PF gives ZNBC to a Chinese firm over $273m loan

By Mbita Bwali

THE government has given ZNBC to a Chinese company over a US$273 million digital migration loan obtained just before the August 11, 2016 elections.

But this deal has brought a rift between ZNBC and Multichoice, which have been in a long-standing agreement, over free to air channels that the latter provides through Gotv.

The agreement between ZNBC and China’s TopStar, which is being called a joint venture, will see the public broadcaster cede revenues for 25 years to service the US $273 million loan, according to sources.

Chinese digital television provider TopStar and ZNBC will roll out top set boxes for watching digital television under the TopStar brand.

But sources explained that ZNBC would be disadvantaged by the deal and attempts by the government owned broadcaster to resist this had been thwarted by top government officials who initiated the transaction.

According to salient features of the deal, for the next 25 years, TopStar would be collecting all ZNBC advertising revenues and tower rentals to recover the US$273 million loan.

To overcome the revenue loss as ZNBC revenue would be going towards servicing the US $273 million loan for 25 years, the government had proposed in the short term an increase in TV Levy from the current K3 to K12 to sustain ZNBC operations.

A cabinet memo had since been prepared to approve the hike in TV Levy.

“In the long term, a public service broadcasting levy has been proposed for Zambian citizens to start paying for accessing information on their mobile phones, car stereos, tablets,” the sources said. “This joint venture is a stark contrast to the PPP arrangement between ZNBC and MultiChoice where ZNBC is the majority shareholder and MultiChoice pays dividends to help meet operational costs but now these fees will now be servicing the TopStar loan.”

The sources further said Cabinet had passed a resolution to authorise a joint venture between ZNBC and TopStar in which the Chinese company would assume majority stake.

According to highlights of the joint venture, the government had contracted, from the Export-Import Bank of China, a US $273 million to invest in a digital broadcasting network and building of provincial studios.

Under the terms of the joint venture, TopStar would hold 60 per cent while ZNBC would retain 40 per cent stake, which was contrary to the regulation governing the establishment of joint ventures in the country which stipulated that a foreign entity was never to own commanding shares.

“It has now become abundantly clear that this was done without sufficient information on the actual structure…information was a preserve of a few technocrats and ZNBC management was not privy to joint venture documents,” the sources close to the transaction said anonymously.

The sources said the prepared documents were just served on ZNBC for signing just before the 2016 elections.

The sources said after studying the documents, the ZNBC board wrote to the Attorney General to register their displeasure on specific contents of the proposed joint venture but their protestation was ignored and ZNBC was later forced in the joint venture with TopStar.

“A cab memo [Cabinet Memo] attached to the documents is what forced the then acting director general to sign for fear of being seen to be going against the highest government decision,” the sources explained. “The broadcasting policy holds that there shall be a public signal but this Chinese company [TopStar], by assuming majority shares is taking away the preserve of national broadcaster status from ZNBC for the next 25 years until the loan is repaid. TopStar will be collecting all ZNBC advertising revenue for 25 years and will also be collecting tower rentals towards servicing the loan. Strangely, the TopStar joint venture has no ZNBC or government representation in the management structure.”

According to the demands of TopStar, ZNBC could only deal with them solely and only TopStar will be allowed to sell decoders in Zambia.

“But this is against competition laws of Zambia and I don’t know why the Competition Commission [and Consumer Protection] allowed this to pass,” the sources said. “TopStar would like to negatively impact any other pay television service in Zambia.”
The sources said the joint venture would eventually lead to the collapse of the long-term partnership between ZNBC and MultiChoice.

“TopStar knows that the ZNBC signal in certain parts of the country is carried by MultiChoice and so the thrust is to frustrate MultiChoice and force them to switch off the ZNBC signal so that TopStar can create the crisis to enable them build its permanent network to carry the signal countrywide,” said the sources.

“So far, TopStar has offloaded 290, 000 of its decoders on the Zambian market while Independent Broadcasting Authority has issued free to air Content Service Provider television licence. TopStar’s appetite to control the broadcast airspace for commercial value has seen them to start scrambling the local signal, threatening the business relationship between ZNBC and MultiChoice which has been carrying the local signal previously. This joint venture is a devious scandal through which ZNBC has been haplessly auctioned to China.”

Already, MultiChoice has complained that ever since ZNBC went into partnership with TopStar, it has started blocking some local channels from being received on the GOtv decoder.

MultiChoice stated that while the TV service had not been disrupted, it was taking all necessary steps, including working with the affected channels, to ensure that viewers could access the content.

“On 01 February, the ZNBC blocked the following local channels from being received on the GOtv decoder – Life TV, ABN, Camnet TV, HC Zambia, City TV, Prime TV, CBC, Revelation TV, Parliament, TBN 1, and TBC 2. Our customers have therefore been cut off from digital channels which they have come to enjoy,” MultiChoice complained.

“We regret this action taken by the ZNBC and are asking them why these channels have been blocked on the GOtv decoder while still being made available on a competitor’s decoder. We continue to engage ZNBC and the relevant authorities to resolve the matter as quickly as possible.”

Multichoice, through Gotv, has now sued ZNBC and TopStar over the blocked channels.

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