When will my people learn? If I had a dollar for every time someone said, “At least Mugabe did not allow retailers to raise prices willy-nilly,” I would be a millionaire, in USD terms. They think it was a good idea to control prices, forgetting that that was responsible for empty shelves.
When you force a supplier to sell at a price that does not make business sense, they will do it for as long as they think they can convince you to reconsider. When they realise you’re not going to budge, they just simply withdraw their products from the market.
Case in point:
Multichoice (DStv) withdraws from Malawi
MultiChoice has exited Malawi after a dispute with the country’s communications regulator over price hikes.
The company announced that it won’t be accepting new customers or reconnections and that it will only continue to serve customers with active subscriptions until 10 September.
MultiChoice had increased its prices in Malawi, but the regulator, the Malawi Communications Regulatory Authority (MACRA), obtained an injunction against MultiChoice Malawi to prevent the implementation of new DStv tariffs. MACRA said that the price hikes were excessive and would have a negative impact on consumers.
MultiChoice Malawi argued that it could not revert to old prices in order to comply with the injunction, since the prices are set by Multichoice Africa Holdings.
MultiChoice said that it had no choice but to exit Malawi after MACRA’s decision. The company said that it was “disappointed” with the regulator’s decision and that it had “exhausted all avenues” to resolve the matter.
It’s not over though because I don’t think Multichoice will leave Malawi. I think it’s a power move to show the Malawian regulators who is holding whose neck. It might be working because Members of Parliament are scrambling to get Multichoice, MACRA and the Ministry of Information to the table and talk it out.
We can draw a lot of lessons from this story. I’ll touch on two.
Price controls = bad, Monopoly = bad
See, we all understand that controlling prices leads to either inferior products and services or no products and services at all. The likes of Econet argue that low tariffs as dictated by the regulator play a major role in the shoddy service they have been providing lately.
The other major lesson is that when one organisation controls the lion’s share of a market, it can hold even the government at ransom. They know that their departure will leave a vacuum that is not easily filled and also that they contribute so much to the fiscus that the govt has to cave at some point.
The Malawian govt now has to consider the job losses that will come from this. If Multichoice pulls out of Malawi, some people will lose their livelihoods.
That includes Multichoice employees and decoder resellers, ana mkoma Bruce who offer realigning services, and many more. There’s also lost revenue for the financial services providers that allow for DStv payments.
The government itself stands to lose out on the sweet tax dollars Multichoice was contributing.
Then the biggest thing to consider is that it would make it very inconvenient for the MPs and higher-ranking government officials to pay for their DStv. That will probably be the biggest factor in pushing the government to work to resolve the issue and grovel at Multichoice’s feet in the least embarrassing way possible.
The monopoly question
Multichoice has a large market share in the pay-TV market in Malawi, while Netflix and other streaming services have yet to make significant inroads due to limited internet access in the country.
The power of a monopoly like MultiChoice means that the government is powerless to protect its citizens from profiteering companies. I’m not saying DStv was looking to charge too much in Malawi but if they were, the government and the citizens would have to button down and take it.
We shall see what happens in Malawi. It looks like that saga is going to be more interesting than any show on DStv, ironically.
The question remains though, “Is multichoice fleeing price controls or is it flexing its monopoly powers to scare the Malawian govt into submission?” It’s a bit of both in my opinion but tell us what you think in the comments section below.