Right of Reply – DStv’s Kenya boss Mr. Isaboke on price increases
With the public disquiet around the recent increase of the popular pay-tv DStv monthly subscription pricing by US$3, Multichoice Kenya Managing Director Mr. Stephen Isaboke spoke to The KARA Weekly Newsletter and here are the excerpts;
Q. What is the justification for increase of your pricing by US$3 on your services effective 1st April?
A. It is important to state from the outset that MultiChoice Kenya merely provides subscriber management services for MultiChoice Africa’s DStv subscribers in Kenya. MultiChoice Kenya is not responsible for this price increase as these are effected by MultiChoice Africa. We have, however, been notified by MultiChoice Africa that the annual price increases are necessitated by rising input costs. As with any other business, there are various input costs, which include - salaries, technical infrastructure costs, satellite lease costs, facility costs, marketing costs and programming costs which have increased over the past 12 months.
Q. Is it because you are a monopoly and have no competitor after GTV went down? If GTV was operational, would you still have increased your pricing?
A. It is not true that either DStv or MultiChoice is a monopoly – there are a number of other pay TV operators in Africa, and in Kenya specifically. The economies of pay television differ markedly from other sectors in that the more competition there is in the market, this is due to the fact that programming content becomes more costly since such programming content is generally acquired on the basis of a competitive bidding process which drives up the price.
MultiChoice Africa have indicated that in determining any price increases it considers a number of issues, including whether it can continue to run its business without any increase, and whether in putting such an increase the service may be beyond the affordability of its subscribers or not. This decision is a complex one that is not taken at a whim on the basis of whether there is a competitor or not.
MultiChoice Africa asserts further that it runs a credible and sustainable business, and it is not a fly-by-night interested in short-term gains. Its business has been in operation for more than 15 years, and has managed to do so because of its prudent management.
Q. Critics of your price adjustment note that you are involved in too much sponsorships – are you possibly exploiting your customers to support your philanthropic/CSR activities?
A. The simple answer is that such critics are incorrect in their assessment. MultiChoice believes that it is important for businesses to give back to the communities in which they operate, as well as invest with a long term view of growing a vibrant television market in Kenya - which is being done through our premium channels such as SuperSport and M-Net. Any CSR initiatives or investment that MultiChoice engages in are well thought out and carefully weighed against the continued viability of the business, and are certainly not the reason for any price increases.
Q. The matter of price increase was brought to Parliament last week by Ikolomani Hon. Dr. Bonny Khalwale and the Minister for Information and Communications Hon. Poghisio is supposed to respond this week. What is your view on this?
A. We certainly think that Members of Parliament, as representatives of people, have a duty to raise any issue that may be of interest to the citizenry, and think that Hon. Khalwale is well within his rights to have raised the issue. The Minister, representing government, has a duty to all of Kenya’s citizens, including corporate citizens, and believe that he would consider the issue very carefully and give a considered response thereto.
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