South African entertainment giant, MultiChoice Group, has suffered a $21 million (₦31.6 billion) loss following the liquidation of Heritage Bank in Nigeria.
The financial hit was disclosed in the company’s earnings report for the half-year ending September 30, 2024.
“Following the revocation of Heritage Bank’s banking licence by the Central Bank of Nigeria (CBN) on June 3, 2024, and its subsequent liquidation, the group wrote off its receivable relating to the cash held with the bank,” MultiChoice stated.
Naira Devaluation and Subscriber Losses Add Pressure
This financial loss is just one of many challenges the Pay-TV provider has faced in its largest African market, Nigeria.
The group also reported a decline in cash remittances from Nigeria, extracting only $65 million in the first nine months of 2024 compared to $91 million in the same period in 2023.
MultiChoice attributes this reduction to the consistent depreciation of the naira, which has made operations and currency repatriation more expensive.
“The further depreciation of the naira against the US dollar has resulted in significant foreign exchange losses on non-quasi equity loans,” the report revealed.
Heritage Bank Collapse: A Blow to Businesses
Heritage Bank’s troubles began in May 2024 when the Central Bank of Nigeria revoked its operating license.
The Nigeria Deposit Insurance Corporation (NDIC) stepped in to liquidate the bank, citing its statutory mandate under the NDIC Act of 2023.
MultiChoice had previously reported holding ₦33.7 billion in deposits with the bank, but this was reduced to ₦31.6 billion by the time of the liquidation due to prior cash remittances.
With the bank’s collapse, MultiChoice officially wrote off the $21 million as an operating loss for the period.
This incident highlights the risks facing businesses in Nigeria’s financial sector, especially amid economic instability.
Subscriber Declines Reflect Economic Struggles
Beyond its financial losses, MultiChoice is grappling with a sharp decline in its Nigerian subscriber base.
The group revealed that Nigeria accounted for 63% of subscriber losses in its “Rest of Africa” segment since the 2023 financial year.
The company lost 1.1 million subscribers in Nigeria during this period, driven by inflation, the devaluation of the naira, and worsening economic conditions.
“Severe economic pressures in Nigeria have contributed significantly to the overall reduction in the subscriber base,” the report added.
Exchange Rate Woes Impact Operations
MultiChoice’s ability to extract cash from Nigeria has been severely hampered by the weakening naira.
In the first nine months of 2024, the company repatriated funds at an average exchange rate of ₦1,516 to the dollar, a stark contrast to the ₦794 per dollar rate recorded during the same period in 2023.
This unfavorable exchange rate resulted in extraction losses of $1 million, further straining the company’s financial performance.
At the end of September 2024, MultiChoice reported holding just $11 million in cash reserves in Nigeria, a significant drop from $39 million at the end of FY 2023.
The Heritage Bank liquidation has sparked fresh calls for reforms in Nigeria’s financial sector to protect businesses from sudden bank failures.
