Tencent Growth At Slowest Amid Regulatory Tightening

Social media and gaming giant Tencent posted on Wednesday an 8 percent rise in fourth-quarter revenue, its slowest growth since going public in 2004.

Tencent said revenue rose to 144.2 billion yuan in the quarter ended December 31, while adjusted profit fell by a fourth to 24.9 billion yuan as costs rose and ad sales slowed. Revenue for the full year rose 16 percent, also its slowest ever pace.

Regulatory tightening in China over the last 18 months on tech giants such as Tencent has dampened decades of unbridled growth. New rules have been introduced governing how these firms 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. 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, 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. However, shares in both Tencent and its peers, including Alibaba, have rallied in recent days after Vice Premier Liu He said last week that Beijing would roll out support for the economy and keep markets stable. (Reuters)