The deal is one that TV2U would dearly love to complete.
It relies on the existing legacy Head-End in Malaysia being upgraded and the $1 million is dedicated to that upgrade.
This Head-End was valued at $3 million pre RTO but got revalued at 300K in the RTO process so I am wondering if the hardware is over 3 years old(typical I.T. depreciation cycle in accounting book values). Anyway the $1 million may need a top up from existing capital reserves if the upgrade is significant but hopefully the deposit was arrived at based on a term sheet that itemised the hardware and software licences and equipment required to do the job.
Either way at least the Head-End is now being put to use as TV2U had previously signalled a shift into the cloud with Amazon to save money on Capex and Opex costs moving forward, and having a responsive scalabe and security component built in. We at least can see a return on the Malaysian asset now.
There is a map of Amazon supported cloud locations(with South Africa now coming online in late 2016). See below.
They have published a graph above which that also relates to the degree of latency expected in packets sent across the internet in the various regions Amazon services which in practical terms means a high bar figure on the chart increases the chance of you get the spinning wheel of death on your viewing device when content is streamed.
IMO What it means is TV2U will need to architect the Malaysian Head-End to work with the African At-Edge packet delivery servers well and optimise them as they are working in challenged environments. There are some tricks to assist in optimisation that I need not spell out here.
The demand on telcos is growing from the consumer side in Africa so network congestion is likely in the short term till the incoming group of telcos into Africa get their 3G and 4G services online outside CBD locations and scaled up which may take years given the wars and chaos inherent across this continent.
IMO Its all doable but a less than ideal operating environment to work with. The trick will be which country within Africa is taking the service and what form of stable and secure local telco infrastructure exists.
In my previous post I mentioned the risk profile that is likely to accrue around the content supply agreement with Vubiquity or another content supplier, and the fact that someone will need to pay for that content catalogue, which could cost a $1 ,illion itself, depending on the mix of content required.
Once someone tables a proper detailed announcement and the terms of the contract we can better gauge the project risks and issues IMO. The market will view this with suspicion till the $1 million drops into the account and more commercials are announced.
TV2U will not have any key competitors if they do a Netflix style service into any of the fringe countries as there is little choice at present.
DYOR.
TV2 Price at posting:
1.8¢ Sentiment: Hold Disclosure: Held
