Every business venture comes with its risks, some with a more far-reaching effect than others, and sometimes, the economic terrain could prove a little too difficult to navigate, causing the venture to crash and burn.
African pay-TV operator, Econet Media, has put its struggling satellite broadcasting business under administration. Econet, which operates under the “Kwese” brand name, will begin talks with creditors to rescue the business, CEO Joseph Hundah said on Wednesday.
Econet has also de-activated customers using its streaming service Kwese Iflix, according to reports. The service provider for Kwese Play is no longer supporting the devices for technical reasons, forcing the Econet family to drop the service. Its users in Zimbabwe, South Africa and Uganda were disconnected on July 3. Kwese Play, which was launched in 2018, is Econet’s Roku-powered streaming platform that uses the internet to deliver entertainment.
In a market dominated by Africa’s largest pay-TV operator MultiChoice, Kwese TV mounted a good fight in more than 12 countries, but could not catch up to DSTV’s two-decade head start, abandoning the model for a free-to-air approach as of the end of 2018.
Hundah said that the company had appointed accountants Ernst & Young to manage the process of administration. In his words, Kwese’s free-to-air business was too small to sustain the financial burden of its satellite operations, which led to the decision to negotiate with creditors. The company struggled with the foreign currency restrictions in Zimbabwe, who stopped recognising the U.S dollar, South African Rand and other foreign currencies as legal tender in June in a bid to curb black-market trading.
“The group’s inability to exit money out of Zimbabwe has had an impact on the business”, Hundah said.
He, however, disclosed that no other business under the Econet Global group was affected by the administration process, and added that Kwese TV would continue to operate its free-to-air business in the rest of Africa as normal.
In March, Kwese Free TV was given a licence by communications regulator Icasa to launch a free-to-air TV service offering five free channels to viewers, including a 24-hour sports channel. Kwese Free TV, which is owned by Econet Group to the tune of 20 per cent, was the first free-to-air terrestrial broadcaster to be licensed since E.TV received its licence in the late 1990s. Five entities had been vying for the licence, which includes a chunk (55 per cent) of radio frequency spectrum in what is called digital broadcasting “Mux 3”. Icasa had given Kwese 24 months to launch the service, a time frame set to elapse by March 2021.
Other shareholders in Kwese Free TV include Royal Bafokeng Metix (part of Royal Bafokeng Holdings), which has a 45 per cent stake, and Moss Mashishi’s Mosong Capital, which has a 35 per cent stake.
Econet Media is owned by Zimbabwe’s richest man, Strive Masiyiwa.
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