South Africa: Sentech Pull-Out From Pay-TV Race a Puzzle

Investment

Sentech has yet to say why it withdrew its application for a pay-TV licence at the last minute, after releasing a "temporary" statement last week .

The state-owned broadcast signal distributor that partnered with the SABC in an attempt to obtain a pay-TV licence said only: "The decision to step out the pay-TV arena was a strategic business decision which will have no negative impact on Sentech's current business affairs, or future business affairs." It said it would continue with "business as usual", although the main stakeholders would be meeting next week to release a "more detailed statement to the media".

The Independent Communications Authority of SA (Icasa) said on Tuesday that it had received the late notice from Sentech on Monday, just two days before the authority was to announce the finalists to the market.

"We were in final deliberations regarding the (pay-TV) decision and so we did not have the time to investigate Sentech's reasons for withdrawing," Icasa councillor Zolisa Masiza said yesterday.

The reasons were not given in Sentech's letter to the authority. But Masiza said Icasa would meet Sentech to find out why it had withdrawn. One concern regarding Sentech was the question of it being a signal carrier as well as a broadcaster.

Masiza said it still had to be established whether the new pay-TV broadcasters whose licence approvals were announced this week -- Telkom Media, MultiChoice, On Digital Media and e.sat -- would be required to set up their own infrastructure and would need an additional licence to do so, or whether they would be entitled to work off the infrastructure provided by other companies such as Sentech and Obicom.

This, Masiza said, would be raised at a meeting with stakeholders on September 25, before the Icasa hearings in October which would further outline the terms surrounding the new licences. Industry commentators speculated that Sentech's withdrawal was because it already knew it would not receive a licence as a result of the confusion surrounding this matter. But one analyst speculated that the decision might have been the result of Sentech not having had sufficient funds to enter the market.

It said earlier this week that it had reduced its losses in this financial year to R21.5m from R76m last year, after receiving a R95m shot in the arm to roll out the government's national move from analogue broadcasting to digital, which is due for completion in November 2011.

Sentech's satellite television offering, Vivid, is beamed into thousands of homes . One analyst said that because these viewers had paid a once-off fee for their decoders and satellite dishes, Vivid was not technically a pay-TV subscription broadcaster, so it was unlikely its viewers would be switched off.

(Business Day (Johannesburg), 14 September 2007)