Wananchi rides on Sh6bn loan to expand reach
Posted Tuesday, June 26 2012 at 19:54
Digital media firm Wananchi Group — which offers its services under the Zuku brand — has secured a Sh6 billion loan from the US government to extend its services across East Africa, as it races to cut the dominance of rival DStv.
It will use the capital to build fibre-optic cable lines in Kenya to provide television programming and voice-over Internet telephone services as well as revamp its content with a focus on local programming.
The company will also offer pay- TV via satellite to markets in Tanzania and Uganda and, through agents, to six other countries in the region including Ethiopia, Eritrea, South Sudan, Rwanda, Malawi and Burundi.
It hopes that its business model of providing voice, internet and TV as a package backed by a wider reach and more local content will help it take on DStv — which has held a near monopoly in Kenya’s pay- TV market.
“We intend to extend our services in these countries before the end of the year and also use part of the money to build local content that is appealing to our target viewers,” said Richard Bell, the Wananchi Group CEO, in an interview with the Business Daily on Tuesday.
“Other than supporting local television producers, we will also be sponsoring annual film festivals in July and have also partnered with NBA, to promote international basketball in eight countries,” he said.
MultiChoice, the owner of DStv has maintained a stranglehold on the region’s Pay-TV segment for the last 20 years, managing to win a loyal following of about three million subscribers in several African markets.
Its dominance has in part led to the collapse of rivals like Smart TV, early this year, and GTV in 2009.
This has prompted the communications regulator CCK to direct DStv to re-sell some of its exclusive content like the English Premier League rights to its rivals whose strategy of pricing their products lower than MultiChoice has not worked.
For instance, Wananchi Group charges between Sh3,299 and Sh4,999 for its premium package while DStv charges Sh6,880.
“We are pleased by the opportunity to support a technological upgrade that provides so many developmental benefits across so many African markets,” said Elizabeth Littlefield, the CEO of Opic, a US government finance institution focused on development projects.