IPTV is about to challenge the dominance of satellite TV in Sub-Saharan Africa, with the arrival of two services from telecommunication operators Telkom Group and MTN.
The initial deployment will be in South Africa, where both are based and which dominates the region economically, accounting for 98.9 percent of Telkom’s revenues.
MTN Group, Africa’s largest telco with revenues of $14.8 million in 2012, will launch the country’s first commercial IPTV service later in 2013, according to its managing director Karel Pienaar. With over 1 million existing DSL subscribers as candidates for IPTV and growing strongly, Multichoice is best placed to compete with satellite TV. Meanwhile Telkom, although having over 800,000 DSL subscribers, has been struggling competitively, hit by rapidly falling demand for its fixed line services.
Pienaar said that Multichoice had been experimenting with different options for IPTV and that the service would only be launched when the platform, content offering and pricing were deemed competitive and attractive. He anticipated a future where increased penetration of fiber combined with national roll out of 4G/LTE mobile services in South Africa will present a huge opportunity for telcos. While South Africa will remain the principle market, neighboring countries will become more significant, accounting for 53 percent of the total Sub-Saharan pay TV market of $4.62 billion in 2018, compared with 39 percent of the $2.88 billion in 2012, according to a report by Digital TV Research.
Currently, DTH is dominant, accounting for 79 percent of the 9.26 million pay TV subscribers in Sub-Saharan Africa at the end of 2012, according to that report. MultiChoice, owned by the South African media conglomerate Napers, accounts for virtually all of this with 6 million subscribers at the end of 2012, according to another analyst group in the UK, Rethink Research. While the new IPTV services will be targeting some of Multichoice’s subscribers, there is plenty of scope for both to grow given Digital Research’s prediction that the pay TV subscriber total will more than double by 2018 to pass the 20 million mark.
In South Africa, the only other significant pay-TV operator so far has been Top TV, owned by On Digital Media of South Africa. Top TV began broadcasting in May 2010, and now has just over 300,000 customers, plus about 100,000 that have decoder boxes but whose service has been deactivated because users could not pay their monthly fee. Top TV has introduced a voucher scheme allowing users to pay their subs in the same way they do for electricity, by using cell phones to make one-off payments with no penalty for having to be reconnected. This highlights a growing trend in Africa to use cell phones for making payments associated with the accounts, exploiting the fast-growing mobile phone penetration, coupled with the fact many people still do not have bank accounts.
Another major force has recently arrived on the continent — French DTH operator Canal Plus. For now, however, it is only targeting the 115 million people in the Francophone countries, including the Democratic Republic of the Congo, but not yet English speaking South Africa.
Canal Plus is broadcasting a modified version of its domestic package, in Ku band, to 20 Francophone countries, mostly in central and western Africa. It gained 227,000 pay TV customers in its first year of operation and has been competing strongly by acquiring French language rights to UEFA Champions League and UEFA Europa League matches from 2012 to 2015 spanning the whole sub-Saharan region. It has actually been selling the content on to Multichoice to make some money from English language broadcasts in South Africa. Unless both MTN and Telkom seek to acquire sporting rights as well, they will find it hard going to make a major impact.