companies. Russell Southwood looks at the data on bouquet prices and currency values to explain why.

In 2019 I carried out research for a Balancing Act Report called Sub-Saharan Africa's Digital Landscape and its Top 11 Markets - data prices, smartphones, digital content and services and e-commerce. It used a Pay TV monthly bouquet prices in three markets as one element of trying to understand who could afford what in Africa's new digital landscapes. The tables below give that original data and its update for this week, country-by-country, with Angola, Cote d'Ivoire and Nigeria:

Angola

2019 2022

DStv Facil AO1650 (US$5.27) AO2,950 (US$6.93)

DStv Grande AO4180 (US$13.34) AO12,050 (US$28.32)

Zap Mini AO2020 (US$7.02) AO4050 (US$9.52)

DStv has put up the cost of the entry-level Facil bouquet by 78% and the Grande bouquet by 290%. The entry level Mini bouquet from Zap has been increased by 200%.

Cote d'Ivoire

2019 2022

Canal+ Access CGA5000 (US$13.77) CFA5000 (US$8.20)

Star Times CFA4500 (US$12.39) CFA4500 (US$7.38)

Both of the key competitors in Cote d'Ivoire have kept their prices the same over the period but have lost significant value on their per subscriber revenue. In addition, Star Times introduced a new, even lower-cost bouquet called Nova at CFA1,500 (US$2.46). Also it sought to offer incentives to higher-paying customers by cutting its HD decoder and dish costs from CFA14,000 to CFA11,000.

Nigeria

2019 2022

GoTV Jinja US$4.57

GoTV Jolli US$6.74

GoTV Lite US$8.82

GoTV Smallie US$8.16

Go TV Max US$10.00

GoTV US$16.53

The 2019 data was based on two bouquets, the Lite being the lowest and the other being twice as expensive. Since 2019, DStv has completely recast its low end bouquets creating more, lower price points, eroding per subscriber revenue value.

The final data looks at the value of currencies in three key markets - Ghana, Kenya and South Africa - and shows how much local currency you would need to take in revenues to get a single US dollar:

2015 2020 2022

Ghana NC3.58 NC5.75 NC7.87

Kenya KS102.35 KS107.26 KS117.79

South Africa R13.32 R16.72 R15.59

The currency value has declined significantly in both Ghana and Kenya. The latter is very over-borrowed and this will exert further downward pressure on the currency. South Africa's currency value has recovered somewhat but may not hold steady over 3-5 years.

So what does this all mean? Mostly, it's obvious but to spell it out:

If value of per subscriber revenue in key markets declines, then there will be less money to buy content to stay competitive, particularly if the pay TV company is buying content in US dollars.

Putting up prices will do one of two things. You may get more revenues but it will probably be from a smaller number of people. The worst scenario is that the total revenue from the smaller number of people will stay roughly the same or decline. Price sensitivity affects even Africans with regular salaries.

The backdrop to these changes will be increased energy costs driving price inflation across Africa. We don't yet know how serious this will but if the figures for the USA and Europe are anything to go by, double-digit inflation is a likely possibility. Inflation eats the value of local currencies and reinforces the points made above. Hold on to your hats!

In Brief

Ghana: The Director-General of the Ghana Broadcasting Corporation (GBC), Professor Amin Alhassan says new media is the order of the day and has a lot of opportunities for businesses.

Ethiopia: Authorities have arrested at least 11 journalists and media workers since May 19 in Amhara state and the capital Addis Ababa as part of a broader crackdown that the state government calls a "law enforcement operation" that has resulted in the arrest of over 4,500 people for allegedly illegal activity.

South Africa: According to Broadcast Media Africa, South Africa's governing party, the African National Congress, has drafted a new policy document which calls for an end to exclusive broadcasting access to national sports events.

Vodacom and streaming service Viu are collaborating to offer their customers premium video-on-demand and data bundle packages. Under this partnership, Vodacom customers will get the Viu premium subscription plus mobile data at no additional cost. According to the telecom operator, the Viu daily premium subscription will cost US$0.32 a day and comes with a free 250MB daily recurring video data bundle.

Nigeria: According to a recent ruling emanating from the Nigerian High Court in the city of Lagos, the National Broadcasting Commission (NBC) (the body that regulates the broadcast media sector in Nigeria) may have acted beyond its authority by seeking to regulate the practice of advertising in the country. According to Justice Ambrose Lewis-Allagoa, the NBC lacks the authority to forbid exclusivity on privately acquired intellectual property rights and further dismissed the proposed amendment to the 6th Edition of the NBC Code for being incompetent null and void and therefore prevented the Commission from implementing it. Judge Lewis-Allagoa made the declaration in suit FHC/L/CS/1152.2020. The judge said, "The NBC acted beyond its power by seeking to regulate the practice of advertising in the country, contrary to the provisions of the extant Advertising Practitioners." An order was issued to the commission to set aside the amendment of the NBC Code and restrained the commission from implementing the Amendment to the NBC Code.

South Africa Clare O'Neil has been appointed as the new Chief Operation Officer of Primedia. O'Neil will coordinate the group's operational growth by upscaling synergies, directing group marketing and research strategies, and unpacking innovative data initiatives. She previously held positions at the SABC as General Manager of TV Sales and Commercial Sales Director at eTV. O'Neil also established and led the Broadcast Research Council of South Africa (BRCSA).

MultiChoice has announced that it will be removing certain channels from its DStv bouquet. Following a review process, the broadcaster says it is undertaking the channel revamp to ensure the quality of local and international content it provides.

Burkina Faso: A TV5 Monde correspondent was expelled from public meeting in in the country. The Committee to Protect Journalists says that activists opposed to France's influence in Africa should not scapegoat journalists attached to French-speaking international media, and authorities in Burkina Faso should ensure that all members of the press can report freely on public events.

South Africa: The South African Minister of Communications, Khumbudzo Ntshavheni, has given the South African Broadcasting Corporation (SABC) until 30 June to specify how the entity will generate more revenue.

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