What A Chinese Purchase Of Opera Software Could Mean For Africa

Written by Dana Sanchez

A group of Chinese companies led by U.S.-listed Web search and Internet security firm Qihoo 360 Technology, offered to acquire Norwegian company Opera Software for $1.2 billion on Wednesday, according to ChinaBusinessReview.

Opera Software produces Opera Web Browser, the fifth most popular browser in the world behind Microsoft’s Internet Explorer, Mozilla Firefox, Google Chrome and Apple’s Safari, RTE reported.

Although Opera Web Browser owns just 5.5 percent of global market share, it is the top browser in Africa and other parts of the developing world, according to ChinaBusinessReview.

The consortium of Chinese buyers includes Beijing Kunlun Tech, a distributor of online and mobile games; Golden Brick Silk Road (Shenzhen) Equity Investment Fund; and its Yonglian Investment affiliate. The resulting company will be a mobile Internet combination of Opera, Kunlun, Qihoo and Golden Brick, Reuters reported.

The deal will give Qihoo and Kunlun access to Opera’s mobile advertising platform, Opera Mediaworks, where they can sell their products.

Opera started out with a PC browser that struggled to compete with mainstream Web browsers such as Internet Explorer, Chrome, Mozilla and Safari, according to Reuters. It transformed itself in recent years into a mobile advertising service from which it now gets much of its revenue.

Its browser division now specializes in compressing data to minimize download times and costs for subscribers, especially when watching video, making it particularly popular in emerging market economies where network bandwidth can be constrained.

Opera’s acquisition is part of a bunch of deals being done by the Chinese buyers seeking to join forces in their home market, which is dominated by giant rivals such as Alibaba and Tencent, according to Reuters. Opera helps the group expand into emerging markets in Africa, Asia and elsewhere.

Beijing Kunlun Tech in January agreed to take a 60 percent stake in popular Los Angeles-based Grindr, a gay mobile phone dating app service popular worldwide.

Opera’s browser division now specializes in compressing data to minimize download times and costs for subscribers, especially when watching video, making it very popular in emerging market economies where network bandwidth can be constrained.

In late January, Opera put out a press release advertising Opera Max, a free app that it said is a data-saving solution for new Netflix viewers across Africa, according to ITNewsOnline.

Opera promoted itself in the statement as a pioneer in advanced compression technology. “Due to high data costs and slow, congested networks, using the Internet and its associated benefits may often be out of reach,” the company said in a prepared statement. “Africa’s smartphone adoption in Africa has doubled over the last two years … data shows that many aren’t using their smartphone to its full capabilities due to the cost of data remaining prohibitively high.”

Opera CEO Lars Boilesen told Reuters that the firm wants “to be an ecosystem with a billion users.”

Both Qihoo and Kunlun have followed a similar evolution to Opera, focusing increasingly on mobile customers. Qihoo, which provides a search, navigation and security services for Chinese mobile phone and computer users, makes more than half of its sales from online advertising sales.

Qihoo agreed in December with some members of the consortium to be taken private, Reuters reported. Kunlun and Qihoo will have access to Opera’s user base to cross-sell their services, said financial analyst David Reynolds in a note to clients.

Opera Chairman Sverre Munck told Reuters on Wednesday it was essential for the 20-year-old firm to find partners and compete against the giants of the technology world and their integrated software platforms.

“Facebook and Google have their ecosystems and now we have one too in a part of the world that is growing incredibly fast and where we will become very strong,” he said in an interview in Oslo.



About Dana Sanchez

Dana Sanchez was born in South Africa and is a U.S. citizen. After working in advertising, she went back to school and earned a master's degree in journalism from the University of South Florida. As a business writer, she won regional and national writing awards. As editor of a daily newspaper, she coordinated staff writers, freelancers and photographers in the fast-paced environment of daily news. Dana was an editor at Moguldom Media Group for four years, helping to build and manage a team of staff and freelance writers. She works now on Moguldom.com for Nubai Ventures. A long-distance hiker and cyclist, she writes about the business of technology.