Increased urbanisation and the growing middle class have seen major pay television merchants scramble for the East African market, ahead of the June 2015 deadline for all broadcasts to be aired in digital form.

Star Times Media recently launched a satellite TV service in Kenya, stepping up competition with rivals Zuku, owned by Wananchi Group, and DStv, which is owned by MultiChoice. The Chinese-owned company also has market presence in Rwanda, Burundi and Uganda.

Star Times has been the only pay-TV provider without a satellite platform, which limited its scope for expansion in the region. But its upgrade to the satellite will now see it compete on both the satellite and terrestrial platforms.

“We believe that we have a very strong product that will appeal to most viewers since our bouquets are priced competitively,” said Star Times vice president Mark Lisboa during the launch of a new studio in Nairobi.

In July, the firm launched the $80 million studio that will house its Africa headquarters. The studio will host a film and television dubbing centre, a Star Times broadcast station, and a digital TV research and development centre.

Star Times’s foray into African markets has been supported by funds from the China Development Bank and China’s Africa Development Fund. The company is already offering up to 140 channels and attracting close to 2.3 million subscribers in the East, Central and West African markets, with an expected target of 3 million by the end of the year.

Last year, MultiChoice spent $33.6 million to set up a facility for generating programmes for its East African audience; half of this investment went towards funding local content. While releasing its 2014/15 yearly results, MultiChoice said that within sub-Saharan Africa, it had 1.3 million net new subscribers, with the number of subscribers outside South Africa at 3.1 million.

“The subscriber numbers for GOtv have reached 1.7 million. GOtv is now available in eight countries, including key markets such as Kenya, Nigeria, Zambia, Uganda, Rwanda and Ghana,” Naspers, MultiChoice’s parent company, said in its 2014/15 financial statement.

MultiChoice has been in the pay-TV business in East Africa for close to two decades, and boasts more than 6 million customers on the continent.

According to Communications Authority of Kenya data, Star Times has 272,594 subscribers on its digital terrestrial platform in Kenya. The company plans to add 80,000 subscribers through its satellite platform. Zuku covers a network of more than 200,000 homes in Nairobi and Mombasa, and DSTv has close to 140,000 subscribers. Figures for GOtv subscribers were unavailable.

In Rwanda, the pay-TV market is controlled by Star Times Media and Tele 10; Star Times Media has the majority of subcribers.
According to the Rwanda Utilities Regulatory Agency (Rura), as at March this year, Star Times had 72,225 subscribers while Tele 10 had 9,582 subscribers. This translates into 82 per cent of the market share for Star Times and 18 per cent for Tele 10. By March 2014, Star Times had made $720,995 in revenues, as compared with $183,146 by Tele 10.

Wananchi Group, which runs the Zuku brand, also announced an injection of $120 million from existing and new shareholders to fund its growth and expansion plans in East and Southern Africa.

“The new capital investment will be used to consolidate the group’s market leadership in East Africa and to extend our services across East and Southern Africa,” said Richard Bell, vice chairman of Wananchi.

“We will continue the deployment of fibre to the home networks in more cities in East Africa and extend our business services networks and product offerings across a wide variety of geographies and market segments,” Mr Bell added.

According to a report by PricewaterhouseCoopers titled “Entertainment and Media Outlook 2013-2017,” the Kenyan pay-tv market is still in its infancy, with subscriber penetration at only 8 per cent in 2013.

“However, as competition increases, this will rise to 15 per cent by 2017. The total of 300,000 pay-TV households at the end of 2013 is expected to more than double to reach 531,000 by the end of 2017. The subscription revenues totalled $70 million in 2013, and will reach $111 million in 2017,” the report said.

According to the report, the subscriber growth will be driven by new players like Star Times and Zuku, which are challenging the incumbent MultiChoice with diversified programmes and reduced prices.

Uganda subscribes

According to the Uganda Communication Commission, Uganda has more than 300,000 pay-TV subscribers, with MultiChoice as the only satellite TV provider. Star Times is still operating on a digital terrestrial platform, and plans to upgrade to satellite before the end of the year.

Uganda has five pay-TV service providers: GOtv and DStv, both products of MultiChoice; StarTimes Digital TV, MOTV and Zuku TV from Wananchi group. In terms of subscription base, Star Times is currently the market leader with about 130,000 subscribers, closely followed by MultiChoice (DStv and GOtv) with about 100,000 subscribers. Zuku Tv and MOtv have less than 30,000 subscribers combined.

Star Times also controls the Burundi pay-TV market. In June, Burundi’s telecom regulator Agence de Régulation et de Contrôle des Télécommunications (ARCT) announced that China had agreed to facilitate the country’s switch to digital broadcasting at a cost of $40 million.

According to Deogratias Bizindavyi, the director in charge of digital process and frequency spectrum at ARCT, part of this money will be a grant, and the rest will be a loan from Export-Import Bank of China to Star Times and Burundi State TV as a joint venture. Star Times will install the network, including equipping radio and television stations.