Naspers on track with MultiChoice unbundling


Naspers on track with MultiChoice unbundling

Published Date: 2018-12-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Naspers on track with MultiChoice unbundling

The internet and media group says listing its pay-TV operations will take it a step further in its evolution into a global consumer internet company.

Naspers has posted a big jump in first-half earnings thanks to Chinese associate Tencent and a growing contribution from its classifieds business, which has turned profitable. The internet and media giant has also taken a step further in its evolution into a global consumer internet company, with plans to list video entertainment business MultiChoice on the JSE next year still intact.

Naspers said its classifieds became profitable in its 2018 financial year - excluding letgo - and was now fully profitable including the US/Spanish shopping app. Trading-loss margins in its online retail and payments businesses narrowed considerably as they accelerated revenue growth and became larger.

Over the period, the group spent $700 million in its classifieds, payments and food-delivery investments, including letgo, online food delivery startup Swiggy, payment technology provider Zooz, UAE classifieds business Dubizzle and online car marketplace Frontier Car Group. It sold its 12% stake in Indian e-commerce company Flipkart to Walmart for $2.2 billion, realising an internal annual rate of return of about 29%.

Revenue increased by 23% to $11 billion in the six months to end-September. In local currency terms, adjusted for acquisitions and disposals, it was 29% higher. On a similar basis, group trading profit rose 22% to $2 billion and was 34% higher in adjusted local currency. Naspers said strong contributions from its classifieds and business-to-consumer units helped drive profitability in e-commerce. Core headline earnings jumped 29% to $1.7 billion.

Excluding equity-accounted investments, such as Tencent, consolidated revenue grew 8% to $3.3 billion, and was up 14% in local currency. Equity accounted investments contributed $2.1 billion to group earnings, an increase of 45%.

The group ended the period with net cash of $8.7 billion, helped by the proceeds retained from the Flipkart disposal and the sale of a portion of its Tencent shares last year. This resulted in net interest income of $48 million.

For the remainder of the year, Naspers said it would maintain its focus on driving profitability in the e-commerce businesses. Containing costs and weathering challenging macro conditions would remain a priority for its more mature assets, it said.t

Its shares declined 2% to R2,763 on Friday.

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