Naspers announced on Monday its intention to list its Video Entertainment business separately on the JSE and simultaneously to unbundle the shares in this business to its shareholders.



The new company will be named MultiChoice Group and will include MultiChoice South Africa Holdings and its subsidiaries, associates and/or affiliates, MultiChoice Africa Holdings and its subsidiaries, associates and/or affiliates), MultiChoice Botswana, MultiChoice Namibia, NMS Insurance Services SA, the African division of Showmax and its subsidiaries, associates and/or affiliates, Irdeto Holdings and its subsidiaries, associates and/or affiliates) and Irdeto South Africa.



Naspers said in a SENS statement that this marks a significant step for the group as it continues what it calls its "evolution into a global consumer internet company".



It expects that listing MultiChoice Group via an unbundling will unlock value for Naspers shareholders and at the same time create "an empowered, top-40 JSE-listed African entertainment company".

Naspers CEO Bob van Dijk said during a press briefing following the announcement that, pending the necessary approvals, MultiChoice Group will list on the JSE in the first half of 2019. He added that Naspers will continue to invest in its e-commerce businesses in SA.

Van Dijk told Fin24 that MultiChoice is already operating as an independent unit. It has increased its subscriber growth and improved its overall cost, especially in sub-Sahara Africa (SSA). In Van Dijk's view, an independent MultiChoice will be able to stay on this path and even choose to accelerate if it wants to.



"We mitigated and stabilised difficulties experienced in SSA. This listing is all about a value strategy we think will crystalise, not just for shareholders, but for other options we are considering as well," said Van Dijk. He added that he cannot say much more about these at this point in time.



"The main thing is that we are looking to improve our e-commerce business," he said.

Socio-economic transformation

"MultiChoice Group will remain committed to broad, socio-economic transformation in South Africa, most notably through its Phuthuma Nathi Investments (RF) and Phuthuma Nathi Investments 2 (RF) - collectively called PN - share schemes," said Naspers. In its view, the PN schemes are among the most successful broad-based black economic empowerment (BBBEE) schemes in SA and have already created around R12bn in value for BBBEE shareholders.

In addition to the value created to date, the Naspers board believes that the unbundling transaction will create further value for PN shareholders. This is due to Naspers’s intention to allocate – for no consideration – an additional 5% stake in MultiChoice South Africa Holdings (MCSA) to PN shareholders prior to the unbundling to increase MultiChoice Group’s BBBEE shareholding.



This means that the PN shareholders’ interest in MCSA and its dividend flows is expected to increase by 25%. The additional 5% stake in MCSA is designed to reinforce MultiChoice Group’s commitment to black economic empowerment, increase PN’s upside in future value creation and ensure the continued compliance with regulatory requirements post unbundling.

Further, post-listing and subject to obtaining the necessary PN board and shareholder approvals, it is the ambition of MultiChoice Group to enable 25% of the PN shareholders’ original shareholding - that is before the allocation of the additional 5% - to be exchanged for MultiChoice Group shares that will be freely tradeable, thereby unlocking incremental value for PN shareholders.

According to Naspers, the listing and unbundling are intended to create a leading entertainment business listed on the JSE that is profitable and highly cash generative. Currently, its multi-platform business entertains 13.5 million households across Africa.



In the last financial year, the business added 1.5 million subscribers and generated revenue of R47.1bn and trading profit of R6.1bn. It employs more than 9 000 people in Africa and indirectly creates economic prosperity for over 20 000 more who are employed by its various partners and suppliers across the continent.

Bloomberg reported on Monday that Naspers has long sought to narrow the gap in value between its stake in Chinese internet giant Tencent Holdings and the firm as a whole.

* Fin24, like MultiChoice, is part of Naspers.

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