Revealed! Double loss for Multichoce as company writes off $21m in Heritage bank after losing customers

• The $21 million that MultiChoice Group Limited had put in the bank has been written off by the company
• It made the decision following the revocation of Heritage Bank's operating license earlier this year
• The group's activities in its largest African market were further hampered by currency rate losses

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Following the liquidation of Nigeria's Heritage Bank earlier this year, MultiChoice Group Limited has written off $21 million that was deposited in the bank.

The high rate of inflation and continuously falling value of the naira in Nigeria continue to be problems for MultiChoice. Photo Credit: Multichoice, Skynesher
Source: UGC

The company's interim financial results for the half-year that ended on September 30, 2024, included this information.

Following the Central Bank of Nigeria's revocation of Heritage Bank's operating license, which essentially closed the bank, the amount was deemed irrecoverable.

The financial statement document read,

“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.”

MultiChoice's choice to write off the money highlights the challenges that companies in Nigeria's banking sector face, especially in light of the country's fragile economy.

The company continues to face difficulties in Nigeria due to the country's high rate of inflation and steadily declining value of the naira.

Additionally, the business reported receiving less cash remittances from Nigeria, taking out only $65 million during the reviewed period as opposed to $91 million during the same period last year.

Losses in exchange rates made the group's operations in its biggest African market even more financially burdened.

It noted,

“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.“The group extracted USD65m from Nigeria in the period (1H FY24: USD91m) at an average rate of NGN1,516:USD (1H FY24: NGN794:USD), incurring extraction losses of USD1m or ZAR20m (1H FY24: USD28m or ZAR518m) in the process.“The group held USD11m in cash in Nigeria at period-end, down from USD39m at end FY24, a consequence of consistent focus on remitting cash, the impact of translating the balance at the weaker naira and the write-off of the USD21m receivable relating to the cash held with Heritage Bank before its license was revoked and the bank was liquidated.”

243,000 Nigerian subscribers disconnect from DStv, GOtv

Legit.ng reported that Multichoice, the parent company of DStv, GOtv, has disclosed that about 243,000 Nigerians refused to renew their subscriptions between April and September 2024 due to the drop in Nigeria’s macro and consumer environment.

The company noted that high inflation at 32.70 affected subscribers in Nigeria.

Multichoice disclosed this in its financial statement released on Tuesday, November 12, 2024, saying that over 566,000 non-South African subscribers ended their subscriptions in the period under review.

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Source: Legit.ng