Review NTA-StarTimes unviable deal
Quite typical of most joint ventures signed by government officials, mistakes had been made in this PayTV deal too. But beyond a forensic audit of its losses and search for alleged missing N200 billion, it is time to review the entire business model.
The viable alternative, in the main, is for the government to step aside and push its 30 per cent equity to private investors, who are skilled in international standards, to run NTA-StarTimes efficiently, competitively and profitably.
Indeed, digitisation has disrupted almost every sphere of daily lives, including the mode of communication and telecommunication services. Nigerian Television Authority (NTA) is a latecomer in the Digital Terrestrial Television (DTT) revolution. The government-owned network in 2008 went into a partnership with the Star Communications Technology of China, to birth NTA-Star TV Network Limited – the operator of StarTimes PayTV. About 12 years after the deal and 11 years of StarTimes PayTV viewership, officials recently got summons to account for their stewardship.
The Senate’s call for accountability could not have come at a better time. At a period when both the regulator, Nigerian Broadcasting Commission (NBC) and the dominant PayTV provider, Multichoice, have conspired against Nigerians in raising fares so ferociously, it is worth asking state officials what has become of similar quasi-indigenous venture that should ordinarily be competing with DSTV? But to the chagrin of all present at the recent Senate hearing, NTA-StarTimes venture has not made much progress or any profit in 11 years! NTA Director-General, Yakubu Ibn Mohammed, told the Senate that the business status has not changed much compared to 2009 when he was an Executive Director. He later said an average of N6 billion, made in the last three years, was immediately ploughed back into the venture. Those were disclosures that should not be allowed to go without proper investigations.
Thankfully, the management of NTA-Star TV Network Limited has welcomed a forensic audit on its finances and operations, as requested by the Senate’s Joint Committee on Finance and National Planning. The Public Relations Manager of the company, Lazarus Ibeabuchi, also explained that no revenue of N200 billion was missing, as its gross earnings had been repeatedly shipped back into cost of production to cover expenditure on transmitters, equipment, generating sets and satellite, content acquisition, as well as operating costs, which include salaries and other running costs, incurred within its 10 years of operation.
In fairness to the handlers, the Nigerian toxic environment has almost made it impossible for any good business to play by the rules and survive. The dollar-denominated ventures are the worst victim of the slugfest. For instance, the exchange rate volatility is causing high-cost businesses to swoon. And when combined with body blows of mismanagement and gross incompetence, they are sent reeling. The narrative cuts across the import-dependent manufacturing sector, aviation, telecoms, and now the satellite-broadcasting arena. DTT has all its components and contents in dollars, yet has to sell to viewers at a weak naira rate – technically, selling more for less. At pro-poor average monthly subscription of N1000 per subscriber, spread across four million active users, it is almost certain that StarTimes will have very little left for profit after covering a high cost of operations. The dominant stakeholder, DSTV, is also struggling despite its seven million customers and another four million-plus on pro-masses GoTV platform. On both platforms, Multichoice has freely increased rates twice in three months, with cost now ranging between N410 to N19, 000 per month subscription.
On the flip side, the NTA-StarTimes venture was perhaps not designed to be viable or benefit Nigeria. Records showed that Nigeria went into the joint venture to give multiple programme options to Nigerians and assist the country realise digital migration by January 1, 2015. Unfortunately, the Chinese started by selling the outdated first-generation Digital Video Broadcast Terrestrial technology (DVB-T1) that had been phased out in African countries. Kenya, Uganda and Rwanda banned DVB-T1 for the latest DVB-T2 that is also compliant with digital switchover. Again, the agreement is such that abhors competition. According to the terms, NTA is forbidden from entering into any relationship with another broadcaster, satellite or terrestrial, and was compelled to annul those entered into prior to the agreement with the Chinese. Technically, the entire arrangement is skewed in favour of the Chinese.
But competition and healthy rivalry are the gadflies of businesses globally. In the absence of one in the NTA-StarTimes deal, the venture has almost gone complacent and out of tune with the demands of most Nigerian TV audiences. In fact, not too many Nigerians know of StarTimes today. How many of the lawmakers probing into its deal have StarTimes decoder either in the office or at home, compared to DSTV? Nigerians that have StarTimes have either abandoned it due to frustrating poor signals or boring contents on display. Indeed, the Nigerian television audience could tell that there is really very few to choose between the NTA broadcasts and StarTimes programmes. Yet, the NTA claims it has the widest Network in Africa, with stations and satellites across all the 36 states. There should be more to programmes than official and mostly state house events, Nollywood and Indian Bollywood soap operas. Nigeria is a football-loving nation, for instance, and therefore, a shame that NTA and StarTimes still cannot bring live, most league matches to homes, to widen its domestic patronage.
NTA and company need to wake up in this age of innovation if they must be viable and relevant in the next couple of years. They need to rejig their business models to be in tune with the thinking of Nigerian consumers. With Internet disruption, consumers are exploring a whole range of options and getting creative too. The erstwhile strategy of the same programmes and price tweaking is now outdated. Via more affordable and multipurpose Internet services, consumers can now stream all manner of programmes and latest movies at their convenience. There are streaming services like Netflix, Amazon, YouTube channels, and so on, with a range of latest content at $13 or N5000/per month to access a whole range of bouquet. In South Africa, the DSTV decoder goes with Internet services. Why not in Nigeria? NTA has all the dishes. Why not have them upgraded and change the decoder to facilitate Internet services in homes? The point is that the Nigerian consumers are getting smarter, and far innovative than what NTA-StarTimes are offering. It is time to benchmark this venture against international trends, to help it stand the test of time.
The Senate’s committee is in order mandating that all revenue-generating agencies of government, including NTA-StarTimes, to remit all earnings into the Consolidated Revenue Funds. It must take steps further to demand an immediate review of NTA-StarTimes’ operations for a noticeable boost in fortunes. In the absence of that, the Federal Government should not acquire more equity, but divest its stake for the much smarter private sector. That is the most viable option for survival of that deal between Nigeria and China.
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