Development spend to cap Naspers profit JOHANNESBURG, June 27 - Heavy spending to drive organic growth at South Africa's e-commerce and media company Naspers will keep profit flat this year, as the company steers away from the acquisition trail in the face of high valuations and restless shareholders. Chief Executive Koos Bekker sees the $22 billion company, which reported a 15 percent jump in profit for the year to the end of March, growing revenue by about 20 percent this year and spending over 7 percent of that to grow its own businesses. "We will probably keep growing the top line quite nicely at around 20 percent or so, but the profit line will be flat because we tend to spend quite a lot in developing our own services," he told Reuters in a telephone interview. Naspers has transformed itself from an apartheid-era newspaper publisher to a global multimedia business by buying or taking stakes in emerging-market Internet companies such as China's Tencent and Russia's Mail.ru. In the past we emphasized more buying companies, we did more mergers and acquisitions, but in the years to come we will spend more on organic development. Naspers has said Internet valuations are inflated and is focusing on two areas: organic expansion of its Internet business and infrastructure for its pay television segment, including a roll-out of a digital terrestrial network across Africa. Development costs jumped nearly 87 percent to 2.8 billion rand ($330.20 million) in the last financial year, the company said in a statement, while spending on acquisitions was at least 1.85 billion. Its latest ventures included buying majority stakes in e-commerce firms such as Turkey's Vipindirim and Fashion Days, which operates in several eastern European countries. Naspers have deployed (their) capital highly effectively and made a number of fantastic acquisitions and moved with the times. From a staid old media company, it's made the transition into the new world very well," said Nic Norman-Smith, portfolio manager at Lentus Asset Management in Johannesburg. But investors in Naspers, which also has stakes in Polish e-commerce firm MIH Allegro and Buscape, a Brazilian price-comparison site, are now impatient to start reaping some of profits made by its Chinese and Russian cash cows. One day development spend will have to end because it is discretionary spend, or at least it will have to stop growing. Even if it stays stuck here at 2.8 billion rand level for the next 2-4 years, we are still going to see big earnings coming through," said one analyst, who preferred to remain unnamed. Naspers hiked its dividend pay-out by 24 percent to 335 cents per share, largely in line with analysts' expectations. "They are making the right movements in terms of upping the dividend and harvesting some of those cash flows, but the market has still placed a massive premium on Tencent and their holding in it," Lentus Asset Management's Norman-Smith said. It's a fantastic business, but if you look at the valuation, it's way too rich for us. Naspers' share price has risen over 30 percent this year. It is currently trading at 46 times full-year earnings, nearly quadruple the average of 12.05 times for Johannesburg's Top-40 index of blue chips. CEO Bekker said Naspers is rolling out a digital terrestrial television (DTT) network across sub-Saharan Africa to make its pay TV offering cheaper. Customers have to buy expensive satellite dishes and decoders for Pay TV but will now need only set-top boxes and install them without professional help with DTT. Naspers is rolling out the technology in Nigeria, Kenya, Uganda and Zambia and is eyeing Namibia next, Bekker said. The Cape Town-based firm's core headline earnings per share rose to 1,850 cents from 1,612 cents a year earlier. It considers core headline earnings, which exclude one-time items, as the most accurate measure of its earnings. Revenue totaled 39.5 billion rand compared with 33.09 billion. Shares rose 1.3 percent to 461 rand, compared with a 0.7 percent decline by the Top-40 index at 9.29 a.m. $1 = 8.4798 South African rand Editing by Jon Loades-Carter