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Naspers bets on $7 Pay-TV Plan to work magic across Africa and talks of going into francophone and lusophone Africa

Naspers Ltd. will expand its pay- television service to Uganda next week priced at about $7 a month and roll out packages in other African countries to add subscribers in an underserved market.

 


“The low-price packages are really meant to give someone an opportunity to be a pay-TV subscriber and then hopefully to scale them up to the higher-price packages,” Eben Greyling, Chief Executive Officer for pay-TV at Naspers, Africa’s largest media company, said in an interview. “If you look at our current penetration there is certainly much more room to grow.”

Naspers added 977,000 pay-TV subscribers in the year ended March 31, taking its total to 4.9 million across the continent, including 3.5 million in South Africa. The expansion of the African pay-TV market may be propelled by 221 million consumers who will advance from poverty to earn annual incomes of $1,000 to $5,000 by 2015, according to McKinsey & Co. estimates. Last month Naspers introduced a $7 a month package in Zambia. Before Naspers, the country only had a state-owned broadcaster.

Naspers will use the low-priced package of 20 channels, including access to the “Big Brother” show and Africa Magic and Africa Magic+ film and music channels, to gain a mass market for pay-TV, Greyling said by phone from Johannesburg. Among the channels are news stations including BBC World, CNN and Al Jazeera, and entertainment and religious channels, he said.

“Our aim is to reduce the barriers to entry for customers and we may even subsidize the price of decoders,” Greyling said. Subscription prices will differ from country to country, but will be around $7 a month, he said.

The price of decoders will probably be about $50 or less, Greyling said. He declined to give budget details and subscriber targets.

In South Africa, Cape Town-based Naspers has been offering an entry-level package for more than two years that costs 20 rand ($2.86) a month. Naspers’s pay-TV operations include MultiChoice and the Supersport sports channels. The price of Naspers decoders in South Africa is 599 rand, with installation costs included.

Telkom South Africa Ltd., On Digital Media, E-Sat and Walking on Water (Pty) Ltd. each won a license in 2007 to operate pay-TV stations in South Africa, ending Naspers’s 12- year monopoly. Only On Digital Media’s Top TV has rolled out services, and the cheapest package is 99 rand a month, according to its website.

Naspers declined 1 percent to 366.79 rand at the 5 p.m. close of Johannesburg trading. The stock has climbed 20 percent in the past 12 months, beating the 9.6 percent gain in the benchmark FTSE/JSE Africa All Share Index.

The company’s interests include a stake in Tencent Holdings Ltd., China’s biggest Internet company. Naspers acquired 28.7 percent of Russian Internet company Digital Sky Technologies Ltd. last year, and in Latin America it purchased 68 percent of classifieds business OLX.com.

Naspers’s pay TV-services will target the parts of Africa where English and Portuguese are spoken, and not Francophone Africa, Greyling said. “We’re hoping we’ll take the service to the rest of the continent,” he said.

Across its markets, Naspers will use sport to lure users. In the main markets of Nigeria, Kenya and South Africa, Supersport is among the largest funders of local soccer leagues and rugby, said Greyling.

Supersport is Africa’s largest sponsor of sport, Naspers Chief Executive Officer Koos Bekker said on Nov. 30. In South Africa it owns Premiership soccer side Supersport United, which has won the local top league three times. “We’ll continue to produce as well as sponsor local sport when subscriber numbers make it affordable,” said Greyling.

Pay television accounted for 21 billion rand of Naspers’s sales in the financial year ended March 31, when the total was 33 billion rand.

Source: Bloomberg/businessweek.com

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