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WhatsApp’s Asia Competitors Drop After Facebook Deal

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Feb. 20 (Bloomberg) -- Instant-messaging service operators that compete with WhatsApp Inc. fell in Asia trading today after Facebook Inc. said it would pay as much as $19 billion for the startup.

Tencent Holdings Ltd., the Shenzhen, China-based owner of WeChat, declined 3.1 percent in Hong Kong trading. Naver Corp., the owner of Line, slumped 8.1 percent in Seoul for its biggest decline since December 2011. Rakuten Inc., which last week paid $900 million for messaging app Viber, fell 4.8 percent in Tokyo.

Facebook said yesterday it’s paying $12 billion in stock, $4 billion in cash and $3 billion in restricted shares for WhatsApp, which lets users send messages through its services on mobile devices with different operating systems. WhatsApp is adding 1 million users daily, and Facebook Chief Executive Officer Mark Zuckerberg said he expects the service to reach more than 1 billion people in the next few years, escalating the challenges to competing Asia-based services.

“It would definitely have some impact on Tencent’s global business, especially now that WhatsApp has a strong platform that they can tie up with,” said John Choi, an analyst at Daiwa Securities Group Inc. in Hong Kong. “For WeChat, we could see more competition kicking in for their Southeast Asian, U.S. and South America markets.”

WeChat, Line

WeChat, Line and Viber each say they have about 300 million registered users. WhatsApp has more than 450 million monthly users.

WhatsApp was the second-most popular app download last year, according to App Annie Ltd., an analytics and marketing service. Facebook was No. 1, Line was No. 6, Viber was No. 9, and WeChat was No. 10.

Facebook’s purchase of WhatsApp helped BlackBerry Ltd. rise as much as 9 percent, highlighting the value of BlackBerry’s messaging service. BlackBerry offers the BlackBerry Messenger instant-messaging service pre-installed on its phones or as a free download for iPhones and smartphones using Google Inc.’s Android operating system.

The deal for WhatsApp implies a valuation of about $3.4 billion for BlackBerry’s BBM service, which has 80 million monthly users. BlackBerry CEO John Chen, named to run the company in November after a scrapped sale attempt, has singled out BBM as a pillar for growth to help revive the struggling smartphone maker. BlackBerry has a market value of $4.7 billion.

“Facebook’s rich valuation per user for WhatsApp confirms that instant-messaging apps lead the next Internet gold rush,” said Praveen Menon, an Internet analyst with Bloomberg Industries. “WhatsApp’s expansive user growth in a number of international markets may command a premium over niche-local market rivals in Asia.”

WhatsApp is free for the first year and then costs 99 cents a year after that, according to its Website. Waterloo, Ontario-based BlackBerry made the BBM software available for free last year. WeChat, Line and Viber also can be downloaded for free.

Lisette Kwong, a spokeswoman for BlackBerry, didn’t have an immediate comment.

To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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