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LOOKING TO THE HINTERLAND

Hosken Consolidated Investment’s (HCI) executive team of Marcel Golding and Johnny Copelyn is quietly scouting for investment opportunities elsewhere in Africa, and its first stop is said to be Nigeria, followed by Tanzania.
The company is looking for broadcast opportunities, with television the focus. This investment will be founded on HCI’s SA operation, e.tv, which since 2004 has shown exciting profits.
In its latest annual report, HCI mentions that “e.tv is also exploring the possibility of expanding its footprint into Africa . . .”
Neither Golding or Copelyn was available to comment at the time of going to press, but a formal announcement is expected early in the new year.
HCI runs e.tv, the only free-to-air TV station in SA, and Yfm, the successful youth radio station based in Gauteng, and has interests in casinos under the wings of Tsogo Sun and Vukani Gaming. It also has interests in commuter transport, where it owns Western Cape-based Golden Arrow Bus Services, and in financial services (Mettle).
E.tv was always viewed as a potentially good investment, but it came with high costs. It’s an industry that can be both capital- and labour-intensive, particularly if a station carries news programming and its own sports and drama productions.
Unlike the SABC stations, e.tv gets no income from licence fees and therefore depends on strong advertising revenue. E.tv was licensed in 1998 but turned cash-positive only late in 2003.
HCI’s results for the year ending March 2005 show that the station generated a R130,7m headline profit. That number is a vindication of HCI, which persuaded other shareholders to be patient.
As both Copelyn and Golding would know, investing in the African continent will not be easy.
There can be tough regulatory obstacles – or a lack of a regulatory regime, which can be more of an obstacle for foreign operators than might at first appear.
MultiChoice Africa (a subsidiary of Naspers) has found with its DStv product that it is a struggle to make inroads in Nigeria, the most populous country in the continent with almost 150m people. It had an uptake of less than 100 000 at last count. The lack of local Nigerian programming was identified as one of the reasons for consumer resistance.
In some parts of sub-Saharan Africa, investing in local production has already started bearing fruit for MultiChoice Africa.
A niche bouquet with nine Portuguese channels was added in the past year and subscription numbers soared by 44 000 to 336 000, with Lusophone Angola leading the pack.
But HCI will not be alone as companies like Johncom and mobile phone operator MTN are already making inroads into the Nigeria and Tanzania markets.
HCI has learnt from those companies that despite the often rough and unpredictable road to some African markets, the rewards are likely to be good in the long run.

Source: Financial Mail – Themba Hlengani