UPDATE 1-Brazil's TIM misses profit forecasts as sales flatten

Tue Apr 30, 2013 9:41am EDT

* Net income rises half as much as expected from year ago

* Rising labor costs, stagnant sales pressure telecoms

SAO PAULO, April 30 (Reuters) - TIM Participações SA , Brazil's second-largest wireless phone company, missed quarterly profit forecasts on Tuesday due to rising labor costs and the weakest sales growth in two years.

First-quarter net income at the Brazilian unit of Telecom Italia rose 14 percent from a year earlier to 306 million reais ($153 million), missing an average estimate of 370 million reais in a Reuters poll of analysts.

TIM shares fell as much as 1.7 percent in early Sao Paulo trading to 8.15 reais, touching a three-week low.

Rising labor costs have kept pressure on Brazilian telecoms even as they cut back sales expenses amid cooling demand. TIM cut marketing costs 7 percent from a year earlier, but personnel costs rose 14 percent and third-party services pushed up administrative expenses 20 percent.

Net revenue rose just 5.4 percent, a third of the growth posted just a year ago and the slowest expansion since the start of 2011.

Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, rose 4 percent to 1.22 billion reais in the quarter, below an average forecast of 1.26 billion reais in the Reuters survey.

EBITDA as a share of net revenue, a measure of profitability known as the EBITDA margin, slipped 0.4 percentage point to 25.9 percent.

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