Naspers is betting heavily on e-commerce and India as it invests in new ventures and technologies to drive growth.
Koos Bekker. Photo: Flickr, World Economic Forum, Eric Miller.
Under the stewardship of former CEO Koos Bekker, Naspers grew from a South Africa-focused print media company into the largest emerging markets media company in the world. Its e-commerce business is only dwarfed by Alibaba and Amazon, overtaking eBay in the six months to end September, based on monthly average desktop visits.
Under Bekker, Naspers diversified into pay television in the 1980s. More transformative was its investment of $32m in 2001 in Tencent, which has grown into the biggest Internet company in China and now makes up the bulk of Naspers’s revenue and growth. Its 50% stake in Tencent has since been diluted to 34% and is currently worth more than $51bn. Naspers is valued at $56.4bn.
For Bob van Dijk, who took over from Bekker in April, the pressure is on to sustain the group’s ability to spot the next big thing.
“We certainly hope to be able to sustain it. I would say what is pretty core to the culture of the company is to look out for what you don’t know, rather than feel good about what you do know. And that’s very much the way I look at the business as well. It’s also in a way easier in a company that’s very driven by entrepreneurs. We are a very decentralised company where entrepreneurs can and do take the initiative,” says Van Dijk.
The decentralised structure makes Naspers more nimble and therefore better positioned to react to changes, he says.
In his view, the future will be shaped by mobile internet. “There have been a lot of developments and I think the ones that stand out are around how particularly mobile internet growth is shaping the future, and that is very aligned with where we put most of our investment,” he says.
Recent research by Flurry showed that Americans had for the first time spent more time on average on their mobile devices than watching television in the third quarter. Van Dijk said this development is “remarkable. I think many people expected that to happen much, much later.”
In the six months to end September, Naspers allocated the most of its development spend of R4.37bn on e-commerce (82%), followed by pay television (15%) and print (3%). Geographically, India (15%), South Africa (14%), Brazil (13%) and Nigeria (11%) received the most attention.
Of the development spend on e-commerce, which Van Dijk describes as a “heated competitive environment”, 58% was spent on classifieds and 26% on e-retail, or etail. “We’re investing quite a bit in classifieds, which is a real growth area across the world. We’re in 40 countries with that model, putting our shoulders behind it,” he says.
Its online classifieds business already has market-leading positions in 10 of the 15 most-populated countries in the world, largely through OLX. It first bought a majority stake in OLX in 2010.
Despite critics saying that the Naspers share price is overvalued and that its bull run cannot be sustained, it is up 59% over the past year, and currently trades at a P/E ratio of 86.5 times. It broke through the R1 500 level for the first time in November after it announced a joint venture with Oslo-based Schibsted and Singapore Press Holdings. The deal will see the companies join forces to develop online classifieds businesses in Brazil, Indonesia, Bangladesh and Thailand.
Its results for the six months show that Tencent’s contribution to revenue grew by 46% to R22.37bn, and remains the biggest overall contributor to the group. Its e-commerce business saw revenue growth of 43% to R12.1bn, while its trading losses widened by 31% to R2.4bn. Pay television contributed R20bn in revenue, remains the biggest contributor to trading profit after Tencent.
Media24, its print media business and owner of Finweek
, saw turnover increase by 1% to R3.9bn.
Bekker, who is currently on sabbatical and will take over as chairman from Ton Vosloo in April, is not micromanaging from a distance. “Koos is travelling widely and intensively. I do connect with him regularly but he doesn’t call me very often. I think he is enjoying his time off and really seeing different parts of the world and getting inspiration,” Van Dijk says. Bob’s bio
Bob van Dijk (41), who spent 11 years of his career in the e-commerce space, took over as CEO from Koos Bekker on 1 April. He joined Naspers in August 2013 as CEO of Allegro Group after being headhunted by eBay. He started his career as an associate at McKinsey. Van Dijk, who lives in the Netherlands with his wife and two daughters, holds an MSc in econometrics from Erasmus University Rotterdam (cum laude) and an MBA
from Insead in France (Dean’s list).