Telkom Media waits for big brother

By Damaria Senne, ITWeb senior journalist

Johannesburg, 06 May 2008

Telkom Media is waiting for word from parent company Telkom on its plans to disinvest from the subsidiary, it says.

It cannot say how this will impact its plans to launch broadcasting services in mid-2008.

The pay-TV broadcaster would also not comment on its plans to find new investors to fill the gap left by 66% shareholder Telkom.

Telkom was initially expected to invest R7.5 billion in Telkom Media. However, it has yet to clarify the extent to which it plans to slash its investment in the company.

"As you know, this was a Telkom SA announcement regarding the fact that they want to reduce their shareholding in Telkom Media. So, until they make an announcement regarding developments in this regard, I cannot comment," says Telkom Media spokesman Chris van Zyl.

Telkom had not responded to enquiries by the time of publication.

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Zolisa Masiza, a councillor with the Independent Communications Authority of SA (ICASA), would not comment on the potential impact the change in shareholding would have on Telkom Media's licensing conditions.

He says the broadcaster has not informed the regulator of the potential change in its shareholding structure.

"We've seen media reports, but the issue is not before ICASA either formally or informally."

Masiza adds that ICASA cannot restrict a shareholder from pulling out of a newly licensed entity. "We cannot say, thou shalt not change thy shareholding soon after thou hast acquired a licence," he says.

Dominic Cull, a legal representative with Nicci Ferguson Attorneys, notes that ICASA has not finalised the terms and conditions of granting broadcasting licences to operators.

Despite this, Telkom Media still needs to inform the regulator of its funding issues, as these may materially affect the broadcaster's ability to use the licence on the basis on which it was awarded, he says.

Cull notes that ICASA granted Telkom Media its pay-TV licence based on a strong business case, which included financial undertakings by investors. "Telkom Media produced two letters guaranteeing availability of funds."

Telkom Media is still probably in a stronger financial position than any of the other bidders, whether it won the licence or not, he adds.