Serial entrepreneur Strive Masiyiwa has announced plans – through Econet Global – to launch a pay TV service known as Kwesé TV, which will offer exclusive sports and entertainment programming to African markets.
The newest venture, which has been in the pipeline for three years, will see Econet Global competing with Multichoice, owners of DSTV, who have dominated the pay TV service since 1995.
“You may know of other companies in this market, most of which either provide content that’s far too expensive, or content that’s just so bad it's not worth paying to see it, even if it’s cheaper.
We know you understand what the problem is. And I believe my team has developed an exciting product which will change that dynamic,” said the billionaire on his facebook post before adding that Kwesé TV’s success will depend on their ability to acquire and also to develop new, high-quality and unique programming at an affordable price.
Dr Masiyiwa said that "Kwesé" means "everywhere" and “anywhere" signalling their intention to penetrate the African market as a whole in a similar manner to MultiChoice’s strong footprint across Africa.
It won’t be the first time a company tries to wrestle Multichoice for the pay TV market share. In 2010, On Digital Media, owners of StarSat pay-TV service was expected to give DSTV serious competition through their TopTV service but the business has since floundered and it’s languishing under a business rescue process.
Multichoice’s lack of credible competitors has made the company a target of criticism for being a monopoly as it controls 98 percent of satellite TV in Africa. Furthermore, DSTV has taken some flak for continuously increasing prices without much improvement on the content they are offering, often accused of airing too many repeats.
But Multichoice continues to be a money spinner for its parent company Naspers. Multichoice reported in its 2015 interim financial results that its group revenue increased from R15.1 billion to R17.1 billion, while its core headline earnings grew from R3.2 billion to R3.6 billion over the past year. DStv’s subscriber base in South Africa also grew from 5.1 million to 5.5 million homes year-on-year. In total, DStv has more than 8 million subscribers across Africa.
However, Econet Wireless might prove to be Multichoice’s most formidable competitor yet. According to Masiyiwa, Kwesé TV will be built around Econet’s core capabilities of satellite communications, fibre optic networks, and mobile services.
Econet is a privately held diversified telecommunications group with operations and investments in Africa, Europe, South America, North America and the East Asia Pacific Rim, offering products and services in the core areas of mobile and fixed telephony services, broadband, internet, satellite and fibre optic networks.
Econet was founded in 1993 by Strive Masiyiwa, who first came to international prominence when he fought a five-year constitutional legal battle leading to the removal of the state monopoly in Zimbabwe’s telecommunications sector. The landmark ruling is regarded as one of the milestones in the opening up of African telecommunications to private capital.
Econet subsidiaries include Econet Wireless International, Econet Wireless Africa, Econet Wireless Global, Econet Enterprises and the Liquid Telecom Group.
But Billy Sekgororoane, Managing Director of Multichoice Botswana, is not a worried man. “We welcome competition as we believe that it benefits the broadcasting and production industries, it can also contribute to diversification of economies, the growth of local production industries and a pluralism of services to customers. Ultimately television viewers may benefit through the additional volume and variety of content that will be distributed by various operators in the market.”
On the issue of Multichoice’s monopoly on the Pay-TV market, Sekgororoane says that couldn’t be farther from the truth. As a matter of fact, Multichoice’s view is that competition in a market stimulates growth, which in turn stimulates the industry and when that happens, the industry in Africa will grow and branch out into the rest of the world. “That is the position that Multichoice wants to be in. Multichoice is, therefore, not a monopoly and does not encourage monopoly in any way,” He remarked.
While consumers might hope that the imminent competition between Kwese TV and DStv will result in competitive prices, Sekgororoane points to a tough trading environment and has defended Multichoice’s annual price increases as borne out of survival than pure profit making.
“Subscription price increases generally occur every year in April, at the beginning of our financial year. These are necessitated by increasing input costs. Multichoice Africa’s cost structure has various input costs, which include staff costs, technical infrastructure costs, satellite lease costs, facility cots, marketing and programming costs.
In determining the price increases Multichoice takes into account many factors including, and amongst other things, current inflation, impact on subscribers, efficiencies that may be effected in the company that may offset the necessity for a price increase. Unfortunately, it is necessary to effect price increase due to the ever rising costs to the business.”
He however explained that Multichoice has various packages that will appeal to different consumer segments depending on what they can afford. Multichoice offers a variety of bouquet options on its DStv service, from basic to premium services. “The range of DStv packages allows subscribers flexibility in price (from P105.00 to P610.00 per month), and choice without compromising quality and variety. Subscribers are able to choose any bouquet of their choice depending on affordability and needs” said Sekgororoane.
Pay TV revenues in Sub-Saharan Africa will reach $6.22 billion in 2020, up from $3.54 billion in 2014 and $1.92 billion in 2010, according to a new report from Digital TV Research released in January 2015. The fourth edition of the Digital TV Sub-Saharan Africa report forecasts that South Africa and Nigeria will contribute more than half of the region’s pay TV revenues by 2020 for the 34 countries covered. Second-placed Nigeria will more than double its revenues from $449 million in 2014 to $1,148 million in 2020.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”