Tencent Music’s Social Services Crisis Shines Upbeat Quarter

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The logo of Chinese group Tencent Music Entertainment is seen next to an earphone in this illustration photo taken March 22, 2021. REUTERS/Florence Lo/Illustration GLOBAL BUSINESS WEEK AHEAD

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March 21 (Reuters) – China’s Tencent Music (TME.N) said its core social entertainment services business shrank in the fourth quarter, eclipsing the company’s online results and sending its shares tumbling more than 9% in extended conversations.

While most of Tencent Music’s users are part of its music streaming unit, social entertainment services, including karaoke platforms where users can live stream concerts and shows, are its main revenue drivers.

Revenue from social entertainment and other services fell 15.2% to 4.73 billion yuan ($742 ​​million), while paying users in the social entertainment category fell 16.7%.

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The weakness was driven by fierce competition from rivals and the changing macroeconomic environment, Executive Chairman Cussion Pang said in a statement on Monday.

Analysts said a resumption of in-person events in the quarter after the country’s COVID-19 recede is expected to weigh on the company’s results.

The findings come amid China’s intense regulatory crackdown on local tech companies and threats of US sanctions if Beijing supports Moscow in its invasion of Ukraine. Read more

In a favorable situation, Tencent Music’s online music service business recorded revenue growth of 4.3%. Total revenue for the Tencent Holdings-controlled company (0700.HK) fell 8.7% to 7.61 billion yuan, in line with market estimates, according to Refinitiv data.

Excluding items, the company earned 0.50 yuan per ADS, meeting analyst expectations.

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Reporting by Yuvraj Malik in Bengaluru; Editing by Devika Syamnath

Our standards: The Thomson Reuters Trust Principles.

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