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Naspers targets phone company partnerships to tackle Netflix

by Katia Porzecanski and Loni Prinsloo

A logo sits on display inside the headquarters of Naspers Ltd., at the Media24 Ltd. office complex in Cape Town.

(Bloomberg) — Naspers Ltd., Africa’s biggest company by market value, is seeking partnerships with mobile-phone operators on the continent to boost its video-on-demand business and help compete with U.S. giant Netflix Inc.

The owner of Africa’s biggest pay-TV provider is planning to build on a joint venture agreed last year with Kenya’s largest company, Safaricom Ltd., to roll out online service Showmax at more affordable data prices. Safaricom is 40 percent owned by Newbury, England-based Vodafone Group Plc.

“We will be targeting the whole of sub-Saharan Africa for mobile partnerships,’’ Naspers Chief Executive Officer Bob Van Dijk said on Wednesday at the annual meeting of the World Economic Forum in Davos, Switzerland. “Working together with telcos will be a big part of what we do. We are live in Kenya and there are several others” that we are targeting, he said.

While the Cape Town-based company’s satellite pay-TV business has long dominated the sub-Saharan African market, it was hurt last year by falling currencies against the dollar and new competitors such as Netflix and Econet Wireless Global of Zimbabwe. Naspers is seeking to maintain its market-leading position with online products like Showmax, which offers movies and TV shows such as Game of Thrones and Vikings.

“There’s not a lot of cable on the continent and never will be,” Van Dijk said. “The video-on-demand business will have to be a mobile play through affordable data.”

Naspers has evolved from a South African newspaper publisher into a global investor in technology companies, with its most successful venture to date being an early-stage investment in the Chinese creator of WeChat, Tencent Holdings Ltd. The shares have increased 8.6 percent this month, valuing the company at 960 billion rand ($71 billion).

The company posted a 31 percent rise in its first-half profit as strength of its e-commerce businesses and stake in Tencent outweighed slumping earnings at the pay-TV service. So-called headline earnings were $914 million in the six months through September.

Naspers plans to harness artificial intelligence to enable growth across its businesses, said Van Dijk. Other Naspers companies include Indian travel operator Ibibo and Russian social media provider Mail.ru Group Ltd.

“We want to get people on board and build our AI capacity internally rather than investing in an AI business,” he said. “We want to bring in the skills. We plan to push this very hard.’’

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