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MultiChoice faces cash constraint in Nigeria, reduces funds in country’s market to $133m

South African cable tv company, MultiChoice Group, has revealed that its management is facing liquidity constraint in Nigeria, and has to retrieve the company’s funds at a greater cost from the country, which is its second largest market in Africa.

Ripples Nigeria gathered from checks that MultiChoice, the parent company of DSTV and GOTV, paid a premium, against the rate offered in the official foreign exchange market, to ensure repatriation of funds continues.

In Nigeria, there are multiple foreign exchange rates, with the official market, Investors and Exporters window, offering $1 at N420.12, while the black market is selling one dollar at N620, as at Monday.

While the company didn’t state the amount repatriated so far, MultiChoice has reduced its cash in the Nigerian market down to $155 million, “Although liquidity challenges continued in Nigeria, the group successfully repatriated cash throughout the financial year, albeit at a premium to the official rate. Consequently, local cash balances in Nigeria were maintained at ZAR2.3bn (USD155m).” The firm said in its Q1 2022 financials.

Read also:Relief for Nigerians as Tribunal stops MultiChoice from increasing DStv, GOTV subscription rates

It stated further that the company’s cash in the Nigerian market, and the rest of Africa where MultiChoice operates its cable tv business, is exposed to rise, as the capital could loss value due to their weak currency, “Cash holdings of ZAR2.5bn (FY21: ZAR2.5bn) held in Nigeria, Angola and Zimbabwe remain exposed to weaker currencies.”

Aside from the constraint in liquidity or repatriation of funds, and fear of weaker Nigerian currency, the country’s current auditing of MultiChoice finances caused a decline in the company’s free cash flow, due to the over $40 million (ZAR0.6bn) deposited “on a without-prejudice and good faith basis” to the Nigerian government.

The fund will only be received depending on the outcome of the audit process. Recall that the Federal Inland Revenue Service (FIRS) of Nigeria had accused MultiChoice Nigeria Limited and MultiChoice Africa Holdings BV. of committing tax related offences, which MultiChoice denied.

Both parties agreed to settle out-of-court in February 2022, with MultiChoice accepting FIRS request to audit its finances, which would cover corporate income tax, value added tax and transfer pricing. The audit began in March 2022.

Meanwhile, Nigeria, regardless of the difficulties the company is facing in the country, remains the best performing markets out of the Rest of Africa (RoA) segment, reporting subscription revenue growth of 43%, and 11% in subscription growth – highest amongst its peers.

The post MultiChoice faces cash constraint in Nigeria, reduces funds in country’s market to $133m appeared first on Latest Nigeria News | Top Stories from Ripples Nigeria.

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