Multichoice in difference of opinion with Nigeria authorities on regulatory payments
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A spark brews between the MultiChoice group against Nigeria’s Federal Inland Revenue Services (FIRS) as the pay-per-view conglomerate diplomatically insists on regulatory payments already made for its alleged non-compliance with contractual statutes in a stand-off that is beginning to chafe on shareholder commitment.
The group closed at 12 994 cents on the JSE Friday, after falling up to seven percent during the day, amid the uncertainty to its response to FIRS’s ultimatum for a concessionary R9.9bn tranche, from Multichoice, in a statement invoking regulatory clauses.
“MultiChoice Nigeria to deposit with FIRS an amount equal to the tax paid by MultiChoice Nigeria in the preceding year of assessment or one half of the disputed tax assessment under appeal, whichever is the lesser amount plus 10 percent,” it said.
Multichoice however is adamant that: “The direction issued by the TAT does not compel MultiChoice Nigeria to make payment of 50 percent of N1.8 trillion, being half of the disputed tax assessment which is under appeal.”
Meanwhile, Multichoice on Friday was cited by the Nigerian media as being on point with a “whopping N1.5 billion that made them the ‘Official Communications Partner of the Super Eagles and other National Teams,’ three-year partnership agreement”.
At an event attended by Minister of Youth and Sports Development, Sunday Dare in Lagos, both parties inked an agreement that is worth N500 million-a-year with several other opportunities and possibilities in the mix under the contract.
Multichoice South Africa’s senior manager of corporate communications, Francois Rank, pointed out to the statement “sticking to paying the lesser amount is the tax paid by MultiChoice Nigeria in the previous assessed year, which is substantially less than the disputed assessment.”
In the current financial year, Multichoice launched 11 new local language/content channels across sub-Saharan Africa. In Nigeria, the fifth season of Big Brother, produced as a lockdown edition, achieved a record 3 million viewers.
In its annual results for 2021 released earlier this year, Multichoice said the strength of the balance sheet remained critically important given the uncertain longer-term economic impact of Covid-19 and funding requirements for Return on Capital that includes liquidity constraints in Nigeria.
About R9.5bn in net assets, including R8.5bn in cash and cash equivalents, combined with R4bn in available facilities, provide R12.5bn in financial flexibility to fund the group’s operations.
The group’s cash holdings of R2.5bn against R1.7bn in the previous year held in Nigeria, Angola and Zimbabwe remain exposed to weaker currencies.
A large part of the YoY increase can be attributed to renewed liquidity challenges in Nigeria, where the central bank has provided limited US dollar liquidity to the market
The Rest of Africa business grew its 90-day active subscriber base by 0.8m subscribers or 8 percent year-on-year, with the closing base now approaching 12 million people.
The macroeconomic environment remained challenging, with sharp currency depreciation and ongoing consumer pressure affecting reported results.
Multichoice conceded that liquidity challenges resurfaced in Nigeria in the previous financial year and, although being actively managed, cash balances in Nigeria increased by R0.8bn to close over R2.3bn.
“MultiChoice Nigeria is a law-abiding corporate citizen and continues to engage constructively with FIRS in an attempt to resolve this matter,” Rank said.
BUSINESS REPORT ONLINE