Wed. Dec 8th, 2021

© Reuters. FILE PHOTO: A Tencent logo is seen during the World Internet Conference (WIC) in Wuzhen, Zhejiang Province, China, on November 23, 2020. REUTERS / Aly Song / File Photo

SHANGHAI (Reuters): Chinese gaming and social media giant Tencent Holdings (OTC 🙂 saw a 29% increase in second-quarter earnings, a slower pace of growth after the coronavirus pandemic caused a boom in online games last year.

Net profit for the three months to June stood at 42.6 billion yuan, above the average Refinitiv estimate extracted from 13 analysts at 34.4 billion yuan.

Revenue rose 20% to 138.3 billion yuan, in line with expectations. Mobile game sales grew 13%.

The results come amid investor concern that Tencent will continue to be embroiled in a spate of regulatory actions that the Chinese authorities have unleashed in several sectors, with the technology industry being the hardest hit.

In particular, regulators have launched a series of antitrust probes, cited the need to increase data privacy and pushed for better consumer treatment.

Tencent has been banned from entering into exclusive music rights agreements and saw its $ 5.3 billion plan merged DouYu International Holdings (NASDAQ 🙂 Ltd. and Huya (NYSE 🙂 Inc. blocked by the Chinese market regulator last month.

The shares of the world’s largest revenue-generating gaming firm were also abused after a state media article described online gaming as a “spiritual opium” and expressed concern about its impact on children.

This drop caused Tencent to temporarily lose its crown as Asia’s largest company by market capitalization to chip maker TSMC earlier this week. Its shares continue to fall by about 8% since the August 3 article.

Since then, Tencent has announced new measures to reduce the time and money children spend on games, starting with its most popular game, “Honor of Kings.”

Last month it also briefly suspended registrations of new users in mainland China for WeChat, the country’s dominant instant messaging platform, to improve its security technology.

Tencent has said the company is very focused on compliance and risk management.

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