November 15, 2012 / 2:40 PM / in 5 years

Satellite firms switch on to Africa's potential

CAPE TOWN, Nov 15 (Reuters) - European satellite companies are spending millions to roll out coverage of Africa, betting that rising wealth will translate into increased demand for digital television.

The world’s poorest continent portends to be a major growth market for broadcasters if they can overcome significant infrastructure hurdles and offer up enough local content, experts say.

Africa is expected to have 85 million households with televisions by 2016, compared with 182 million in Western Europe.

“We all want to enjoy life to some extent, to have some sort of comforts,” said Ibrahima Guimba-Saidou, general manager for Africa at Luxembourg-based satellite firm SES.

“As you see disposable income becoming more available, people start to become more demanding,” he told Reuters on the sidelines of a telecoms conference in Cape Town.

SES has already launched three Africa-focused satellites this year, spending around 250 million euros per satellite.

French firm Eutelsat Communications has eight satellites covering Africa and plans to have 13 by 2016, deputy chief commercial officer Francesco Cataldo said.

But for a continent where a television is still a luxury for many, satellite and digital broadcasting is likely to remain behind the rest of the world.

Countries around the globe are expected to switch to digital television by 2015, but in Africa only South Africa, Tunisia, Morocco and Algeria are expected to meet the deadline.

“A lot of African nations have underestimated the challenges that this involves,” said Rob Gallagher, head of broadband and TV research at consultancy Informa Telecoms & Media.

The transition to digital television will require consumers to buy a special “set-top box” decoder that can cost between $50 and $70, a large sum for many Africans.

Still, companies are betting that more middle-class Africans will pay that to keep tuning in.

“We are expecting that digital television is going to grow about 36 percent from now to 2015,” Eutelsat’s Cataldo said, adding that some countries will see nearly 60 percent growth because they are coming off a low base. (Additional reporting by Helen Nyambura-Mwaura; Editing by David Dolan)

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