Tencent Music Entertainment Group

The stable outlook on TME reflects the outlook on Tencent and our expectation that TME will remain a highly strategic subsidiary of the group over the next two years. As such, the rating and outlook on TME will move in tandem with those on Tencent, with a one-notch gap between the ratings on the two companies. We could lower our rating on TME if we downgrade Tencent. We could also lower the rating on TME if the company's strategic importance to Tencent diminishes, and its stand-alone credit profile (SACP) deteriorates at the same time. TME's weakening importance to Tencent could be indicated by: Signs that TME is diverging from its parent's strategies; or A material reduction in Tencent's ownership and

...We expect Tencent Music Entertainment Group (TME) to remain a highly strategic subsidiary of Tencent Holdings Ltd. (Tencent) over the next two years. As the only online music entertainment platform in China within Tencent's ecosystem, TME plays an integral role in satisfying Tencent users' demand for music consumption, supporting user growth and engagement. The company's importance to the group is in spite of its low financial contribution given the group's sheer size. We also believe TME is highly integrated with the group in terms of management and operations. TME will likely remain a dominant player in China's fast-growing online music industry with nascent paid penetration. The company's wide content coverage from mainstream top hits to "long tail" music and its high user engagement underpin its market dominance. We anticipate TME will take an active role in unlocking the growth potential in China's online music industry by improving the paying ratio from the current low level of around...

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