Telkom Media faces uncertain future
Telkom Media is facing an uncertain future after Telkom said yesterday that it will significantly reduce its financial commitment to the company and is further looking to rid itself of much of its shareholding in the new pay-TV provider.
In a recent Telkom presentation the company CEO Reuben September said that Telkom Media’s business model, of targeting the LSM 5 – 8 for its satellite TV and LSM 10 – 12 for IPTV markets and differentiating itself on content and price, remains sound.
September said that IPTV holds great potential and added that Telkom can – after receiving the appropriate licenses – provide a variety of content to its subscribers over its network.
He did however indicate that the absence of IPTV will not be ‘overly destructive’ as other content provisioning – including images, video-on-demand and even advertising – is still a viable model. This is the first sign that there may be doubts from Telkom about the feasibility of a national IPTV rollout.
Reduce funding & shareholding
Telkom said that it accepted the Telkom Media business plan as realistic and achievable, but that it reduced funding for Telkom Media to R5.3 billion from the previously allocated R 7.5 Billion.
September said that the decision to reduce Telkom Media’s funding was partly due to the fact that a number of initiatives are competing for limited funds, and that these initiatives have shorter pay-back periods than Telkom Media.
September further said that fixed-line businesses all over the world need to focus on their strengths in the face of increased competition and this will require investment. He said it is in Telkom’s interest to support and strengthen the fixed-line business.
Telkom has started the process of reducing its Telkom Media shareholding according to September and the company’s aim is to keep the smallest possible stake whilst retaining the rights to provide IPTV products and have access to content.
September concluded that Telkom will continue to fund essential operational expenses in the interim.
Telkom Media said that they are currently investigating other potential investors and will make a statement in due course.
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