Content creators: M-Net Africa CEO Yolisa Phahle with MultiChoice executive chairman Nolo Letele. Picture: SUNDAY WORLD
Content creators: M-Net Africa CEO Yolisa Phahle with MultiChoice executive chairman Nolo Letele. Picture: SUNDAY WORLD

Naspers is considering the sale of its pay-TV business in Africa, as sluggish economic expansion in key markets stifles growth and viewers switch to cheaper online alternatives, according to two people familiar with the matter.

A disposal of MultiChoice would not include the South African division, which is still highly profitable, said the people, who asked not to be identified as the plans had not been made public. A sale is one of a number of options being considered by Africa’s biggest company by market value, and a final decision had not been reached, one of the people said.

Naspers and MTN, Africa’s largest wireless operator, had briefly discussed a deal for MultiChoice Africa, but no agreement was reached, according to one of the people.

Both companies confirmed on Thursday that they were still in talks that were disclosed earlier about sharing TV content. MyBroadband, a South African internet news site, reported earlier that MTN was in talks to buy MultiChoice Africa, citing unidentified people.

The sale of Multichoice Africa would represent a further shift by Cape Town-based Naspers away from its traditional media business, which includes newspapers and Multichoice’s main product, the DSTV satellite-TV service.

Since winning big with a 2001 investment in Chinese technology company Tencent, a stake that is now worth about $107bn, Naspers has become a serial investor in internet companies around the world, ranging from an online travel agency in India to education software providers in Silicon Valley.

Profit slump

The value of the Tencent stake is worth more than Naspers’s market value of R1.2-trillion, which partly reflects the weak performance of the TV division. While the company arrested a decline in subscriber numbers over the six months through September, earnings before interest, taxes, depreciation and amortisation at the unit declined 33% to $331m.

As Naspers charges customers in local currencies, "the continued weakness of currencies and economies in many African countries resulted in lower US dollar revenues," the company said in its November results presentation.

Nigeria’s economy contracted for the first time in 25 years in 2016 and its currency has depreciated 37% against the dollar over the past 12 months. Sub-Saharan African economies grew by an average of 1.4% in 2016, compared with 3.4% in 2015, according to the International Monetary Fund.

Bloomberg

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