South Africa: Pay-TV, Internet Boost for Naspers

Technology & Convergence

Naspers, Africa's largest media company which lifted core headline earnings 38% to R3.9bn in the year to March, would continue to expand existing businesses and develop new opportunities in the year ahead, the group said yesterday.

Taxed profit rose to R3.9bn from R2.06bn and profit for the year increased to R4,06bn from R2,2bn the previous year. Core headline earnings per ordinary share rose 16% to R11.16. Revenue was up 19% to R20.5bn. Free cash flow was much the same at R2.2bn.

The contribution to revenue from the internet businesses in particular rose sharply by 42% to R1.62bn. The biggest contribution to revenue was from pay- television, which rose 22% during the year to R11.5bn. The annual dividend was raised 15% to R1.80 a share. Naspers stock rose 5.2% to R162.50 on the JSE yesterday after the results were released.

The group's financial performance in the year ahead would be influenced by the timing of regulatory approvals for ventures such as mobile TV and the development of further Internet opportunities. These services typically had a negative effect on cash flows and earnings, until they started contributing.

In South Africa the continued slowdown in consumer spending would dampen advertising and circulation revenues. However, in the past, pay-TV had been resilient to the economic cycle.

Macro-economic conditions in the other major markets in which the group operated, such as Brazil, China and Russia, were, however, expected to remain buoyant in the year ahead.

The R1.1bn the group spent on developing new technologies in the past year was lower than expected due to the slower roll-out of mobile television services, which remain dependant on the issue of a commercial licence.

The group had acquired minority stakes in businesses in emerging economies such as China, Brazil and Russia, it said.

Business Day (Johannesburg) 26 June 2008