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UPDATE 1-Tencent posts quarterly drop, to distribute $20.3 bln in Meituan shares

Reuters · 11/16/2022 04:25
UPDATE 1-Tencent posts quarterly drop, to distribute $20.3 bln in Meituan shares

Adds details

By Josh Ye

- Tencent Holdings 0700.HK on Wednesday said it would distribute most of its stake worth $20.3 billion in food delivery firm Meituan 3690.HK to its shareholders in the form of a dividend, as it posted a second straight quarterly revenue drop.

Tencent, the world's largest video game company and the operator of the WeChat messaging platform, said it will transfer 958.12 million shares in Meituan, representing approximately 90.9% of the Class B ordinary shares it held in Meituan.

Tencent owns 17% of Meituan. Reuters reported in August the company planned to sell all or a bulk of its stake in the Chinese super app to placate domestic regulators and monetise an eight-year-old investment. A senior Tencent executive said at the time that was " accurate".

The company has continued to struggle under harsh rules imposed by Beijing on the tech industry and slowing economic conditions.

On Wednesday, Tencent said revenue fell 2% to 140 billion yuan ($19.8 billion) for the three months ended Sept. 31, from 142.3 billion yuan a year earlier.

Analysts on an average expected 141.6 billion yuan in revenue, according to Refinitiv.

Up to the previous quarter, Tencent reported double digit growth for almost every three-month reporting period since it went public in 2004, but its expansion has been halted by China's crackdown on the tech industry that began in late 2020.

The Shenzhen-based giant is retrenching, shutting some unprofitable businesses and laying off staff in a bid to return to growth.

In the third quarter, the of Tencent employees fell by 1,875 to 108,836 as of end-September. The second quarter’s was already down by 5,498, or 5% from the first quarter.

Reuters reported on Tuesday that the company has begun a round of job cuts targeted at its video streaming, gaming and cloud units. Reuters was able to establish the scale of the job losses.

($1 = 7.0858 yuan)

(Reporting by Josh Ye; Editing by Kirsten Donovan and Tom Hogue)