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Facebook, Google, Others to Start Paying Tax in Nigeria

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  • Social Media Giants, Facebook, Twitter, Others to Start paying Tax in Nigeria

The Federal Government through the ministry of finance has commenced plans to ensure foreign-owned digital service providers that generate revenue from Nigeria through various services pay the right tax.

The Minister of Finance, Budget and National Planning Mrs Zainab Ahmed, who issued the Companies Income Tax (Significant Economic Presence), disclosed this during the weekend.

According to the Minister, these top global firms with a huge presence in Nigeria are now expected to pay digital tax to the Federal Inland Revenue Service.

The new policy will only affect foreign companies listed under the Significant Economic Presence (SEP) category. However, she said the ministry, may by order, determines what constituted SEP in Nigeria.

Some of the businesses to be affected are Facebook with over 33 million monthly users and about 16 million daily users, Google, Alibaba, Amazon, Netflix, Twitter, etc.

Analysts at PricewaterhouseCoopers said these affected companies will be mandated to register for income taxes in the country despite not having a physical presence in Nigeria.

The analysts further stated, “that Nigerian resident businesses (as well as the fixed bases of non-resident companies) that have transactions with the affected non-resident companies would also be required to account for withholding tax on some of the payments made to these foreign companies.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Tech Companies Profiting Big from COVID-19 Pandemic -GlobalData

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Tech Giants Growing Market Value During COVID-19 Pandemic

Global tech giants are taking advantage of the numerous business opportunities that the COVID-19 pandemic is opening up across the globe.

This was evident in the second quarter financial reports of the top 25 technology companies that saw the market capitalisation of the companies expanding quarter-on-quarter during a global health crisis.

According to the Data compiled by GlobalData, Apple’s second-quarter revenue was aided by the strong performance from its services and wearables business units despite COVID-19 disruption. This, according to the data, allowed the tech giant to gain substantial market share and emerged as the world’s most valuable company.

Speaking on the strong financial statements from global tech giants, Keshav Jha, Business Fundamentals Analyst at GlobalData, said: “Apart from its impressive Q2 performance, the announcement of the new iOS and new iMac during Apple’s annual developer conference (WWDC) in June 2020 seemed to have pleased investors with the company’s MCap rising by over 40% during the quarter.

“The second of the top 25 technology companies by MCap was Microsoft. The company’s business accelerated during the company’s Q3 ending March 31 2020 mainly driven by growth in its cloud usage, increased Xbox sales, and higher demand for Office commercial and Dynamics business solutions. The company’s decision to close its physical stores and invest in e-commerce operations to drive sales, as well as the announcement of regular quarterly dividend, helped its stocks reach a new high.

“In third place was Amazon Web Services (AWS), which recorded a huge surge in demand of its cloud services after the COVID-19 outbreak. Additionally, an increase in e-commerce retail demand due to lockdowns imposed by governments in major economies helped Amazon’s stock rise over 40% and its MCap crossed US$1 trillion mark in Q2 2020.”

Alphabet, Facebook and Tencent led in the digital advertising space with over 20 percent quarter-on-quarter growth in their market capitalisation. The report noted that in the last three weeks of Q1 2020, advertisement revenue of Alphabet and Facebook dipped slightly but started showing stability in the first three weeks of April.

This renewed interest in the advertisement of the two companies aided their stocks by 20 percent in April as investors remained strongly bullish due to an increase in consumer engagement on its services because of the quarantine and shelter-in-place orders.

Jha continued: “Although suspension of sports events affected Tencent’s media advertising revenue, its online advertisement and games revenues increased over 30% in Q1 2020, ended March 31, which seemed to help the company win over investors’ confidence.”

For major semiconductor companies such as Samsung, Taiwan Semiconductor, NVIDIA, ASML, Broadcom, Texas Instruments and Qualcomm their market value grew between 9 percent to 45 percent quarter-on-quarter during the period.

Jha adds: “The health crisis led to rise in demand for memory chips, mainly due to higher demand from cloud applications linked to remote working and online education. The continued investment in AI, 5G infrastructure, data center, autonomous vehicles and gaming also kept market interested in these stocks.”

While ServiceNow and Zoom were the two entrants on the GlobalData’s top 25 technology companies ‘my MCap list’. They both grew subscription revenues and widening customer base with ServiceNow closing 37 deals in the first quarter. Zoom usage surged by 75.6 percent quarter-on-quarter in the second quarter of 2020.

Jha concludes: “The economic downturn caused by COVID-19 has impacted all sectors, but the performance of tech stocks in Q2 suggests that investors believe they can successfully manage the headwinds from the health crisis. Tech companies are uniquely positioned to provide technology and resources to organizations and partners, which help in securely accessing and sharing data while working remotely. These companies are also playing pivotal role for consumers coping with lockdown measures, and in enabling health institutions and governments to maintain databases, which help in containing the spread of virus.”

Please note that the technology companies include software and hardware developers, IT services providers (including internet-based services providers), and electronics manufacturers including semiconductors, mobile devices etc.

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Amazon Receives Approval to Launch $10bn Broadband Project, Kuiper

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Amazon Project Kuiper

Amazon, founded by Jeff Bezos in 1995, just claimed a major victory by getting regulatory approval to create Kuiper, a planned fleet or constellation of 3,236 of internet-beaming satellites.

If realized, Kuiper would compete with Starlink, a similar yet potentially much larger fleet of 12,000 to 42,000 satellites many times the number of spacecraft humanity has ever launched being formed by SpaceX, the aerospace company founded by Elon Musk.

On Wednesday, the FCC’s five commissioners unanimously voted to permit Amazon to launch its Kuiper fleet into space and communicate with Earth-based antennas, giving the project the paperwork it needs to get off the ground.

“We conclude that grant of Kuiper’s application would advance the public interest by authorizing a system designed to increase the availability of high-speed broadband service to consumers, government, and businesses, the FCC wrote in its order, released on July 30.

In a subsequent announcement by Amazon on Thursday, the company pledged to invest “more than $10 billion in its effort to provide “reliable, affordable broadband service to unserved and underserved communities around the world.”

“A project of this scale requires significant effort and resources, and, due to the nature of [low-Earth orbit] constellations, it is not the kind of initiative that can start small. You have to commit, Amazon said.

That amount, incidentally, is precisely what SpaceX COO Gwynne Shotwell estimated in May 2018 as the cash it may take to complete Starlink.

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Airtel Africa Grows Customer Base to 111.5 Million in Q2 2020

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Airtel Africa Increase Customer Base by 11.8% to 111.5 Million

Airtel Africa Plc, one of Africa’s leading telecommunications companies, on Thursday reported a 11.8 percent increase in customer base to 111.5 million for the second quarter of 2020.

Airtel grew revenue by 6.9 percent $851 million, while constant currency revenue growth expanded by 13 percent.

In the financial statement released on the website of the Nigerian Stock Exchange on Friday, the telecom giant said it recorded constant currency revenue growth across key business segments, with voice revenue rising by 2.2 percent and data expanding by 35.7 percent during the quarter.

The company said its mobile money segment grew by 26.3 percent in the second quarter of the year.

Key Highlights of the Quarter

  • Underlying EBITDA increased by 7.9% to $375m, with constant currency growth of 14.6%
  • Reported underlying EBITDA margin was 44.1%, up by 40 bps(61 bpsin constant currency)
  • Operating profit increased by 12.9% to $210m, an increase of 21.5% in constant currency
  • Free cash flow was $96m compared to $62m in the same period last year
  • Earnings per share (EPS) before exceptional items was $1.0 cents and basic EPS was $1.1 cents
  • Net debt to underlying EBITDA was 2.2x, compared to 3.0x in June 2019

Commenting on the performance, Raghunath Mandava, Chief Executive Officer, said: “During last quarter our business was impacted by the Covid-19 pandemic, as restrictions on movements of people and ways of socialising were introduced to contain the spread of infection. In these unprecedented times, we have worked with governments, regulators, partners, and suppliers to keep customers and businesses connected as well as supporting the economies and communities. We focussed on expanding and maintaining our network to ensure it could cope with increasing demand, we kept our distribution up and running by increasing the penetration of digital recharges and stock levels, and we expanded our home broadband solutions to ensure customers could work and access entertainment remotely.

Covid-19 impacted customer usage pattern, particularly during the month of April, however, as some of these restrictions started to be lifted, customer usage trends in May and June returned to being broadly consistent with pre Covid-19 trends. The Group’s performance generally reflected these trends, with revenue growth accelerating in May, and we ended the quarter with 13% revenue growth and 61 bps of EBITDA margin expansion in constant currency. The business showed its resilience even during these unprecedent circumstances with all key business segments – voice, data and mobile money, and all regions – Nigeria, East Africa and Francophone Africa contributing to growth.

During the quarter we also increased our support of the communities where we operate by providing financial support towards essential workers, free data for educational purposes and we worked together with governments to temporarily waive fees on certain mobile money transactions. We also created an exciting partnership with UNICEF to provide children with access to remote learning and enable access to cash assistance for their families via mobile cash transfers.

The outlook remains uncertain, particularly regarding a so called potential second wave of infections and the actions governments will decide to take in that event. However, these results are further evidence of the growth opportunities our markets offer and the effectiveness of our strategy to focus on winning customers, investing in our network and expanding our voice, data and mobile money businesses.

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