It’s a two-way race…
NEVER MIND the horde of consortiums that recently converged on Icasa to make submissions for pay TV licences before South Africa’s telecoms regulator, as analysts polled by Finweek reckon that the battle for market dominance will be a two-way race pitting applicant Telkom Media against MultiChoice.
Although it’s difficult to put a precise valuation on SA’s pay TV market, Telkom Media head Mandla Ngcobo’s submission to Icasa suggesting that the market for satellite subscriptions could potentially grow as high as 2,3m by 2012 – more than double the current number of households with access to pay TV – does shed some light on the value of the market.
Based on a conservative estimate, MultiChoice is said to have slightly fewer than 800 000 subscribers and pegs its DStv subscription at R470/month, raking in revenues of up to R376m/month. And now Telkom Media – majority owned by the cash-laden fixed-line incumbent – appears set on at least breaking MultiChoice’s stranglehold on SA’s pay TV market, given the composition of its consortium and its envisaged capital injection.
Veteran SA film producer Anant Singh is part of Telkom Media’s empowerment consortium. And it also recently enlisted the services of Connie Molusi – former CE of media group Johnnic – to chair the group.
Telkom Media has earmarked a peak funding of up to R7bn over eight years. It anticipates to break even by 2013. Among the services it intends offering are digital services via the Internet, satellite and IPTV, TV content, video-on-demand and interactive services (portals, music, games). It will offer a basic bouquet of channels estimated to cost no more than R100/month – 370% less than the incumbent’s price.
Khulekani Dlamini, an analyst at Renaissance Asset Management, says: “Competition won’t be about pricing – it will eventually come down to content. The challenge for Telkom Media is to provide the right content to its viewers at the right price.” Dlamini adds that Telkom Media’s war chest is enough to worry its competition.
Given MultiChoice’s recent manoeuvring – that’s seen it enter into a DStv reselling partnership with Vodacom – it’s gearing up for full-scale competition.
As part of MultiChoice and Vodacom’s tie-up terms, the cellular group will resell MultiChoice’s DStv select bouquet of 14 channels for a discounted price of R139/month. The offer extends only to Vodacom subscribers.
MultiChoice hopes to leverage Vodacom’s extensive footprint in the SA market that’s seen it garner a 58% market share of the country’s estimated 29m subscribers. Ironically, Vodacom is 50% owned by Telkom.
Following hot on the heels of the Vodacom deal, MultiChoice – in a move that a source says is aimed at thwarting Telkom Media’s future interests in the pay TV market to the north of Africa – is said to be on the verge of signing another agreement, this time with pan-African cellular giant MTN.
MultiChoice claims a substantially huge DStv subscriber base spread throughout Africa. Outside SA, Nigeria – with an estimated 135m population – is MultiChoice’s biggest pay TV market.
MTN says it has more than 20m subscribers outside SA, spread in 14 African countries, with Nigeria potentially its biggest market outside SA. MTN product manager Ashraff Paruk declined to comment, saying the timing was inappropriate. Although MultiChoice was equally guarded on the subject, our source says both parties had reached an agreement pending a formal announcement of the deal.
Finweek
Loading ...