Chinese tech giant Tencent has posted a sharp drop in profit for the third quarter as rival Alibaba gears up for its Hong Kong listing.
The gaming and social media firm reported net profit of 20.4bn yuan (£2.3bn), down 13 per cent on the same period last year.
Revenue rose 21 per cent to hit 97.2bn yuan, but this fell short of the 98.2bn yuan estimated by analysts, according to data from Refinitiv.
Tencent has been battling an economic slowdown in China and tough competition from large rivals. Alibaba, its largest competitor, today won approval for its float on the Hong Kong stock exchange, which is set to be one of the year’s largest fundraising rounds.
Tencent’s media advertising revenue dropped 28 per cent over the quarter, which the firm blamed on unpredictability in major content releases and lower income from sponsorship deals.
However, revenue from the Shenzhen-based tech giant’s online games business rose 11 per cent to 28.6bn yuan.
This was driven primarily by revenue growth from popular smartphone games, including Honour of Kings and Peacekeeper Elite.
Tencent has previously locked horns with Beijing after regulators imposed a nine-month ban on licences for new online games last year.
Revenue from Tencent’s fintech and business services division, which includes its payment services through social media network Wechat, jumped 36 per cent to 26.8bn yuan.
Ma Huateng, Tencent’s chairman and chief executive, used the trading update to unveil his company’s new motto of “Value for Users, Tech for Good”.
“We believe these are not new principles but rather a reiteration of what we have always believed and how we have always sought to behave,” he added.
It comes after Tencent was embroiled in a controversy over the NBA in China, where the company holds streaming rights for the next five years.
The firm was forced to pull some of the games after the manager of the Rockets posted a tweet in support of the Hong Kong protests, but its decision to resume streaming sparked outrage in its home country.
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