Telkom looks to shut Telkom Media?

By Candice Jones for Neotel
Johannesburg, 24 Mar 2009

Telkom Media is unsure about its future as rumours began circulating that majority shareholder Telkom might attempt to shut down the pay-TV no-starter.

However, Telkom Media spokesman Chris van Zyl says the company is still going and has had no formal notification from shareholders that there is any intention to shut the doors. "To close down the company, a shareholder meeting will need to be called. As far as we know, that has not yet happened."

Telkom, which owns 66% of Telkom Media, will need to gain an 80% shareholder agreement to have the broadcasting business closed.

Telkom has been in mysterious discussions with a possible buyer for Telkom Media for the last few months, after it decided to pull most of its backing from the project weeks after Telkom Media received its pay-TV licence.

SA`s fixed-line giant promised to announce the details of the sale in November last year and, when no name was forthcoming, it said regulatory issues had prevented the announcement. A second deadline for the end of January this year was also not met by Telkom.

Speculation was that two potential bidders were on the cards, one being Tokyo Sexwale`s Mvelaphanda, and the other being Chinese-based Shenzen Media, neither of which has been confirmed.

Rough waters

Employees are uneasy about the situation, since they have been sitting on their hands for over a year.

A source close to Telkom Media says some staff had been told it is unlikely the company will remain in operation. It is also rumoured that employees have been trickling out for some time.

One source noted that Telkom has plans to sell the much valued pay-TV broadcasting licence, which Telkom Media received in September last year. However, the licence is not so easily transferred.

According to the Independent Communications Authority of SA (ICASA), the licence cannot be sold willy-nilly. "They will need to engage us if they want to change anything relating to the company`s licence," says ICASA spokesman Sekgoela Sekgoela.

He notes that none of Telkom Media`s shareholders have approached the regulator with queries about the licence or its handling.

Telkom will need to make a move in the next few months, because one of the stipulations for holding the broadcasting licence is to make use of it within a year of the issue date. That means Telkom will need to make a decision before September this year.

Ready to go

Telkom Media has been ready to go since November last year, when it announced details on technology purchases and infrastructure. Expected technologies included services over satellite, online and IPTV. Van Zyl said, at the time, the company had researched best-of-breed technologies to ensure it is able to provide its content over the various platforms.

The company was also in discussions with several content providers for entertainment and sports shows that were expected to go live anytime between June and August last year.

Since its launch, Telkom Media made more progress than its new pay-TV competitors, and was tipped by analysts as the leader in the new pay-TV applicant race. Before Telkom decided to pull its investment, the company was also expected to provide stiff competition to incumbent pay-TV broadcaster MultiChoice Africa.

Other pay-TV licensees were E-sat, which bowed out of the race, favouring its position on a 24-hour channel on DStv; Walking on Water; and On Digital Media, neither of which have launched a commercial service yet.

Telkom declined to comment on the situation, saying: "Telkom is unable to confirm or deny any allegations at this point." However, the company is supposedly preparing a media statement due for release any day now.