By TJ Strydom
JOHANNESBURG (Reuters) – Africa’s largest provider of pay-television services Naspers
Naspers, the biggest listed firm on the continent, which sells access to popular American series and blockbuster movies in 50 countries in Africa and the Indian Ocean via its Multichoice unit, reported an 18 percent rise in full-year profit on Friday, but flagged pay-TV as a drag on its performance.
Weaker currencies and lower economic growth in commodity exporting economies such as Angola, Zambia and Nigeria have hurt business, said Chief Executive Bob van Dijk.
“The currency decline has been massive and that really hurts us because we bill in local currency,” he said.
Though it is not the case in its home market South Africa, Naspers has lost around 288,000 subscribers across the continent, the firm’s results showed on Friday.
Most of Naspers’s content costs are in dollars, said Van Dijk, which means it has to absorb the increases or pass it on to consumers who are struggling to afford an entertainment luxury.
“We’ve frozen the prices of our products in local currency,” Van Dijk told Reuters in a telephone interview, adding that many don’t have the disposable income to pay their subscriptions.
“That’s a big deal if you’re in a scenario with local currency still deteriorating like the naira just did,” he said.
Naspers’ pay-TV business had for decades been the cash cow for a firm that started out a century ago as an Afrikaans newspaper publisher, but the unit has since been dwarfed by the Internet business that accounts for more than two thirds of revenue.
Naspers’s Internet unit, which includes a 34 percent stake in China’s Tencent Holdings <0700.HK>, buoyed profits in the year until end-March, while revenues from pay-TV declined by 11 percent.
“It’s not all sunshine, we had a tough year in Sub-Saharan Africa,” Van Dijk said about the results.
The firm had to cut costs in the region, he said, but since freezing prices the drop in subscriptions has stopped and the firm is trying to win back numbers by adding programming to some of its products aimed at the lower market.
“Besides cost reduction we also have strengthened some of the mid-tier bouquets which give people access to great content,” a move Van Dijk said could eventually set its business on the right path.
(Editing by James Macharia)