May 18 (Reuters) - Tencent Music Entertainment Group
confirmed on Tuesday it is facing heightened scrutiny from
Chinese regulators, adding it was "actively co-operating" with
them and is committed to complying with all laws "including
those related to anti-trust".
This is the first time the Tencent group has publicly
commented on the matter.
Reuters reported last month that Tencent Holdings,
which controls music streaming company Tencent Music, was told
by Chinese anti-trust regulators to pay a fine, give up
exclusive music rights and sell some of its music assets.
Tencent did not comment then.
The action against Tencent came amid a sweeping anti-trust
clampdown by China on its internet giants.
"In recent months, we have received increased regulatory
scrutiny from relevant authorities, and have been actively
co-operating and communicating with the relevant regulators,"
Tony Yip, chief strategy officer of Tencent Music, told an
earnings conference call.
Yip declined to comment further or predict the outcome of
the talks with the regulators, but said "we are committed to
comply with all relevant laws and regulations, including those
related to anti-trust."
On Monday, Sony Music Entertainment announced digital
distribution agreements with both Tencent Music and NetEase
Cloud Music, ending an exclusive arrangement with Tencent Music.
News of the regulatory scrutiny has pressured Tencent group
shares over the past month, with Tencent Music down more than
Tencent Music beat quarterly profit and revenue estimates on
Monday, driven by strong growth in subscription and advertising
revenue from its music streaming platform. But its monthly
active users numbers fell.
The company, known as China's Spotify, has been
expanding its music library through new partnerships and
multi-year licensing deals. That, coupled with efforts to
diversify its content base through long-form shows and live talk
shows have helped lure more paying users as well as advertisers.
Although paying users for its music platform jumped,
monthly active users (MAUs) for both music and social
entertainment platforms declined by 6.4% and 14.2%,
"Users have stopped growing in general; last year was a high
base due to the COVID," said Tian Hou, analyst at T.H. Capital
Profit attributable to equity holders of Tencent Music rose
to 926 million yuan ($143.94 million) in the quarter from 887
million yuan a year earlier.
Excluding items, the company earned 69 yuan per American
Depository Share (ADS), above estimates of 55 yuan per ADS.
Revenue rose 24% to 7.82 billion yuan, while analysts were
expecting 7.73 billion yuan, according to IBES data from
($1 = 6.4333 Chinese yuan renminbi)
(Reporting by Tiyashi Datta and Eva Mathews in Bengaluru, and
Pei Li in Hong Kong; Editing by Shinjini Ganguli and Muralikumar