(Incorporated in the Republic of South Africa)
(Registration number 1925/001431/06)
Share code: NPN ISIN: ZAE000015889
(“Naspers” or “the company”)
EXCHANGE OF JOHNCOM INTEREST IN ELECTRONIC MEDIA
NETWORK LIMITED (M-NET)/SUPERSPORT INTERNATIONAL
HOLDINGS LIMITED (SUPERSPORT)
FOR NASPERS SHARES AND CASH
Naspers currently owns an effective 60,12% interest in M-Net/SuperSport (29,98% via MultiChoice Africa (Proprietary) Limited
(MCSA), 26,33% via MNH Holdings (1998) (Proprietary) Limited (MNH) and 3,81% directly) (collectively, the “Naspers interests”).
Johnnic Communications Limited (Johncom) currently owns an effective 38,56% interest in M-Net/SuperSport (an effective
25,01% through its 47,5% via MNH and 13,55% directly) (collectively, the “Johncom interests”).
The Johncom interests will be exchanged for a consideration of Naspers shares and cash (“the transaction”).
In light of the migration from analogue to digital broadcasting, the introduction of new technologies such as high definition (HD)
television and pending competition for content, all of which will increase costs and capital expenditure, the parties have considered
it prudent to consolidate the interests of M-Net/SuperSport with those of Naspers.
Naspers is currently concluding an empowerment drive within its South African operations. After the above transaction has been
concluded, the intention of Naspers is to consolidate the whole of the M-Net/SuperSport shareholding into MCSA.This will ensure
that M-Net and SuperSport are appropriately empowered and will secure the best possible position for the new BEE shareholders
Naspers will issue 20 886 667 Naspers N ordinary shares and pay R250 million in cash to Johncom as consideration for the
4. INFORMATION RELATING TO M-NET/SUPERSPORT
At present, M-Net’s television channels are delivered to subscribers via analogue terrestrial and digital satellite distribution. The
existing analogue system, which broadcasts the main M-Net entertainment channel and Community Services Network (CSN)
channel, has been in operation for 20 years and is rapidly becoming obsolete. M-Net also compiles some 11 channels for
distribution via satellite in South Africa and across the rest of sub-Saharan Africa by MultiChoice, as part of the DStv bouquet.The
main markets are Nigeria and Angola.
Similarly, SuperSport compiles seven sports channels for distribution in South Africa and across sub-Saharan Africa.These comprise
three 24-hour channels, including a dedicated pan-African football channel, a sports update channel, a 24-hour highlights channel,
a dedicated interactive sports channel, a Portuguese-language sports channel for Angola and Mozambique, and three
ad hoc sports channels.
Looking forward, the introduction of several competitors, coupled with the recent weakening of the rand relative to the US dollar,
is expected to drive up M-Net/SuperSport’s programming costs. This will cause turbulence and affect profitability over the next
5. FINANCIAL EFFECTS
Pro forma financial effects
After the transaction, Naspers’s effective stake in M-Net/SuperSport will be 98,7% and M-Net, SuperSport and MNH will be
subsidiaries of Naspers. Consequently, the articles of association of each of M-Net, SuperSport and MNH will be amended (to the
extent required) to conform to the requirements set out in Schedule 10 of the JSE Limited Listings Requirements.
The table below sets out the unaudited
pro forma financial effects of the transaction and is based on the published pro forma
numbers of Naspers for the year ended 31 March 2006.
pro forma financial effects, for which the Naspers board is responsible, are presented for illustrative purposes only
and may not give a fair reflection of the financial position and results of operations post the implementation of the transaction.