Telkom Media hopes dashed

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 02 Feb 2009

Telkom's promised deadline around the sale of Telkom Media has come and gone, with the potential buyer of the broadcaster remaining a mystery.

In a media release last month, Telkom promised to announce the details, including the name of the potential buyer of Telkom Media, by the end of January. However, Telkom Media says it still has no idea who the buyer will be.

The hamstrung broadcasting business has been sitting on its hands since March last year when Telkom decided to pull most of its 66% shareholding. Telkom has been keeping details around potential bidders close to its chest, although it has indicated it needs to sell Telkom Media to prevent financial losses.

Telkom's international financial statement (20F), published in June, said the telecoms giant had already invested R326 million (up to the end of March 2008), and was required to provide an impairment provision of R217 million. “If Telkom is not able to procure a purchaser for its investment, it could incur additional losses from the investment, and its reputation and relations with ICASA could be harmed,” it stated.

Speculation is that there are two potential bidders, one being Tokyo Sexwale's Mvelaphanda, and the other an unknown Chinese company, neither of which has been confirmed by Telkom.

Sources indicate Telkom has not even told its broadcasting business who the successful bidder is. The telecoms company referred ITWeb to a pending JSE announcement, which will provide an official update.

Waiting in the wings

Telkom Media has held a pay-TV licence from the Independent Communications Authority of SA (ICASA) for more than a year.

Since it started, the company made more progress than its new pay-TV competitors and was tipped by analysts as the leader in the new pay-TV applicant race. Before Telkom decided to pull its investment, the company was expected to provide stiff competition to incumbent pay-TV broadcaster MultiChoice Africa.

The company invested in technologies that would facilitate services over satellite, online and IPTV. It had also started discussions with several content providers, which could not be completed while it waited for its investors to make a move.

It had hoped to hold its official launch between June and August last year; however, the lack of clarity around its future prevented the broadcaster from going live.

Other pay-TV licensees were E-sat, which bowed out of the race, favouring its position on a 24-hour channel on DSTV; Walking on Water and On Digital Media, neither of which have launched a commercial service yet.