MultiChoice soared 16% in debut trading on the JSE on Wednesday as the pan-African pay-TV company embarks on a new era of independence following a spin-off by technology giant Naspers.

The shares traded at R111.12 as of 11am local time on Wednesday, valuing the company at almost R50bn ($3.5bn). That’s the biggest listing in Johannesburg since Steinhoff International Holdings unbundled its Africa retail operations, now known as Pepkor, almost 18 months ago. The shares first traded at R95.50.

“We are happy with where the share opened and how it is trading,” MultiChoice CFO Tim Jacobs said in an interview at the JSE. “We expect it to settle down in the next three months.”

The move creates an Africa-focused company free from Cape Town-based Naspers, which has expanded around the world since making a blockbuster early investment in Chinese internet giant Tencent in 2001. MultiChoice broadcasts live sport such as English Premier League soccer, global hit dramas such as Game of Thrones and locally produced content, and services about 14-million households.

New customers

“We have identified about 40-million additional subscribers that could be signed on in the middle-income and mass market,” Jacobs said. About half the company’s current customer base is in SA, but the focus after listing will be to accelerate growth on the rest of the continent, he said.

MultiChoice faces challenges from cheaper online alternatives — including Netflix — which have sprung up alongside rising African household incomes and faster internet speeds. To compete, the company is pushing its own video-on-demand service Showmax, and a mobile app for the TV footage, Jacobs said.

Naspers is looking to realise value from its myriad of assets to help narrow the difference between its $129bn stake in Tencent and the lower value of the company as a whole. The spin-off of MultiChoice is also an attempt to reduce its dominance of the JSE, where it made up about 18% of the benchmark index before the listing. The stock has declined 5.3% in past 12 months, valuing the company at R1.4-trillion.

MultiChoice’s valuation could eventually settle at about $5bn to $6bn, according to Bloomberg Intelligence analyst John Davies. According to Jacobs, the company has about R4bn in cash and R4bn in undrawn facilities, so didn’t need to raise cash from the listing.