UPDATE 1-Brazil's TIM beats second-quarter profit forecasts

Wed Jul 31, 2013 9:51am EDT

* Cost controls help lift net income 12 pct from year ago

* Revenue growth remains modest as consumers turn wary

SAO PAULO, July 31 (Reuters) - TIM Participaçoes SA , Brazil's second-largest wireless phone company, posted a 12 percent rise in second-quarter profit, beating forecasts on strong cost controls.

Profit at the Brazilian unit of Telecom Italia rose from a year earlier to 386 million reais ($170 million), according to a late Tuesday securities filing, above an average estimate of 337 million reais in a Reuters poll.

Operating expenses rose 6 percent, less than inflation in the 12 months through June, due to a smaller marketing and sales budget. Mobile service revenue rose 5.6 percent from a year earlier, down from double-digit growth last year, but edging up from the first quarter.

Accelerating inflation and fragile economic growth have put Brazilians on edge this year, dragging consumer confidence lower in 13 of the last 15 months and cooling an explosion in cellphone subscriptions in recent years.

Lower interconnection rates for calls to mobile phones also dragged on TIM's earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA.

EBITDA rose 2 percent from a year ago to 1.232 billion reais, just below an average forecast of 1.246 billion reais.

TIM shares rose more than 1 percent in opening Sao Paulo trading on Wednesday.

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