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DStv owners shift focus from floundering pay-TV market

DStv owners shift focus from floundering pay-TV market

Naspers has revealed that a loss of 288 000 direct-to-home (DTH) pay-TV subscribers in sub-Saharan Africa has prompted the company to reposition its business in order to deflect any potential negative impacts.

Basil Sgourdos, Chief Financial Officer at Naspers said the company will increase its focus on its internet businesses in a bid to recover from the weakening subscriber numbers, according to results for the year ended 31 March 2016.

"In the year ahead, the focus will be on continuing to deliver topline growth while scaling the more established ecommerce businesses...we'll invest further in long-term growth opportunities such as ShowMax, letgo and ibibo. In video- entertainment, the loss of DTH subscribers and the effects of weakening currencies in sub-Saharan Africa will have a significant downward impact on earnings and cash flows in the year ahead. It could take some time before the plans to reposition this business will have a positive impact," stated Sgourdos in a presentation of results.

Naspers attributes the poor subscriber numbers to substantial price increases in order to offset the impact of currency declines and weaker consumer sentiment in the region. The company has vowed to minimise further price increases for consumers in order to reinvigorate growth by focusing on managing and absorbing costs itself where possible going forward.

"Our new subscription video-on demand service, ShowMax, had a good start in South Africa with a deeper and more customised content offering than competitors and a focus on service delivery," the company detailed in its results announcement, which reported 21% growth in earnings for its business overall to US$1.2bn.

SA probe into pay-TV

Naspers has revealed that South Africa has been unaffected by the sub-Saharan Africa trend, and the company has added 325 000 customers to its base within the Southern African country.

The country's ICT and telecommunications regulator, the Independent Communications Authority of South Africa (ICASA), has announced that it will conduct an inquiry into the subscription television broadcasting market to determine the level of effective competition.

ICASA says its has observed the failure of new market entrants to commence with licensed activities and noted that only two subscription broadcasters are operating, despite several having been licensed.

The regulator will begin gathering information this week and plans to publish a discussion document before the end of Q2 of this financial year.

As the inquiry to enable more competition in the Multichoice-dominated South African market gets underway, Naspers noted that the surge in subscriptions in the country could ultimately reduce its growth and profitability due to a weakened South African rand coupled with a poor macro-economic outlook.

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