Will a government onslaught push Africa’s largest pay TV operator out of Nigeria?

 (This is a transcript of the podcast posted on Monday, July 19th 2021. You can listen to the podcast by clicking on this link https://mansamedia.africa/the-weekly-beat-july-19-2021/)

Welcome to The Weekly Beat by Mansa with your hosts, Arnold Segawa, Maggie Mutesi, and Dumi Jere. Giving you all the info on Africa’s big finance and economic stories, The Weekly Beat by Mansa.

ARNOLD SEGAWA:

A very warm welcome to this edition of Mansa’s The Weekly Beat, I’m Arnold Segawa. As always I’m not alone. Maggie Mutesi and Dumi Jere are joining me. Maggie, how are you doing today?

MAGGIE MUTESI:

I’m doing fantastic Arnold. It’s good to have you back. We missed you dearly.

ARNOLD SEGAWA:

Glad to be black.

DUMI JERE:

And the prodigal son returns.

ARNOLD SEGAWA:

Oh, but of course, and I come bearing gifts from Nigeria. It doesn’t end if you thought Arnold is all they have. Well, it doesn’t end there. Just a few days ago, we actually heard that Nigeria’s Federal Inland Revenue Service recently issued a statement directing banks to freeze all accounts in Nigeria belonging to MultiChoice Nigeria and MultiChoice Africa until it had been able to recover the money.

Of course, the tax man is allegedly owed. This is around 1.8 trillion naira. It’s close to $4.4 billion. I often do comparisons with countries’ GDPs. As I checked, this is bigger than Burundi’s GDP. Is this the end for Africa’s largest paid television provider? Maggie, you do love your television. Just give me a sense of where you see this going for the very beloved MultiChoice.

MAGGIE MUTESI:

I mean, it doesn’t end between Nigeria and South Africa, does it? I actually want to look at it that way, but $4.4 billion is a lot of money. And for me, I honestly don’t know Arnold. I would say maybe it’s one of those usual fines, Nigeria just lapsed on South Africa once in a while, but I would love to get educated more from Dumi.

DUMI JERE:

I’m not sure I’m the best person.

MAGGIE MUTESI:

I know. He probably knows more than what we know about this particular story. I mean, these are your guys. Yeah.

DUMI JERE:

Yeah. I think at the end of the day this is just pretty much adding to perceptions that Nigeria is a very unfriendly place for foreign capital. And again, the keyword I’m using is perception because it may not necessarily be so on the ground in terms of whether this is the end of the pay station. I don’t quite think so because much as there’s a large population in Nigeria that accesses MultiChoice services, the bulk of MultiChoice’s revenue comes out of Nigeria anyways.

So it’s South Africa. Well, let’s call it SADC as well as the other few countries in the other regions, DRC and the… So compared to what they will lose if worst case scenario they had to close shop in Nigeria, I’d say they would recover.

ARNOLD SEGAWA:

Dumi, I wouldn’t disagree more. I’m sorry, I’m cutting you off. But the world is moving towards generating your own content and not relying on Game of Thrones and whenever, if and when they actually do give you something you’re ready to take it. And guess what? Nollywood is only second to Bollywood.

If we’re to go with the numbers, MultiChoice’s in between 1.5 million to 2 million Nigerian subscribers alone. This is why when we’re watching football games and halftime comes on, guess what? You’re going to see Nigerian banks, Nigerian soft drink ads. So this would be massive, especially given Nollywood and how much they produce.

DUMI JERE:

Okay. So yes, you do raise a valid point. There’s an episode we spoke about football. And one of the points that we raised was that Nigeria probably has the biggest Arsenal supporters, more than England themselves, right? So that’s how huge sport is in Nigeria. And guess who has the rights to football? MultiChoice. So it can’t just walk out or else where else are they going to watch the soccer from?

ARNOLD SEGAWA:

I know I’m digressing here, but one of the conditions to getting some of those rights is you must be airing enough local leagues. Have you ever wondered why there’s a Zambian league showing on SuperSport, or a Kenyan league or a Nigerian league or a Ghanaian league much as some of our leagues like back home in Uganda are not particularly interesting to watch? Most of them end in goalless draws.

It’s because this is actually a condition by many of the FAs abroad so that you do not just get the rights and ignore your local talent. Now if you’re to cut Nigeria off, arguably the home of Yakubu, Jay-Jay Okocha, Nwankwo Kanu, Oliseh, I could go on with these names, especially from the good times. God knows the PSL besides good commentary on Laduma and Marawa is not as fascinating as the Nigerian league. You might correct me here.

DUMI JERE:

Yes, it may not be, or it may be. Who knows? However, what I know for a fact is that as Africans I don’t know whether it’s a curse or what but we seem more interested in English Premier League more than our own leagues at times. Sadly, but that’s just the reality.

MAGGIE MUTESI:

But sadly too this is a lot of money for MultiChoice to recover. I honestly do not see them walking out of this with their head high. I would love to know more beyond that. Can they even recover from this Arnold?

ARNOLD SEGAWA:

I think just the other week we talked about the MTN wanting to add the bid for Ethiopia. And one thing that we could borrow from MTN is empty and fiasco. In Nigeria in 2018, the Nigerian authorities claimed that there was an improper repatriation by MTN Nigeria of close to $8.1 billion between 2007 and 2015. Now there was a lot of and forth.

This is where I got a chance to interview by then CFO Ralph Mupita and there was a lot of back and forth. Again, it’s always interesting to see this from the South African media perspective because everyone says, “Oh, Nigeria is wrong. Nigeria is wrong.” But last I checked, there was a settlement. There was a settlement. Now it’s probably behind closed doors, but there was a settlement. Now at the beginning, this could have been solved amicably according to someone.

And again, this is time to actually go back to the drawing board and try and sit down and have a gentleman’s argument because let’s face it, I don’t want to go with the South African media here, but this numbers are not pulled out of a hat like a rabbit. This numbers are coming out of somewhere.

You cannot tell me that the Nigerian authorities just wake up and pull numbers out of a hat like Houdini or something. This is coming from something. Just last year alone the revenue brought in by MultiChoice was 53 billion rand for the year until March. This was a profit of 3.1 billion rand.

So the money is definitely there. Was it a big estimation because the Nigerian authorities claim that they’re being undercut on the subscribers? Now how do you find out how many subscribers MultiChoice has in Nigeria?

Are they privy to those figures? This reminds me of the time when I was working in Rwanda and one telecom company apparently was undercutting the subscriber figures. Now do the Nigerian authorities, this is the biggest elephant in the room. Do they have the capacity to actually tell how many subscribers are subscribing at any particular time to MultiChoice? Remember now there’s pay TV, there’s Showmax, which is actually internet based. Do they have a capacity to actually track this on the internet, over to you guys?

DUMI JERE:

No, they don’t. If you ever asked around the question that how many, what is the population of Nigeria? You’re never going to get one single figure. It depends on who you’re talking to. Somebody will tell you 180, somebody will say 200, and somebody will say whatever. So if we can’t even account for how many people we have, how much more when it comes to these kind of things?

One thing I know for sure is that Nigeria has always been ranked as a country that’s got one of the lowest tax collection rates in the world, right? So over and above that, it’s been seeking to boost non-oil tax receipts to sort of support its struggling economy and cut its budget deficit. And so why do those always happen to multinational companies and particularly South African ones? You have ShopRite also leaving.

For me, the question then becomes is Nigeria really a friendly place to invest, or what is going on? What is the bigger picture here?

ARNOLD SEGAWA:

Maggie, before you jump in, the shares actually dropped on the day by 8%, MultiChoice shares. Is it a time to actually drop the stock as you actually wrap up?

MAGGIE MUTESI:

Not really, not really, but for me, I want to take it away from what’s happening now. I mean, Dumi, I understand where you’re coming from when you start questioning whether Nigeria is a good place to invest, but again, we need to ask why is it always South Africa? Yeah, that’s also something we have to look at, but Nigeria and South Africa from my understanding actually are pretty great countries in terms of trade between themselves. So they have so much to offer each other.

But maybe there’s also something about the South African companies, but I would love to say things have evolved. You can’t do business the same way you did it 30 years ago. Could it be about South Africa and how they want to operate across the continent? I think Africa has evolved. Going back to what Arnold said, we should look at some of these companies from South Africa as well and ask, okay, why are they losing licenses? Why have they been fined all the time, is something we could question.

DUMI JERE:

Look, I don’t think it’s only South African companies. It’s just for now South African companies are the ones that had gone in and made the bigger noises of bigger impact, I guess. But recently we had the public debacle between the Nigerian government and Twitter. And Twitter is not a South African company. Yes, it may not be about money, but sometimes it just feels like Nigeria is doing bully tactics.

However, taking a more positive look, at the end of the day I feel, and in agreement with you Maggie and Arnold, that amicable solutions particularly when business and some such kinds of monies are involved, I think amicable resolutions are the way to go. So there’s a need for MultiChoice on their part to also engage openly with the revenue authority in Nigeria and do that in a transparent and constructive manner.

On the part of the government they also need to not just do this knee-jerk reaction of, okay, that’s it. We are closing. I think there needs to be more constructive dialogue so that there’s business continuity. That’s my take.

ARNOLD SEGAWA:

Thank you for that guys and to wrap it up with the South African media on covering this particular scenario, I think it’s the Daily Maverick… Yes, it is the Daily Maverick. “Showmax and GOTV platforms are by far the biggest television provider on the continent making it lucrative targets for authorities looking to plug their big holes that COVID-19 has left in their budgets.” I’m reading this as written. I might pardon some of the grammar here. I don’t know if the editor was on sabbatical that day.

That brings for me a big problem because this is still alleged. This is still an ongoing investigation. There’s still conversations happening and for me, this is the beginning and the end of the problem. Because if at all journalism is also not doing a good job in portraying some of these issues as neutrals and looking at it as an opportunity for the Nigerian authorities who have not yet been proven otherwise, both parties still have a case to answer, that is very unfair for anyone to write something like this. But that’s just me being normative and up straight and…

DUMI JERE:

Controversial.

ARNOLD SEGAWA:

Up straight. No, I’m not controversial. This is written on one of the leading platforms in the country and they’ve already kind of passed judgment. Sounds like Jacob Zuma’s case. I think it is quite unfair for someone to write such a thing, especially when investigations are still ongoing, but guys, many thanks for this. As always I appreciate this.

Thank you, Dumi. Thank you, Maggie. If you missed anything in the past week, be sure to visit the website Mansa, that’s of course, www.mansamedia.africa. On Twitter we’re @mansa_media. I’m Arnold Segawa, many thanks to Dumi Jere and Maggie Mutesi. From me and the entire gang, have a lovely week.

The Weekly Beat by Mansa with your hosts Arnold Segawa and Maggie Mutesi and Dumi Jere, giving you all the info on Africa’s big finance and economic stories, The Weekly Beat by Mansa.

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