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Cobus Stofberg: Acting CEO: Naspers


27 November 2007 23:05

MONEYWEB: OK Cobus, there you have your first question [from Piet Viljoen]. You did raise billions of rands recently. It's sitting in the bank, I suppose, finding a new home in various assets that you're chasing around the world. But, as Piet says, would there not perhaps be an easier way of raising than capital rather than selling shares?

COBUS STOFBERG: I think there's always the possibility, and we continuously look at that. But in the final analysis I have to look at it operationally, and operationally we believe than Tencent does still have some way to go in growing the business. Plus, what we find is that, in the development of the technology and the use of the technology outside of China, we increasingly work together with Tencent in doing that. And, for instance, the venture in India is becoming a joint venture with them using their technology to bolt up the instant messaging community in India. We see that happening in other parts of the world, and Tencent is at a stage where they want to look outside of China, like a lot of other Chinese companies, to grow their business and to exploit business opportunities. And I think there we have a role to play. And yes, this is a decision - if you took this decision a year ago, the shareholders would have lost what? About half that share price was put on in the last half-year.

MONEYWEB: And I guess if you're going to be partners with Tencent, you certainly don't want to be seen to be selling down your holding.


MONEYWEB: How much cash to you still have left in the bank account after the investments - and we'll talk about those in a moment - that you have made in the past six months?

COBUS STOFBERG: We have about R10bn in the kitty, but that's a combination of money that was left from the capital-raising exercise, as well cash we have internally. So there's still R10m left at the end of September.


COBUS STOFBERG: R10bn, sorry, ja.

MONEYWEB: So the acquisition of the part of M-Net that you didn't own is not going to make too big a dent in that balance?

COBUS STOFBERG: No, indeed, it won't make a big dent.

MONEYWEB: It's interesting to see how the strategy is going. Does your colleague, Koos Bekker, who's on a sabbatical at the moment still have a role? Do you still update him on the issues that you're doing into the future?

COBUS STOFBERG: No, he's not really involved. But a lot of this - we've had a strategy and we've set a strategy out early in the year, and we're following that strategy and executing on that strategy. He's was very involved before he went on sabbatical to set up that strategy. No doubt he's following it carefully from the outside.

MONEYWEB: But he's not picking up the phone and saying, "Cobus..."

COBUS STOFBERG:[Laughter] You know Koos better. [Laughter]

MONEYWEB: He is picking up the phone, isn't he? But he's suppose to be having a sabbatical. I'm sure he's learning a lot in his travels.

COBUS STOFBERG: Yes. He is in fact off to Harvard for a short course at the moment.

MONEYWEB: Interesting deal that you've done in Poland. You've now got irrevocables from 55% of the shareholders in a company called - is it Gadu-Gadu?

COBUS STOFBERG: That's correct, ja. It actually means chit-chat in Polish. Again, an email instant-messaging company. Yes, we have 55% irrevocable, but that offer closes on the 21st of December, and only then will we know the final figure.

MONEYWEB: That's an area that Microsoft is also starting to flex its muscles in - the email, instant-messaging arena. Do you see them as a competitor?

COBUS STOFBERG: They are. I think they're more successful in the English-speaking world. But yes, for instance in China I believe Tencent's market share is almost like 80%. But the next one, quite a distance behind them, would be Microsoft or MSN, so you see them in the rest of the globe.

MONEYWEB: You talk in your results also about strong growth not only coming from China, but also in Russia. And a deal that you did there in buying a small additional share in a Internet company called, which would value the whole business at $1bn. What exactly does it do?

COBUS STOFBERG: Again, it's an email. They also have a strong community, and they now take the largest market share as far as advertising online is concerned. But again there, when we bought our first stake, if you do the calculations, it was closed in January this year and then it was valued at about $550m. And it's up now at $1bn, and those valuations were done by independent advisers to the company and to us. So we're very happy. That increase in value is borne out by a doubling of their turnover, as well as a tripling of their bottom line.

MONEYWEB: Things are going crazy in other parts of the world, China and Russia. Here at home, not so exciting, the magazine circulation-inflation scandal that hit Naspers - there are people who say that heads should roll, executive heads, that is. Have you internally made any decision on that?

COBUS STOFBERG: Ja, we have. And I must say this for my colleagues in Media24, I believe they performed exceptionally well in the way they tackled the whole question. There was transparency right the way through. They did re-audits, they are refunding the advertisers, plus interest, for the period. We've had disciplinary hearings and the outcome of the disciplinary hearings was that nine people were implicated. Of those about five have already resigned, a further two will be fired or have been fired last week, and another two got reprimanded.

MONEYWEB: Are you comfortable that that's the end, that you're not going to have a similar shock, say, in the newspaper division?

COBUS STOFBERG: Ja, I feel very comfortable that with the newspapers we don't have anything similar to that, and, believe me, if it comes out, we will handle it the same way with transparency, full refund, and disciplinary action. But at the moment with the information that we have we don't have anything that looks like it.

MONEYWEB: Cobus, when Koos Bekker spoke to us earlier this year, he felt that the ICT regulation here in South Africa - he described it as a tragedy. From what you're telling us about Poland, Russia, China, it does appear as though we're on the back foot here. Have there been any improvements in that line?

COBUS STOFBERG: No, not really. There has been more of a broadband rollout, and we see that increasing. But it's increasing for me still at a too slow a rate compared to other developing countries. I'm not even comparing us to a developed country - I'm comparing us to other developing countries and other countries in Africa, where they seem to have leapfrogged us. So, although on the one hand it is favourable to our print media business that the online business is growing much more slowly as a result of the broadband rollout, I think it is damaging South Africa's future.

MONEYWEB: You say the print media business is having a bit of an Indian summer?

COBUS STOFBERG: Ja, and I think it will be at least another three to five years that they have the benefit of that, and I'm sure my print colleagues are thankful for every day.

MONEYWEB: What do you make of the development in one of your competitors, Johncom, with Mvela becoming more involved there? Do you see them as perhaps a stronger competitor in future?

COBUS STOFBERG: Johncom for a long time has not really been a BEE company but I believe now that will change, and I would trust that we need strong media companies in South Africa. So I would welcome a stronger Johncom.

MONEYWEB: Cobus Stofberg is the acting chief executive of Naspers. "Acting" because his colleague Koos Bekker is on sabbatical.