How does Telkom plan to get its media unit sale past foreign-ownership law?

There is something I don’t understand about Telkom’s sale of its media unit to Shenzhen Media, a Chinese-owned company. In terms of our broadcasting laws, a local broadcaster may not be in foreign hands. This fact seems to have escaped most of the journalists covering the transaction, although the South African Press Association (SAPA) raised the question with Independent Communications Authority, and received a vague and equivocal answer. ICASA is “applying its mind” to the transaction, spokesman Sekgoela Sekgoela said, and would “engage” with Telkom over the matter.

What is there to apply one’s mind to? The Electronic Communications Act of 2005 is very clear. Section 64 states that “a foreigner” may not directly or indirectly control a local broadcast licencee or own more than 20 percent of a licencee. In addition, no more than one-fifth of a broadcaster’s board of directors may be foreigners.

The unit that Telkom sold to Shenzhen includes a 75 percent interest in a pay-television licence. If the deal goes through, Shenzhen will own that interest. Clearly, the law doesn’t allow that.

Could Telkom have been unaware of the legal issue? I don’t think so. One would have expected Telkom to discuss the matter with ICASA before announcing the deal. Could it be that some form of accommodation had been promised? I can’t see how the law would allow for it. Either way, I don’t think Telkom’s problems with its media aspirations are over.

PS. Telkom sold its media unit to an entity called Shenzhen Media South Africa, which apparently is the South Afircan subsidiary of Shenzhen Media. That makes no difference. The law is clear: a licence may not be controlled or owned, directly or indirectly, by a foreing entity. So, unless Shenzhen Media South Africa is 80 percent owned by South Africans – and if it is, then why call it Shenzhen Media SA? –  the deal is not legal.

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One Response to How does Telkom plan to get its media unit sale past foreign-ownership law?

  1. […] Just to spite me, Telkom Media appears to have returned from the dead. After all my hard work photoshopping an appropriate tombstone (see two posts down: April, 28), Telkom announced last Wednesday (May, 6) that its 75% stake in Telkom Media had eventually been sold to Shenzhen Media South Africa, which is owned by Shenzhen Media, a company based in China. Do you hear alarm bells? If so you’re not alone. […]

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