China's Mobile Giants Squeeze Tencent Earnings

From The Standard: Mobile giants squeeze Tencent earnings

"Tencent Holdings, providers of China's most popular instant messaging software QQ, reported an 8.9 percent fall in first-quarter net profit due to the stoppage of a mobile phone messaging service and higher selling costs."

"Tencent dropped ``161 Mobile Chat,'' a service offered to China Mobile's subscribers, at the start of the year after the mobile operator demanded to replace the previous revenue-sharing arrangement with a system in which Tencent would receive only a fixed fee.
Also starting this year, China Unicom will increase charges on messaging services from 12 percent of gross revenues to 20 percent, said Tencent chief financial officer Patrick Tsang, further adding pressure on its MVAS business."

"Revenues from fee-paying Internet value-added services (IVAS) such as QQ increased 42.5 percent to 149.1 million yuan in the first quarter to help offset the decline in MVAS sales. Overall, first-quarter revenues increased 16.7 percent to 300.5 million yuan on a year ago, though they were down 4.5 percent quarter on quarter."

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