Telkom’s call for help
Telkom has a tough decision ahead. Recent market talk says 10 parties, mainly institutional investors, are interested in buying part of the fixed-line operator's 66 percent stake in Telkom Media, the new pay TV firm.
The fixed-line operator has appointed Goldman Sachs to advise it on the deal. So much interest in a company that is yet to operate is unexpected. Maybe its association with Telkom has something to do with it.
So far there's no vast interest from international players, mainly because the Electronics Communications Act has capped foreign ownership of a broadcasting entity at 20 percent. Telkom is said to have approached News Corporation to take up a stake, to no avail.
Telkom has put a veil of secrecy around the matter. But it is running against time, because Telkom Media, the one company that was seen as a strong rival to MultiChoice, has to launch its services soon.
Telkom had planned to launch in the second half of the year, but this might be pushed to early next year.
It might not launch at all.
Institutional investors seem like suitable candidates, as they have deep pockets and are generally patient for their return on investment. Telkom Media's peak funding has been reduced from R7.5 billion to R5.6 billion over five years.
It is restructuring the business plan and looking for a long-term investor.
Everyone, including Telkom Media employees – some of whom left cushy jobs to join the new kid on the block – are hoping a good Samaritan will rescue the company.
Even content providers like international company HBO are rumoured to be rooting for Telkom Media to succeed, because dealing with monopoly MultiChoice is becoming unbearable – the bargaining power is not in their favour.
Adding a another player will create a competitive market, even though it might take long. The market is waiting with bated breath, hoping that next month, when Telkom announces its full-year financial results, there will be clarity on who will save the sinking ship.
Business Report
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