Naspers CEO excited about e-commerce
Naspers published interim results last Friday to September 30. TechCentral editor Duncan
McLeod spoke to group chief executive Bob van Dijk on various aspects of the media and technology giant’s latest financial report.
Excerpts of that interview.
McLeod: The last time we spoke, we chatted a bit about the discount in Naspers shares relative to its stake in Tencent. You spoke of the need to try and find means to unlock that value . ... the MultiChoice Group unbundling has since happened. Are there any further thoughts you could share about your thinking around how you might further unlock value for Naspers shareholders? Van Dijk: ... our largest area of investment in e-commerce – online classifieds – turned profitable... We have always said this is an extremely attractive area ... we see a lot of growth and cash-flow-generation potential. Now those investments have led to a profitable and fast-growing segment. So, this really is a milestone.
There are other things we are working on, such as the disposal of [our stake in India’s] Flipkart. That demonstrated diligence in our investment approach, and when we saw an opportunity for value realisation for our shareholders, we did so. We locked in an annual return on that investment of something like 29%.
Those are the kind of things that will make a massive difference for our shareholders: recognition of our capital allocation … we find great opportunities earlier than others, that big investment houses wouldn’t see, and crystallise the value at the right time… McLeod: On the unbundling of MultiChoice, is there anything new to share, particularly in terms of timelines? Van Dijk: ... the first half of the new year. We are still working through the details, making sure all the preparatory work is done well … the development path that MultiChoice is on is encouraging. They have showed continued growth while managing their costs well. That gave us confidence that the company is ready for that standalone life and can continue to demonstrate good growth and be an attractive asset for investors. McLeod: The churn in the premium segment at MultiChoice has been blamed on factors other than competition – more to do with the macroeconomic environment. How do you determine it’s in fact macro issues and not people switching to alternative services? Van Dijk: When people unsubscribe, we ask them why. Some people just find it hard to afford it… We are trying to mitigate this by adding other services, but at the end of the day ... there’s little we can do about it. People are typically happy with the product, but customers are feeling the pinch.