Vodacom Said to Be in Talks With Naspers on Content Deal

Vodacom Group Ltd. (VOD), the wireless operator with the most subscribers in South Africa, is in discussions with Naspers Ltd. (NPN) about access to its television content, according to a person familiar with the matter.

The talks, which are at an early stage, may lead to Vodacom using content from Multichoice, a broadcast division of Africa’s largest media company, to offer to users of its phone and Internet network, said the person, who asked not to be identified because the talks are private.

Naspers operates satellite television in South Africa and 48 countries on the continent, making the Cape Town-based company the dominant provider of pay-TV in sub-Saharan Africa.

“With connection speeds rising and data prices continuing to fall, the delivery of music and video content via mobile is becoming increasingly viable,” Vodacom spokesman Richard Boorman said by e-mail. “We’re exploring a number of opportunities along these lines but it’s too early to comment in detail.”

Meloy Horn, a spokeswoman for Naspers, declined to comment when contacted by phone. The company, which is expanding its own Internet business across the world, said on June 25 full-year sales rose 27 percent to 50.2 billion rand ($4.8 billion).

Photographer: Nadine Hutton/Bloomberg

Visitors approach the entrance to the headquarters of Naspers Ltd. in Cape Town, South Africa. Close

Visitors approach the entrance to the headquarters of Naspers Ltd. in Cape Town, South Africa.

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Photographer: Nadine Hutton/Bloomberg

Visitors approach the entrance to the headquarters of Naspers Ltd. in Cape Town, South Africa.

Vodacom’s potential tie-up with Naspers comes as other Africa-focused telecommunications companies look to expand into higher-margin data accessed on smartphones as voice revenue declines. Safaricom Ltd., Kenya’s biggest phone company, said Nov. 6 it plans to begin selling bundled Internet and television services for on-demand viewing.

High Speed

“If you want to take a step to personalized TV, possibly there is a way of utilizing a smartphone or device to distribute content over,” Fredrik Jejdling, head of sub-Saharan Africa for Stockholm-based Ericsson AB, said in an interview in Cape Town yesterday. “A smartphone is the most desirable consumer device in Africa.”

Vodacom said on Sept. 30 it’s in exclusive talks to acquire Internet provider Neotel Pty Ltd., a unit of Tata Communications Ltd. (TCOM), in a deal that will give the Johannesburg-based company access to business customers as well as households. Vodacom plans to invest in the combined entity to provide high-speed connectivity, it said at the time.

The company, 65 percent owned by Newbury, England-based Vodafone Plc (VOD), plans to use cash from its parent’s sale of a stake in Verizon Wireless to boost investment in its Africa network, it said on Nov. 11. Vodacom plans to spend as much as 17 percent of its revenue on capital expenditure in the medium term, up from 13 percent in 2013, it said.

Network Speed

Vodafone said yesterday it would invest 7 billion pounds ($11 billion) on improving network speed and coverage as part of its “Project Spring” venture by March 2016. Vodacom shares advanced 2.1 percent to 121 rand by the close of trading in Johannesburg, having gained 3.3 percent yesterday, the most in four months.

“It makes good sense for mobile operators to engage the content owners to obtain and deliver such content,” Steven Ambrose, chief executive officer of telecommunications advisory company Strategy Worx, said by e-mail. “Video content will become a major component of data consumption. Unlike many developed markets mobile is where this will happen in South Africa and Africa. We expect more such deals.”

South Africa remains one of the world’s stragglers in Internet access, with average broadband speeds lagging behind smaller economies including Greenland and Azerbaijan, according to broadband statistics website netindex.com. Vodacom’s data revenue growth in Africa’s biggest economy rose 21 percent in the six months through September, outpacing a total sales increase of 6.6 percent.

To contact the reporter on this story: Christopher Spillane in Johannesburg at cspillane3@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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