Tencent posts slowest sales growth as regulatory scrutiny, slowing ad sales bite
ReutersMarch 23, 202210:42 AM GMT+1Last Updated 18 min ago
SHANGHAI, March 23 (Reuters) - Chinese social media and gaming giant Tencent Holdings (0700.HK) posted on Wednesday an 8% rise in fourth-quarter revenue, its slowest growth since going public in 2004 that reflected heightened regulatory scrutiny and a slowdown in advertising.
Tencent said revenue rose to 144.2 billion yuan ($22.63 billion) in the quarter ended Dec. 31, below an average of 147.6 billion yuan from 17 analysts, Refinitiv data showed.
Revenue for the full year rose 16%, its slowest ever pace as well.
A year-and-half-long crackdown by Beijing on tech giants such as Tencent has brought decades of unbridled growth to an end and placed them under new rules governing how they interact with their users and how they conduct mergers and acquisitions.
Regulators have frozen game approvals since August last year, casting a chill over the sector and putting many small gaming studios out of business.
Advertising has also been hit as many industries affected by the regulatory crackdown cut back on spending.
Tencent said in a statement it expected to benefit from new game launches when new game monetisation licenses are released, adding that it also expects its advertising business to resume growth in late 2022.
Last year, Chinese regulators ordered Tencent to end exclusive music copyright agreements and found its messaging and payments app WeChat illegally transferred user data. They also imposed new gaming limits for young players.
During an internal meeting at Tencent at the end of 2021, chief executive Pony Ma told staff that the company should prepare itself for a "winter", according to two other sources.
Tencent's stock has lost more than a third of its value in the past 12 months.
Tencent and its peer Alibaba Group Holding (9988.HK) - whose stock has more than halved in the past year - are preparing to cut tens of thousands of jobs combined in one of their biggest layoff rounds as the internet firms try to cope with the new regulatory climate, Reuters reported last week citing sources. read more
However, shares in Tencent and its peers have rallied in recent days after Chinese Vice Premier Liu He said last week that Beijing would roll out support for the economy and keep markets stable. read more
Tencent said on Wednesday its adjusted profit for the December quarter fell by a fourth to 24.9 billion yuan as costs rose.
It posted a 60% jump in quarterly net profit, helped by one-off gains made through deals such as its disposal of most of its stake in JD.com (9618.HK).