IGG stops lease of digital TV deal to Chinese firm

Saturday July 9 2016

A viewer scrolls through TV channels. Star

A viewer scrolls through TV channels. Star Software Technology Company Limited, an affiliate of Star Times television, was set to manage the provision of digital services . Photo by Rachel Mabala  


Kampala. The Inspector General of Government (IGG) has halted the proposed leasing of the national digital terrestrial television (DTT) and radio network to a Chinese company, Star Software Technology Company Limited, an affiliate of Star Times television.
This follows a petition filed at the inspectorate raising questions about the suitability of the Chinese company for the deal valued at $30 million (about Shs101b) deal.
Ms Ali Munira, the spokesperson of the inspectorate, confirmed to this newspaper that investigations into the deal were ongoing.
“Yes, we are investigating, and will issue a report soon,” she said.

The petitioners say Star Times was already in the market at the time of applying and winning the tender, [and had] prior relationship with [the] Uganda Broadcasting Corporation (UBC) managers who comprised the contracts committee.
Sources familiar with the matter also intimated to this newspaper that the Chinese firm last month invited some officials from Signet, a subsidiary of UBC, and Uganda Communications Commission (UCC) for a sponsored tour of Star Software Technology Company Limited’s headquarters in China to see some of the company’s technology. The officials were expected to write a report to back up the final agreement.

Nothing fishy?
Signet’s managing director Sam Batanda, in a recent interview, however, defended the deal, saying there is no foul play at all. “The tender went out; it went through processes, and nothing was done wrong.”
He said UBC/Signet does not have the money to operate the infrastructure “so if someone brings in their money and has followed our terms of reference, how are we supposed to turn them away?”

The petitioners also queried the letting out of such strategic national infrastructure to a foreign company.
Information available to this newspaper indicates that seven firms, including UK-based WTS Broadcast Systems, Kenya’s Rentco East Africa Ltd, France’s Arelis Broadcast SAS, South Africa’s African Union Communications (PTY) Ltd, and Star Software Technology Co Ltd, Complant, ZTE Corporation, and Huawei International PTE Ltd, had submitted applications to lease the digital broadcasting network.

Star Times already has a troubled past in other African countries, including Zambia, Rwanda, Nigeria, Ghana, DR. Congo, and Kenya over similar DTT deals, according to investigations by Saturday Monitor. In Kenya for example, the firm was dragged to Court by the Nation Media Group accusing it of allegedly issuing five per cent of their shareholding to government officials in exchange for obtaining the licence.
The network is currently operated by Signet, which was specifically established to broadcast and distribute DTT signals. The body spearheaded and is in charge of digital migration.
In the agreement that the IGG is now investigating, Star Times would also take over the main Network Operation Centre (NOC) at Kololo, and installing, financing and operating the 17 DTT sites upcountry.

The sites are in Masaka, Mbarara, Kiboga, Masindi, Kisoro, Kabale, Ntungamo, Kisoro, Rukungiri, Fort Portal, Hoima, Arua, Gulu, Mbale Soroti, Jinja, Kiboga and Rubirizi districts. UCC last year said it had started works on some of the sites to facilitate countrywide digital migration but were constrained by financing.
UCC had created a new licensing regime, the regional broadcasting licensing with 10 regions and national broadcasting licence.
A regional licencee broadcasts in a region and when they cross to all the 10 regions, they become a national broadcaster.
There are about 25 TV stations in the country, according to UCC.

Since digital broadcasting consumes less bandwidth, UCC says, the number is likely to increase.
Evaluations were completed on July 3, and an evaluation report was approved by the contracts committee on July 6, with Star Times said to be in the lead.
Two of the bidders, Arelis and Rentco, unsatisfied with the evaluations, petitioned the Public Procurement Disposal of Public Assets Authority (PPDA) separately in September for administrative review; applications which were rejected after inquiry.
As Signet neared entering into agreement with Star Times, the IGG was petitioned over the matter and it consequently suspended the deal.

Effect to TV consumers
The chairperson of the Broadcasters Association Kin Kariisa, told Saturday Monitor that they are completely against the idea of involvement of a third party in signal distribution.
“If at all it is to happen, we need to get back our own individual licences for signal distribution. Otherwise that entry of a third party means making it very expensive for both us and to the TV consumers because they have to pay for it.”
Mr Kariisa equated signal distribution to road construction, which he said is supposed to be the responsibility of government. “When you put it in the hands of shrewd investors, it means road users will be charged for using it.” He said the first mistake government did was to monopolise signal distribution (Signet) yet they do not have money to manage the infrastructure.

Government speaks out
Meanwhile, Information and Information and Communications Technology (ICT) minister Frank Tumwebaze, during an ICT public dialogue on Thursday in Kampala, said there is need to further discuss the challenges facing digital migration.
“The question of digital migration seems to be a sticky one. We will have a session with the regulator, with the ministry, with UBC and the signal distributor then we discuss the challenges. First of all, as a country, we have to comply with the requirements of going digital; that is a must, according to international standards. What do we need to do as government to guarantee those who are not able to pay subscription? If I am not able to pay for that package as a Ugandan, shouldn’t I be able to get the basic? Do we need to buy those set top boxes and distribute them free? Do we need to remove the taxes on them? What do we need to do to support Signet, to support UBC…” Mr Tumwebase said.

The deal
In June last year, UBC published a notice for Expression of Interest in the local dailies for a company to supply, install, finance and operate the DTT and radio network. The successful contractor, according to an addendum also published on June 18, would be responsible for designing, building, operating and financing terrestrial TV equipment in all UBC stations—a deal which would be a Public Private Partnership (PPP). Digital Migration is the name given to the process of changing from analogue terrestrial television, previously used widely; where television broadcast services are transmitted on the VHF (Band III) and UHF band (Bands IV and V). Migration means switching to digital terrestrial television, where signals are carried on a multiplex, which can carry much television in the same frequency channel as one analogue television service. With migration, TV stations/content providers relinquished the responsibility of transmitting their own signals.

Signet picks up signals from each of the TV stations and transmits them to a wider spectrum via the NOC at Kololo. Some of the other terrestrial providers include Gotv, Zuku Tv and Azam Tv, which will now be buying signals from Star Times. Transmission fees range between $2,500 (Shs8.4M) and $4,000 (Shs13M).
Should the IGG clear Star Software Technology Company Limited and should it bag the deal, the company will recoup its money over a 10–year period through charging local TV stations a fee of Shs8 million per month.