Tencent Music’s profits halved amid crackdown on monopolies, tax evasion

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What’s new: Tencent Music Entertainment Group (TME), the operator of China’s largest online music platform, reported a year-on-year decline in profits and revenue as authorities tightened monitoring monopolies and artists who evade taxes.

Quarterly net profit attributable to shareholders plunged 55.3% from the same period in 2020 to 536 million yuan ($84 million) in the fourth quarter, a deeper contraction than the 34.5% drop recorded in the third quarter, according to Monday’s report. financial statement.

Revenue fell 8.7% year-on-year to 7.6 billion yuan, a reversal from a 3% rise in the previous three months. Executive Chairman Cussion Pang blamed the decline in revenue on “increased competition and (a) changing macro environment”.

The context: China has launched a regulatory repression targeting the tech sector last year, tightening rules in various areas including monopolies, taxation and data security.

TME has seen monthly active users and paid users of its social entertainment services – primarily live streaming – decline year-on-year and quarter-on-quarter as repression against tax evading artists forced some popular live streamers off its platform.

In July, Beijing ordered Tencent to drop all of its exclusive global music licensing deals, citing anti-monopoly rules. This negatively impacted the company’s copyright distribution revenue, Chief Strategy Officer Tony Yip said in a webcast discussing the earnings report.

Related: Tencent Music’s profits fall for running second quarter as antitrust crackdown bites

Quick Takes are condensed versions of China-related stories for quick news that you can use.

Contact reporter Guo Yingzhe ([email protected]) and editor Joshua Dummer ([email protected])

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