Tencent Music Entertains New Notes

Chinese online music platform Tencent Music Entertainment Group (NYSE: TME) said Monday, it will sell new senior unsecured notes, while lingering uncertainties continue to plague China’s corporate debt markets, and geopolitical tensions remain on the rise.

Shenzhen-based Tencent Music said it will conduct its public debt offering in one or more tranches, subject to market conditions and other factors, with net proceeds from the sale intended to be used for general corporate purposes.  

A series of fixed-income investor calls began Monday, according to Bloomberg.

The proposed deal falls hot on the heels of the release of the company’s second quarter of 2020 unaudited financial results, which appear to have met most analysts’ estimates.

Among the metrics, paying users for its online music platform grew by nearly 52% year-over-year to 47.1 million, with average revenue per paying user (ARPPU) having risen by just north of 8% over the same period.

Tencent Music also said it generated total revenue of almost RMB 7bn (US$981m), an increase of 17.5% year-over-year, with online music subscription revenues up by 64.7% over the same prior-year quarter to RMB 1.31bn (US$186m).

Tencent Music CEO Cussion Pang said that as “the industry leader of China’s online music market,” the company’s Q2 2020 online music revenues jumped 42.2% year-over-year—accelerating from 27.4% in the first quarter— which was mainly attributable to a nearly 65% year-over-year growth in music subscription revenues, as well as “strong performance from our digital album sales.”

Pang continued that with “our content leadership, a well-executed paywall strategy, and enhanced recommendation capabilities, we have significantly improved our online music paying ratio to 7.2%, up from 4.8% in the same quarter of last year.”

TME online music metrics

He further highlighted that the company’s “social entertainment services performed steadily in the second quarter, registering sequential growth as the COVID-19 situation continued to improve in China.”

Pang added that Tencent Music “will continue to invest in and ramp up our long-form audio services, and expect to achieve significant synergies across all aspects of our businesses and further boost our long-term sustainable growth,” which he said is supported by “our strong financial position and cash flow generation.”

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