Naspers sees bright future in internet sector
KOOS Bekker, CEO of Africa’s biggest media business, Naspers, wants to elevate the group into one of the biggest media businesses in emerging markets in the next five years on anticipated sharp growth in the internet business sector.
Naspers ended a lively financial year to March with revenues up 19% to R20,5bn, largely driven by growth in its international internet businesses. Core headline earnings per share increased 38% to R3,9bn. The dividend was lifted 15% to 180c a share.
It was a year of acquisitions, which totalled R17bn in the internet sector, and included 100% of Tradus, the e commerce business in Poland, Switzerland and eastern Europe, and 97% of Poland’s leading instant messaging platform, Gadu-Gadu.
Naspers also sold some units, including the local private education business Educor. It recently finalised the sale of its Greek and Cypriot pay TV business NetMed.
Bekker said the new financial year was unlikely to have either disposals or acquisitions on the same scale, though some refinements may be made.
Naspers’ future may be affected by the granting of regulatory approvals for Mobile TV and internet ventures. Bekker says the group needs these in order to to proceed.
“In seven Africa countries approvals have already been given. Three of them, Nigeria, Kenya and Namibia, have already launched full Mobile TV services. These countries are now ahead of SA. SA is still in test mode, commercial licensing has not yet happened,” he said.
Bekker said Mobile TV was a young business globally and the business model was as yet unproven. “No one has yet made money this way.”
He said Naspers was moving ahead in sub-Saharan Africa because it wanted to be ready for the World Cup. “We want to show them that African technology works.”
Bekker expected that all Mobile TV launches would lose money in the first four to five years before breaking even, so the effect of a delay on the income statement was initially positive, but negative in the long term.
Commenting on the effects of weaker economic conditions on local pay TV operation MultiChoice, where competition is also expected to intensify, he said that while pay TV did not benefit from booms, it also did not suffer in recessions. MutliChoice has been resilient to downturns.
“Pay TV is a substitute for more expensive activities like eating out, going on holiday, etc. In a recession people revert to those things you can do relatively cheaply at home: listen to CDs, watch movies on pay TV.”
The slowdown in consumer spending in SA is expected to dampen advertising and circulations in the local print and newspaper operations.
Bekker said both circulation and advertising in newspapers were under pressure in developed countries. “In SA, due to our lack of broadband, the pressures are somewhat less. So far.”
He described broadband as the information highway of the “e-economy” and that without it in our homes, no leading edge services could be developed. “SA has fallen way behind its peers — India, Brazil, China and Russia — where innovation and risk taking is welcomed,” Bekker said.
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