Naspers may revitalise unit
Naspers may spend about R1bn bolstering its video entertainment division as it warns it may take a while for the unit’s struggling sub-Saharan Africa operations to return to profitability.
Naspers may spend about R1bn bolstering its video entertainment division as it warns it may take a while for the unit’s struggling sub-Saharan Africa operations to return to profitability.
The business under MultiChoice’s pay-TV platform Dstv managed to record modest growth in subscribers in the year to March, thanks to the change in pricing and discontinuation of nonperforming content. But currency weakness negated a similar improvement in financial performance.
The business recorded a trading loss of $358m.
Monetary policy continued to affect liquidity in Nigeria, Angola and Mozambique with limited availability of foreign currency.
At the end of March, Naspers had $289m cash trapped in Nigeria, Angola and Mozambique. But it had managed to extract the bulk of the money by the end of May.
Naspers chief financial officer Basil Sgourdos said it may take a “couple of years” for the sub-Saharan Africa business to return to profitability.
“Video entertainment has become both more mature and more competitive.” He expects the business to continue containing costs and with its further turnaround strategies. The payTV businesses including South African operations added 1.5million subscribers for a 11.9million total.
Commenting on the video entertainment business Falcon Crest Asset Managers CEO Farai Mapfinya said the group was sticking with its “spaghetti approach, which is quite nimble for a company of its size”.
“The group tries various things quite aggressively and just as quickly turns off the tap if the line of sight and development direction appears to be flawed,” he said.
“We think it is a good strategy and works even better especially for a company with the capital resources of its size,” Mapfinya said.
There were reports that Naspers may sell its subSaharan pay-TV business.
Naspers CEO Bob van Dijk told Bloomberg that “so far it [the sub-Saharan Africa operation] has turned out to be a viable business. Whether that will change in a number of years, we will have to see”.