Tencent Stresses Regulatory Compliance as Profits From Gaming, Payments Surge
March 24 2021 - 9:17AM
Dow Jones News
By Stephanie Yang and Keith Zhai
TAIPEI -- Tencent Holdings Ltd. Chief Executive Pony Ma
emphasized his commitment to working with regulators amid
heightened government scrutiny over China's powerful technology
companies, as strong growth in mobile gaming and payments propelled
the social-media and entertainment giant to its most profitable
year yet.
Mr. Ma's message Wednesday, made during a quarterly earnings
briefing, comes as Beijing steps up antitrust efforts against
China's tech sector, where companies have collected massive amounts
of user data.
Tencent was among several companies fined by antitrust
regulators this month for failing to properly report past
acquisitions. Meanwhile, the State Council's antitrust committee
has been gathering information about Tencent's online payments
service WeChat Pay -- alongside rival Ant Group Co.'s Alipay --
since last year due to their dominance in China's payments market,
according to officials familiar with the investigation.
"We are working closely with the government and the regulators
on our compliance," Mr. Ma said through translation, when asked
about China's antitrust regulations.
This month Mr. Ma met with Chinese antitrust regulators from the
State Administration for Market Regulations after he requested to
see them, people familiar with the matter said.
In a conference call Wednesday, Tencent President Martin Lau
said the meeting was voluntary and a normal part of conducting
business. "We had discussions about a broad range of topics and the
main focus is actually on creating a healthy environment on
innovation to happen in China," Mr. Lau said.
The State Administration for Market Regulations and the State
Council's antitrust committee didn't respond to requests for
comments. Reuters earlier reported on Mr. Ma's meeting.
Investor concerns have grown since Chinese authorities tightened
regulations to rein in the country's rapidly expanding internet
industry. Antitrust regulators are probing e-commerce giant Alibaba
Group Holding Ltd., while Tencent has also been fined for failing
to properly report past acquisitions.
Yet Tencent, like many other technology giants, benefited from a
year in which the coronavirus pandemic led homebound consumers to
turn to online products and services.
Revenue at the world's biggest videogame company reached 482.06
billion yuan, or $73.88 million, in 2020, a 28% increase compared
with the previous year. Net profit for the year was 159.85 billion
yuan, a 71% rise.
Net profit for the quarter ending in December nearly tripled to
a record 59.30 billion yuan, after the valuations of the companies
it invested in grew. Revenue rose 26% to 133.67 billion yuan. Both
beat analyst expectations.
Tencent's mobile gaming business has flourished during the
pandemic, with online gaming revenue increasing 29% year-over-year
in the fourth quarter. The company said its "Honor of Kings" was
the top-grossing mobile game globally for the second year in a
row.
Revenues from financial technology and business services grew
29% last quarter, the company said, due to growth in commercial
payments and wealth-management services. In its financial report,
Tencent said that its priority for its fintech business is risk
management rather than scale, and it said it would work closely
with regulators.
Tencent's presence in the e-commerce industry has also grown.
The company reported that last quarter's advertising revenue
increased 22% year-over-year in part because of increased demand in
e-commerce platforms and consumer goods.
Annual transaction volume generated through WeChat's mini
programs, which function as apps within the messaging app, more
than doubled in 2020 compared with the previous year.
--Yifan Wang contributed to this article.
Write to Stephanie Yang at stephanie.yang@wsj.com and Keith Zhai
at keith.zhai@wsj.com
(END) Dow Jones Newswires
March 24, 2021 09:02 ET (13:02 GMT)
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