Telkom Media sold

By Staff Writer for Telkom
Johannesburg, 06 May 2009

Telkom Media has received a last-minute lifeline, with Telkom selling its stake in the pay-TV business to Chinese company Shenzhen Media SA.

At the end of last month, shareholders met to discuss the liquidation of the long dormant broadcaster after several failed attempts to sell it. Reports indicated shareholders were squabbling over how to slice the Telkom Media pie.

However, Telkom, in a last-ditch effort, began an accelerated sale process. “In terms of this process, Telkom was only prepared to consider unconditional offers backed with adequate financial guarantees. An invitation was sent to parties who, in one way or the other, had expressed an interest in Telkom Media,” says Telkom's chief of strategy, Naas Fourie.

Shenzhen, one of the original interested parties, took up the invitation. Telkom says the companies signed a share sale agreement at the end of last week and the deal closed on Monday.

“There were no conditions precedent included in the share sale agreement, which enabled the quick conclusion of the deal. Shenzhen agreed to procure Telkom Media and to change its name within 30 days of closing,” adds Fourie.

Telkom has not disclosed the value of the deal, or whether it has recovered any of the financial investment it had made in the company. Telkom's investment amounted to R326 million by the end of March last year, according to its US financial statement.

Fourie says Telkom Media's future now lies in the hands of Shenzhen Media. Shenzen could not be reached for comment by the time of publication.

Sign of hope

The hamstrung business has been sitting on its hands since March last year, when Telkom decided to pull most of its 66% shareholding. Telkom has played its cards close to its chest since then, although Shenzhen was speculated to be one of the bidders.

Since it started, the company 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 expected to provide stiff competition to incumbent pay-TV broadcaster MultiChoice Africa.

The company invested in technologies that would facilitate services over satellite, online and IPTV. It had also started discussions with several content providers, which could not be completed while it waited for its investors to make a move.

It had hoped to hold its official launch between June and August last year; however, the lack of clarity around its future prevented the broadcaster from going live.

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.