Tencent Denies Rumors Concerning China Mobile Taking Stake

On October 24, news broke that China Mobile, a multimedia service provider through its nationwide mobile network, could take a stake in Chinese tech giant Tencent, a move Tencent later denied.

At the end of October 24, TencentThe share price fell 11.43% to HK$206.2. Previously, the share price traded as high as HK$758.9 in February 2021, with a market value of over HK$7 trillion.

In fact, China Mobile and Tencent have a lot in common. For example, both focus on the exchange of information between people and are inextricably linked to the development process of the last 30 years.

Tencent‘s first rapid development phase was supported by China Mobile. In late 2000, China Mobile launched a business plan to build a bridge between service providers and users.

At that time Tencent, which had hundreds of millions of users, quickly entered the field of value-added mobile and telecom services, leveraging its relationship with China Mobile to become a service provider. In late 2001, TencentThe annual sales of reached 50 million yuan (6.88 million US dollars). At that time, China Mobile was the world’s largest mobile operator with annual revenue of 134.68 billion yuan.

Tencent since 2002 has developed rapidly and went public in Hong Kong in June 2004. However, the company hasn’t completely shaken off its dependency on China Mobile. 2004, TencentThe revenue of was 1,143.5 million yuan, and the revenue of mobile and telecom value-added services totaled 641.2 million yuan, accounting for 56.07% of the total revenue. Internet value-added service revenue was 439 million yuan, accounting for 38.39% share.

In January 2011 Tencent launched WeChat after QQ as a model, and its core function is to support the rapid exchange of short messages, videos, images and texts across communication operators and operating systems. Eight months later, China Mobile launched Feiliao. Unlike WeChat, Feiliao used a cell phone number as a user identifier that can interact with SMS. However, Feiliao ceased operations in July 2013. At that time, WeChat had more than 400 million Chinese users and more than 100 million foreign users.

Tencent in 2012 finally freed from dependence on China Mobile. The revenue share of mobile and telecom value-added services fell to 8.6%, with the main revenue coming from Internet value-added services (mainly games business).

SEE ALSO: Tencent stock price falls below HK$250, a new low

In 2018 Tencent has taken the initiative to adjust its organizational structure, mainly to merge artificial intelligence, big data and cloud computing, which the company believes will have far-reaching implications in the future. In 2019, China Mobile’s performance was not so good. Operating income for the first three quarters of 2019 was 566.7 billion yuan, down 0.2% from the same period last year, while net profit was 81.8 billion yuan, down 13.9% from a year earlier.

Currently, China Mobile is still far behind Tencent in terms of market value totaling HK$1.44 trillion and HK$1.98 trillion respectively.