(ATF) Tencent Music Entertainment Group on Monday beat quarterly profit estimates, driven by strong growth in subscriptions and advertising, even as it faced scrutiny from China’s competition regulators.
The Chinese company has been expanding its music library through new partnerships and multi-year licensing deals. That, coupled with efforts to diversify its content base.
Tencent Music and Sony Music Entertainment said on Monday they had signed a multi-year extension of their digital distribution agreement.
Total revenue of the company, controlled by Chinese tech giant Tencent Holdings, rose to 7.82 billion yuan ($1.21 billion) in the first quarter from a year earlier.
Analysts were expecting revenue of 7.73 billion yuan, according to IBES data from Refinitiv. Profit attributable to equity holders of the company rose to 926 million yuan from 887 million yuan a year earlier.
New York-listed shares of Tencent Music rose 0.5% in trading after the bell on Monday.
The State Administration of Market Regulation is scrutinising the Shenzhen-based company’s dealings with music labels including Universal Music Group, Sony Music Entertainment and Warner Music Group.
The company operates popular apps QQ Music, Kugou Music and Kuwo Music, with a combined 622 million monthly active users in the December quarter last year.
Tencent could face penalties for not properly reporting past acquisitions and investments for antitrust review, which might force it to sell its Kugou and Kuwo apps.
The company has long attracted high-profile investors. Billionaire George Soros’s investment firm snapped up $34 million of Tencent Music shares during the first quarter as they were being sold off during the collapse of Bill Hwang’s Archegos Capital Management.
With reporting by Reuters