Tencent Holdings Ltd. (700), China’s largest Internet company, will introduce a payment system to wireless platforms as it tries to commercialize apps including its WeChat instant messaging service to drive profit growth.
The company is seeking to tap customers who access its services on smartphones and tablet computers, Tencent President Martin Lau said at a conference in Beijing today. WeChat, with more than 300 million users, has over 70 million registered accounts outside mainland China, he said.
Tencent is seeking ways to make money from its apps to compete with Alibaba Group Holding Ltd., China’s largest e-commerce company that is expanding its own mobile development and acquiring stakes in rivals. Billionaire Chairman Ma Huateng is counting on WeChat, known as Weixin in China, to bolster earnings growth as consumers spend more time on mobile devices.
“Tencent plans to extend its payment system to wireless platforms in the future,” said Lau. “Some apps don’t charge users, but they have large traffic, we can commercialize them through ads.”
The Internet company has been testing a payment system internally on WeChat, Jerry Huang, a director of investor relations, said last month. Tencent is also developing a pipeline of online games, Lau said on an earnings call in May.
WeChat’s overseas users include customers in Thailand, India, Indonesia and Malaysia, Lau said today. The company plans to share 3 billion yuan ($489 million) from its open platform with developers this year as an incentive, he said.
China’s mobile users are projected to pay 7.9 billion yuan for games this year, according to Internet consulting group iResearch.
“The payment system is a step for helping gaming to take off on WeChat,” said Eric Qiu, an analyst at Guosen Securities Co. in Hong Kong. “Mobile gaming has proved to be commercially successful and holds great potential.”
WeChat may have at least 400 million users by the end of this year, Alicia Yap, an analyst at Barclays Plc in Hong Kong, wrote in a March 13 report. If WeChat provides games and related services, it could produce annual revenue of as much as 2.16 billion yuan, Yap wrote.
The stock fell 1 percent to HK$298.80 at the close of Hong Kong trading, paring this year’s gain to 20 percent. The benchmark Hang Seng Index has dropped 11 percent in 2013.
Net income at Tencent rose 37 percent to 4.04 billion yuan in the three months ended March, helped by higher advertising and e-commerce revenue.
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