You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
 Registered users can save articles to their personal articles list. Login here or sign up here

Naspers, Tencent and the Israelis

Why a tiny Naspers investment is notable.

CAPE TOWN – These days when one thinks about media giant Naspers, one automatically thinks about Tencent, the instant-messaging, entertainment and internet services provider, in which Naspers has a 34% stake.

It makes sense, Tencent along with Russia’s Mail.ru accounts for the bulk of Naspers’ revenues, so investors tend to take notice. However, one shouldn’t forget that Naspers owns dozens of internet companies, with hundreds of sites across the developing world. Collectively they brought in a billion dollars of revenue in the last financial year.

What this means though is that when Naspers makes interesting little investments, as it has done in Israel recently, they tend to go unnoticed.

Last month Naspers invested in SimilarWeb, a web-analytics start-up that was in the market for a third round of venture capital funding.

Parent company SimilarGroup’s valuation and the size of the round was not disclosed, but the investment will secure Naspers a seat on the holding company’s board.

What is notable is that this is Naspers’ first investment in Israel and in the analytics and data space, according to Etai Rosen, VP Sales & Marketing for SimilarGroup, who posted news of the investment on the company’s blog.

SimilarWeb provides data that helps companies understand their web traffic better. For instance it identifies the sources (direct, referral, search) of traffic; it shows how users in different countries engage differently with a site; it enables one to see the traffic for a specific subdomain on a site; it shows you the top inbound links sending traffic to a site; it provides a list of websites which were also visited; it will also indicate the social networks sending traffic to a website.

“Internet companies are beginning to understand the importance of analytics,” says internet expert and CEO of World Wide Worx Arthur Goldstuck. “Information and understanding of what drives people to your site and what keeps them there is essential for companies that want to monetise their customer base. Web analytics has become a science.”

“Naspers makes many under-the-radar acquisitions just to gain market-share,” adds an analyst who could not be named. “It is difficult to assess the impact one makes over another.” But he notes that this acquisition, unlike most others, is not about content. “This could also be an attempt by Naspers to secure skills – engineers and programmers and the like. Israel is renowned as a seat of technological innovation and these skills could add competitive advantage.”

The deal makes even more sense when one understands that SimilarWeb will use the funding to move into the mobile realm, just as Tencent and many of Naspers’ other ecommerce sites are doing.

“The main purpose of this round of funding,” Rosen writes, “is to expedite our expansion into mobile. This means we’ll be introducing mobile app data as well as mobile browsing data into SimilarWeb in the upcoming months.”

Tencent results

Tencent announced on Wednesday that revenues for the year to December climbed 38% to $9.91 billion (R106.4billion); operating profit rose 24% to $3.14 billion (R33.71 billion), but operating margins fell from 35% to 32% as the company ramped up its marketing spend. Diluted earnings per share were $1.33 (R14.35)

The year saw Tencent embracing mobile internet and ramp up its efforts to monetise mobile services. Tencent and its equally heavyweight competitor Alibaba (which is soon to list in the US) have been slashing each other’s profits for weeks in the battle to dominate China’s mobile payments market.

Tencent migrated its popular instant messaging service QQ from a primarily PC to a primarily smart phone experience as 500 million of China’s 618 million internet users are now using their phones to access the internet. It also enhanced its WeChat app, taking it from a straightforward communications tool to a multi-functional platform.

Tencent has also ramped up its partnerships with vertical category leaders such as Dianping in local life services, JD.com in eCommerce, and Sogou in search as its competition with Alibaba hots up.

“We will further expand our mobile leadership via app distribution,” said chairman and CEO Ma Huateng in a statement. “We will invest in long-term opportunities such as online video, online payment and expand WeChat internationally.”

The going hasn’t been easy recently. Last week China’s central bank ordered a halt to some mobile payment methods used by the two companies, amid concerns over the security of verification procedures. And questions are surfacing about Tencent’s ability to expand WeChat into the US – a far more competitive market than China where internet companies need a license to trade.

Naspers spokespeople were not available to comment.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   0

Comments on this article are closed.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: