MultiChoice Stock Plunges After Nigeria Ordered $2.2-Billion Tax Bill

South African Pay TV company MultiChoice, has been ordered by Nigeria Tax Authority (FIRS) to pay $2.2-billion in disputed taxes.

MultiChoice’s share fell 7.5% on the news, to R105,73, as investors digested the news that the sum is almost two-thirds of the firm’s market value of $3.3-billion, or R50.4-billion; almost three times the R10.4-billion ($698-million) the firm earned in operating profit in 2021.

Problems in Nigeria surfaced in early July when FIRS instructed local banks to freeze MultiChoice’s bank accounts to recover the $4.4-billion it claimed was owing. At the time, the tax authority claimed that MultiChoice had breached several agreements and that its data could not be trusted. Among other issues, it argues that MultiChoice had not accurately disclosed its number of subscribers and that the company had refused to grant access to its servers.

At the time, MultiChoice said its engagements with FIRS were ongoing and constructive, and that the matter would be resolved amicably. 

This is not the first time a South African company has run up against the Nigerian authorities. In 2015, MTN was slapped with a fine of over $5-billion for not satisfactorily registering new users on its cellular network. Following extensive negotiations, this sum was reduced to $1-billion.

In 2018, the Nigerian central bank took issue with MTN, in an alleged illegal repartration of profit back to South Africa.

The disputed case will be heard by Nigeria’s tax tribunal on 23 September, provided the company pays the sum instructed, FIRS said in its statement.