Home Latest Insights | News Limited Choices As A Nigerian Court Hits MultiChoice (DStv, GOtv) with $2 Billion

Limited Choices As A Nigerian Court Hits MultiChoice (DStv, GOtv) with $2 Billion

Limited Choices As A Nigerian Court Hits MultiChoice (DStv, GOtv) with $2 Billion

The halt-time score is 1-0 as Nigeria’s tax agency scored a big goal against MultiChoice which controls brands like DStv and GOtv. The referee is a court which found sense in the documented dribbles presented by the agency, and asked MultiChoice to pay N900 billion ($2 billion) to Nigeria while the game is restarted at appeal.

The tax rift between the Federal Inland Revenue Service (FIRS) and Multichoice Nigeria Limited took a new turn on Wednesday following a court ruling ordering the TV company to pay N900 billion to the tax agency, which is 50% of the backlog of what it allegedly owes in taxes.

The FIRS had accused Multichoice of owing up to N1.8 trillion in taxes after the tax body said it conducted a forensic audit which revealed that the company had failed to fully fulfill its civic responsibility in the assessed years. NAN reports that five-member Tax Appeal Tribunal (TAT) sitting in Lagos issued the order following an application to it by the counsel to FIRS. TAT led by its Chairman, A.B. Ahmed, issued the order following the application.

[…]

After hearing arguments from both sides, TAT upheld the FIRS submission and directed Multichoice to deposit with the FIRS an amount equal to 50 percent of the Assessment under the Appeal plus a sum equal to 10 percent of the said deposit as a condition precedent for further hearing of the appeal.

But even after the half-time, the choices before MultiChoice are limited. This is what happens when you become a monopoly or dominant in a foreign land: head, tail, you have few friends. Toyota paid for the same business sin as America forced it to build plants in the US to sell its cars.

MultiChoice controls the most important entertainment product in Nigeria – European football – and across all domains, the firm is very successful. Try to call ten young men during any evening of a Champions League game. The response will be “we are watching a game, call back later”. Yes, its product shuts down evenings as people congregate to watch millionaires kick round leather.

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With those premium licenses signed in European capitals, MultiChoice’s competitors are largely muted, offering mundane products. Watching DStv is a right and that is why the greatest critics of MultiChoice are also its most loyal customers! That is why Nigeria thinks it has some hidden treasures. So, the tax agency went for those, dropping some numbers. The court has asked the entertainment powerhouse to deposit 50% of the amount.

So, as is typical now in Nigeria, we want to teach this company in the language it understands: we will drop a number it ought to have paid on taxes, and then force the company to prove that it does not owe that amount. As expected, the court will bless that. That seems to be what is playing out here, except that this is not a script of Zee World on DStv.

“The amount constitutes what the FIRS calculated as due in taxation to the Federal Government of Nigeria from Multichoice after an investigation over several months to determine the extent to which Multichoice has been evading taxes in Nigeria,” FIRS officer explained.

But do not show pity to MultiChoice: “The counsel also prayed TAT to direct Multichoice to produce before the Tribunal the integrated Annual Report and Management Account Statements of Multichoice Group Ltd for Tax Years 2012 to 2020, among other prayers.”  Yes, if it is not hiding something, it needs to present the books. Otherwise, it needs to deal with the limited choices presented.

Comment on LinkedIn Feed

Comment: The problem with multi choice and all these onslaught is that it has refused to show flexibility.

The company will not die if it finds a way to offer pay per view services in Nigeria, even if they have to tweek it a little. So as to pacify their host.

They are so stiff and adamant and I do not pity them. Taking the advantages of being a monopoly to the extreme is a dangerous game

My Response: “The company will not die if it finds a way to offer pay per view services in Nigeria, even if they have to tweek it a little. So as to pacify their host.” – why do you think we have to decide how someone must run its business? Why not start another MultiChoice and do PPV (pay per view)? I will be really worried if Nigeria follows that path.

Looking at the economics, PPV makes no sense unless Nigeria will allow them to price based on demand. A boxing match on PPV can cost $100 for 30 minutes even though a monthly plan on the same channel may be $9! So, Nigeria must not think MultiChoice must divide $9 by the number of hours in a month and charge for that during Champions League.

The only message monopolies get is competition: Nigerians must create a competitor and all the noise will stop.

Court Orders MultiChoice (DStv, GoTv) to Pay Nigeria’s Tax Agency N900 Billion


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3 THOUGHTS ON Limited Choices As A Nigerian Court Hits MultiChoice (DStv, GOtv) with $2 Billion

  1. Has FIRS gained access to MultiChoice’s database? For FIRS to calculate evaded taxes to the tune of N1.8 trillion, it means that MultiChoice must have made at least N5 trillion profit (not revenue)! Even when you add VATs, it’s still unclear how you generate such incredible numbers as profit in the Pay TV space in Nigeria.

    What is the difference between MultiChoice and Dangote? We cry so much about a company that provides luxury services, yet don’t seem to know how to handle the ones that provide essentials products.

    It’s like Nigerians have given up on the idea that another company can challenge MultiChoice, quite pitiful to surrender in that manner.

    People shout monopoly, but yet incapable of raising competitors. Maybe all the betting companies can fund a competitor, since they make their money from sports too…

  2. Sad development for a country looking at inviting foreign investors.
    We have been hounding Multichoice for a seeming monopoly, yet when a Nigerian company took the reins in the same field, it couldn’t deliver on promises.
    We have to realize that PPV is not what our representatives are selling to the gullible masses. The economics don’t make it feasible for what we have here. We are basically getting sports services and subscription cheap. What is our current exchange rate ? Chasing shadows and playing to the gallery just to serve hidden interests will not augur well for us in the long run.
    This bogus charge is just another ploy to deal a blow to the South African investments here. Simple.

    • We are not happy with this Fine’s, but you too have to looks at peoples that are working with you like DSA and installer’s, and many of your partners working for the company,show government your contribution for this country.

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