Naspers buys 30% of MXit

29 January, 2007 at 10:21 am | Posted in Companies | Leave a comment

Media group Naspers has added an instant messaging business to its portfolio by acquiring a 30 percent stake in MXit, the home-grown and popular instant-messaging service.
MXit allows users to download software on a cellphone to send and receive messages from people who are also connected to MXit, via either cellphones or computers.

Users can message each other at a cost of 2c. This is cheaper than an SMS rate of between 35c and 80c.

However, users will have to pay an additional R2 for each megabyte of internet data from network providers Cell C, MTN and Vodacom.

With its lower message rate, the two-year-old company has attracted as many as 3-million users between the ages of 12 and 25 in the past two years.

MXit offers its customers a range of services and products, such as news and games. More than 40 bouquets are in the pipeline. The group is looking at expanding in nine more countries in the next three years.

Having an investor like Naspers with its huge cash resources means MXit could now kick-start its expansion plans.

Arthur Goldstuck, the managing director of telecommunications research firm World Wide Worx, said that although MXit had huge subscriber growth, it did not have the resources and solid revenues to execute its expansion strategy. “The number of users does not necessarily equal revenue,” he said. MXit’s founder and chief executive Herman Heunis said the company could have pursued its expansions on its own, but it would have been at a “much slower pace”.

He said the group would accelerate on Naspers’ international footprint to expand to other countries.

Heunis’s plan is to have 50 million customers internationally by the end of next year. MXit currently has 400 000 international users.

Naspers operations are in the print, pay TV and internet markets in Africa, Brazil, Russia, India, China and Greece. It plans to launch mobile television commercially in South Africa and the rest of Africa, and to grow its broadband, or high-speed Internet, business.

Last week Naspers bought a 30 percent stake in Mail.ru, a Russian-based internet company, for $165-million (R1.2 billion).

Naspers spokesperson Beverly Bradford said MXit would give Naspers a unique opportunity to tap into the youth market, which viewed technology as part of its lifestyle.

Goldstuck said MXit would help Naspers grow its market for the future because MXit’s user base used the Internet effectively, not only through computers but also through cellphones.

(BusRep)

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