Nigeria’s national TV broadcaster, Nigerian Television Authority (NTA), entered a deal with China’s originated Startimes, a PayTV company, in 2008, under a special profit sharing model where Startimes keeps 70% and NTA gets 30%. Remember, it is profit-sharing, not revenue sharing. The implication is this: Startimes can operate in Nigeria for 100 years and structurally decides not to record any profit if it wants to keep expanding and growing. With NTA not involved in backend operations, Startimes has many ways on how it spends its budgets. So, since 2010 when the service got into full force, Nigeria has not received a dime. Of course, Startimes benefits from the brand equity that it is working with a national broadcaster, helping it amass many customers in the fledgling satellite television business. Startimes offers services which are low cost.

The DG ran into trouble at yesterday’s sitting when he told the committee members that not a single dime has been realised from the joint operational venture it entered into with Startimes in 2008.

Mohammed said: “As an executive director in NTA in 2009, not a single kobo was made from the joint venture with Startimes, the same situation I met in 2016 when I returned as the DG.

“In fact, on assumption of office as the director general, that was the first question I asked, upon which records of non- profitability was presented by the NTA subsidiary outfit running it. The non-profitability status of the venture remains till today.”

My estimate is that PayTV has a market cap of $700 million pre-Covid-19 and will continue to grow in the nation. Startimes has the lion’s share in terms of absolute numbers of subscribers. MultiChoice, however, commands the bulk of the industry profit, powered mainly by its exclusivity on the highly premium European football. The low-price of Startimes offering has not brought much revenue and that affected its ability to find profits in the market. The profit-less state of Startimes/NTA joint venture remains debatable though.

Relying on the audited report of the Auditor-General of the Federation, the Senate through its Joint Committee on Finance and National Planning revealed that the NTA/Star times JV made a whopping $36.1 million (about N11 billion) in 2018; contrary to earlier claims by NTA that the business had yielded no profit in almost 12 years.

Consequently, the Senate accused NTA/Star Times of coming up with incoherent financial records to show that it spent a total of N19 billion; leaving a shortfall of N8 billion in 2018 to justify earlier claims that the business had yielded nothing.

According to the Chairman of the Senate Committee, Solomon Olamilekan said the reason NTA officials kept the account to the JV in dollar form was them to easily ship the profits outside of Nigeria in connivance with some Nigerian officials.

According to Startimes management, PayTV is capital intensive and that the firm has ploughed back all gross earnings to grow the business. So far, PayTV or variants did not work for Startimes/NTA partnership. iROKOtv has also struggled, pausing any plan to look for growth in the African market. But somehow, MultiChoice, owners of DStv and GOtv, seems to be doing well. If you check, it has better pricing power due to superior product mix. If it loses that power, it will fall into the profitless mess. That explains why the new industry code should worry DStv.

iROKOtv Gives Up on Nigeria and Africa!

In business we like to talk of disruption. Disruption is a word that is used in any strategy document. To grow, you have to disrupt the incumbents by setting a new basis of competition which will help you to take market share from them. The digital camera innovators disrupted companies like Kodak who built their businesses on thin film photography.

Yet, it is not always necessary for a company to disrupt for it to grow. To explain that disruption is not always required for growth, I will use free-range chickens, found in most African villages, to create an analogy. A free-range chicken “is a bird that is allowed constant access to the outdoors, with plenty of fresh vegetation, sunshine and room to exercise”.

This bird does not compete for your time. Unlike dogs and cats, you practically do not invest so much time on free-range chickens. In the morning, they leave the house and in the evening, they return. They feed for themselves!

In business, we can be like chickens. That means we can find new markets and opportunities that may not have to compete with the present ones.

What is your free-range chicken strategy? Learn more on this post.

https://www.tekedia.com/non-disruptive-growth-the-free-range-chicken-analogy/

WorldRemit, the cross-border remittance company, is advancing. Western Union has a real challenge at hand when it comes to remittance into Africa. Founded in 2010,  WorldRemit serves over 4 million customers, covering 90 currencies  in 150 countries. The company is acquiring Sendwave, a rapidly growing app-based remittance company in a cash and stock transaction. Sendwave will continue to operate independently and retain its mobile applications, brand, management, employees and key partners.

This is the number, from the press release: “US $7.5 billion in transfers, generating approximately US $280 million in revenue.”  That is big and this company continues to advance.

In the last 12 months, ending 30 June 2020, WorldRemit and Sendwave have sent approximately US $7.5 billion in transfers, generating approximately US $280 million in revenue. This represents a YoY growth of over 50% for the year ended June 2020 relative to historic combined revenues. On a pro forma basis, the combined company will have over 100 send licences including for every US state, across a network that includes 50+/150+ send/receive countries and almost 8,000 payments corridors, a broad footprint that serves a large, but fragmented $715 billion remittances market that the World Bank estimates is growing at a 10% annual CAGR.

In Tekedia Institute’s Mini-MBA, our focus this week is Media, Branding and Design. Grace Akinosun, CEO of smepeaks begins it with Media, Communications, and PR. Branding and advertising veteran Akachi Ngwu, Eexcutive Director / COO of Luzo Digital Network & Media follows with Branding and Advertising. Kemisola Oloriegbe of  Nigerian Breweries Plc provides insights on how to make sure that product we are branding/adverting is well designed and packaged. Go to the Board.

Sept 2 is the last day to join Tekedia Mini-MBA Edition 3.