MultiChoice unbundling unlocks R57bn for Naspers

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Naspers CEO Bob van Dijk.
Naspers CEO Bob van Dijk.

Global consumer Internet group Naspers has posted revenue of $19 billion after unbundling MultiChoice operations.

The company this afternoon announced its results for the year to 31 March 2019. Naspers says by unbundling the pay-TV operator, it has unlocked $4 billion of value for shareholders.

In a statement, the company says: “We successfully listed our video entertainment business (MultiChoice Group) on the Johannesburg Stock Exchange (JSE) and distributed our shares in this business to our shareholders in February 2019.”

Founded more than 100 years ago, Naspers has transformed itself from a newspaper publisher into an over $100 billion behemoth with private equity style investments in e-commerce platforms such auction sites, classified and online retail.

Naspers notes that MultiChoice has been presented as a discontinued operation in these summarised consolidated financial results and, accordingly, all income statement information from continuing operations excludes the contribution from MultiChoice Group.

This week, in its maiden results following its successful listing on the JSE on 27 February, MultiChoice said revenue increased 6% to R50.1 billion and trading profit 11% (or 27% organically) to R7 billion.

Discontinued operations

According to Naspers, profit from discontinued operations in the income statement includes results of MultiChoice Group for 11 months in the current year, as a single line.

“As a result of these strategic initiatives, Naspers enters the 2020 financial year as a fundamentally different group, with virtually all revenues now generated from online activities, and is well-positioned as a global consumer Internet group,” says the JSE-listed company.

Naspers says it delivered solid results for the year-ended 31 March 2019. Group revenue, measured on an economic-interest basis and excluding the video entertainment business, was $19 billion, reflecting growth of 16% (or 29% in local currency and adjusted for acquisitions and disposals).

“We executed well during the past financial year, growing revenue 29% to $19 billion, and trading profit 22% to $3.3 billion,” says Basil Sgourdos, Naspers Group chief financial officer.

“With continued focus on accelerating growth in our core segments, the classifieds and core payments service provider businesses are now profitable. Trading loss margins in e-tail and the rest of the payments and fintech business narrowed as the businesses delivered solid revenue growth and continued to scale.

“We have broadened our ambitions in food delivery, which is an exciting, meaningful and rapidly transforming opportunity fuelled by a significant reallocation of consumer spending to this growing sector. Our progress gives us confidence in our ability to continue to identify opportunities that can create significant value going forward.”

Transformational year

Bob van Dijk, group chief executive, says: “This was a transformational year for Naspers. We entered FY20 well-positioned as a global consumer internet group.

“The listing and unbundling of MultiChoice Group unlocked around $4 billion of value for Naspers shareholders, and virtually all group revenues are now generated from online activities. At the end of the financial year, we also announced our intention to list our international Internet assets on Euronext Amsterdam.

“This is designed to create a strong platform for continued growth while also reducing the outsized weighting of our primary listing on the JSE. Looking ahead, we will continue to drive profitability in our established e-commerce segments while selectively investing in earlier stage opportunities.”

Koos Bekker, Naspers chairman, comments: “The team made good progress this year, delivering a solid financial performance while continuing to take action to create value for our stakeholders. We are executing well on our strategy to build meaningful global businesses in the online classifieds, payments and fintech, and food delivery sectors.”

In March 2019, Naspers announced its intention to list its international Internet assets on Euronext Amsterdam.

The company says the listing will create a new global consumer internet group Prosus (formerly referred to as NewCo), comprising Internet interests outside of South Africa and including investments in online classifieds, food delivery, payments and fintech, e-tail, travel, education and social and Internet platforms, among others.

It notes that Prosus will have a secondary, inward listing on the JSE in SA and is expected to be around 75% owned by Naspers with a free float of some 25%.

Further scale

“We invested $3.1 billion to accelerate growth and provide further scale to several existing and new businesses,” says Naspers.

Notably, it adds, this includes: in classifieds, acquiring minority interests in Avito, Dubizzle and letgo totalling $1.5 billion to increase the company’s stakes in these businesses as well as a $89 million investment in Frontier Car Group to further pursue the convenient-transaction model; in food delivery, an additional investment in Swiggy of $716 million to expand its position in India; a $383 million investment in BYJU'S to drive innovation and set new benchmarks for tech-enabled learning products; and through PayU, a $60m investment in Zooz to boost our global merchant capabilities.

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