|
Getting your Trinity Audio player ready...
|
At a press news conference on August 1st, Ghana’s Minister for Communications and Digitalisation, Sam George, threatened to revoke the license of MultiChoice’s DStv over the company’s failure to reduce subscription fees in Ghana.
According to the Minister, the satellite TV provider has failed to reduce prices dispute Ghana’s recent currency appreciation.
DSTV had previously responded to the Minister, defending its prices, stating that the Ghanaian Cedi had depreciated 200% in the past and its recent appreciation was “unsustainable“.
In his press brief, Mr George dismissed this defense and made comparisons to other markets which DSTV operates in, showing that the company offered cheaper pricing in countries like Nigeria and Angola.
In the end, he gave the company an ultimatum: Reduce subscription prices similar to other African counterparts by August 7th, 2025, or face revocation of its broadcasting license.
In the Minister’s defense, DStv’s prices have been increasing in the past few years, making it more expensive for the Ghanaian consumer.
But the Minister’s threat of outright revocation due to pricing disagreements could set a bad precedent for private companies that operate in different sectors in the country.
Force of Hand
From a consumer protection standpoint, the government’s intervention appears righteous.
DStv enjoys a strong foothold in Ghana’s pay-TV market, with few alternatives that offer content like the English Premier League.
The company is basically a monopoly, with past competitors like Kwese TV failing to penetrate and compete in the space.
The absence of meaningful competition appears to have led to price setting that’s less about local affordability and more about profit margins.
On its face, a public threat by the Minister to revoke DStv’s license may be an attempt to restore balance and force MultiChoice to the negotiation table.
But beneath the surface of consumer advocacy lies a dangerous precedent.
When a government uses the threat of license revocation to coerce pricing decisions from a private company, it undermines the principles of market freedom and regulatory fairness.
Backed Into A Corner
DStv, like any business, calculates its pricing based on a number of internal and external factors: satellite infrastructure, licensing agreements for content, exchange rate volatility, and more.
The company has been facing a loss of subscribers over the past years due to COVID, alternatives like Netflix, and other market forces. This may be a reason why the company is adamant in its decision to keep prices where they are.
But if Ghana truly believes prices are unfair, a more sustainable approach would be to encourage new entrants into the media market—local or international—who can provide cheaper and competitive alternatives.
Regulatory bodies like the National Communications Authority (NCA) could impose transparency requirements, mandating that providers like DStv disclose how local prices are set and what factors influence them.
Outright revocation of DStv’s license would not only take out a major media platform but also risk investor confidence in Ghana.
If pricing disagreements can potentially lead to the loss of operating licenses, what’s to stop other sectors—telecoms, fintech, e-commerce—from facing similar threats when public sentiment shifts?
Ironically, the Minister of Communications also issued directives to the major telecom companies like MTN and Telecel to provide value for money for their services due to consumer complaints about pricing.
Could the Minister of Food and Agriculture or the Food and Drugs Authority (FDA) force restaurants and eateries to reduce menu prices because of the appreciation of the Cedi and public outcry?
The ripple effects of the loss of DStv could mean less patronage of bars and public places where football games like the English Premier League are shown.
It could also mean the loss of investment in the production of Ghanaian movies and TV shows for Multichoice’s Showmax streaming platform.
Does DStv Have Legal Recourse?
With this threat of losing access to the Ghanaian market, DSTV faces a hard choice: Reduce pricing or seek legal recourse in court.
Depending on the terms of its license agreement and Ghana’s communications law, license revocation could be deemed unlawful, especially if due process isn’t followed.
Multichoice could explore protections under ECOWAS investment frameworks or South African-Ghanaian bilateral agreements.
But in doing so, it could make an “enemy” of the Minister, who could further frustrate the company by other means.
Or DStv could simply acquiesce to the Minister’s demands and reduce its prices and play the long game.
Multichoice could also have a nuclear option: Leave the Ghana marketplace and focus investment elsewhere.
What We Predict Will Happen
In our view, we predict that Multichoice will “bend the knee” and take a hit to its bottom line by reducing its pricing.
The price reduction might be substantial, but it may be enough to live to fight another day.
But in smoking the peace pipe and giving in to the demands of the government, a bad precedent could be set.
What if the Minister or other regulatory bodies feel that pricing in the housing market needs to be capped? Will real estate developers lose their license if they don’t fulfill demands set by the government?
Could internet service providers be next if their pricing is called out by the public?
The government’s role should be to create a fair playing field, not to dictate price points through threats.
It should be using its tools and powers to create a more competitive playing field to enable new entrants to compete.
Multiple players in a space will also compete for market share with competitive pricing if everyone is playing on the same level.
If you look at Ghana’s telecom space, it’s just the opposite.
If you’re a Ghanaian DSTV subscriber, don’t throw out your DSTV decoder yet. But if you’re a private company, you might need to pay attention to how this plays out in the long run.
