Naspers hikes Internet revenue by 70%

Media giant Naspers heralded a 22% rise in revenue for the six months ended September 2012, to R22.6 billion. This came on the back of organic growth in existing businesses, supplemented by a few acquisitions.

Core headline earnings per share grew 15% to R10.62 per N ordinary share.

The group, with internet companies including Russia’s Mail.Ru Group, kalahari.com and China’s Tencent in its portfolio, reported an operating profit of R2.5 billion, from R1.95 billion in 2011.

Internet revenue improved 70% to R14.1 billion rand.

Over the past six months the group said it continued to expand its businesses with an increasing focus on ecommerce. “The internet segment remains our area of fastest growth, whilst pay television put in a solid performance,” Naspers said.

The group said that it also benefitted from a weaker rand.

Naspers said it is developing digital terrestrial television (DTT) services in markets across Africa, while it also plans on scaling its ecommerce operations in emerging markets. In that vein, development spend over the period accelerated to R1.6 billion, from R1.1 billion in 2011.

Tencent and Mail.ru, continued to grow strongly with a collective contribution to core headline earnings of R3.2 billion.

In addition, Naspers also recorded a non-recurring book profit of R1.5 billion from Mail.ru’s partial sale of its stake in Facebook. This profit was excluded from core headline earnings.

Pay TV

For its pay television segment including MultiChoice, MultiChoice Africa/GOtv and SuperSport, Naspers recorded a net growth of 393,000 subscribers during the six-month period. The pay television base now stands at just over six million homes.

Revenues were up 19% to R14.4 billion, whilst trading profits grew 18% to R4 billion.

In South Africa, the group added 187,000 subscribers to a total of 4.2 million households. “The Compact bouquet, benefiting from our local content offering, accounted for 87% of growth. The DStv service was successfully migrated to the new IntelSat-20 satellite, providing capacity for new subscriber services,” it said.

Naspers said it increased sales of the personal video recorder (PVR) by 90,000, with the cumulative base now at 747,000 households.

The BoxOffice service, which allows PVR subscribers to view the latest blockbuster movies on-demand, reached monthly movie rentals of 400,000. This service was recently made available online.

In the rest of sub-Saharan Africa subscribers increased by 206,000 to reach 1.8 million homes.

Internet

Overall managed internet businesses yielded trading profits of R3.1 billion.

Tencent monthly active instant-messaging accounts increased to 784 million, whilst peak simultaneous online users increased to 167 million.

The Mail.ru portal now attracts 32 million unique Russian users and is also expanding its mobile audience, Naspers said.

Ecommerce

Revenues from the ecommerce segment grew by 61% to R4 billion in the period. This came mainly from existing businesses, augmented by the inclusion of a few acquisitions such as Netretail, an on-line retailer with operations in Eastern Europe.

The R1 billion development spend, fully expensed through the income statement, resulted in a trading loss of R767 million. “Given our drive to scale these operations and to expand across the ecommerce value chain, we anticipate a further ramp-up in development spend in the second half of the year,” Naspers said.

During October 2012 the group invested US$120 million in total, acquiring a controlling stake of Dante International S.A. trading as eMag, a leading online retailer in Romania, and a minority stake of Souq Group, an online retailer in the Middle East.

Looking ahead, Naspers said the it will persist with the strategy to build its pay television subscriber base and to expand ecommerce businesses across emerging markets.” To date we have invested US$530m in new ecommerce businesses such as Netretail, Flipkart and eMag.

“Given the planned acceleration in development spend, as well as the increased focus on ecommerce we anticipate that group trading margins will trend down in the second half. The aim is to increase our profits and returns over the medium and long term,” the group said.

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Naspers hikes Internet revenue by 70%