Kuwait Projects Company, a conglomerate whose interests span financial services, media, manufacturing and real estate, is delaying the sale of a stake in pay TV operator OSN until 2021 as it awaits a recovery in markets that have been hit by the Covid-19 pandemic.
Kipco, as the firm is known, will continue to prepare OSN to bring new investors on board and said that given the recent growth in subscribers to its streaming platform, it is confident it will “attract many partners”, Kipco group's chief financial officer, Pinak Maitra, said.
“That journey is progressing well,” Mr Maitra told analysts on a call discussing the group's second quarter results.
“Given the reality of Covid-19, where things have greatly disrupted all businesses, we believe that it [the sale] is likely to be a 2021 item, but very much in forefront of our thinking.”
Kipco had hired Goldman Sachs to advise it on selling its 60.5 per cent stake in OSN in November 2018. In March, however, it increased its shareholding in the pay TV operator to 87.6 per cent following capital calls and an arbitration decision, it said in a regulatory filing at the time to Boursa Kuwait, where its shares trade.
Kipco reported a net profit to shareholders of $36 million (Dh132.2m) for the first half of 2020, compared to a loss of $59m in the same period last year. In the second quarter, however, its net loss widened to $58m – mainly driven by Covid-19's impact on group companies – compared to a loss of $43m in same period last year.
OSN has faced tough competition from the likes of Netflix and Amazon Prime in the past few years, as the new entrants chipped away its market share in the Middle East. However, it has made a comeback in recent months. OSN, like other pay TV businesses, has grown during the pandemic as movement restrictions to stem the virus outbreak forced people to stay at home.
Subscribers to its over-the-top streaming (OTT) service – its internet-based service recently rebranded as OSN Streaming – have more than trebled over the past four months to 250,000, up from 80,000 in April, the company said. It began offering Disney's new streaming service, Disney+, through the OTT platform during the period.
“The encouraging part is that without the partners, we are doing fantastic and with the partners we will hopefully be able to report even better performance,” Mr Maitra said. “It is a great place to have after very difficult three years and to come out on the right side of it.”
Dubai-based OSN has made significant changes to its operations over the past 12 months. Operating from 13 offices, it now employs about 700 people, according to a presentation to investors accompanying its second quarter results, compared to around 1,300 in the same period last year. It also strengthened its management team and appointed new, independent directors with expertise in OTT platforms and original content.
The company has signed partnerships with more than 15 major telecoms operators across the Middle East and North Africa region and is looking to grow its OTT services in both key markets and low-income markets across the region.
OSN has also begun producing original, non-scripted Arabic shows. The first show is releasing in the third quarter of this year and more content will be released in the last quarter of 2020 and in 2021.
“We continue to believe that the media business is a global business,” Mr Maitra said. “OSN is now operationally stronger with strengthened management team, reduced cost base and improved technology platform.”
