ISTIL Group set to launch satellite TV business
28 July 2011 |
A new player – Xtra TV brand - is entering Ukraine’s fast-growing yet embryonic pay satellite TV market.
ISTIL Telecom, part of the ISTIL Group of companies owned by Pakistani-born, United Kingdom citizen Mohammad Zahoor, has approved a budget of $50 million to launch a pre-paid card system in September. The company’s service will allow satellite TV households to access content not available on free-to-air platforms.
Less than 3 percent of satellite households, or 93,000 households, pay for satellite TV as of June, according to GfK Ukraine, a leading market researcher. The remaining 3 million satellite households use free-to-air satellite TV.
“We’ll offer high quality channels at low, affordable rates across Ukraine,” said Jim Phillipoff, ISTIL Group’s media and telecom director. Phillipoff was previously the chief executive officer of the Kyiv Post, which is also part of Zahoor’s ISTIL Group.
Existing and new satellite TV users will able to purchase monthly pre-paid cards in five different thematic packages that total 39 channels. Each package has, on average, eight channels. Prices for one card will start at Hr 29 (below $4) while the full package of channels will run for Hr 89 ($11). Discounts will be offered when more than one package is purchased.
The categories include universal, sports, children’s, movies and knowledge, all of which will be available on Russian-language audio tracks and, when available, English-language audio tracks. Phillipoff said the pre-paid cards offered under the Xtra TV brand will be made available via the existing satellite network of dealers and distributors, as well as through post offices, banks and other outlets. He said the business will offer several advantages to customers.
“Under this pre-paid model, there are no lock-in contracts or agreements. Customers are free to choose and pay for each package as they wish,” Phillipoff said.Moreover, the New York native said, the cards will work with most existing decoders in free-to-air satellite TV.
Satellite TV households have been growing at 2-3 percent annually, GfK’s senior market researcher Tetyana Ilyashenko said. There is nationwide digitalized satellite TV coverage.
Currently, cable TV is the largest pay-for-TV platform in Ukraine with 30 percent of household subscribers, or 5.1 million households, according to GfK Ukraine. Volia Cable, owned by private equity firm SigmaBleyzer, is the largest cable TV provider with roughly 1 million subscribers.
GfK’s Ilyashenko said the timing of Xtra TV’s rollout is ripe but cautioned the market is very concentrated.
“The market is ready but the question is how much are people ready to pay and for which channels…but this move puts them into the top 10 providers,” added Ilyashenko.
Phillipoff said much market research was conducted. He noted that they’ve found a “right price" point.
“Our business model is centered on the fact that there are low entry fees, low monthly rates [for the cards] and good content,” said Phillipoff.
Ilyashenko said the fastest growth of satellite TV households are located in rural areas where 50 percent of existing satellite TV users are located and where terrestrial TV signals are weak with no cable TV available.
NTV+ Ukraine and VisionTV, known under the Viasat brand, are currently the two pay satellite TV companies operating in Ukraine’s market.
GfK wouldn’t provide a financial estimate of the pay satellite market citing its miniscule size.
This is ISTIL Group’s second foray onto the satellite TV market. Its first experiment ended in disappointment last year when the company wrote off Zahoor’s $58 million investment into the Poverkhnost digital TV project.
Phillipoff cited “corporate culture problems” with partners for the failed project, saying that it “wasn’t the right formula.”