Dual-listed Naspers continues to benefit from its electronic media investments, but warns growth will slow in the coming years.
The multinational media company's local interests include MultiChoice, MNet, MWeb, SuperSport, Media 24, Paarl Media, Educor and Via Africa.
Internationally, its interests include MultiChoice Africa, Netmed, Irdeto, Entriq, M-Web, Tencent, MIH, mail.ru and Abril.
In the year to 31 March, revenue from the company's electronic media division grew 28%, to R13.2 billion. Comparatively, revenue from its print media investments delivered 16% growth, to R6.3 billion. The operating margin slipped slightly from 19.7% in 2006 to 19.5%.
TV developments
The majority of the company's R876 million net development costs were deployed to its pay-TV, Internet and broadband/Internet technology investments.
Within its pay-TV segment, Naspers' revenue increased 26%, off a net increase of 200 000 subscribers, to 2.2 million. However, margins came under pressure from business development costs of R260 million, mostly for the development of mobile-TV television services, it says.
"Internationally, the launch of commercial mobile-television services is still in its infancy. Business models are unclear and will evolve as platforms launch. While risky, the development of these services creates the opportunity for our group to build new mobile broadcast platforms in our existing and new markets using digital video broadcast handheld and other technologies," Naspers adds.
Doubling up
The company's content security business, Irdeto, more than doubled revenue, delivering R775 million. This growth was due to orders from new and existing customers, as well as from the Philips CryptoTec business acquired in April 2006, says Naspers.
"Irdeto continued its participation in mobile-television technical trials worldwide as operators prepare for commercial launches.
"This included supporting initiatives with DStv in Africa, as well as trials in Hungary, Spain and France. Irdeto has now supplied more than three million security devices to TU Media, the mobile-television business in South Korea."
Taking advantage
An expanding global broadband market has created opportunities for delivery of content, applications and other broadband services, says Naspers.
"Against this backdrop, Entriq, in the US, continues to invest in broadband technologies and application services for distribution to broadband-connected PCs, mobile devices and televisions. Although Entriq has gained traction with revenue growing 38%, substantial investment is expected in the short term to consolidate the progress achieved."
As for its Internet segment, Naspers says it continues to remain focused on emerging markets.
"In China, Tencent extended its leading position in a fiercely competitive market. In Russia, portal Mail.ru continued to develop its business model. In India, we recently launched a start-up Internet operation. In SA and sub-Saharan Africa, we continue to expand our Internet activities."
Note of caution
Despite a strong overall performance, the company again warned investors that growth rates were unlikely to be maintained.
"The group has experienced tremendous growth in recent years. While this growth rate is pleasing, it is unrealistic to expect it to continue.
"Looking forward, the group is set to continue its expansion through a combination of organic growth in existing businesses and new investments in either established or start-up operations.
"We anticipate that business development expenditure in the year ahead will accelerate, with an increased impact on earnings and cash flows."
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