MultiChoice Group Limited, the parent company of DSTV, has announced a $21 million loss following the liquidation of Nigeria’s Heritage Bank earlier this year.
The write-off, disclosed in the company’s interim financial report for the half-year ending September 30, 2024, highlights the risks associated with doing business in Nigeria’s challenging financial environment.
Heritage Bank’s license was revoked by the Central Bank of Nigeria on June 3, 2024, marking the end of its operations.
MultiChoice confirmed that the funds deposited with the bank are irrecoverable.
In its report, the company stated, “Following the revocation of Heritage Bank’s banking licence by the Central Bank of Nigeria on 3 June 2024 and its subsequent liquidation, the group wrote-off its receivable relating to the cash held with the bank.”
The loss underscores the complex landscape foreign businesses face in Nigeria, where high inflation, currency volatility, and policy uncertainty have increasingly strained operations.
MultiChoice revealed that cash remittances from Nigeria dropped significantly during the reporting period, with $65 million extracted, down from $91 million in the same period last year.
The extraction came at a steep cost, with the naira’s depreciation against the US dollar compounding losses.
The report highlighted that funds were extracted at an average exchange rate of ₦1,516 to $1, a sharp increase from ₦794 to $1 during the same period last year.
This shift resulted in a $1 million (ZAR20 million) foreign exchange loss, although this marked an improvement from the $28 million (ZAR518 million) loss recorded in the prior period.
By the end of the reporting period, MultiChoice’s cash holdings in Nigeria had fallen to $11 million, down from $39 million at the close of FY24.
This reduction reflects a combination of remittance efforts, the naira’s devaluation, and the Heritage Bank write-off.
Before its liquidation, Heritage Bank held approximately ₦31.6 billion in MultiChoice deposits. Efforts are underway to recover uninsured funds.
The Nigeria Deposit Insurance Corporation (NDIC) recently announced plans to auction Heritage Bank’s assets as part of its statutory liquidation process.
The sale, set to begin on December 4, 2024, will involve competitive bidding for properties and assets across 36 locations in Nigeria, as authorized under Section 62(1)(d) of the NDIC Act, 2023.
Nigeria’s economic woes have also impacted MultiChoice’s subscriber base. Since FY23, the country has accounted for 63% of the subscriber losses in the company’s Rest of Africa segment, with a net decline of 1.1 million active users.
Despite these setbacks, the company remains committed to its largest African market, even as it navigates the economic headwinds affecting its operations.
