Multichoice’s DSTV Nigerian pay as you go cable television subscriber distribution firm, which of late has graced the country’s front-pages of national newspapers may have to contend with the country’s competitive law to strip self of monopoly.
Findings show that the company is feasting fat on the absence of competition law in the country, to thrive towards total monopoly of paid TV content distribution, a development that could be reversed as soon a competition bill is in place and commensurable sanctions meted out for monopolists.
MultiChoice’s DStv, early in the month of February, was fined $14 million (R180 million) in South Africa for price fixing.
The satellite television’s Media Sales division was found by South Africa’s Competition Commission to have contravened the country’s Competition Act in relation to “price fixing and fixing of trading conditions”.
Investigative eyes of the law enforcement and corporate governance compliance investigators would sooner than later close in on some of these companies that fail to adhere to corporate governance standards, irrespective of prevailing enabling supportive laws or not.
Before Glo Nigeria crashed call rates in Nigeria, MTN, a South African firm , maintained that per second billing was not possible, as in their reasoning , the cost of acquisition of its chips then was astronomical.
Its sister company, Multichoice has maintained that same trend with its refusal to introduce pay as you go on its bouquets, irrespective of mounting down time in its deliveries.
While DSTV came to cater for a niche market, GOTV, was further created for the mass market to enhance monopoly and strengthen unhealthy competition in the country, which has wrestled down all other local or emerging competitors.
The two companies, which may soon have heavy penalties hanging on their necks irrespective of the $14m sanction against them in faraway South Africa, may not be as lucky as their sister South African company, MTN,
MTN opted to exploit the option of listing on the Nigerian Stock Exchange to evade heavy regulatory sanction that would shook the company to its foundation.
Recently, MTN Nigeria revealed that the company would be listing its shares on the Nigerian stock Exchange (NSE) this year , after raising about N153billion ($500m) from the either pubic offer or private placement of its shares in Nigerian.
Even as the volume of business MTN slated for listing on the NSE represents an insignificant size of the company’s operations in the country, cross-section of Nigerians have maintained that ethical business operations, high adherence to best corporate couture as well as development of business judicial infrastructures remains the key to ensure that foreign companies operating in the country get sanctioned as soon as they breach the contrary’s rules.
It would be recalled that MTN Nigeria in 2015 was fined $5.2bn about N780 bn imposed on it by the Nigerian Communications Commission (NCC) for regulatory infractions.
The South African telecoms operator before taking to the option to list on the NSE, exploited many options to escape the sanction, and even filed a suit at the Federal High Court Lagos to quash the fine , a development that could have further worsen the company’s plight in the country.
In November 2015, the company entered into gentleman’s agreement with the NCC of which MTN also filed to honor and was on the course of triggering a tougher sanction form the commission.
A financial consultant, who pleaded anonymity, said that giving foreign companies the easy way out, whenever they breached the Nigerian law is not always the best, hence many others would also tow the path, break the law and seek the most beneficial way of resolution
The expert said, “what is there in listing on the NSE the companies collect money of Nigerians through initial public offer, public offer or private placements they may decide to record profitability for few year and then start posting losses”
According to the exert, it is not compulsory to list on the Exchange Nigerians investors have seen many hitherto profitable companies, all of a sudden start making losses, and the net option is convening a court ordered meeting to seek the shareholders vote to buy them out of the company.
He said that even s MTN may have been pressurized to list its shares on the NSE, historically, South African companies listed on the bourse had history of poor performance and this may also be the same with the telecommunication company.
Certainly the company would not be barred from delisting from the exchange when it feels like, hence the market is free entry and free exit.
CEO Nigerian Stock Exchange, Mr. Oscar Onyema corroborate this recently when he said that the Exchange cannot stop any company from delisting when it deems fit”
He added: “We cannot regulatory prevent a company that freely listed on our platform from delisting because it is not a prison.
According to the NSE CEO, “What we can do is to ensure that when they are leaving, there are certain things they must put in place for their shareholders and we believe that our current listing rules, which are bench-marked against other rules in other jurisdictions, do provide those protections”
The NSE CEO maintained that the job of the Exchange is to make sure that it is easy for companies to come in and if they want to leave, “they leave in an orderly manner.
“So, what we have tried to do with our listing rules in the last one to two years is that we have tried to enhance the rules to ensure that companies behave in an orderly fashion, especially companies that want to delist voluntarily and where there is a business purpose why they are delisting”.
Demonstration of the forces that culminated to the proposed listing on the bourse by MTN is traceable to a June 2016 agreement to pay a $1bn fine for missing a deadline to disconnect unregistered subscribers amid a security crackdown.
The penalty, originally set at $5.2bn, led to the resignation of the Johannesburg-based company’s then chief executive officer and a slump in the share price that’s yet to be clawed back.
While MTN has taken the listing option which cross-section of stakeholders have described as a short term measure to eventual sell off of their Nigerian operations, Multi choice DSTV and GOTV may not have the exalted privilege of listing on the bourse and maybe they may want to seek the easy way out to sell off their business in the country, instead of paying huge financial fines which may be coming their way.
It is generally believed that while the Nigerian competition law is still in the making, companies from countries where the law is fully operational exploit the lacuna in Nigeria to exploit consumers.
A stakeholder a subscriber to DSTV, speaking on condition of anonymity said that if Multichoie could flaunt the competition law in South Africa, where the law is effective, what will the company not do to exploit subscribers in Nigeria where the competition law is not yet in place?
He said, “ I stopped my subscription to DSTV hence weather you use it or not, if the time elapses, your charge elapses and you would be required to recharge again, that alone is another fraud like NEPA, ‘ Whether you use light or not, you must pay NEPA bill”
MultiChoice’s DStv in the past week was fined $14 m (R180m) in South Africa for price fixing. The satellite television’s Media Sales division was found by South Africa’s Competition Commission to have contravened the country’s Competition Act in relation to “price fixing and fixing of trading conditions”.
Nigeria is one of the South African brand’s biggest markets and DSTV has been operating in the country for about 22 years.
However, the company has often been in the news mostly for ripping Nigerians off with its inflexible subscription conditions and unfriendly quality of service (QoS) which could be attributed to its monopolistic status in the Nigerian market.
“Monopoly is also a breach of competition law, which the company has been flaunting in Nigeria for the past 22 years,” an expert, on condition of anonymity said.
The Chairman of DSTV Nigeria, Mr. Adewunmi Ogunsaya is also being questioned for his shady practices in Nigeria and GOTV transmission circumvention of licensed digital switch over, DSO providers,
Recall that in 2017 April, the Nigeria’s House of Representatives instructed its Committee on Information, National Orientation, Ethics and Values to investigate Multichoice Nigeria’s ‘exorbitant charges’ for its DStv and GOtv packages.
In May 2017, Multichoice Nigeria increased its prices by 5% on all its packages, after it had increased it prices by more than 20% earlier.
As the House committee is bracing up with findings on exploitation of the Nigerians consumers and breach of the corporate governance law, it is only a matter of time for the NCC and the government to wage its sledge hammer on Multichoice Nigeria,
Nigeria’s competition bill if passed into law would establish a National Administrative Framework for consumer protection, remove regulatory overlaps, create regulatory harmony between the Commission and other agencies involved in consumer protection and create a strict liability offence for common unfair trade practices to deter indulgence by providers of goods and services.
Leave a Comment
You must be logged in to post a comment.