Tencent Undergoes Strategic Restructuring Awaiting the Arrival of 5G

To brace for the dawn of 5G and AI, Tencent Holdings is undergoing a strategic upgrade, which involves the establishment of two new business divisions—Cloud and Smart Industries Group (CSIG) and Platform and Content Group (PCG).

Prior to the restructuring, Tencent was structured into seven main businesses. After the upgrade, the company will add the two new divisions—CSIG and PCG to the existing divisions of Company Development Group (CDG), Interactive Entertainment Group (IEG), Technology and Engineering Group (TEG), and WeiXin Group (WXG).

On the other hand, the work of three previous business groups, Mobile Internet Group (MIG), Social Network Group (SNG), and Online Media Group (OMG) will be split into six business groups.

The new CSIG will include many B2B products of Tencent, such as Tencent Cloud, smart retail, maps, and other security products, to provide business solutions to medical, education, and transportation industries. The new PCG, however, will focus on content products, including QQ, browsers, online literature and audio, videos, news and sports.

The restructuring comes only one month before the company’s 20th anniversary and is a measure taken to balance the setbacks of the company’s business in the past year. In the past nine months, the company shares plunged from a high of HKD 476.6 to the current HKD 323.2, a drop of 32 percent. The market cap has shrunk by nearly HKD 1.5 trillion.

The company has been criticized for falling behind in terms of the research on cloud computing and artificial intelligence. This strategic restructuring initiative will act as a new starting point for the company, according to Pony Ma, chairman and CEO of Tencent.

“Technology is Tencent‘s most solid, underlying infrastructure”, Ma exclaims in an official statement. “To embrace AI and the upcoming 5G era, Tencent will use technology as a driving force to explore next-generation social networks and contents.”