MULTICHOICE wiped off 7.38 percent of its market value to close at R8.84 as Nigerian authorities trained their guns on the entertainment group, with regulators issuing a freeze on its accounts to recover $4.4 billion (R63bn) for allegedly failing to comply with the country’s audit and transparency laws.
Nigeria’s revenue service said yesterday that it had instructed banks to freeze MultiChoice Africa’s accounts and its Nigerian subsidiary for breaching agreements and denying access to their records for auditing.
Nigeria’s Federal Inland Revenue Service (Firs) executive chairperson, Muhammad Nami, reportedly issued the directive after the companies allegedly failed to grant the authority access to their records.
“Particularly, MCN has avoided giving the Firs accurate information on the number of its subscribers and income,” Nami reportedly said. “The companies are involved in the under-remittance of taxes which necessitated a critical review of the tax-compliance level of the company.”
Firs said the groups’ performance did not reflect in their tax obligations and compliance level in the country.
MultiChoice, however, said athough it had not received formal notification of this matter, it advised shareholders that it was aware of the reports.
“The matter is apparently based on unfounded allegations that MultiChoice Nigeria have not fully disclosed all existing subscribers to authorities,” MultiChoice said. ”We have engaged openly with Firs and the engagements are ongoing in a transparent and constructive manner. We believe that this matter will be amicably resolved.”
The group said its operations in Nigeria were continuing.
Analysts said MultiChoice was paying the price for not being particularly liked for the lack of bang for the buck.
Mark Narramore, an analyst at Excelsia Capital, said the amount involved spooked the market.
Narramore said the stock would, however, stabilise as more information came out.
“It looks quite serious at first sight but the amount is not a fine per se, it is quite weird that the market is reacting to that,” Narramore said. ”The market shoots first and asks questions later, the whole thing is based on an unknown for now.”
The group is the latest South African firm to face a huge tax bill in Nigeria after MTN Group’s Nigeria unit.
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