Naspers’ $20 Billion Revenue, $112 Million CEO Bonanza

I like Naspers (parent of MultiChoice – operator of DStv and GOtv), Africa’s largest company by market capitalization, because it is an amazing institution. The more I learn about this firm, the more hopeful the promise could be about Africa. This is the same company that turned $34 million into $170 billion (with b).

So when South Africa’s Naspers invested in China-based Tencent $34 million, it was making a huge call, in 2001. Today, that $34m berth is now worth $170 billion (with b), based on Tencent’s current market capitalization. Magically, Naspers is the 65th most valuable company in the world. That berth is perhaps the greatest investment in Africa.

Naspers is a digital conglomerate and it is everywhere in the digital world. Yet, it is South African, making it clear that capital can be accumulated in any continent. In the league of some of the best investments ever, Naspers has a seat. It had a great year: $15.6 billion revenue from internet segment alone.

Naspers announced that its core headline earnings grew by 72% to R33.6bn ($2.5bn) as the company released its financial results for the year to March 31, 2018, on Friday afternoon.

Revenues, measured on an economic interest basis, increased by 38% year-on-year to R270bn ($20.1bn).

[…]

In a statement, Naspers said its revenue in the internet segment was up by 50%, compared to 51% in 2017, to R213bn ($15.9bn).

Interestingly, golden paycheck does not discriminate when there is huge value created. The CEO of Naspers, Bob van Dijk, went home with about US$112 million (R1.6bn) on wages, bonuses, vested stocks, etc during the year ended March 31, 2018. The investment in China’s Tencent, owner of WeChat, continues to make everyone a star in Naspers. Move over Wall Street, Africa has got the real king; Bob van Dijk, CEO of Naspers, is the king.

“But the quantum being paid out is obscene and probably puts Van Dyk amongst the richest 1 percent on our planet.”

[…]

The latest report does little to dispel the worry that Van Dyk and his executive colleagues are securing huge payouts because of the stellar performance of the Naspers share price, which is driven by the 31% investment in Tencent — over which Naspers executives have no influence.

Almost R1bn of the R1.6bn Van Dyk picked up during 2018 was the payout on 284,031 Naspers N shares that had been allocated to him in 2014 when he was appointed CEO.

In addition, Van Dyk cashed in R619.6m in share appreciation rights during 2018. The value of the share appreciation rights is based on an assumed value of Naspers’s e-commerce businesses, which exclude Tencent and MultiChoice. Most of the e-commerce businesses are making little or no profit.

Investors should not castigate executives of Naspers for their pay bonanzas. The executives have created value and made many of them millionaires. If more money would motivate them, so be it. Of course, the correlation between more pay and great returns has a limit before paying more becomes a waste. Yet, it is extremely important that investors see this firm as uniquely positioned to redesign many sectors in Africa, and should be allowed to invest in talent. If Naspers had been Nigeria-born, its tax alone could possibly fund the national budget, assuming it brings all the money it has made outside Africa home same time.

As Naspers shifts its massive profit home to South Africa, there is no way the South African treasury will not get at least $30 billion if you have around 20% tax rate. That is a national budget for Nigeria if this had happened in our country. We need to pay more attention to venture funding to stimulate our economy.

Think about it: if Africa could have ten of Naspers, the conversation about the continent would change. We need MVPs as I have noted before.

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