As TopTV, SA's ailing second satellite pay-TV provider, enters crunch time in the business rescue process it voluntarily initiated last year, a Chinese technology firm has emerged as likely to step up as its critical equity partner.
Should StarTimes, a global technology company with 25 years under its belt and a significant African presence, be successful in its bid to buy into TopTV, it would provide the company with a significant cash injection and could see StarTimes buy out shareholders. This would go at least some of the way to paying off the company's significant debt.
Owned by On Digital Media, TopTV's main shareholders are the Industrial Development Corporation; Cosatu's investment arm, Kopano Ke Matla; the National Empowerment Fund; global satellite company SES; and First National Media Holdings.
Floundering finance
According to Peter van den Steen, appointed as business rescue practitioner for TopTV in November, the company incurred a burn of expenditure over its income of R25 million a month, prior to the business rescue plan.
Van den Steen says this "burn rate" was reduced with the cooperation and participation of trade creditors and content providers, together with various cutback initiatives, including curtailing marketing and other overhead expenditure.
TopTV's largest creditor, the Development Bank of Southern Africa (DBSA), he says, had expressed early on in the business rescue plan that it was not willing to inject any more funds into the company.
DBSA has invested about R200 million into the company and, says Van den Steen, is the only creditor that stands to receive any kind of dividend on its claim against TopTV, should it go under. "No other creditor, secure or unsecured, will receive any dividend in respect of claims against the company in the event of a liquidation of the company."
The entry of StarTimes, however, could avert this and creditors would qualify for a pro-rata dividend distribution in respect of their claims for monies owed for the period after the business rescue commencement date.
Details of the StarTimes proposal are set to be published in the business rescue plan, due to be made public today, according to ODM's proposed timeline.
Channel churn
Meanwhile, TopTV has had to review its current channel line-up and make adjustments, leading to the discontinuation of two of its channels - Top Movies +24 and Top Junior.
TopTV says it regrets the timing of this change to its channel make-up "but, due to operational reasons, it has become necessary to prepare for a proposed new channel structure".
The company also awaits feedback from the Independent Communications Authority of SA regarding an application it made for the introduction of a standalone pornography bouquet - a move many have said was made in a bid to up TopTV's dropping subscriber base. The company is up against MultiChoice's popular DSTV offering, which has the rights to top sports and movies channels.
TopTV is reserving comment on the prospective investor, saying only that "more details regarding this issue will be made public in the coming weeks. These talks are at an advanced stage and should they reach finality, a much-needed cash injection will be made into the operation that could result in a restructure of the business and the channels that are currently on offer."
StarTimes has licences and registered companies in 10 African nations - having been issued the first digital TV operator licence by Rwanda in 2007. Its operations network currently covers Nigeria, Tanzania, Uganda, Rwanda, Burundi, the Republic of Central Africa, Guinea and Kenya. The firm says it aims to become an influential global media group and "provide every African family with affordable and enjoyable digital television".
TopTV has extended its gratitude to what it says is a base of loyal subscribers "for their continuous support over this trying period in the company's history". Confident that it will withstand the test, TopTV says it awaits confirmation of new developments "for an exciting new future".
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