Tencent bets on internet as mobile income falls

Tencent Holdings, the mainland's largest instant messenger service provider, will focus on internet-based value-added services this year amid regulatory uncertainties in the wireless sector, chairman Pony Ma Hua-teng said yesterday.

Tencent yesterday announced tat revenue grew 24.73 per cent last year to 1.42 billion yuan, while net profit rose 10.02 per cent to 485.36 million yuan.

Earnings per share were 27.4 fen and the company declared a final dividend of eight cents per share.

The firm will continue its US$30 million share repurchase programme this year to avoid shareholder value dilution after issuing share options to its staff.

Its operating profit, excluding a foreign exchange loss of 47 million yuan due to the depreciation of the US dollar and a deferred tax income of 48 million yuan, was up 3.34 per cent at 484.35 million yuan. Operating margins fell seven percentage points to 34 per cent.

'We boosted spending on product development last year, which dragged down the profit margin,' chief financial officer Patrick Tsang said.

About 55 per cent of its revenue came from internet-based services last year, while in 2004 it was only 38 per cent.

New services such as online game portals and the online auction website Paipai.com generated 786 million yuan, up 79 per cent on the previous year.

Mobile value-added service revenue dropped 19 per cent to 517 million yuan. The mobile-phone service accounted for just 36 per cent of revenue last year, down from 56 per cent previously.