The first step in this process has been the creation of Telkom Media (Pty) Ltd, a private company with a 41.5% black economic empowerment shareholding, which applied to Icasa (Independent Communications Authority of South Africa) for a commercial satellite and cable subscription broadcast licence on Thursday.

Partners in the joint venture are Videovision Entertainment, MSG Afrika Media and Women Development Bank Investment Holdings (Pty) Ltd. This shareholding combines a wealth of electronic media expertise.

Telkom Media will offer two media and entertainment services: satellite pay-TV and cable TV (IPTV).

"Telkom Media aims to stimulate and lift demand for entertainment services and act as a catalyst for the development of convergent solutions in South Africa. The goal is to substantially broaden access to pay-TV services within the South African population and open the gateway to new convergent services," says Wally Beelders, Telkom's Chief Sales & Marketing Officer.

Although pay-TV has been licensed in South Africa since 1986, penetration within South Africa remains low. Current offerings are targeted in terms of price, content and marketing at the high income market and offer very little flexibility.

Telkom Media was adamant that these offerings fail to address the mass market of South Africa. According to the company, their research shows that this is a reflection of supply side weaknesses rather than demand side dynamics.

"We're excited to be entering this market," stated Beelders.

He adds: "Our research shows that there is a potential market of over 40% of South African households that are interested in and willing to pay for satellite TV services. This is a hugely untapped market that is not addressed by current pay-TV services. With respect to our IPTV offering, there is significant interest in an enhanced video- and content service over DSL at the upper end of the market."

Boost for local content

Initial offerings in the satellite subscription service will provide subscribers with access to seven locally compiled television channels which will contain a significant amount of local content.

"Local sport and local content is important in terms of satisfying the needs of our target audience. We have made significant budgets available for the core basic tier channels to ensure extensive provision of sports coverage, local news, local music and a broad range of local content across other key genres. In addition, we will access content from Africa and the rest of the world," says Beelders.

A basic bouquet comprising of the following locally compiled subscription television channels will be offered:

Entry into the bouquet will be priced at a level that is favourable to the majority of South Africans, Telkom said.

According to Anant Singh, CEO of Videovision Entertainment, one of Telkom Media's key aims will be to provide stimulus to the local TV production sector.

"We will establish relationships with the independent television production sector to provide an outlet for both established production companies and new talent. In addition, the promotion of new interactive technologies, such as user-generated content, will provide a much-needed stimulus to the local digital media industry," says Singh.

Telkom's entrance into the pay-TV market opens new opportunities for it in the Information, Communications and Entertainment space and is in line with its strategy to provide converged solutions and satisfy the diverse needs of an increasingly sophisticated customer base.

"Our involvement in the highly competitive pay television environment in South Africa and the significant material and financial commitments on our part underlines our absolute confidence in the continued economic growth and prosperity of our country," says Wally Beelders.