Multichoice is a South African video company and internet company which grew out of M-Net, both of them being owned by Naspers. Multichoice is best known for DStv, their pay-TV service. To expand their business across Africa, Multichoice embarked on a lot of joint ventures in different countries and licensed franchises in others. In Zimbabwe they decided on a franchise arrangement.
From the onset we should understand that there are different types of franchises. Even when franchises are similar, they usually are not identical, for example business franchises awarded by KFC are different from the ones McDonald’s give. The difference is starker for a fast food outlet like KFC and a pay-TV service like DStv.
Some business franchises require the franchisee to pay a fixed amount per period for use of a trademark and brand name. Some franchise agreements require royalty payments based on number of units sold for example. In Multichoice Zimbabwe’s case, what they pay out is dependent on the number of subscribers they get.
This means that although Multichoice Zimbabwe is paying out over $45m in six months to South Africa they get to keep the profits in US dollars. The thing is, Zimbabwean subscribers pay their full subscriptions in US dollars but not all of it is remitted to South Africa. Some of it is Multichoice Zimbabwe’s.
Some have raised the point that Multichoice Zimbabwe should not get to be paid in US dollars whilst all the other local businesses struggle with bond notes. They argue that they should ask for only the portion they remit to SA in hard currency and the balance should be swipable, EcoCashable etc.
Of course Multichoice Zimbabwe would not want that. The biggest reason obviously being that they do not want to be paid in bond notes, who does? The second would be that they would be telling everyone how much they make, the bond note portion. The third might be the difficulty and/or cost in implementing such a payment system.
We now all know that the Zimbabwean government has a sizable investment in Multichoice Zimbabwe and so we know that even if it was feasible and made all the sense in the world for them to split the subscription payments it still would not happen.
What do you think about Multichoice Zimbabwe getting paid in US dollars? Do you think they should be forced to split the subscriptions into bond note and foreign currency? Or maybe you think they should actually be forced to take the whole subscription in bond notes, something Kwese TV promised before they got banned. Let us know what you think.–techzim