Uganda: Epic pay TV battle

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UCC optimistic ahead of 2015 digital migration deadline.

Pay TV providers in Uganda are bracing themselves for a bruising battle for market share. Already, a new player, Azam Media Uganda Ltd, has entered the market with an attractive proposition, and several other providers have lodged their applications with the Uganda Communications Commission (UCC), a development that has made the UCC excited ahead of next year’s deadline for digital migration. The consumer too, should be looking ahead to a good future in terms of excellent customer care and affordable prices.

UCC data indicates that there are over 300,000 pay TV subscribers shared between five pay TV service providers that are active in the market. These include GOtv and DStv; both products of MultiChoice, StarTimes, MOTV and Zuku TV. DStv and Zuku TV offer satellite television services while GOtv, MOTV and StarTimes offer digital terrestrial television (DTT). Azam is set to give Dstv and Zuku a good run as it becomes their newest direct competitor on the satellite segment.

Uganda has an estimated 6-7 million TV sets, but of these less than 10% are connected to a digital, an indication of a massive deficit with barely a year to the digital migration deadline. Isaac Kalembe, the media relations specialists at UCC, told The Independent that more licences would be issued soon.  Almost all the players have not been offering free to air TV services because the moment your monthly subscription runs out, your TV goes blank; you can’t even watch the local free to air channels.  That too could change soon.  Five companies have applied to import free-to-air decoders – it’s a one off purchase; if you buy it you will watch all the local free-to- air channels in high quality digital video and audio without any monthly subscriptions.   The five companies include; Trans-African Container Transport, Syscorp International, Brivid, Icomsys Africa and World Technologies.  Already, they have delivered samples of their decoders to the UCC for testing, and are now awaiting approval, according to Kalembe.

The competition is therefore getting a little stiffer and Dstv, which is hitherto the market leader, is watching its back. The entry of Azam, which is part of the Bakhresa Group, a household name in Uganda in the soft drinks and baking flour industry, has already made it cut prices of its decoders.

Simon Arineitwe, (he quit StarTimes to join Azam as general manager) told The Independent in an interview that their presence in these other industries gives them a competitive advantage. Additionally, the company has modern satellite technology that covers the whole of the sub-Saharan Africa, and this is making it for them so easy to penetrate newer markets.  The advantage with satellite technology is that it connects and covers a larger part of the country or region and is more reliable compared to Digital Terrestrial Television which uses transmitters on the ground to broadcast the signal to a TV aerial. The company, which will officially launch at the end of the month plans to offer one package for a start with over 60 channels at only Shs 20, 000 as monthly subscription fees. The entire kit will not cost more than $100 (about Shs 250, 000 at current exchange rate), according to Arineitwe.  Indeed, DStv reacted quickly to this comparatively more attractive offering; it recently announced that effective April 24,  a fully- installed kit for DStv would go for Shs  279,000, a reduction of 40% from the previous price.

In addition to the popular satellite channels, Azam will also provide the local free-to-air channels including all the national broadcasters in the East African region. The company has recorded over 55, 000 customers in Tanzania in a span of about four months, which gives it hope that it will quickly penetrate the Ugandan market as well.  The company targets to sell 30,000 decoders in the first 30 days after the launch.  Arineitwe suggests that the Ugandan market has much potential for digital TV but the high taxes are a limiting factor and the “biggest challenge.” For example, he said they pay 18% in VAT, import duty of 25% and withholding tax of 6%, all of which contribute to almost 50% of the total cost of each set.

If anything, the departure of Arineitwe from StarTimes, its pioneer marketing manager, its rival, gives only a facet of the turbulent times the company faces.  A few months ago, the company was at logger heads with consumers and UCC over its “obsolete” DVB T1 decoders but it has now replaced them with the modern T2. Christine Nagujja, the StarTimes PRO, said until they launch their own satellite services, they are not bothered by the entry of Azam in the pay TV market because they are not yet direct competitors.  She said while more players could enter the market, the question will be; “can the market sustain the many players?”

In a recent interview, Charles Hamya, the MultiChoice/DStv general manager for Uganda, said they would continue to churn out innovative products by deliberately investing in new technologies and ensuring excellent customer services.

Going forward, Arineitwe said the future of pay TV market in Uganda is bright driven by the rising rate of urbanization, rural electrification, access to solar energy and the rapid growth of the middle class.

Source: The Independent in Uganda - Julius Businge 11 May 2014