Trace and MTG look to Africa for growth

Broadcast

Trace’s strength in Africa was a key factor in Modern Times Group’s decision to acquire a controlling stake in the sports lifestyle and music broadcaster and the pair will jointly look to exploit free-to-air and non-broadcasting related opportunities across the continent, according to Trace CEO Olivier Laouchez (see next story for interview).

Trace offers channels such as Trace Sport Stars and Trace Urban via third party distribution deals in more than 160 territories worldwide, including all 55 in Africa, where MTG is rapidly expanding.

MTG announced it had taken a 75% stake (€30 million) in Trace earlier this week. The broadcaster also has an option to acquire the remaining 25% to take full control at a later date, said Laouchez. MTG took the shares from Citizen Capital, Entrepreneur Venture, NextStage and company management, the latter of which will retain a 25% stake.

Laouchez said the “African dimension” had been key to MTG’s interest in Trace. MTG has launched FTA channels in Ghana and Tanzania, while Trace’s channels are carried by pay TV operator DStv and Canal Horizons, with a presence spanning both Anglophone and Francophone Africa.

Trace has also recently developed partnerships with mobile operators to bring additional branded services to mobile platforms.
Laouchez said that the Trace and MTG could work closely together, possibly bringing Trace content to MTG’s FTA channels.

Trace may also grow its presence in Africa by making selective acquisitions, said Laouchez. “MTG has significant internal financial resources,” he said. “We have discussed potential acquisitions and a line of finance to grow the company. “We have a few ideas in mind. Trace is ready to grow the company maybe by selected acquisition.”

Revealed in the deal were figures that show Trace has recorded 23% compound annual net growth in the five years to the end of 2013 and also reported net sales of €19.3 million for fulll year 2013. The Paris-based company generates almost half of its revenues from Africa and emerging markets, meaning it is well placed for further growth as those territories’ media sectors expand, and has 37 million paying subscribers, up from 27 million at the end of 2012.
The deal is subject to approval from French media authorities and MTG said it would consolidate Trace’s results into group accounts once the transaction has closed.