NTA-StarTimes joint venture as drain pipe
The probe of the Nigerian Television Authority (NTA) and StarTimes Joint Venture Agreement by the senate over the non-profitability of the venture which has been existence since 2008 raised eyebrows last week.
StarTimes, a Chinese electronics and media company with strong presence in Africa, offers digital terrestrial television and satellite television services, provides technologies to countries and broadcasters that are switching from analog to digital television.
In the partnership agreement, StarTimes has 70 per cent shareholding while NTA has 30 per cent.
But when the NTA Director General (DG), Yakubu Ibn Mohammed, appeared before the Senate Joint Committee on Finance and National Planning on Monday, Solomon Adeola, its chairman, queried him, saying it was unfair for NTA to claim that zero profit was recorded during the 11 years joint venture agreement with StarTimes.
Adeola said, “Mr. DG, are you telling this committee those for solid 11 years, the joint venture agreement NTA had with StarTimes has not yielded any profit despite using your facilities for over one million subscribers? This is completely unfair to Nigeria.”
Adeola added that, “Something is cooking. You must come with the MD of your subsidiary unit overseeing the contractual and operational agreement.”
In his response, the NTA DG said no profit was made between both parties as of 2009 when he was an executive director.
Mohammed said the situation did not change when he returned to the agency in 2016 as the DG.
He said, “As an executive director in 2009 in NTA, not a single kobo was made from the joint venture with StarTimes, the same situation I met in 2016 when I returned as DG.”
Mohammed added that, “In fact, on assumption of office as DG, that was the first question I asked, upon which records of non-profitability was presented by the NTA subsidiary outfit running it. The non-profitability status of the venture remains till today.”
However, relying on the audited report of the Auditor General of the Federation, the senate committee revealed that the NTA/StarTimes JV made $36.1m (about N11bn) in 2018; contrary to earlier claims by NTA that the business had yielded no profit in 11 years.
The lawmakers then accused NTA/StarTimes of coming up with incoherent financial records to show that it spent a total of N19bn; leaving a shortfall of N8bn in 2018 to justify earlier claims that the business had yielded nothing.
According to Adeola, the reason NTA officials kept the account to the JV in dollar form was for them to easily ship the profits outside of Nigeria in connivance with some Nigerian officials.
He said, “So that we can look at everything relating to these transactions because from the last record we are able to gather over N200bn was generated because only two years alone accounted for about N30bn.
“N13bn in 2018 and about N11bn in 2019, this is almost N30bn; and another $90m. By the time you now take it from 2008; that will come to about N100bn that was missing.”
The senate then asked that the Managing Director of NTA TV Enterprises, Maxwell Loko, and two other senior management staff of the NTA business subsidiary should immediately step aside to give room for an unbiased investigation.
Sen. Adeola said, “DG, you will be doing Nigeria a lot of good if this managing director, the CEO and the director of tax are allowed to step aside for now; immediately to step aside. We will be doing Nigeria a lot of good because they need to be investigated.
“It will do you a lot of good if you act in that direction. If you continue to keep them in those seats while they are being probed, it will be dangerous for us. They should be asked to step aside with immediate effect.
“The revenue accruing to you was $46.4m, and N14.2bn in 2019, and a clear loss of $4.8m and N1.4bn. You said your cost of sales was $31.7m, and administrative expenses of $19.5m; that is N5.9bn.”
Effort by the MD of NTA TV Enterprises, Maxwell Loko, to provide explanations with regards to transactions with StarTimes did not go down well with the senators as they countered him with more revelations.
For instance, the N720m, the MD told the senate that NTA borrowed from StarTimes to pay for licensing fees from 2011 to 2021 from the National Broadcast Commission (NBC) did not reflect anywhere in the financial records of NTA, according to the committee.
Maxwell said, “It will interest the committee to know that it was indeed the NBC that introduced StarTimes Communication of China to NTA during the 2009 Africast secured in Abuja.
“NBC granted the company licence for the period of August, 2011 to 2016 the first instance and we were expected to have paid N500m as licence fee.”
The senate, on Tuesday, therefore, canvassed for the urgent forensic auditing of the joint venture account through which over N200bn had allegedly been taken out of the country since 2008.
The Senator Adeola-led committee declared that the forensic audit of the account of the non-profitable venture to NTA needed to be carried out to unravel the exact sum of money that had been fraudulently taken out of the country within the last 11 years, estimated to be N200bn.
Senator Adeola declared that, “With what we are seeing, you people as management of the venture are collaborating with StarTimes in siphoning money abroad.
You need to be put under oath along with the other management team, collecting monthly salaries from NTA and working for StarTimes and in the process, indulging in capital flight in collaboration with foreign staff of the company.
“By rough estimations, all the revenues made through the joint venture and recorded in dollar amounted to about N200bn between 2010 and 2018.”
The MD of the joint venture, Loko, told the committee that he agreed that the business was not thriving because Digital Terrestrial Television (DTT) being operated through the venture was capitalintensive as against the satellite model.
He lamented that out of the four million subscribers StarTimes had, only 20 per cent were active, which according to him, made the venture unprofitable for both parties.
No N200bn is missing in our accounts – NTA-Star TV network
But fighting back at the weekend, the joint venture has said there is no N200bn missing from the company’s accounts.
The Public Relations Manager of StarTimes Nigeria, Lazarus Ibeabuchi, in a statement he signed on Thursday, said the venture welcomed the forensic audit on its finances and operations as requested by the Senate’s Joint Committee on Finance and National Planning.
Ibeabuchi said, “We also want to clarify that no revenue is missing as gross earnings have been repeatedly ploughed back into cost of production to cover cost of components, namely transmitters, equipment, generating sets and satellite; content acquisition; as well as operating costs, which include salaries and other running costs, incurred within our 10 years of operation.”
He further said NTA-Star TV Network Limited was a responsible corporate organisation which accounts were audited by one of the big four audit firms in the world.
He added that the venture’s financial activities were fully audited by the Federal Inland Revenue Service (FIRS).
“The loss in our operations over the years is as a result of the fact that our huge upfront investment is in US dollars, and the long-term cost recovery has met brick-walls with successive years of naira depreciation.
“Pay-TV business is capitalintensive and has a long gestation period. More than 80 per cent of inputs into our operations are dollar-denominated. The naira fluctuations haven’t been favourable to the business, making it more and more difficult to meet dollar-denominated obligations,” he said.
He further said the joint venture was open to a proper investigation into its operations and financials.
However, relying on the audited report of the Auditor General of the Federation, the senate committee revealed that the NTA/StarTimes JV made $36.1m (about N11bn) in 2018; contrary to earlier claims by NTA that the business had yielded no profit in 11 years.