MultiChoice Group Limited, the parent company of DSTV, has written off $21 million previously held in Nigeria’s Heritage Bank, following the bank’s liquidation earlier in 2024.
This write-off was disclosed in MultiChoice’s interim financial report for the half-year ending September 30, 2024.
Heritage Bank’s license was revoked by the Central Bank of Nigeria on June 3, 2024, marking an end to its operations.
With no prospects for recovery, the deposited amount was declared irrecoverable.
In the financial statement, the company noted, “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.”
This loss underscores the challenges that foreign businesses face in Nigeria’s financial landscape, especially in an increasingly volatile economic climate.
Nigeria has proven to be a complex and testing market for MultiChoice, which has also contended with high inflation rates and the severe depreciation of the naira.
The financial report revealed that cash remittances from Nigeria had fallen, with MultiChoice extracting only $65 million during the reporting period, down from $91 million in the same period the previous year.
Currency exchange fluctuations further deepened the financial strain on MultiChoice’s Nigerian operations, which is its largest market on the continent.
The report explained, “The further depreciation of the naira against the US dollar has resulted in further foreign exchange losses on non-quasi equity loans (on the USD-denominated intergroup loan from MultiChoice Africa Holdings B.V. to MultiChoice Nigeria Limited), contributing to the ZAR2.1bn (1H FY24: ZAR2.4bn) recognised in the condensed consolidated income statement.”
Moreover, the company noted that during the period, MultiChoice managed to remit $65 million from Nigeria, but at a significant cost. The extraction was performed at an average rate of NGN1,516 to USD1, in contrast to the previous year’s rate of NGN794 to USD1, and incurred a loss of $1 million or ZAR20 million, compared to the prior period’s $28 million or ZAR518 million.
MultiChoice also reported that by the end of this period, it held $11 million in Nigerian cash, down from $39 million at the close of FY24.
The reduction is attributed to a combination of focused remittance efforts, the impact of a weaker naira, and the write-off of the $21 million held in Heritage Bank prior to its closure.
Economic pressures in Nigeria, including inflation and the currency’s devaluation, have contributed to a substantial loss in MultiChoice’s subscriber base.
Since FY23, Nigeria alone accounted for 63% of subscriber losses in the Rest of Africa segment, showing a net decline of 1.1 million active subscribers.
Before Heritage Bank’s liquidation, MultiChoice’s balance with the bank was estimated at NGN31.6 billion. Now, efforts are underway to mitigate losses for uninsured depositors.
Recently, the Nigeria Deposit Insurance Corporation announced that it would auction off Heritage Bank’s assets to recover funds.
This effort, part of the NDIC’s statutory responsibility as the liquidator, is authorized under Section 62(1)(d) of the NDIC Act, 2023. The sale, set to begin on December 4, 2024, will involve competitive bidding for Heritage Bank’s properties and assets across 36 locations in Nigeria.
