MultiChoice Group faces financial strain as Heritage Bank’s liquidation leads to a $21m write-off, highlighting Nigeria’s economic challenges.
MultiChoice Group Limited has confirmed a $21 million write-off due to the liquidation of Nigeria’s Heritage Bank, as revealed in the company’s interim financial statements for the half-year ending 30 September 2024.
The Central Bank of Nigeria (CBN) revoked the bank’s operating licence earlier this year, rendering deposits irrecoverable.
In the financial statement, MultiChoice disclosed:
> “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 development underscores the hurdles businesses face in Nigeria’s volatile financial environment. MultiChoice, which owns DSTV, is grappling with a depreciating naira, high inflation, and limited cash remittances.
During the review period, the group remitted $65 million from Nigeria, a stark drop from $91 million in the same period last year.
The average exchange rate during these remittances was NGN1,516 to $1, leading to extraction losses of $1 million. Additionally, foreign exchange losses on intergroup loans added to the company’s financial strain, totalling ZAR2.1 billion.
The group also reported holding $11 million in cash in Nigeria at the period’s end, down from $39 million at the end of FY24. This reduction reflects efforts to remit cash despite the weaker naira and the Heritage Bank write-off.
Nigeria accounted for 63% of subscriber losses in MultiChoice’s Rest of Africa segment since FY23. Active subscribers dropped by 1.1 million, attributed to severe economic pressures. This decline illustrates the critical role Nigeria plays in the company’s overall subscriber base.
Before Heritage Bank’s collapse, MultiChoice reported an account balance of NGN31.6 billion with the bank. In a bid to recover funds for uninsured depositors, the Nigeria Deposit Insurance Corporation (NDIC) has announced plans to auction Heritage Bank’s properties and assets.
The sale, scheduled to begin on 4 December 2024, will feature competitive bidding for 36 properties nationwide.
MultiChoice’s financial woes mirror the broader challenges of operating in Nigeria’s unstable economic terrain, highlighting the need for resilient strategies in navigating such markets.
