Naspers snaps up global education companies: Smarter than Tencent buy?

File photo of dancers performing underneath logo of Tencent at Global Mobile Internet Conference in BeijingNaspers, a South African media company that transformed its fortunes in the digital era after buying Chinese tech company Tencent ahead of the pack, is scouring the globe for technology companies in the education sector. This was revealed recently when Chief Executive Bob Van Dijk told Bloomberg’s Loni Prinsloo that the company believes technology is set to radically transform education provision within the next 10 years. Naspers is selling off assets in order to shore up finances to snap up opportunities in education technology. The group has been looking for acquisitions in general in India, which is a country with a huge population and the ambition to educate its citizens on a grand scale as China has been doing in recent decades. Investing in Naspers could well be a shrewd long-term investment move, if you believe – as many analysts do – that technology is set to create major shifts in the way teaching and learning are delivered and received around the globe. Here are some insights into the thinking at Naspers, followed by an in-depth piece on global education trends, to help you assess whether this South African multinational (JSE: NPN) could be a welcome addition to your investment portfolio. – Jackie Cameron

By Loni Prinsloo

Naspers Ltd. plans to expand in education software as Africa’s biggest company by market value searches for a repeat of the profitable bet it made on Tencent Holdings Ltd. of China.

The owner of Africa’s biggest pay-TV service is seeking to build on investments in U.S. education-technology companies Udemy and Brainly that it made earlier this year, adding a new limb to a growth strategy that has taken the Cape Town-based company into Indian online retail and Russian social networks, reports Bloomberg.

A logo sits on display inside the headquarters of Napsters Ltd., at the Media24 Ltd. office complex in Cape Town, South Africa, on Thursday, May 7, 2015. South Africa lacks a coherent economic policy and government departments are failing to work together, said Koos Bekker, billionaire and chairman of Naspers Ltd., Africa’s biggest company. Photographer: Halden Krog/Bloomberg
A logo sits on display inside the headquarters of Napsters Ltd., at the Media24 Ltd. office complex in Cape Town, South Africa, on Thursday, May 7, 2015. Photographer: Halden Krog/Bloomberg

“We believe that, like how technology has transformed the way people communicate, if you go ten years from now education will be fundamentally transformed,” Chief Executive Bob Van Dijk said in a phone interview on Friday. “People spend a tremendous amount of money and time on education.”

Naspers has been scouring the world for a repeat of the investment that made its name: the purchase of a $32 million stake in WeChat creator Tencent in 2001, which is now worth about $78 billion. That helped transform the business from a South African newspaper publisher into global investor in technology companies, and Tencent’s contribution helped Naspers increase earnings by 31 percent in the six months through September, the company said earlier on Friday.

The e-commerce division also showed signs of strength, with 23 businesses making a profit compared with 18 a year earlier. That helped offset a decline at the TV unit, which was hurt by weaker sub-Saharan African currencies against the dollar while subscribers switched to cheaper competitors.

Naspers will consider disposing of businesses alongside any purchases in education and other industries, Van Dijk said, citing the sale of Polish online auction site Allegro to private equity firms for $3.25 billion last month. The company has also agreed to combine Indian travel operation Ibibo with U.S. competitor MakeMyTrip Ltd., while Amazon.com Inc. is in talks to acquire Dubai-based online retailer Souq.com FZ, in which Naspers owns a stake, according to people familiar with the matter.

Bob van Dijk
Bob van Dijk

“We are critical of our portfolio and we want the right assets on board,” the CEO said. “You can expect us to keep looking at our assets that may well lead to further action.”

Naspers is committed to India, where its online retailer Flipkart has been taking advantage of a rise in smartphone use. That’s even as Seattle-based Amazon seeks to expand in the world’s second most populous country.

India “can become one of the biggest online retail markets in the world,” van Dijk said. “Amazon is a fierce competitor and we never underestimate them. I think the strategic advantage that Flipkart has is that it is run by Indian people for Indian people.”

Naspers’s education investments have all been in the U.S. to date, and the company doesn’t see the administration of President-elect Donald Trump as a setback to its growth plans even if he introduces more protectionist policies.

The company’s U.S. classifieds unit “is not a cross-border business; it’s a domestic person-to-person trade business,” Van Dijk said. “In theory if the country becomes more closed the business might actually do better.”

Five ways universities have already changed in the 21st century

By Paul Ashwin

Global higher education underwent a period of remarkable change in the first 15 years of the 21st century. Five key trends affecting universities around the world illustrate how, despite increased access to information, our understanding of higher education remains limited.

1. More people are going to university

Since 2000, participation in higher education has increased significantly. UNESCO figures for enrolment in tertiary education show that globally, participation rose from 19% in 2000 to 32% in 2012. While the proportions enrolled vary between countries and regions, the increases are pretty much universal. For example, tertiary enrolment in Sub-Saharan Africa has doubled from 4% to 8% over this period.

The percentage of those who left secondary five years ago who go on to tertiary education.
CC BY

While the increases in participation have been seen everywhere, there have been differences between countries in terms of who is going to university. The OECD Education at a Glance 2014 provides figures for the relative likelihood of participation in higher education for those whose parents engaged in tertiary education and those whose parents did not.

In Italy and Poland you are 9.5 times more likely to attend tertiary education if your parents did, whereas in South Korea and Finland, the proportion is a little over one. The UK and US have among the highest ratios: young people with parents who attended tertiary education are over six times more likely to enrol. These figures show large differences in how equal the expansion of higher education has been across the world and do not appear to relate to differences in tuition fees.

Beyond easy generalisations about the ways in which social hierarchies operate in different national cultures, we are not much closer to understanding the origins of this disturbing variation.

2. People are travelling further afield

While the figures on the proportion of tertiary students enrolled show clear increases, they are slightly misleading because they divide the total number of students by the total number of school-leavers in a country. This means that the proportions can be over or underestimated by the inclusion of international students (both incoming and outgoing) and the proportion of mature students. For example, the US and Western Europe are net importers of students, while Sub-Saharan Africa and south and west Asia are net exporters.

According to the OECD, the number of students studying abroad more than doubled from 2.1m in 2000 to 4.5m in 2012. While most of the host nations for these international students have remained the same over this period, the one exception is China. It did not figure as a host nation in 2000, yet by 2012, 8% of international students studied there, putting it third behind the US and UK.

The relative impact of these students is different depending on the size of the higher education system in question. In the US, over 800,000 international students make up only 4% of their student population, while the UK has around half the number of international students but they make up 20% of the student population.

In the UK, this has led to stories about international students dominating particular courses, but we are still in the process of understanding the impact of differing proportions of international students on teaching and learning cultures in universities.

3. The rise of the student experience

As the number and mobility of students have increased, so has the range of experiences that students are offered: from the limited and passive experience of a poorly-designed Massive Open Online Course (MOOC) to students engaging as partners in the design of their curricula and teaching and learning experiences.

This focus on students’ experience has been an important corrective to traditional teacher-focused approaches to teaching in higher education. However, the danger is that highlighting the “student experience” has obscured the essential role that students’ engagement with knowledge plays in the transformative potential of higher education. It is knowledge that changes students’ understanding of themselves and the world.

4. Quality of teaching under scrutiny

As the focus on student experience has increased, so has the intensity of scrutiny on the quality of teaching. In Europe, this has been partly informed by the Bologna process, designed to harmonise higher education systems across Europe. Positions in national and international higher education league tables have become a dominant way of representing this quality. Their attraction is understandable: they travel across a number of contexts and audiences, have resonance for prospective students and their families, employers, policy makers, academics and universities, and international bodies.

A counter promoting WeChat, a product of Tencent, on reading books for the blind, is displayed at a news conference announcing the company's results in Hong Kong. REUTERS/Bobby Yip
A counter promoting WeChat, a product of Tencent, on reading books for the blind, is displayed at a news conference announcing the company’s results in Hong Kong. REUTERS/Bobby Yip

However, their shortcomings are equally obvious: they tend to involve unrelated and incomparable measures that are brought together into a single score by algorithms and weightings that lack any statistical credibility. Crucially, the stability at the top of the league tables reinforces privilege: higher status institutions tend to take in a greater proportion of privileged students.

League tables strongly and wrongly suggest that students who have been to these institutions have received a higher quality education. But this distorts our understanding of teaching, making it about history and prestige rather than about the ways in which students are given access to powerful knowledge.

5. The impact agenda

Since the turn of the millennium, there has been an increasing expectation for research to bring a benefit to the society that funds it. This is now a standard element of research funding in the European Union and South Africa.

While it is very reasonable to expect research to lead to wider social benefits, the particular approach that has been taken to measure this impact has been distorting. The focus on how individual projects impact on societies shows a basic misunderstanding of the way in which research has an impact.

Individual research projects contribute to collective bodies of knowledge in a discipline or professional field. It is these bodies of knowledge that lead to impact, not individual studies. Despite this, we now have myriad impact case studies purporting to show the changes single studies have wrought, giving us much more information about impact but potentially obscuring our understanding of the relations between knowledge and society.

A mixed blessing

The greater amount of information we have about higher education around the world is a mixed blessing. The measurement and monitoring processes that generate and communicate this information – such as university league tables – distort what is considered valuable about higher education.

The danger is that the individual, durable and stable elements of higher education that can be easily measured are given a greater value than those that are collective, complex, changing and country-specific. In the face of this, we need to reassert a focus on the communal creation and sharing of knowledge that global universities contribute to the world.