Ghana: K-Net plans to roll-out DTT infrastructure in 12 months, Government sued by StarTimes for breach of contract

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2018 - K-Net

Ghana’s road to the digital broadcasting transition has been a bumpy one. Initially it appointed Chinese Pay TV operator StarTimes to carry out the process but fell out with it and StarTimes is now suing the Government. To replace it, the Government gave the contract to local company K-Net. Russell Southwood talked to its founder Richard Hlomador about what the company is going to do.

Ghana’s Ministry of Communications has signed a US$82.3 million contract with K-Net to complete the country’s DTT roll-out after a bidding process. The financing of the roll-out will come from the sale of 4G spectrum to mobile operators by auction ahead of it being available. Once the roll-out has been completed, there will be a one year dual illumination period before the analog signal is completely switched off.

According to K-Net’s Hlmomador, the ambition is to provide 100% coverage of the country: 90% will be by terrestrial DTT transmission and 10% by satellite. When the project is completed in 12 months time there will be 48 transmission towers.

In the initial phase to the end of October this year there will be 8 towers, with coverage focused on the Greater Accra area and Ghana’s second city, Kumasi:”The head end is being built as we speak and should be completed to coincide with the completion of the phase 1 roll-out. Simultaneously we are doing the tower roll-outs and in some cases we are literally building roads to get them done.”

In terms of capacity, there will be two head ends and 2 MUXs which will give 40 channels capacity:”It can grow channels in the future but we’re not planning beyond 8 years ahead at this stage. There’s a lot of HD channels that may come and we’re planning for a minimum of four of them. Initially we’re focused on (state broadcaster) GBC, Metro TV and a few others. We’re building a “highway” and the private companies can join the platform and get on the MUX.”

So what will the rates be on a monthly basis for transmission?:”It’s the Government’s job to decide and it’s going to do that in discussion with the operators and the management.” K-Net is going to provide everything on a “build, operate and management” basis. It will have a five year contract and will need to tender again at the end of the contract. It will also manage the DTH satellite element of the coverage, providing an uplink and capacity for 25 channels. Part of the contract was that K-Net would not enter the TV market as a broadcaster:”I will not ever be an operator.”

Meanwhile, StartTimes is suing the Government for US$200 million for breach of contract, which it signed to complete the DTT process on 11 April 2012 and was to have been completed with a US$95 million loan from China’s Exim Bank.

It has indicated its intention to institute arbitral proceedings at the International Commercial Court, London, against the government over the issue. To this end, it has appointed Bentsi-Enchill, Letsa & Ankomah as its local solicitors and DLA Piper as its external solicitors to assist it to pursue its claims.

The appointing of K-Net has drawn local comment as the Deputy Communications Minister Edward Ato Sarpong, a long-time Internet industry executive, was previously COO of K-Net.

William Ma, Overseas Public Relations Director, StarTimes told us:” We got this deal through an open bidding way supervised by Ghana government. The Digital-TV industry is tech-intense, capital-intense industry. The costly digitalization infrastructure will go nowhere if operation doesn't follow up when the infrastructure is finished. Although StarTimes has proved (it has) plenty of operation know-how, we still found a joint venture with a local partner which (had) licence from government”.

We understand that one of the sticking points was that StarTimes wanted – as it has in all other countries it operates in – to be both a signal distributor (with a local partner) and a Pay TV operator. But the full extent of the issues separating the two may not ever be known as international arbitration cases are usually held behind closed doors.

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