NASPERS’S debt has been downgraded to junk by Fitch Ratings, which said yesterday that the cost of expanding Africa’s largest media company was hurting earnings.

The issuer default ratings were lowered one level, with the long-term rating cut to BB+ from BBB-, and the short-term rating to B from F3, Fitch said.

Naspers posted the slowest annual profit growth in at least six years in June as the company expanded its Chinese internet and African television businesses.

Adjusted net income rose 1 percent to R8.6 billion in the 12 months to March, in contrast to a 26 percent jump in sales.

The media company said at the time that it planned to invest in new ventures and to spend “heavily” on adding to existing operations.

Fitch’s move “wasn’t too much of a surprise”, as “Naspers’s earnings outlook is weak because of its investments”, said Kate Turner-Smith, an analyst at BPI Capital Africa.

Naspers’s share price initially fell as much as 2.4 percent before rallying to close 1.15 percent up at R1 432.42 after its Chinese investment, internet giant Tencent, said quarterly profit leapt 59 percent.

Meloy Horn, a spokesman for Naspers, said the company had been talking with Fitch over the past couple of weeks and was committed to regaining an investment grade rating.

“This downgrade will have a limited impact on our financing position and borrowing costs in the near future,” she said.

“Rather frustratingly the Fitch methodology ignores the value of our listed assets – Tencent and stakes valued at $55bn – which more than adequately covers our $1.5bn in net debt.”

Fitch also lowered Naspers’s senior unsecured debt to BB+ from BBB-. The outlook is stable, meaning the ratings are unlikely to be changed again soon.

“The downgrade reflects the deterioration in the group’s profitability mainly due to its high development spend as Naspers continues to invest in growth opportunities,” the credit reporting agency said.

Moody’s Investors Service rates Naspers debt at Baa3, the lowest investment grade, with a stable outlook.