UPDATE 3-Naspers buys 29 pct of Russia internet firm DST

* Naspers to pay $388 mln, hand over its stake in

* Russia’s DST to own all of after the deal

* Says Africa is top priority for internet expansion

* Looking to expand Brazilian internet unit

* Naspers shares up 0.9 percent

(Adds analyst and DST partner comments)

By Tiisetso Motsoeneng and Diana Neille

JOHANNESBURG, July 14 (Reuters) - African media group Naspers NPNJn.J is taking 29 percent of Russia's Digital Sky Technologies (DST) in a cash and share deal worth at least $388 million, boosting its focus on the Internet in emerging markets.

Unlike many global media companies which have been battered by a drop in traditional advertising revenue, Naspers has been able to book consistent growth due to an emphasis on e-commerce in countries where internet use is growing fast.

The head of its internet unit Antonie Roux told Reuters expansion in Africa would be the company’s next top priority.

Cape Town-based Naspers, which operates pay television channels in Africa and has stakes in internet firms across Europe and Asia, said on Wednesday it would hand its 39 percent stake in another Russian internet company,, to DST as part of the deal.

Naspers will in addition pay $388 million to DST but declined to say how much the stake in was worth. DST had co-owned with Naspers for the last three years and will become sole owner of the communication and internet portal.

Unlisted DST runs instant messaging platforms and social network sites in Russia and eastern Europe. DST estimates its companies command 70 percent of internet page views in Russian.

“What Naspers wants to have is an all-encompassing Internet solution,” said Ziyad Joosub, an analyst at JP Morgan, who noted Russia was more attractive than some other emerging markets given its growth potential.

“The growth story is still strong, numbers are coming through, penetration levels in terms of broadband and Internet are going up, so it looks good. So if you’re going to chuck money somewhere, chuck it here,” Joosub said.


DST holds stakes in a wide portfolio of internet companies, including Facebook and Zygna, which produces the popular “FarmVille” and “Mafia Wars” games on Facebook.

DST is 10 percent owned by Tencent 0700.HK, China's top Internet company, in which Naspers owns 30 percent.

Because of its stake in the Chinese company, Naspers will own nearly a third of DST, JP Morgan’s Joosub estimated.

Head of internet operations Antonie Roux said the company would focus next on expanding across Africa, where it already has a strong pay-TV presence.

“We’re starting to see encouraging numbers in terms of broadband rollout (in Africa), which we believe will lead to good opportunities to roll out e-commerce (businesses) for example,” Roux said in a telephone interview.

Africa’s broadband growth has been hamstrung by costly international bandwidth and patchy national infrastructure, impeding development and deterring investors.

But recently launched undersea cables that link some African countries with the rest of the world have slashed costs and spurred faster internet speeds.

Brazil was another expansion target, Roux said. Naspers is considering expanding BuscaPe, the comparison-shopping site it bought last year, he said.

“Brazil is (an) immensely attractive country and economy, we’re very happy with our investment there and we would like to expand on that,” Roux said.

Shares in Naspers gained 0.9 percent to 285.55 rand by 1413 GMT, in line with Johannesburg's Top-40 index .JTOPI. (Additional reporting by Georgina Prodhan; Editing by David Dolan and David Holmes)