CORRECTED-UPDATE 1-Portugal Telecom profit up 10 percent

Thu Feb 28, 2013 7:30am EST

(Corrects fourth paragraph to remove reference to cash flow)

* Net profit helped by cost cuts, one-off asset sale

* Bundled pay-TV, Internet sales cushion revenue drop

LISBON, Feb 28 (Reuters) - Portugal Telecom (PT) beat expectations with a 10 percent rise in quarterly net profit, helped by lower operating costs and a gain from disposals while revenue fell amid a deepening recession in Portugal.

PT said on Thursday fourth-quarter net profit rose to 41.4 million euros ($54 million), compared with a forecast for 29 million in a Reuters poll.

The result was helped by a 10 percent cut in operating costs to 1.08 billion euros and a gain of 30 million from asset sales in Brazil by Oi operator, in which PT has a 25 percent stake.

PT said earnings before interest, taxes, depreciation and amortization (EBITDA) rose 1 percent to 540 million euros, in line with expectations for 538 million.

Revenue fell 6.7 percent to 1.61 billion euros, meeting forecasts, with Brazil's largest telecommunications company Oi bringing in 747 million, down 4 percent.

PT's domestic revenue fell 8 percent to 660 million euros in the quarter, during which it saw a rise in the number of internet and pay-TV clients.

Bundled "triple-play" TV, internet and phone services under PT's MEO brand, which the company said was "highly diversified and resilient to adverse economic conditions" supported a 3.4 percent increase in sales in the residential segment, which reached 178 million euros.

The number of MEO clients rose 17 percent to 1.22 million. ($1 = 0.7628 euro) (Reporting By Filipe Alves and Andrei Khalip; Editing by Dan Lalor)