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Tencent 'eyes Singapore' for WeChat spinoff

By Li Tao in Hong Kong (China Daily) Updated: 2013-08-13 07:24

With such an enormous user base, the profit model of WeChat remains a "mystery", according to the source. WeChat is still a "strategic product" for Tencent, like Tencent Weibo, which means the company doesn't expect to turn a profit at present.

But the earnings prospects are definitely rosy, said the source. Tencent released WeChat 5.0 earlier this month, which for the first time introduced games into the app.

One game, called Tian Tian Ai Xiao Chu, which must be downloaded separately from WeChat 5.0, was downloaded nearly 80 million times on the day of its debut.

Tencent's first-quarter profit rose 37.1 percent to 4.04 billion yuan ($660 million), fueled by robust growth in online gaming and advertising income, the company said in May.

"Say, if we only charge 1 yuan for downloading the game from WeChat in the future, it will bring us 80 million yuan from WeChat, in just one day," said the source.

WeChat's future versions will gradually introduce "money-making tools" for Tencent, but the company will be very discreet about these decisions, the source added.

Tencent will not hastily utilize WeChat to make money as it is not even an issue for such a cash-rich company, according to the source.

Following a maiden US-dollar bond transaction in December 2011 with a $600 million issue, on Aug 30, 2012, Tencent issued $600 million in 5.5-year unsecured notes. The net proceeds of $594 million were to be used for "general corporate purposes".

"Tencent's ultimate goal remains an initial public offering on NASDAQ and all these bond issue activities serve to test the reaction of global markets," said the source.

"But it appears the dual listing plan in the US has been put aside by Tencent at this moment, given the relatively stricter listing rules as well as concerns from regulators (there)," the source added.

Tencent 'eyes Singapore' for WeChat spinoff 
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