RIO DE JANEIRO, Nov 4 (Reuters) - TIM Participacoes SA , Brazil’s second-largest wireless phone company, posted an 11 percent rise in third-quarter profit on Wednesday as lower interconnection costs made up for weak demand.
The Brazilian unit of Telecom Italia reported net income of 348.3 million reais ($139 million) compared with 315 million reais a year earlier, according to a securities filing. The result is in line with an average estimate of 342 million reais in a Reuters poll of analysts.
Net sales, or revenue from goods and services minus sales taxes, fell 4.5 percent from a year earlier as TIM offered aggressive promotional prices to entice sales from Brazilian consumers whose confidence hit a five-year low in the quarter due to high inflation and meager job growth.
Weak earnings forecasts for the industry have stoked speculation that TIM’s rivals may make a joint bid to take over and break up the operator to cut down on competition and costly capital spending. None of the companies involved have confirmed the reports.
TIM was able to make up for lower sales with an 8.1 percent decline in total costs.
A drop in connection charges between operators also weighed on revenue but reduced operating expenses, favoring telephone companies such as TIM with a focus on wireless operations.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 6.4 percent from a year earlier to 1.332 billion reais, in line with an average forecast of 1.324 billion reais. EBITDA is a measure of a company’s ability to generate cash from operations.
$1 = 2.5049 Brazilian reais Reporting by Jeb Blount; Writing by Brad Haynes and Jeb Blount; Editing by James Dalgleish