Weak Rand lead a big DStv price increased in April

The tremendous weakening of the rand over the past year, and particularly the past two months, will have a big impact on MultiChoice and DStv.

“We purchase most of our international programming in foreign currency – exchange rates therefore have a big impact on our business,” the company told MyBroadband.

Since 2015, the rand has lost over 30% of its value against the US Dollar – with 13% of that value lost in the last two months.

The rand’s decline accelerated in December when President Jacob Zuma decided to remove finance minister Nhlanhla Nene and replace him with David van Rooyen.

By 10 December, the rand had broken through R15 per dollar, on 7 January it went through R16 per dollar, and on 11 January it slumped to its lowest level ever – R17.99.

Since then, the rand has been trading at between R16-R17 per dollar, briefly dipping below R16 on 1 February.

Price hikes imminent

Unless our local currency strengthens dramatically, it could spell bad news for DStv subscribers.

As the graph below shows, programming and production costs at MultiChoice increase every year.

The company spent R12 billion on content during its April – March 2015/16 financial year, and another R5.8 billion in the six months between April and September 2015.

A recent report in the Daily Mail said that SuperSport paid £296 million (around R6 billion at the time) for the 2016-19 Barclays Premier League broadcast rights for sub-Saharan Africa.

Annual price increase

 

MultiChoice announces DStv price adjustments annually, with the increase in fees of its DStv Premium package usually remaining below the Consumer Price Index.

With inflation expected to be around 7% and rand devaluing by more than 30% in the past year, keeping DStv’s 2016 price increase in check will be no easy task.

“While we continue to ensure that we minimise the impact on our customers, we are constantly reviewing the situation,” said MultiChoice about a potential larger-than-normal increase in 2016.

DStv’s new prices will be announced at the end of February, and will come into effect on 1 April.