East Africa: Wananchi Group Raises U.S.$58 Million From Venture Funds

Mergers, Acquisitions and Financial Results

The region's satellite television market is set for a new wave of competition as new players enter the market.

Last week, Kenyan-based Wananchi Group announced it had received a $57.5 million boost from an international consortium of investors, kick-starting the firm's ambition to launch satellite television services as it expands operations into Africa.

Wananchi plans to launch its pay TV service in Kenya Uganda, Tanzania, Ethiopia, Eritrea, South Sudan, Rwanda, Burundi, Malawi and Somalia. Liberty Global, one of the world's largest cable companies, Oppenheimer Funds, and Sarona Asset Management, a Canadian-based emerging markets fund manager, raised the amount.

Wananchi Group CEO Richard Bell said the funding would help build the firm's infrastructure and launch direct to home (DTH) satellite services to consumers in the greater Eastern Africa. "We are on track to roll out our services to over 10 countries in the coming months," said Bell.

Wananchi, which already provides cable television services alongside Internet connectivity to consumers in Kenya, announced plans to diversify into satellite pay TV services early this year, citing the low penetration rate of such products in Africa.

The firm's regional expansion plan will intensify competition with South-African based DSTV, that has enjoyed a near monopoly in the market for the past 15 years, and lays claims to over 100,000 customers in the region.

Recently, DSTV announced it would deepen its partnership with mobile service providers -- Safaricom in Kenya and Vodacom in Tanzania -- which allow subscribers who own Internet-enabled handsets to get live streams of over 16 channels for a weekly fee.

Over the past two years, a number of new operators have entered the pay TV space hoping to pose a challenge to DSTV, forcing the firm to realign its product offering in order to defend its market lead.

Looming on the horizon is the entry of Indian mobile operator Bharti Airtel, that plans to launch satellite TV services in Africa from mid this year. Airtel will launch a direct-to-home satellite television service, most likely in the 16 countries where it offers mobile telephony services in 16 African countries.

According to industry sources, Africa lags behind global Pay TV penetration rates, with just 0.1 per cent of Africans being able to access the service compared with nearly 80 per cent in some markets.

"The penetration of satellite pay TV is very low in Kenya and most parts of Eastern Africa, and this is attracting investment," said Mohamed Jeneby, MD, Wananchi Satellite. "The launch of our Zuku satellite pay TV starting May 2011 should see more people enjoying meaningful, quality entertainment for the entire family at an affordable price on Zuku TV."