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PAY TV LICENCE SHAKE-UP

New life breathed into long monopolised entertainment market REUTERS

SOUTH Africa`s pay-TV market, which has been dominated by media group Naspers, is set for a shake up after the award of four new broadcast licences yesterday.

The country`s communications authority granted fixedline operator Telkom’s media unit, Telkom Media, and leisure and media group Hosken Consolidated Investments, licences along with two smaller operators – On Digital Media and Walking on Water.

Entry of new operators is expected to stimulate the market, with more money being pushed to marketing pay- TV services, portfolio manager Khulekani Diamini at Renaissance Specialist Fund Managers said.

Chief Executive Officer Nolo Letele of Naspers’ local pay-TV operation MultiChoice SA said the unit had been gearing up for competition.

“We will have to fight that much harder for the disposable rand in people’s pockets,” Letele said after the announcement of the winning bidders.

Telkom applied for the licence to run a pay-TV service while trying to diversify its revenues and challenge Naspers’ decade-old pay-TV monopoly.

Telkom Media – which has funding of over R7.5 billion over eight years – has said it will offer cheaper packages in attempts to attract subscribers, starting at approximately at R100 a month.

MultiChoice packages currently run from R139 to R494 a month.

Most of the budding pay-TV operators put forward a much cheaper package as key to the success of their ventures.

“We expect to be in the market within the next 12-16 months,” said Connie Molusi, chairman of Telkom Media and former Johnnic Communications CE.

Molusi said operators that offer the best composition would win the day Telkom Media is also looking to move into 12 countries in the continent.

Letele said MultiChoice which has launched cheaper packages in anticipation of increased competition – would not enter a price war, although he said the operator would possibly relaunch its R18/month offering.

“No price wars, we believe to do that you are destroying your business,” he said. MultiChoice SA – which has about 1.4 million subscribers contributes approximately 76% to Naspers revenue.

Letele said the market had the potential to reach 2.5-3 million subscribers.
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Source: Daily News – Reuters