[South Africa] MTN BEE Scheme Misses Offer Target

MTN has raised R1.1billion through the public offer for its new ‘Black Economic Empowerment’ scheme, Zakhele Futhi, well short of the target of R2.5billion, but sufficient to allow the transaction to proceed. The telecommunications group will underwrite the difference.

The new scheme, which is expected to close by Thursday, replaces MTN’s previous empowerment scheme, Zakhele, which is in the process of being unwound this month.
The public offer raised the R1.1billion from more than 81,000 black applicants. In addition, applications were received from 11,203 qualifying Zakhele shareholders holding in aggregate 13.5million Zakhele shares to reinvest into Zakhele Futhi.

The cash raised by Zakhele Futhi under the public offer exceeded the minimum amount of cash required for transaction to proceed, namely R250 million.
MTN will underwrite 27.8million Zakhele Futhi shares worth R557million to make up for the equity shortfall, it said in a note to shareholders.

The group said it will warehouse these shares for a period of time and then on-sell them to “select qualifying parties”. It said it has already received expressions of interest in this regard.

Ordinary shares in Zakhele Futhi will be allotted and issued to successful applicants on Wednesday, 23 November.
MTN’s share price was trading 1.9% higher at R118.70/share at 4.39pm on Tuesday.

Source: Techcentral

[South Africa] Vodacom Nearly Doubles 4G Base

The number of active 4G/LTE customers on Vodacom’s South African network has increased by 88.9% in the past 12 months, the operator revealed in its interim financial results on Monday.

At the end of September 2016, Vodacom had 3,6m active 4G users on its network. The growth in 4G users contributed to a 14.4% increase in average monthly data usage on smart devices, to 629MB.

“This has resulted in an overall ARPU (Average Revenue Per User) uplift of 23.7% as customers migrate from 3G to 4G and 17.9% as customers migrate from 2G to 3G,” Vodacom CEO Shameel Joosub said in notes accompanying the financial statements.

South African service revenue grew by 5.6% to R25.5 billion aided by strong customer net additions and increased data demand. Revenue grew by 3.8% to R31.4billion, impacted by a 5.2% decrease in equipment revenue due to higher prices and weaker consumer demand.

Active customers grew strongly, reaching 35,7m, with 1,5m net customer additions in the first half of the year. Active prepaid customers increased by 1,4m to reach 30,6m. Prepaid voice bundle purchases increased by 26.8% to 447m bundles, reducing the pace of voice revenue declines for the past four quarters. These personalized offers led to a 15.4% reduction in the prepaid effective price per minute.

Vodacom South Africa added 131 000 contract customers, with contract churn down to just 5.1%. Contract ARPU rose by 5.4% to R408.
Data revenue, which increased by 19.5% to R9.9billion, now makes up 38.8% of service revenue, up from 34.3% a year ago. Active data customers grew by 4.1% to 18,2m. It said the average price per megabyte fell by 13% over the past year and by 61% over the past four years.

Vodacom ploughed R4.1billion into its South African network in the six months ended September 2016, which it used to widen its 3G and 4G data coverage “substantially”. 3G coverage increased to 99.2% of the population and 4G coverage to 68.7%, up from 46.8% a year ago, it said.

“We extended our high-speed transmission to 89.8% of our sites. We are making good progress on our fibre deployment by entering strategic wholesale agreements to sell services through other network providers. We completed the development of our new customer management and billing systems to futureproof our operations and have migrated approximately 70% of our consumer contract customers to this new platform,” it added.
Source: Techcentral

[Nigeria] Unsolicited Telemarketing: Telcos May Face Sanctions

Thirteen (13) network operators risk sanctions if they fail to comply with the Nigerian Communications Commission (NCC) Do Not Disturb (DND) directives issued on April 20, 2016.
They are however given another one-week ultimatum being from Monday, November 14, 2016 to remedy the situation or face the sanctions enshrined in the directive

Worried by the non-compliance by the operators occasioned by a deluge of complaints by subscribers across Nigeria, the NCC inaugurated an eight–member committee to look into the matter.

NCC Director for Public Affairs Mr. Tony Ojobo said that after several meetings, including those held with the network providers, it had become necessary for the NCC to issue the latest ultimatum to redress the menace of incessant unsolicited text messages and phone calls for telemarketing via the various networks.
The network operators include Airtel Network Limited, MTN Nigeria, Globacom Nigeria, Smile Communication, Visafone Communications, Ntel, and Etisalat, Multi links, Starcomms, Danjay Telecoms, Gamjitel Limited and Gicell wireless.

The NCC has written to all 13 networks providers on whose networks it has received a series of complaints from subscribers regarding the efficacy of the Do Not Disturb (DND) service.

The statement said that the Commission had engaged mobile network operators on this subject and further directs that: the phrase 'MTN generated SMS' referred to part (d) of the duration issued on April 20, 2016 to MTN and other network providers shall be taken to mean: messages and calls with respect to only information on emergencies such as national security or fire. Notifications on network maintenance programmes down times and Notification regarding subscribers bundle usage and service renewals.

Other text messages and voice calls informing subscribers of new products and service offerings are not regarded as network generated and therefore regarded as "unsolicited marketing messages".

The NCC has therefore asked these network providers to ensure that information on the Do Not Disturb service should be disseminated after every revenue generating activity via the End of Call Notification (EOCN) for the period not less than 45 days within the hours of 8am to 8 pm daily from the receipt of the latest letter on the subject.

The operators are also admonished to deploy this information through all their channels of communications, including websites, social media platforms, bill boards, flash messages, text messages, Interactive Voice Response platform, radio jingles, newspapers advertisements and television commercials.

The statement said that this notice serves as a pre-enforcement notice and "Failure to comply with the directives, in furtherance of the Direction of April 20, 2016, within seven days from November 14, 2016 shall result in the imposition of appropriate sanctions". The menace of unsolicited text messages has been a nightmare to several millions of subscribers and the Commission can no longer accept any excuses whatsoever from the network providers, Ojobo said in the statement.
Source: Biztechafrica.

[SOUTH AFRICA] Streaming could yet save the music industry

For the last few years, Barclays’ annual research reports about the music industry reflected the challenges of a business in transition — or, more specifically, one that had slowed a rapid decline but had not returned to growth.
In 2014, as track sales fell, the bank’s report declared that “Streaming killed the download star”; the 2015 edition was titled “Swimming upstream”. But the bank’s latest research report, published in October and titled “Dancing days are here again”, starts with much better news: “2016 is the year recorded music appears to be turning a corner.”
Many US analysts and executives have been making the same claim, particularly since September, when the Recording Industry Association of America announced that recorded music generated 8,1% more revenue in the first six months of 2016 than it did during the first half of 2015.

That growth was driven by the increasing number of streaming service subscribers: there were 10,8m at the end of 2015 but an average of 18,3m during the first six months of 2016. And the good news isn’t just in the US: the UK market was up 10,9%, France 6%, and some analysts are predicting growth worldwide.

“We’ve reached a place where our largest source of revenue is increasing,” says Stu Bergen, Warner Music Group CEO of international and global commercial services. “That is a good feeling after the long decline of physical.”
However, it’s not time to pop the bubbly just yet.

As streaming grows, sales of downloads and CDs are plunging — by 22,1% and 12,7% respectively in the first nine months of 2016, according to Nielsen Music — and it still remains to be seen just how many casual fans will pony up for subscriptions when music is available for free on YouTube and Spotify’s ad-supported tier.

While streaming has been great for the major labels, its economics are rarely as rewarding for songwriters, publishers and even some labels and artists. And so far, none of the companies in the streaming business is making money.
In other words, if this is a turnaround, then it’s a fragile one. “We’re in recovery,” says Michael Nash, Universal Music Group executive vice-president of digital strategy. “It’s one day at a time.”

The good news
So far, the rebound in the recorded music business has been driven by paid subscription services, which together in the first half of 2016 brought in more than $1bn, more than double the $478,6m for the same period in 2015. (That’s 63 % of the overall US streaming market.)

Much of that growth came from Apple Music, which didn’t generate any revenue until the second half of 2015.

“This seems a solid and continuing [trend],” says Martin Mills, founder and chairman of Beggars Group. “I see no reason it would turn back.”

No one knows how big the potential US market for music subscriptions is, but if approximately 100m households have some kind of cable TV subscription and 47m subscribe to Netflix, there’s plenty of room for growth.
“The question isn’t whether we’ll get to 50m streaming subscriptions,” says Russ Crupnick, managing partner of the consultancy MusicWatch. “The question is how long it will take.”
To understand the opportunity this represents, consider that about 42m people in the US bought a downloaded track in the last year, according to MusicWatch, spending an average of between $50 and $60 on music. Broadly speaking, that means each additional subscriber paying $10/month is worth two average downloaders.

One factor that should continue to drive streaming’s success is something the download business never really had: competition. The major labels have a vested interest in Spotify’s success — literally, since together they own an estimated 18% equity in the company — but they also want to be sure one company doesn’t end up controlling the streaming market in the way Apple dominated downloads.

So far, Spotify has a lead in streaming, with more than 40m paid subscribers worldwide, while Apple Music has 17m. Amazon just introduced its own subscription streaming service, which the company is marketing and discounting to its 60m Amazon Prime members. Pandora and iHeartMedia will enter the market in 2017 with the ability to promote their services to the millions of listeners they already have, and Google could make Google Play or YouTube Red serious competitors as well.

“We’re looking at a world with four or five players competing on the core proposition,” says Nash, “and we’re going to see innovation at the high end and the low end.”
The former could involve high-quality audio options from Tidal or Deezer, while the latter could involve lower-priced limited subscriptions, like the $4/month Amazon deal that offers unlimited access to music for one of the company’s Echo speakers.

Promisingly, as the music business starts growing again, investment seems to be following. “I’m getting calls from people in private equity asking me about music assets,” says Doug Davis, a leading entertainment lawyer. “That hasn’t happened for six or eight years.”

The bad news
Even with all the positivity, “we aren’t out of the woods yet”, says Bergen.

However fast streaming grows, it won’t become a stable, sustainable business until it’s profitable for those tech companies. So far, that hasn’t been the case: Deezer postponed its listing in October, Rdio filed for bankruptcy in November, and Spotify’s financial results show that in 2015 it lost $191,4m on revenue of $2,2bn.

A broad economic downturn could hurt Pandora’s stock price or Spotify’s projected listing, forcing those companies to readjust their business models, or even scaring other companies out of the market.
“Eventually these companies have to make a profit for the overall industry to be healthy,” says attorney Joel Katz, who leads the media and entertainment business practice at Greenberg Traurig. “If they don’t become profitable, that could disturb the revitalisation of the record label business, which is coming back in a really good way.”

The streaming business also will require labels to fundamentally change how they operate.

First, they’ll need to shift promotion and marketing efforts to drive consumption rather than transactions.

Second, as smartphones increasingly are used to consume video content, labels need to produce more of it.

Finally, labels have to ensure they don’t help make streaming services so powerful that they will start releasing music themselves, as Apple essentially did with Frank Ocean’s Blonde.
The upshot
Few in the music industry harbour any illusions that things will return to the way they were in 1999, when US revenue peaked at $14,6bn.
Today, music generates money when it’s played rather than when it’s purchased — which adds up more slowly but also more steadily.

“The new market is not like the old market,” says Mills. “New releases generate less immediate revenue than they used to, but their earning span is extended.”

The revenue that labels and other rights holders collect also will be more predictable. The music business always has depended disproportionately on hits, but in a streaming world, the amount of money consumers spend on music won’t vary nearly as much.

“There are very few businesses that survive a 50% revenue decline,” says Nash. “If we do, it’s because we have the big picture in mind.”

SOURCE: Techcentral