Tencent Music quarterly revenue climbs 8% on stronger streaming demand

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(Reuters) -Tencent Music Entertainment Group’s revenue rose 8.2% in the fourth quarter, as China’s biggest music streaming company registered its second straight quarter of growth after a year-long slowdown.

The company posted revenue of 7.46 billion yuan ($1.03 billion) for the quarter ended December, exceeding analysts’ estimates of 7.30 billion yuan, according to LSEG data.

The U.S.-listed shares of the company were up 3% in premarket trading.

Tencent Music’s premium Super VIP (SVIP) membership, which combines long-form audio content, online karaoke services and high-quality sound, has gained significant traction among users.

However, the social entertainment unit continues to weigh on overall growth due to the removal of certain live-streaming features to comply with Beijing’s anti-gambling regulations.

For the fourth quarter, revenue from the social entertainment services business, which includes karaoke app WeSing and live concert platform Kuwo Music, was 1.63 billion yuan, down from 1.87 billion yuan a year ago.

The social entertainment segment showed signs of recovery, with revenue rising 6% from the previous quarter despite the year-on-year decline.

The sequential growth suggests the impact of regulatory measures has largely played out, said Charlie Chai, analyst at 86Research.

Chief Executive Ross Liang told analysts on a post-earnings call that the social entertainment business remains in a state of “stabilization with some downward pressure” for this year amid ongoing industry challenges.

($1 = 7.2228 Chinese yuan renminbi)

(Reporting by Kritika Lamba in Bengaluru and Yelin Mo in Beijing; Editing by Sonia Cheema, Alexandra Hudson)