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Sep 12, 2007

New pay-TV licensees make big promises, but face uphill battle

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ODM GM Vino Govender on the firm's plans to enter the local pay-TV market
Africa|Merrill Lynch|MultiChoice South Africa|SES|Walking|Water|Africa|South Africa|Communications Regulator|Independent Communications Authority Of South Africa|Govender|Horne|Icasa|Marcia Socikwa|Meloy Horn|Nolo Letele|Water|Worldspace|Zolisa Masiza
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© Reuse this Local information and communications regulator Independent Communications Authority of South Africa (Icasa) on Wednesday announced the five winners of pay-TV broadcasting licences, one of which immediately pledged that the move would promote choice and affordability in the market.

Speaking at the announcement function in Sandton, Icasa councillor Zolisa Masiza said that Telkom Media, On Digital Media (ODM), E-Sat, MultiChoice, and religious broadcasting firm Walking on Water were the recipients of the licences.

However, Merrill Lynch telecoms analyst Meloy Horn expressed strong doubt over the likelihood of the local pay-TV market undergoing any significant change as a result of new participants. Another analyst, who asked not to be named, agreed, saying that the new companies would have to fork out “huge amounts of capex spend”.

It was for this reason that the expert believed Telkom Media to be MultiChoice’s most likely competitor, with E-Sat coming in after it.

MultiChoice owns M-Net and DSTV.

The firm was “well-entrenched” in the market, after having dominated it for the past 20 years, Horne pointed out, adding that the new entrants would have to have “really deep pockets”, to compete effectively.

Speaking in a telephone interview, Horne stated that, in the past few years, many new pay-TV operators had tried to establish themselves in other countries, but had “gone belly up”.

MultiChoice upbeat on new competition

Meanwhile, MultiChoice was quite content to have new competitors, saying that it would grow the market and encourage investment.

“This is an exciting development for us and one which will have a positive impact in our industry,” MultiChoice South Africa CEO Nolo Letele said in a statement. “We believe competition will attract investment into the broadcasting industry and the South African economy in general.”

“It will also stimulate growth of the pay television market and ensure that consumers are provided with choice and more diversity of content,” he added.

Losers can work with new licensees - Icasa

“We hope that the winners will be able to work with those that weren’t awarded licences,” Masiza said, citing areas such as skills and cooperation.

Icasa added that more was to come in South Africa’s pay-TV market.

“This is not the end of it all,” it said.

Icasa councillor Marcia Socikwa said that hearings regarding the conditions of the licences would take place on October 1, and that the new broadcasters “should be able to start by December”.

ETV-owner Hoskens also owns E-Sat.

Masiza said that Icasa’s decision on the licences had been a “momentous task”.

Of the 18 applicants, Worldspace, Multichannel TV and Sentech withdrew their application, he said.

The regulator said that it was still finalising a 560-page document on the reasons behind its decision, and that this would be made public in about three weeks.

ODM says it will shake the market up

ODM, which is partly-owned by satellite broadcaster SES, said that its successful application to offer a new pay-TV service to South Africans would, for the first time, offer consumers choice and affordability in the sector.

ODM for the new firm Vino Govender said that the company would “completely revolutionise the market”.

He said that customers would only pay for the channels that they wanted to watch.

The firm would invest R1,2-billion to start broadcasting, planned to occur towards mid-2008, mainly on content acquisitions.

Govender stated that ODM would be targeting a primary market of some 1,6-million, as well as a secondary target market of 1,5-million, which totalled a potential three-million customer base.


Edited by: Liezel Hill
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