Tag: revenue

Only 30% of people pay TV licence fees

By Sihle Mlambo for IOL

The SABC would be commercially viable and would receive an immediate cash injection of up to R2bn per year if everyone paid their TV licence fee.

This is according to the public broadcaster’s chief operations officer Ian Plaatjes, who was speaking to IOL in a wide ranging interview on Friday.

Plaatjes said only 30% of TV licence holders were compliant and that had substantially affected the public broadcaster’s funding model.

“Our TV Licence is R265 per year and we have 30% of people paying, so we have a default rate of 70%.

“As you know the organisation’s funding model is through TV licence fees as well as advertising revenue, so we are not government funded, we are very dependent on that.

“If everybody was paying their TV licence, we certainly would be a financially stable and viable organisation, but that isn’t the case,” said Plaatjes.

The public broadcaster also lost a lot of money in advertising revenue during the peak Covid-19 and has only started to show promising signs recently.

He said advertising revenue plunged between 70% to 80% during hard lockdown months.

Plaatjes said the organisation was entering into a Section 189 retrenchment process which would see 400 jobs on the line as part of the SABC’s bid to save about R700m per year for the next three years.

Management at the SABC have also said they will freeze salary increments for the next three years, abandon the company’s leave encashment policy and have also reviewed annual leave and sick leave policies.

Plaatjes also said the public broadcaster would be making a push to utilise DSTV as a TV licence revenue collection stream, while also clarifying that they will not be doing the same with international streaming services such as Netflix.

“We have said that we expect DSTV to collect television licence fees on our behalf, they have about 10 million subscribers and if those subscribers do not pay their fee, they can cut them off immediately.

“Some of those subscribers (on DSTV) do not have a TV licence, so we are saying they can collect those TV licence fees on our behalf,” said Plaatjes.

“(Unpaid TV licence fees account for) about R2bn per year, we would be financially stable and viable immediately, so, if you compare ourselves with the BBC (in the UK), which is completely funded through their TV licence, their fee is over R3000 per year and they have nearly 100% collection rate, so it makes a huge difference.

“All that money can be redirected to content and we can have fresher, newer content and also additional content as well,” said Plaatjes.

Meanwhile, he said the public broadcaster had developed a new target operating model which was geared at cashing in on digitisation of the sector.

On Monday, the Telkom streaming service went live with SABC content.

“With our new target operating model, we have identified additional revenue drivers, one of it being carriage licences, like the deal we have just concluded with Telkom which went live on Monday.

“What that does to our revenue is it gives us two additional revenue streams that we never had before, we get a licence (fee) for our channels and we will be able to share in the revenue on the Telkom platform.

“This is not an exclusive deal with Telkom, so we intend to do this deal with other telecommunication companies as well, and so, those will be other additional revenue.

“That is over and above what we have projected in turning the organisation around, so it is huge,” he said.

With the SABC still stuck on analogue, Plaatjes said it was critical to the SABC’s viability that the public broadcaster moved to digital in the next five years.

He said if the public broadcaster was able to offer direct-to-home (DTH) services with a set-top box, that would enable the SABC to have its own dedicated sports, health, education and channels aimed at the marginalised language groups.

Thriving SABC

Asked what a thriving SABC looked like in the next five years, Plaatjes said: “In a best case scenario, we will be in a multi-platform and multi-channel environment.

“Right now we are on analogue, we need to migrate to a digital platform. There’s currently two platforms available, DTT (digital terrestrial television) and DTH.

“The current legislation forces us to a DTT platform, but in five years time that cannot be the case because it is unsustainable in terms of the cost of it being too high.

“In five years time we will have more people on DTH, which is completely interoperable because you can be anywhere in the country and you will be able to be connected via DTH if you have a set-top box.

“But if I have a DTT box, and I move into an area which does not have DTT coverage, it is not interoperable, I have to buy a new box.

“We cannot grow our channels right now because we are on analogue, but on digital, we can have multiple channels and grow the industry through that, and by then we will have our own OTT (over-the-top) platforms, we will have our own OTT platform in the next couple of years,” said Plaatjes.

Grim

As much as Plaatjes said the SABC was ready to go with digitisation, the matter was beyond them.

“The future of our destiny is not in our own hands. With digitisation, we are ready right now, but that requires a set-top box.

“But the roll-out of the set-top box is not determined by us, the manufacturing of it, the setting up of it, the installation and the managing of it afterwards, is outside of our control (it is with the preserve of the Department of Communications).

“So if that is not rolled out, then in five years time, worst case scenario, we will still not be off analogue,” he said.

He added: “There is no stumbling block from our side, all we need is a set-top box, because the infrastructure is there.

“There are 4.5 million households right now that do not have digital TV, so they are still on analogue.

“If you go provide them with a DTH set-top box right now, they will be able to connect.”

 

Source: The Citizen

WhatsApp vice president Chris Daniels confirmed at an event in New Delhi, India earlier this week that the popular messaging app will start showing users ads in the app’s status feature come 2019.

The WhatsApp status feature was launched early last year to mimic Snapchat’s stories feature which was later co-opted by Instagram and Facebook and it allows users to share text, photos, videos and animated GIFs that disappear after 24 hours.

According to India’s Economic Times, Daniels told journalists “we are going to be putting ads in ‘Status’. That is going to be primary monetisation mode for the company as well as an opportunity for businesses to reach people on WhatsApp.”

The new feature will take effect in 2019 but Daniels could not lock down an exact date.

Facebook CEO Mark Zuckerberg’s goal to monetise WhatsApp has forced the social media messaging service’s co-founders to leave the company reports Economic Times.

On of the app’s co-founders Brian Acton told Forbes that the move would undermine elements of WHatsapp’s encryption technology and that Zuckerberg was in a rush to make money from the app after purchasing it for $19 billion four years ago.

Source: BusinessDay 

Media24 has announced it is ending its publishing arrangement with global internet media brand, HuffPost.

In a statement on its website, HuffPost SA said: “Today Media24 and HuffPost announce plans to mutually end its SA licence.”

The company said it was a routine decision and was being made despite “strong” audience numbers because advertising revenues were “challenging”.

The statement quoted Esmaré Weideman, CEO of Media24 saying: “We regularly review our portfolio of brands. The HuffPost SA audience numbers are strong and consistently hold steady on the list of top-10 news sites in SA. HuffPost SA was an important new voice in South African journalism and attracted a fresh new audience.

“Advertising revenues for HuffPost in SA have, however, been challenging. As an innovative and responsible business, we will continue to respond effectively to the market’s needs and explore new digital opportunities.”

The story said staff members were “being consulted”.

SARS undershoots revenue target by R0.7bn

By Sunita Menon for Sunday Times

The South African Revenue Service (SARS) has undershot Treasury’s revised revenue target for 2017-18.

SARS collected R1.216-trillion for 2017-18‚ Finance Minister Nhlanhla Nene said at the announcement of the preliminary revenue results in Pretoria on Tuesday. Tax revenues amounted to R700 million‚ or 0.06%‚ short of the revised estimate announced in the February 2018 budget‚ but still represents growth of R72.4 billion or 6.3% from 2016-17.

Malusi Gigaba‚ who was finance minister at the time‚ announced in the budget in February that tax collection of R1.217-trillion was expected — up slightly from the previous estimate of R1.214-trillion but still much lower than the ambitious R1.265-trillion target announced in 2017.

Treasury still expects a R48.2-billion revenue shortfall for 2017-18‚ which it says reflects weak growth‚ administrative challenges at SARS‚ and increased tax avoidance.

Under the watch of suspended commissioner Tom Moyane‚ SARS has in recent years reported revenue shortfalls on a scale not seen since the 2008 financial crisis.

SARS collected a gross amount of R1.415-trillion in 2017-18‚ which was offset by refunds of R234.3 billion. Personal income tax contributed R462 billion‚ value-added tax (VAT) contributed R297 billion‚ company income tax contributed R220 billion and customs contributed R49 billion.

An improved trend in revenue collection in the latter part of 2017 was offset by a contraction in March‚ because of timing issues and base effects relating to bringing collections forward.

“Up until February we were right on track but the collections in March broke this‚” said SARS head of research Randall Carolissen.

Nene said: “Tax compliance is one of the key determinants of revenue collection. SARS has seen a decline in compliance.

“Ninety percent of the budget comes from revenue collections and forms the basis of our fiscal framework‚” he said.

The 2018 budget demonstrated that growth was expected to be higher and that the government had made significant changes to the fiscal framework‚ including revising the expenditure ceiling downwards‚ Nene said.

The revenue estimated for 2018-19 is R1.345-trillion‚ which represents growth of 10.3%.

In its first year, Amazon Business has generated more than $1-billion in sales from more than 400 000 business customers, the company said during its earnings report released on Thursday 28 June.

Amazon Business wasn’t exactly a started-from-scratch new unit, as VentureBeat reported at the time.

It launched at the end of April 2015 and replaced a service called AmazonSupply that had been around since 2012. AmazonSupply was a marketplace that focused more on industrial products and office supplies. It was Amazon’s first attempt to get into the market occupied by warehouse retailers.

Amazon Business is run by Prentis Wilson, which also ran AmazonSupply. Prentis Wilson came to Amazon after working as a buyer for Cisco.

The revised Amazon Business expanded the scope of the stuff for sale. As Amazon describes it, it offers “hundreds of millions of products — everything from IT and lab equipment to education and food service supplies” that businesses can buy for special prices.

It also enlisted manufacturers and distributors to sell their stuff directly to Amazon customers. Amazon said that 30,000 third-party sellers have participated and have fulfilled over half of the Amazon Business orders.

All this to say that Amazon Business may have had a bit of a head start in reaching $1 billion in its first year but, even so, it looks like Amazon has another hit on its hands.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

By Julie Bort for www.businessinsider.com

Massmart may have escaped a sell-off this year by a whisker, but pressure is mounting and Walmart may in future alter its view that the South African retailer is a strategic asset worth holding onto.

A top analyst has warned that US retail giant Walmart could lose its patience and sell its 51% controlling stake in Africa’s second largest retailer, Massmart, if the Johannesburg-based general merchandiser fails to turn around its lukewarm performance by 2018.

Shamil Ismail, an analyst at Primaresearch, has suggested that Walmart, which paid $2.5 billion to acquire Massmart in 2011, has a history of pulling the plug on its offshore investments that misfire and that Massmart was in danger of being dumped by the US retailer if it does not turn the corner in the next two years.

Ismail’s ominous prediction is not baseless. In January this year Walmart announced the closure of 269 stores, of which 115 were in Latin America.

This massive scale-back sent shockwaves through the markets and triggered speculation that Africa could be the next target of Walmart’s pull-back – not an unlikely scenario in light of the recent announcement by British lender Barclays Plc that it was intending to sell down its stake in its African business significantly.

“The closure of these stores follows a review that took into account a number of factors, including financial performance and strategic alignment with long-term plans,” wrote Ismail in a research note.

Ismail believes Massmart, which currently operates 38 stores in 13 countries outside South Africa, would not have passed the financial performance muster as the retailer’s earnings have largely been flat over the past nine years.

“We have noted Walmart has failed in and exited two countries – South Korea (1999-2006) and Germany (1998-2006) – and the tenure of these holdings was seven to eight years. With the 2011 entry into South Africa, applying the same time frame would suggest that Massmart may have until probably 2018 to turn around its performance, in our view,” he wrote.

Walmart failed to crack the Russian market after spending eight years trying to find a suitable local acquisition target. It also has not managed to get into the Indian market. In Japan, it is scaling back by closing 30 of its 373 outlets in that country.

“We have noted Walmart has failed in and exited two countries – South Korea (1999-2006) and Germany (1998-2006) – and the tenure of these holdings was seven to eight years. With the 2011 entry into South Africa, applying the same time frame would suggest that Massmart may have until probably 2018 to turn around its performance, in our view”
Massmart may have escaped a sell-off this year by a whisker, but pressure is mounting and Walmart may in future alter its view that the South African retailer is a strategic asset worth holding onto for a very long time.

“In light of recent developments, with the substantial weakening of the rand and the announcement that Barclays Plc will sell off its stake in its African business, we believe there is a heightened risk that Massmart’s anchor shareholder Walmart may consider a similar move,” notes Ismail.

A fall in Massmart’s share price and a sharp depreciation in the value of the rand against the US dollar have conspired to eat a big chunk of the value of Walmart’s stake in Massmart. The US retailer acquired the 51% stake in Massmart in October 2011 at a share price of R148 and at an exchange rate of R6.76 to the US dollar, costing the US company $2.5 billion to consummate the transaction.

According to Ismail, Walmart’s investment in Massmart has faltered. On January 21 this year Walmart’s stake in Massmart hits its lowest value (peak diminution) in US dollar terms when it was reduced to $545 million, a whopping 78.2% reduction from the original price it paid to buy into the South African retailer. This means the “peak diminution” or the stake’s rock-bottom value was reached at a share price of R83.20 and rand/dollar exchange rate of R16.55.

Since January 21 both Massmart’s share price and the rand have recovered, helping to boost the value of Walmart’s shareholding in Massmart.

At the time of going to press, Massmart’s share was trading at R124.50 while the rand was quoted at R14.42 against the US dollar, implying the two key ingredients that drive its valuation had lifted the stake’s value to $964 million. Still, the value of the stake is 60% lower than Walmart’s initial investment of $2.5 billion.

As Walmart was concluding its acquisition of Massmart in 2011, established South African retailers were lying in wait to give the foreign invader of their home turf a proper baptism of fire.

From the word go, the likes of Shoprite and Pick n Pay – both powerful merchants of fresh meat, fruit and vegetables – played rough with Walmart after the American giant signalled its intention to get into fresh food retailing through Massmart-owned Game stores, a specialist general merchandiser known for selling household goods ranging from soap to electronics.

“In South Africa Massmart is known to achieve the highest retail trading densities (sales per square metre), indicating we generate higher sales out of fewer stores. For example, the ratio of Game stores to specialist grocery competitors is about one to 33, which is consistent with the ratio of stores outside of SA”
They have prevented Game from adding fresh food in shopping malls, where they have a presence, citing clauses in leases they signed with mall owners that give them exclusive rights to sell food.

Pick n Pay and Shoprite have used the courts to have the exclusivity leases enforced.

Massmart has sought the help of competition authorities to ban the “anti-competitive” exclusivity leases. Walmart never saw this counter punch coming. Game is selling fresh produce in about half of its 110 stores.

The feud over food, plus slow growth in the South African economy, has pegged back Massmart’s performance. The retailer’s first-half earnings to December 2015 dropped by 26% to R364 million while main rival Shoprite lifted its half-year earnings 12% to R2.2 billion.

Brian Leroni, Massmart corporate affairs executive, said the general merchandiser is planning to open five stores outside South Africa, where Massmart stores are known to generate three times the turnover of a South African store.

“In South Africa Massmart is known to achieve the highest retail trading densities (sales per square metre), indicating we generate higher sales out of fewer stores. For example, the ratio of Game stores to specialist grocery competitors is about one to 33, which is consistent with the ratio of stores outside of SA,” said Leroni.

Shoprite wants to increase the number of its supermarkets in oil-rich countries like Angola and Nigeria, where it has noted the sharp drop in oil prices has not led to a slump in consumer spending. Shoprite plans to open 168 stores between now and June 2017, of which 58 will be outside South Africa.

By Andile Ntingi for www.getbiz.co.za

In South Africa, digital advertising on smartphones and computers will generate 52% of the total increase in ad spending during the next five years, with over half of South Africa’s Internet traffic on mobile phones, making it the greatest opportunity for growth in the immediate future, according to digital media buying agency Atmosphere Orange’s media director, Chanel MacKay.

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