Tencent’s Q3 profit up 3 per cent, its slowest growth in two years amid regulatory crackdown, gaming licence freeze

Tencent Holdings reported a 3 per cent increase in profits in the third quarter of 2021, its slowest growth in two years, as China’s biggest social media and video gaming business faces regulatory uncertainty amid tighter government scrutiny of the industry.

The Hong Kong-listed company on Wednesday posted a net profit of 39.5 billion yuan (US$6.18 billion) in the quarter ended September, up from 38.54 billion yuan in the same period last year, beating estimates of 32.6 billion yuan.

Revenue increased 13 per cent to 142.37 billion yuan, up from 125.4 billion yuan a year ago, but below the 145.41 billion yuan consensus estimate by 28 analysts. The last time Tencent missed revenue estimates was also two years ago.

The results came amid a regulatory crackdown on Chinese Big Tech, with tighter scrutiny over a wide range of activities from how they can compete with rivals to the way they handle user data.

“We are proactively embracing the new regulatory environment which we believe should contribute to a more sustainable development path for the industry,” said Tencent founder and CEO Pony Ma on Wednesday.

“The government is trying to drive higher quality and sustainable growth for the entire industry with a focus on consumer rights and privacy protection”, said Tencent president Martin Lau on an earnings call with analysts. “Regulatory changes in future... might be smaller in percentage terms as the industry adapts further [to the new environment].”