Naspers eyes China for growth

Johannesburg, 16 Jan 2007

Naspers aims to expand its technology reach in China, North America and parts of Africa.

The company will target broadband services in China and North America, and digital video broadcast-handheld (DVB-H) in Africa, as it seeks to maintain bottom line growth.

Naspers, a multinational media company, cites its most significant operations as being located in SA, with operations elsewhere in sub-Saharan Africa, Greece, Cyprus, the Netherlands, the US, Thailand and China.

In Johnnic Communication's circular to shareholders outlining the disposal of its M-Net and SuperSport stake to the media giant, Naspers says it will have to make strategic investments in the year ahead to continue growing.

In the year to end-March, it reported revenue up 16%, to R15.7 billion, with core headline earnings growing by 67%, to R1.9 billion.

Strategic growth

In sections of the circular pertaining to Naspers, the group attributes growth to past investments "coming to fruition" and a positive economic environment in many of its key markets. "Over the past few years, economic management, of especially the South African and Chinese economies, has been particularly impressive."

Naspers intends increasing its investment in broadband and mobile technologies. "After four years of rapid earnings and cash flow growth, some strategic investments are required in the year ahead to deliver growth in ensuing years."

However, it cautions that future growth relies on continued expansion in its markets, which "is uncertain". Geographically, the group is focused on Brazil, Russia, India, China, South and sub-Saharan Africa, which it says offer above average growth opportunities.

Established presence

Naspers already has a stake in China-based Tencent, an instant-messaging (IM) platform, which is growing internationally. "To date, we have been successful in establishing a firm presence in Africa and China."

During the past financial year, peak simultaneous online user accounts for IM services from Tencent reached 19.6 million and active IM user accounts increased to 220 million, although some users have more than one account.

Tencent has three principal lines of business: Internet value-added services, mobile and telecommunications value-added services, and online advertising. It is making long-term investments to develop IM solutions targeted for enterprises in China, says Naspers.