Kenya: Pay-TV providers gear up for digital shift

Premium television channels providers are increasing investments, hoping to cash in on new opportunities as Kenya gears up for migration to digital broadcasting.East Africa Capital Partners (EACP), the majority owners of Wananchi Group, have invested Sh1.54 billion in the telecom to expand its satellite and cable pay-TV offerings.

Mark Schneider, the chairman of EACP and the vice chairman of the Wananchi Group, is optimistic about returns on the investment.

“What I see in Africa is a very big opportunity. This latest infusion of capital will allow us to create two new business divisions. One is programming that will create 10 brand new channels and the other, direct-to-home satellite TV, will accelerate coverage to more rural areas where it will take time for our cable and WiMax offering to reach. It is a very exciting time for us.”

The investment comes at a time when pay TV services are under pressure from new technologies.

The ongoing migration to digital terrestrial broadcasting is expected to avail more frequencies for investors interested in charging consumers for premium TV content.

“In fact, we have a lot of applications for frequencies from people who want to offer pay TV services. The challenge has been inadequate frequencies as broadcasters are currently occupying space on the analogue and digital platform. However, by 2012 when we expect to have migrated all the current free-to-air analogue broadcasters to the digital platform, we will channel the extra frequencies to pay TV investors,” said Mr Francis Wangusi, the director of broadcasting at the regulator, the Communications Commission of Kenya.

Licensing of more pay TV players is expected to spur competition with consumers set to enjoy a wider range of premium TV packages and prices.

Analysts say the introduction of new players in the pay TV market will lead to price cuts, with consumers tipped to be the biggest winners.

There is a pent-up demand for premium TV as signalled by the rampant illegal distribution of DStv channels in middle and lower income estates in Nairobi.

“Digital broadcasting opens up a lot of opportunity for anyone who wants to push out content at minimal costs as there will be no need to incur infrastructure costs,” said Mr Muriuki Mureithi, the CEO of Summit Strategie.

He added that the digital platform will create new competitive pressures to challenge the current players.

MultiChoice Africa, operators of the DStv channels, has been lowering its prices in recent years in a bid to encourage uptake among lower income groups.

Mid last year, the firm introduced a 25-channel package for about Sh800 per month, one of the lowest prices seen in the market.

Its main rival, Wananchi Group, under the Zuku brand, has packages starting from Sh1,000.

Wananchi is betting on triple play services—a bundle of Internet, voice, and television or video content services— to boost home subscriber numbers.

Already having TV content and Internet services, the telecom is set to introduce the voice component in the third quarter.

- June 30, 2010 by Victor Juma

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Source: www.businessdailyafrica.com/Pay%20TV%20providers%20gear%20up%20for%20digital%20shift/-/539552/948950/-/os236u/-/index.html (accessed 30.06.10)