MiDigital mulls R500m venture

Johannesburg, 22 Sept 2006

MFP Logistics-owned MiDigital has applied for a pay-TV licence with the Independent Communications Authority of SA (ICASA).

Over half a billion rand will be invested in the pay-TV plans if the regulator awards MiDigital a licence, says Ken Modise, executive director of MFP Logistics.

It will be leading a consortium involving systems integrator Pitso ICT Solutions, customer contact centre investment company Tlhalefang Investments, and Nehawu InvestCo - the finance arm of the National Education and Health Allied Workers Union.

On the service provision side, MiDigital has partnered with GlobeCast (international signal distributor), NDS for encryption and conditional access, and JNC for set top boxes.

Metropolitan youth

"MiDigital, if its licence application is successful, plans to target an urban youth niche market.

"We plan to provide about 25 channels, some of them direct feeds and some commissioned and directed by ourselves, aimed at a contemporary market - people between two and 39 years, in mainly metropolitan areas," says Modise.

"There is a market for this that is quite open," he says, adding the business plan is to attract between 3 000 and 4 000 consumers over an initial three-year period.

Applicants

GlobeCast has strong existing links with Sentech, which Modise feels may be useful when it comes to ICASA`s deliberation and licence-awarding processes.

Modise was surprised by the high number (18) of applications for a pay-TV licence, saying he expected it to have been just over half that number. Each applicant had to fork out R100 000 for the regulator to consider the application.

"The market can only carry so much," he says, adding there are perhaps one to two million consumers left that can be captured by any new pay-TV entrants. MultiChoice, which holds a monopoly on the market, has over a million viewers in SA.

Analyst`s perspective

BMI-TechKnowledge director Brian Neilson believes there have been a high number of applications because of growing trends to convergence.

"We should see more niche licensees in the future," he adds.

Lisa Thornton, director at Lisa Thornton Attorneys, says in the absence of any formal quantitative analysis, she would guess there could be a maximum of eight licensees, "though four or five of these would be niche services," she adds.

ICASA recently indicated decisions would be made on which of the 18 are successful by about June next year.