South Africa: Internet, Pay-TV Help Boost Naspers Revenue

Investment

Media group Naspers released a solid set of annual results at the beginning of July, with most analysts commenting on an excellent performance.

While the media sector in general has come under pressure from falling ad revenues, Naspers's pay-television and Internet businesses have helped it to weather the storm and increase revenue 30% for the year ending March. It posted revenue of R26bn, from R20bn the previous year. Core headline earnings grew marginally to R4.4bn, or R11.79 per share, from R4bn and R11.30 previously.

CEO Koos Bekker said the group would continue its growth strategy. "New internet investments will be considered where opportunities arise, especially where they complement existing operations," he said. Financial director Steve Pacak said pay-TV competition and added regulation, as well as slower consumer spending, could affect revenue .

Cobus Stofberg, CEO of subsidiary MIH, which houses the Internet, pay-TV and technology interests, said diversified revenue streams had made the group more defensive. Emerging markets, where most of Naspers's investments lie, also had better growth prospects than the rest of the world, said Stofberg.

Pay-TV accounts for R14.9bn in revenue, an increase of 29% as the subscriber base grew. The Internet division increased revenue 136%, from R1.6bn to R3.8bn. Print media saw only a 3% growth in revenue, reflecting a slump in the advertising market, where revenue grew only 2%.

Pay-TV margins declined from 34% to 32%, due to the costs of increasing its subscriber base, and to decoder subsidies and premium-content costs.

But it found 453,000 new subscribers in South Africa and 230,000 new subscribers in sub-Saharan Africa, proving its resilience in a downturn. It now has 2.4-million subscribers in South Africa and 900,000 in sub-Saharan Africa. Advertising came under pressure, but pay-TV has a subscription-based revenue model. The number of consumers upgrading to more premium pay-TV packages equalled those who were down grading, with the mid-priced Compact bouquet seeing most growth.

Naspers proposed a dividend of 207c a share, a 15% increase over last year's 180c .

Business Day