Is Koos Bekker a clever man or a lucky man? The boss of Naspers, Africa’s largest media group, took a punt on an internet company back in 2001. But this was not just any internet company – it was China’s Tencent, whose success with instant messaging services in that country’s booming internet market has helped its shares to gain almost 7,000 per cent since it listed in Hong Kong in 2004. Naspers’ shares have gained 1,390 per cent since then. So while Tencent has made Naspers investors rich, they would have been even better off if they had gone straight to the market to buy Tencent’s shares themselves.
Naspers’ one-third stake in Tencent, as well as a 22 per cent stake in Russian social network site Mail.ru, now make up 90 per cent of the African media group’s $28bn market capitalisation. It is only over the past three years that it has made more sense to own Naspers than to own Tencent. Shares in the former are up 160 per cent compared with 120 per cent for the latter. But much of that is due to currency – the one-third of Tencent’s earnings that hit Naspers’ accounts were boosted by a 40 per cent fall in the South African rand against the renminbi over that period. But is there more to Naspers than its stake in Tencent?
Naspers’ African pay TV business contributed R9.1bn to its earnings before interest, tax, depreciation and amortisation for the year to March, it said on Tuesday. Tencent and Mail.ru made a similar amount, R9.5bn in ebitda but saw far superior growth (56 per cent versus 22 per cent for African pay TV). So Naspers is becoming ever more dependent on these two stakes. Granted, it is investing heavily in other unlisted ecommerce sites globally. But they make up only 15 per cent of sales and do not yet turn a profit. They need to, quickly, if Mr Bekker is to be seen as more clever than lucky.