Tencent looks to H2 recovery after growth slows - Mobile World Live

Tencent looks to H2 recovery after growth slows

24 MAR 2022

Chinese internet giant Tencent’s growth in Q4 2021 was crimped by restrictions on gaming and advertising, with the company registering its slowest revenue rise in 18 years but forecasting a recovery in H2 2022.

On an earning call, CSO James Mitchell explained Tencent’s efforts to limit children’s use of games led to an 88 per cent year-on-year decline in total usage by the age group and a 73 per cent drop in gross receipts.

President Martin Lau added it expects to “fully digest the impact” of its child-protection measures in the back end of this year.

Chairman and CEO Pony Ma dismissed speculation Tencent was considering breaking up the business beyond a move to establish a financial holding company insisting it “is not something we are considering at this point in time”.

Ma noted Tencent is focused on optimising the services of each business which “is more important than sort of doing some re-engineering on how you draw up the pieces”.

One-off gains
In Q4 2021, net profit was up 60 per cent year-on-year to CNY95 billion ($14.9 billion), due to CNY86.2 billion in one-off gains including the sale of JD.com stock.

Revenue increased 8 per cent to CNY144.2 billion, its slowest growth since it was listed in 2004.

Value-added services revenue increased 7.3 per cent to CNY71.9 billion, with mobile games rising 9 per cent to CNY40 billion and PC client games up 4 per cent to CNY10.6 billion.

Domestic games revenue was nearly flat at CNY29.6 billion due the restrictions on children, while international games sales grew 34 per cent to CNY13.2 billion.

Social networks revenue increased 4 per cent to CNY29.1 billion. Its fee-based VAS subscriptions increased 8 per cent to 236 million.

Online advertising dropped 12.7 per cent to CNY21.5 billion, as the business was hit by strict regulations on a number of sectors which are heavily regulated, resulting in lower advertising spending.

Tencent expects the advertising business to resume growth in late 2022.

Fintech and business services grew 24.6 per cent to CNY47.9 billion.

Combined monthly active users (MAUs) of messaging service WeChat and Chinese version Weixin rose 3.5 per cent to 1.3 billion.

MAUs on its QQ mobile messaging platform fell 7.2 per cent to 552.1 million, its second consecutive quarterly decline.

R&D expenses for the year increased 25 per cent to CNY14 billion.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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