Tencent sees lower profit on China Mobile deal

PUBLISHED : Thursday, 23 December, 2004, 12:00am
UPDATED : Thursday, 23 December, 2004, 12:00am

Instant messaging provider Tencent Holdings expects its monthly profits to drop four million yuan after a possible change in its licensing agreement with China Mobile.

The Shenzhen-based company said it was renegotiating a deal for its 161 Mobile Chat service with the country's largest mobile operator, which was expected to change from a revenue-sharing model to a pre-determined monthly subscription business plan.

Tencent said its monthly net earnings would be reduced by four million yuan.

The 161 Mobile Chat service contributed about 10 per cent of the firm's net profit last year and 16 per cent in the first half this year.

The company posted a net profit of 107.97 million yuan for the third quarter this year, down from 113.28 million yuan in the previous three months but up from 88.14 million yuan a year ago.

The stock shed 8.1 per cent to $5.10 yesterday.

Meanwhile, Internet service provider Linktone said it was sanctioned by China Mobile over violations of billing rules on wireless access protocol (WAP) services.

'This violation arose from the company's inadvertent billing in November 2004 of approximately 27,000 WAP customers of six yuan each for a service that should have been free,' the company said.

It expected the sanction to have 'a moderate impact' on first-quarter revenue next year.

For the quarter to September, WAP services accounted for 1.8 per cent of Linktone's gross revenues.

China Mobile will also suspend approval of any new applications and joint marketing activities for Linktone's wireless service platforms between January 1 and June 30 next year at the central and provincial levels.

Linktone said the mobile operator also suspended one of its interactive voice response services for a month for carrying inappropriate content.