South Africa's Naspers plans to spin off, list pay-TV unit

By Tiisetso Motsoeneng and Patricia Aruo

JOHANNESBURG (Reuters) - South Africa's Naspers unveiled plans on Monday to spin off and list separately its pay-TV unit, its first major move aimed at narrowing a discount between its market value and the value of its stake in Chinese technology giant Tencent.

Founded more than 100 years ago in Stellenbosch, South Africa, Naspers has transformed itself from a newspaper publisher into a $94 billion behemoth but it owes all of that valuation to its one-third stake in Tencent.

The Tencent stake is worth around $155 billion, or 65 percent more than Naspers despite the company owning other assets such as the pay-TV unit MultiChoice, which is a de facto monopoly in Africa. The discount has prompted some investors to urge Chief Executive Bob van Dyk to find ways to narrow it.

MultiChoice is expected to list in Johannesburg in the first half of 2019, Naspers said, adding that the business would be hived off with limited debt to enable it to pursue growth opportunities in Africa.

"Will this address the discount? We mentioned earlier that there are several structural options that we're considering. This is one of them. We think it will crystallise value for shareholders," van Dyk told a conference call.

The Multichoice business will be spun off to existing shareholders and Naspers will not raise new cash through the move.

MultiChoice, which also owns a streaming service called Showmax, contributes around 18 percent of Naspers' total sales of $20.1 billion. It has a presence in around 13.5 million households in Africa and generates around 6 billion rand ($403 million) in annual trading profit.

Van Dyk told a conference call that Naspers was also considering other options aimed at closing the discount, including ensuring that its e-commerce ventures swing into profit.

"We are also looking at other primary listings of parts of our business," he said.

Alongside MultiChoice and its stake in Tencent, Naspers runs an e-commerce unit, which houses assets such as OLX, the biggest classified ads site in India and Brazil, and mobile classifieds platform Letgo, which vies with Craiglist in the United States.

Shares in Naspers inched up 0.7 percent to 3,206 rand as traders weighed whether the move to spin off the business to shareholders would be sufficient to address the discount.

"It's not necessarily a game changer for them. I'm not sure that it is going to change the valuation much now," said Ryan Woods of Independent Securities in Johannesburg.

Naspers' problems mirror the dilemma faced by Yahoo, where its core business ended up being worth 10 times less than its stake in Alibaba and Yahoo Japan.

Yahoo fixed that by selling its core operating business to Verizon in 2016 and re-branding what was left as Altaba, a conflation of 'alternative' and 'Alibaba'.

($1 = 14.8803 rand)

(Editing by James Macharia and Adrian Croft)