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China Widens Probe Beyond Didi, Roiling Global Investors – Yahoo Finance

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(Bloomberg) — China expanded its latest crackdown on the technology industry beyond Didi Global Inc. to include two other companies that recently listed in New York, dealing a blow to global investors while tightening the government’s grip on sensitive online data.

In a series of announcements that began on Friday and escalated over a holiday weekend in the U.S., Beijing ordered all three companies to halt new user registrations and told app stores to remove Didi’s service from their platforms. The regulatory onslaught came just days after the ride-hailing giant completed one of the biggest U.S. listings of the past decade and within weeks of debuts by the other targeted companies — Full Truck Alliance Co. and Kanzhun Ltd.

Investors responded by dumping Chinese tech stocks in Hong Kong and sending shares of SoftBank Group Corp., a backer of both Didi and Full Truck, to a seven-month low in Tokyo. Didi, which tumbled 5.3% on Friday, could extend losses when trading resumes in the U.S. on Tuesday.

While China watchers have been on high alert for regulatory shocks since Beijing scuttled Jack Ma’s IPO of Ant Group Co. in November, the move against Didi and its peers adds a new dimension — cybersecurity — to a clampdown that has so far focused on fintech and antitrust issues. The Communist Party-backed Global Times said in a Monday column that Didi’s data hoard posed a threat to individual privacy as well as national security, particularly since its top two shareholders — SoftBank and Uber Technologies Inc. — were foreign.

Beijing’s targeting of recent U.S. listings may chill the pipeline of overseas IPOs that have enriched Wall Street and private Chinese firms alike. That could in turn fuel concerns of an economic decoupling between China and the U.S., at least in sensitive areas like technology, as both Xi Jinping and Joe Biden take steps to limit the flow of capital and expertise between the two superpowers. Helping tech companies sell shares in New York has been a lucrative business for firms like Goldman Sachs Group Inc. and Morgan Stanley, both of which were key underwriters of the Didi IPO.

Among the questions still lingering for global investors, Chinese tech bosses and U.S. regulators: Which companies might enter Beijing’s crosshairs next? And in Didi’s case, should investors have been given more explicit warnings about China’s clampdown before the IPO?

“Didi seems to have rushed up their IPO process, indicating that there might be early signs of upcoming government scrutiny,” said Shen Meng, director of Beijing-based boutique investment bank Chanson & Co. “The Didi probe, together with the other investigations announced today, show how the tensions between China and the U.S. are spilling over into the capital markets. The incident will suppress Chinese companies’ desire to go public in the U.S.”

Didi said in an emailed statement on Monday that it was unaware of the Chinese watchdog’s decision to suspend user registrations and remove Didi Chuxing from app stores ahead of its listing.

Didi undoubtedly has the most detailed travel information on individuals among large internet firms and appears to have the ability to conduct “big data analysis” of individual behaviors and habits, the Global Times wrote Monday. To protect personal data as well as national security, China must be even stricter in its oversight of Didi’s data security, given that it’s listed in the U.S. and its two largest shareholders are foreign companies, the newspaper added.

“We must never let any internet giant control a super database that has more detailed personal information than the state, let alone giving it the right to use the data at will,” the Global Times said in the commentary. While it’s not clear how Didi illegally collected personal data, companies should gather the least amount of information required for their services, it added.

The probe is part of a wider crackdown on China’s largest internet corporations, as the government seeks to tighten the ownership and handling of the troves of information they gather daily from hundreds of millions of users. As part of the reviews, the Cyberspace Administration of China ordered Didi, Full Truck Alliance’s Huochebang and Yunmanman platforms, as well as Kanzhun’s Boss Zhipin to halt new registrations, though existing customers can continue to use their services.

For more on China’s latest crackdown

What Is Didi and Why Is China Cracking Down on It?: QuickTakeChina Widens Security Probe to Two More U.S.-Listed FirmsBeijing’s Blocking of Didi App Sends Peers Tumbling in Hong KongChina Blocks Didi From App Stores Days After Mega U.S. IPOXi’s Next Target in Tech Crackdown Is China’s Vast Reams of DataWhat Is Behind China’s Crackdown on Its Tech Giants: QuickTake

On Sunday, Didi said on social media that it had already halted new user registrations as of July 3 and was now working to rectify its app in accordance with regulatory requirements. It offered its sincere thanks to authorities for their oversight. In a follow-up statement, Didi said the regulatory move may have “an adverse impact” on its revenue in China.

The investigation comes hot on the heels of Didi’s float, which listed on Wednesday in New York after a $4.4 billion IPO — the largest by a Chinese firm in the U.S. after Alibaba. SoftBank owned roughly 20% of Didi following the listing, while Uber’s stake was about 12%, according to an earlier Didi filing. Founder Cheng Wei owned about 6.5%, just ahead of the 6.4% held by Tencent. SoftBank sank 5.4% in Tokyo trading Monday to the lowest since Dec. 8.

Even before the CAC’s crackdown, Didi had been under close scrutiny from regulators since a pair of murders in 2018 that founder Cheng has called the firm’s “darkest days.” It was among 34 firms told by the antitrust watchdog to conduct self-inspections and rectify abuses, while the transport ministry had ordered ride-hailing companies including Didi to review their practices relating to driver income and pricing.

Full Truck Alliance, backed by Tencent, is little changed since it raised $1.6 billion in a June 21 listing. Kanzhun, also part of Tencent’s investment portfolio, has nearly doubled after its $912 million IPO. Other firms that listed in the U.S. last month as part of a boom in Chinese companies selling shares overseas include grocery services MissFresh Ltd. and DingDong Cayman Ltd.

Other tech stocks fell in Hong Kong trading Monday. Tencent retreated as much as 4.5%, touching its lowest level this year. Alibaba sank more than 3%, while Meituan and Kuaishou Technology, a short video streaming platform that listed in the Asian financial center earlier this year, tumbled more than 7%.

“It’s clear that there’s a regulatory overhang on China’s tech giants at the moment and that may continue to weigh on sector valuations for the large internet platforms,” according to Matthew Kanterman, an analyst at Bloomberg Intelligence.

(Updates with comment from Didi in eighth paragraph)

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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