MultiChoice Group Ltd. was ordered by a Nigerian tribunal to pay 50% of a disputed 1.8 trillion naira ($4.4 billion) tax bill, the latest crisis facing a South African company in the continent’s most populous nation.
Shares in Africa’s biggest pay-TV provider slumped after Nigeria’s Federal Inland Revenue Service imposed the penalty as a condition to an appeal being heard in a Lagos court. The stock declined 8% by the close in Johannesburg on Wednesday, nearing 11-month lows.
MultiChoice disputes the amount it has to pay — saying it owes far less — and continues to engage with authorities, the company said in an emailed statement. The firm is the operator of DSTV, a satellite TV provider across sub-Saharan Africa.
“The market needed quicker communication from MultiChoice as it’s unsure what the company’s position is and how serious the situation is,” said Greg Davies, a money manager with Cratos Capital in Johannesburg.
MultiChoice’s predicament resembles one that engulfed MTN Group Ltd. in 2015, when Africa’s largest mobile-phone provider was slapped with a $5 billion fine for failing to deregister Nigerian subscribers without proper registration. While the carrier eventually settled for a far lower penalty, the stock hasn’t fully recovered.
MTN went on to have disputes over tax and dividends withdrawn from Nigeria, its biggest and most populous market. Shoprite Holdings Ltd., Africa’s largest food retailer, sold its operations in the country to local investors this year after battling supply-chain disruptions and issues repatriating funds.
Nigeria’s tax authority asked lenders to freeze MultiChoice’s local bank accounts to recover the alleged tax arrears last month. The decision came after the Johannesburg-based firm refused to grant access to its servers for an audit, Nigeria’s Federal Inland Revenue Service said at the time.
The $2.2 billion bill facing MultiChoice is a deposit and condition of the pay-TV company’s case being heard at an adjourned date of Sept. 23, the Federal Inland Revenue Service said in an emailed statement on Wednesday.
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