New pay-TV monopoly

South Africans hoping for greater choice in the pay-television market are in for a disappointment. Regulator Icasa had promised to introduce the equivalent of cable services into the market as a way of offering greater choice.

The cable-equivalent services work on the same basis as cable, where subscribers pay to access a bouquet of television channels, but in South Africa, Internet Protocol Television (IPTV) will be used as the delivery mechanism.

The idea is that consumers can choose either rival satellite services or select from a range of cable services.

But the DStv rivals are still to come to market and the Mail & Guardian has learned that the cable option has been given on a monopoly basis to a single company.

The firm is Super5Media, formerly Telkom Media — the only licensed cable provider in the country.

The main benefactor of Icasa’s decision to license a single player in the IPTV market is Chinese-led consortium Shenzhen Media SA, which purchased the monopoly licence from Telkom.

The M&G understands that Telkom sold its 75% shareholding in Telkom Media to Shenzhen Media SA for next to nothing, despite the fact that it had a monopoly on cable television in South Africa.

Industry insiders told the M&G that Shenzhen had paid Telkom R20-million for Telkom Media, in which Telkom had invested R470-million and where it has R20-million in cash sitting in the firm.

Three players applied for cable licences, but Telkom Media was the only successful applicant.

It is unclear where this leaves players such as MultiChoice, which are already rolling out a triple-play service that includes supplying IPTV to gated communities through its subsidiary Smart Village.

Smart’s website boasts that it already has more than 1 000 homes signed up to its triple-play service.

Telkom chief executive Reuben September has been accused of a lack of leadership and many analysts have queried Telkom’s long-term business strategy. This is likely to increase the pressure on September and the board.

Both Telkom and Shenzhen Media SA refused to comment on the sale price of Telkom Media, claiming the information was confidential.

Super5Media will offer a bouquet of channels that are delivered via the internet for a monthly subscription fee.

It is unclear whether other forms of IPTV, such as video on demand, would be regulated by Icasa.

Super5Media’s competitors claim that Icasa has flouted due procedure by issuing it with a new licence and that there should have been a public process.

On Digital Media (ODM) lawyers sent Icasa a letter pointing out the irregularities in the issuing of the new licence, claiming that, in fact, it is null and void.

However, Super5Media director Tian du Pisanie says the initial licences issued by Icasa, which were technology neutral, were not compliant with the Electronic Communications Act and that the new licence issued by Icasa was compliant.

“Icasa has issued Super5Media with the correct licence as far as the Act is concerned,” says Du Pisanie. “Technology neutrality is not something that exists.

“ODM are our competitor so they have their own reasons they don’t want us to come to market,” says Du Pisanie.

Icasa issued Super5Media with a new licence a few weeks ago and has given the firm 60 days to sort out its new shareholders’ agreement and to illustrate that it will not contravene the foreign ownership limit of 20%.

Du Pisanie told the M&G this week that it did not contravene the foreign ownership limit because 80% of Shenzhen Media SA was owned by local company Imbandi Media and only 20% was held by Chinese company Sino-Africa Development Group, an effective 15% shareholding in Super5Media.

However, Shenzhen Media SA is still in negotiations with its minority shareholders to finalise the shareholders’ agreement.

The minority shareholders include Given Mkhari’s MSG Afrika Investments, Anant Singh’s Videovision and the Women’s Development Bank, which, together, own 25% of Super5Media.

The relationship between the minority shareholders and Telkom broke down when, after agreeing to liquidate the company, Telkom inked a deal with Shenzhen and then presented it to the minority shareholders as a “fait accompli”.

The minority shareholders’ response was to resign from the board and to write to Icasa expressing their dissatisfaction with the way the transaction was handled.

“At the time there were decisions being made without consultation, even though we were on the board,” says Singh. “We felt like we were being marginalised.”

Another source close to the minority shareholders says that the decision to withdraw from the board had to do with corporate governance concerns.

The source said discussions between Shenzhen and the minority shareholders were continuing and had been “relatively fruitful” up until this point.

Singh said it was too early to comment on the negotiations.

Meanwhile, Super5Media recently retrenched 22 more staff members employed when the company was called Telkom Media.

The M&G understands that Super5Media will face a number of legal challenges to the retrenchment process. Icasa said for legal reasons it could not comment on the issuing of the Super5Media licence.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.


Where is the deputy president?

David Mabuza is hard at work — it’s just not taking place in the public eye. The rumblings and discussion in the ANC are about factions in the ruling party, succession and ousting him

Zuma turns on judiciary as trial nears

Former president says pre-trial correspondence is part of another plot

High court declares Dudu Myeni delinquent

Disgraced former SAA chairperson Dudu Myeni has been declared a delinquent director by the...

SANDF inquiry clears soldiers of the death of Collins Khosa

The board of inquiry also found that it was Khosa and his brother-in-law Thabiso Muvhango who caused the altercation with the defence force members

Press Releases

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

Wills, Estate Administration and Succession Planning Webinar

Capital Legacy has had no slowdown in lockdown regarding turnaround with clients, in storing or retrieving wills and in answering their questions

Call for Expression of Interest: Training supply and needs assessment to support the energy transition in South Africa

GIZ invites eligible and professional companies with local presence in South Africa to participate in this tender to support the energy transition

Obituary: Mohammed Tikly

His legacy will live on in the vision he shared for a brighter more socially just future, in which racism and discrimination are things of the past

Openview, now powered by two million homes

The future of free-to-air satellite TV is celebrating having two million viewers by giving away two homes worth R2-million

Road to recovery for the tourism sector: The South African perspective

The best-case scenario is that South Africa's tourism sector’s recovery will only begin in earnest towards the end of this year

The best local and international journalism

handpicked and in your inbox every weekday