The board of directors of TopTV's holding company, On Digital Media, has decided to adopt the provisions of "business rescue", as per the Companies Act (section 129), to buy some time for the company to find a strategic equity partner.
TopTV has emphasised that this is a proactive decision taken by the board to protect the company while it seeks an equity partner, and it is "still very much business as usual".
TopTV interim CEO Eddie Mbalo says: "Since the start of the turnaround programme, the bottom line has improved and some limited funding has been sourced and injected into the business. This is the strongest position the company has been in since inception.
"However, the business has always required a significant cash injection to recapitalise it in order to complete the turnaround and take the business to the next level of competitiveness. South African companies in this space have generally taken between three and four years to make a profit and with far less regulatory and statutory restrictions imposed on them."
According to TopTV, the best source of such a cash injection would be a current industry player. Due to the competitive landscape locally and the legislative requirements that allow a foreign entity only a 20% share in ownership, the process of finding an appropriate partner has proved challenging for the start-up business.
TopTV says the business rescue will provide a "protective bubble" and it will continue to function as normal, and will continue with its plans to launch new initiatives in the run up to the holiday season.
"It is still very much business as usual at TopTV. While we are taking precautionary measures and being prudent with our current cash reserves, the board has taken this decision to ensure the long-term sustainability and growth of the company," says Mbalo.
"We further believe that this decision will cement our commitment to transparent business practices, while we continue our battle on what we hope will become a more transformed landscape and a level playing field.
"The board, management and staff at TopTV are committed to the company, and we are determined to work together as a team to make it a successful business," Mbalo concludes.
TopTV says it is adding a new dedicated sports action channel to its platform this week, and is in the process of launching three original, locally-produced programmes for its flagship channel Top One.
Last month, TopTV said it is looking to increase its active subscriber base to between 300 000 and 400 000 in the next 18 to 24 months. The pay-TV operator has reportedly sold about 450 000 decoders since its launch in May 2010, yet only 160 000 to 200 000 of those are active, steady paying monthly customers.
MultiChoice had a 15-year monopoly in the pay-TV space, and has a subscriber base of four million households, out of an estimated 11 million houses with televisions. In the year to March, it added 492 000 subscribers.
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