FIRS said the DStv provider had not paid VAT since its inception. It has subsequently appointed Nigerian Deposit Money Banks to freeze and recover 1.8 trillion naira from MultiChoice Nigeria and MultiChoice Africa’s bank accounts. MultiChoice acknowledged the report, saying it is in discussions with the FIRS regarding its bank accounts being frozen. The company said the matter is based on unfounded allegations that MultiChoice Nigeria has not fully disclosed all existing subscribers to authorities. “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,” MultiChoice said.

Vaughan Henkel, head of equity research at PSG Wealth, said the fine imposed on MultiChoice is excessive, and it is unrealistic to expect the company to pay this fine. He highlighted that it is eight times MultiChoice’s annual revenue in Nigeria and higher than its assets in the country. “MultiChoice Nigeria has approximately R4 billion in assets, of which about R2.3 billion in cash. The entity also has around R23.4 billion in liabilities,” he said. “As such, we believe it is unrealistic for the group to entertain paying more than what the assets are worth, as it would be in the group’s best interest to simply exit Nigeria.”

Henkel likened the MultiChoice fine to the $5.2 billion fine handed to MTN by the Nigerian Communications Commission (NCC) in 2015. MTN and the NCC negotiated the fine down to $1.671 billion. It is not the only time Nigeria hit MTN with a large fine. Three years ago, the Central Bank of Nigeria ordered MTN to bring back $8.1 billion it alleged the company had illegally repatriated. After protracted negotiations, the matter was resolved after MTN agreed to a “resolution payment” of $53 million. Henkel expects the same to happen in the MultiChoice tax case. “We believe that the MultiChoice fine is excessive and will eventually be negotiated down,” Henkel said. “Given the size of MultiChoice’s Nigerian assets, we think the fine in a worst-case scenario would be in the region of R4 billion to R5 billion.” He said the market seems to have already priced in a fine of a similar size.