Naspers Doubles Profit on Internet Sales, Pay Television

Naspers Ltd. (NPN), Africa’s biggest media group, said first-half earnings rose as pay-television subscriber numbers and sales generated from Internet businesses both advanced.

Net income more than doubled to 4.15 billion rand ($469 million) in the six months through September from a year earlier, the Cape Town-based company said today in a statement. Sales rose 22 percent to 22.6 billion rand, beating the median estimate of 21.6 billion rand of five analysts surveyed by Bloomberg.

Subscribers to the group’s pay-television service in Africa increased by about 6.5 percent to more than 6 million homes, the company said. “South Africa is pretty mature,” Chief Executive Officer Koos Bekker said in a phone interview from Cape Town. Elsewhere in Africa, that’s not so, including in Nigeria where there is “a lot of growth left.”

Naspers targets consumers who will pay $30 to $40 a month for a premium rate service as well as those who prefer to pay a cheaper rate of $6 or $9, Bekker said.

There is potential for growth in pay-television subscriptions in South Africa and the rest of Africa as more people move into the middle class, Rudi van der Merwe, Standard Bank Group Ltd.’s head of stockbroking in Johannesburg, said by phone before the results were released. Subscriber numbers from countries other than South Africa gained about 12 percent to 1.8 million.

Profit Margins

Naspers has supported profit margins in the past by raising pay-television prices, Van der Merwe said. It may start to see lower margins in that unit due to a weaker rand as much of the content is sourced in foreign currencies, he said.

The rand has slumped 8.5 percent against the dollar this year, the worst performer of 16 major currencies tracked by Bloomberg after Brazil’s real. It strengthened 0.4 percent to 8.8285 per dollar at 5:22 p.m. in Johannesburg.

Revenue from Naspers’s stakes in Internet companies including Tencent Holdings Ltd. (700) and Mail.ru Group Ltd., rose 70 percent to 14.1 billion rand compared with a year earlier. The firm owns 34 percent of Hong Kong-listed Tencent and 30 percent of Moscow-based Mail.ru.

The company plans to make as many as 20 acquisitions in the year through March 2013, Bekker said in June.

“We will probably end up in that ballpark,” he said today. Naspers bought a minority share in Dubai-based online retailer Souq.com and a 70 percent stake in Romanian Internet business eMAG for undisclosed amounts during its first half.

Naspers’s earnings per share, adjusted for non-recurring and non-operational costs, increased 15 percent to 10.62 rand. Revenue from E-commerce, or Internet trading, gained 61 percent, the company said.

The stock declined 0.5 percent to 537.25 rand by the close in Johannesburg, the lowest level since Oct. 15. About 1.3 million shares, or 25 percent more than the daily average over the last three months, changed hands.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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