DStv war between Naspers and Caxton

Naspers lawyers have described Caxton’s call for Icasa to probe it for a breach of the Electronic Communications Act a “commercial war”.

The request for the investigation is partly based on shareholder information in the possession of Caxton and the matter dates as far back as August 2007.

At that time, Icasa reportedly refused and delayed the probe. But a judgment in July last year ordered the regulator to immediately look into the matter in terms of Sections 64, 65 and 66 of the ECA, according to Caxton’s submissions.

In a hearing heard by Icasa’s Complaints and Compliance Committee on Tuesday, Caxton charged that Naspers has violated among others section 64 of the Electronic Communications Act.

Section 64 reads:

“A foreigner may not indirectly or directly exercise control over a commercial broadcasting licensee or have a financial interest or an interest either in voting shares or paid up capital in a commercial broadcasting licensee, exceeding 20% . Not more than 20% of the directors of a commercial broadcasting licensee may be foreigners.”

Caxton argues that MultiChoice and M-Net, through Naspers, contravened section 64 because a foreigner directly or indirectly has an interest in voting shares or paid-up capital exceeding 20%.

Citing a 2007 Naspers annual report, Caxton told the hearing that the owner of Media 24 and DStv had 712 131 class A ordinary shares of R20 each and also 366 688 936 class N ordinary shares of 2c each.

According to Caxton’s calculation of Naspers shares held by non-residents of South Africa, 41.9% of Naspers’ class N ordinary shares were held by foreigners.

Naspers, according to Caxton’s submission, effectively held “75% of the shares in MultiChoice and therefore foreigners’ indirect interest in MultiChoice amounted to 32.41% (being foreigners’ interest in Naspers of 41.82% x 77.5% Naspers’ holding in MultiChoice)”.

Caxton further added that MultiChoice and M-Net had submitted amended figures in March 2009, but the change in figures did not yield a different conclusion.

“As Naspers held 80% of the shares in MultiChoice and M-Net, as at March 31 2009, foreigners’ indirect interest in MultiChoice and M-Net amounts to 34.08% (being foreigners interest of 42.6% x 80% Naspers holding in MultiChoice and M-Net). Hence, on the latest figures provided by them Naspers, MultiChoice and M-Net remain in contravention of section 64.”

Caxton said this state of affairs was not in line with the Electronic Communications Act requiring Icasa to ensure that broadcasting services in the country were owned by South Africans and not foreigners.

But Naspers’s lawyers argue that Caxton’s call for an inquiry was not in the public interest, but an old battle that was being fought in places like the “Competition Commission”.

“We are deeply skeptical of Caxton in this inquiry,” said Naspers’ lawyers.

“This is a commercial war.”

The views came up at an Icasa hearing held in Johannesburg on Tuesday. Caxton’s lawyers argue that Icasa has a duty to monitor compliance.

The hearing continues on Wednesday.

Moneyweb

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DStv war between Naspers and Caxton