Tencent plays down talks of break-up despite regulatory risks, slowest ever quarterly revenue growth
- Concerns are rising among investors that the Chinese government may want to split up internet giant Tencent
- Analysts say regulatory headwinds will continue to cast a shadow over Tencent’s prospects, despite efforts to meet government requirements
As executives from Tencent Holdings fielded questions from investors and analysts in its earnings call on Wednesday evening, one query appeared to have hit a nerve.
When chief strategy officer James Mitchell was asked whether Tencent might spin off some of its businesses, so as to “not seem so large in the eyes of your regulators”, he quickly shifted the question to founder and chief executive Pony Ma Huateng.
Before Ma had the chance to say anything, however, president Martin Lau Chi-ping spoke up, saying that any talks of breaking up Tencent are “highly speculative” and “not something that we consider at this point in time”.
Behind the delicate question are growing concerns among investors that the Chinese government may want to split up the 24-year-old social media and video gaming giant, known for occupying “half of the mountains and rivers” of China’s internet landscape through its sprawling stakes in hundreds of internet firms, including on-demand service provider Meituan, the country’s second largest short-video platform Kuaishou Technology and e-commerce company Pinduoduo.
Tencent’s extensive empire – which covers finance, social media, video gaming, e-commerce, cloud computing, streaming video and news – has helped it become one of the most indispensable service providers for China’s 1 billion internet users, as well as the most valuable publicly-listed Chinese tech company. Its leading position has now become a source of anxiety as Beijing tries to limit the “irrational expansion of capital”.