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| Multichoice Africa CEO Tim Jacobs |
Multichoice this week announced new prices for its DStv bouquets with the top end premium subscription now priced at Sh9,400 up from Sh8,200.
Jacobs, who is in charge of Multichoice business outside of South Africa said the company had held off raising prices hoping the Shilling would stabilize but the national currency's continued slide forced the review.
"The currency started depreciating way before we increased our prices," Jacobs said, "We held off for sometime waiting to see if the currency would stabilize (but) there comes a point where currency devaluation (can no longer be absorbed)."
The Shilling yesterday hit a new three year low of Sh104.75 against the dollar with many analysts bracing themselves for it to breach the pyschological Sh105 mark.
It has now plunged 14% this year against the US Dollar and other hard currencies.
While the Dollar is itself down against the major world currencies, it has surged against African currencies owing to their negative trade balances (they import more than they export).
For instance in Kenya, importation of capital goods associated with the construction of the Standard Gauge Railway has widened the trade deficit and consequently current account deficit.
This has seen many commodities that are purchased in Dollars soar in prices.
A Toyota Premio that cost Sh1.3million in December to import is now going for Sh1.6 million or more owing to the strong Dollar.
Vehicle importers are now asking customers to hold off until the Shilling returns to familiar levels before importing a vehicle.
Local companies with significant Dollar spend have also faced adverse effects of the weak Shilling.
Kenya Airways when it reported the biggest corporate loss in Kenya cited huge interest payments and foreign exchange losses on dollar denominated of Sh4.7billion.
Athi River Mining, which also has some Dollar denominated debt, in its half-year results, reported Sh1.4bn in unrealized foreign exchange losses.
"The sharp depreciation of both the Kenyan and Tanzanian currencies, has resulted in unrealized forex losses on our dollar denominated borrowings," adding that, "it could be reversed if the currencies strengthen or against future dollar earnings."
The Kenya government is itself paying a lot more on the Eurobond it floated sometime back as the Shilling continues to weaken.
Jacobs said Multichoice has faced the same issue as it pays most of its content including movies and local football leagues in Dollars.
Consequently, all countries with a free float currency in Africa have seen a review of bouquet prices.
Nigeria which has pegged its Naira to trade at a fixed N199 to the Dollar for example has not been affected.
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