Video entertainment firm MultiChoice is intensifying its foray into the internet service provider (ISP) market.
The company said yesterday it has partnered with Vumatel, one of the pioneers of the fibre-to-the-home (FTTH) industry in South Africa, as it moves to diversify its offerings.
“MultiChoice is thrilled to announce a new partnership with Vumatel, one of the biggest providers of FTTH services in SA, to offer a range of bundled and standalone fibre packages to customers who have Vumatel coverage in their area,” says MultiChoice in a statement.
It notes the service will cater to customers who need high-speed fibre internet, or require both high-speed fibre internet and digital television services as one bundle.
This means MultiChoice customers will have more uncapped line speeds to choose from, priced from R699 per month.
With this pact, market analysts believe the pay-TV giant is looking to diversify its revenue streams amid a dwindling satellite-based subscriber base.
In a bid to get more South African homes connected, MultiChoice in 2021 launched DStv Internet to provide internet access to those who do not have access to fibre services.
The offering was rolled out in partnership with mobile operator MTN as the network partner.
DStv Internet is a fixed wireless access service, which means users get connected to the internet with a SIM card and WiFi router. It’s an option for those who do not have fibre in their residential area but want to access the internet.
Last year, the company launched uncapped fibre deals through wholesale partnerships.
MultiChoice notes it has been successfully evolving its offering to deliver value to its customers that is beyond video entertainment.
The company says it is offering an integrated digital ecosystem, where customers can access a suite of services that meet their unique needs.
“The expansion to an entertainment ecosystem allows MultiChoice to continue to meet the ever-evolving needs of its customers,” says the firm.
“Although MultiChoice continues to invest significantly in its video entertainment business, the company is also targeting select segments that are adjacent to its core business, including solutions in cyber security, sports betting, connectivity, on-demand medical and armed response, insurance and rewards – all linked on one platform.”
Reversing its losses
Commenting on the deal, Dobek Pater, telecoms analyst at Africa Analysis, says Vumatel can benefit from additional subscriptions on its network, which would result in higher wholesale revenue.
“Residential customers who want to take advantage of MultiChoice’s bundled offering may opt to move from another FNO [fibre network operator] to Vumatel, and use MultiChoice as the ISP,” he says.
“However, this would only be possible in areas where both Vumatel and other FNOs have their FTTH infrastructure.”
He points out MultiChoice is trying to expand its subscriber and revenue base, and arrest the decline in its DStv (satellite-based) subscriptions in the mid-market and premium market segments.
“Bundling DStv programming and other content with FTTH may gain them new DStv customers, or at least arrest or slow down loss of subscribers. Additionally, it would potentially generate new revenue from the range of other services it plans to offer.”
According to Pater, MultiChoice has been expanding its presence as an ISP on FNO networks to make its DStv offering more attractive by bundling it with FTTH products.
He explains the aim is to proactively take advantage of a new video or content streaming medium (fibre) to expand its DStv customer base and reverse the loss of mid- to high-end customers.
“Furthermore, MultiChoice is positioning itself to become a more holistic provider of various digital services to the residential market in general. It wants to leverage its platform, and the box in the residential home, as a tool to control access to the end-user for various services.”
However, Pater says, it must be noted the DStv offering is on a 24-month contract basis.
“The vast majority of FTTH packages are month-to-month and there are very few sales of 24-month contracts in the market.
“This may make it difficult for MultiChoice to make inroads into homes that already buy a ‘plain’ FTTH package and other content services separately.
“Additionally, homes within FTTH network coverage which have not yet purchased an FTTH service are increasingly price-sensitive and probably not likely to purchase a bundled service at a price higher than comparable ‘plain’ fibre connectivity.”