TIM Brasil reports net profits; TI receives offer

7 Nov 2006

Brazil’s second largest mobile phone company TIM Participações (TIM Brasil) has reported net profits of BRL20.3 million (USD9.5 million) for the three months to 30 September 2006, compared with a loss of BRL304 million in the corresponding period on 2005. The company, which is owned by Telecom Italia, posted a 30% rise in revenues to BRL2.75 billion, up from BRL2.1 billion previously, aided by a reduction in average financial costs and exchange rate fluctuations. Its Q3 performance was affected by the adoption of a new accounting policy concerning handset subsidies for contract customers and resulted in an extraordinary gain of BRL136 million. TIM Brasil reported EBITDA of BRL677 million, up 92.7% year-on-year, with an EBITDA margin of 24.6% – 7.9 percentage points higher than a year ago. At the end of September TIM counted 24.1 million clients, up 31.3% year-on-year and with a market share of 25.1% versus 22.9% in 3Q05.

Meanwhile, Telecom Italia has confirmed that it has received an unsolicited takeover offer for TIM Brasil. Further details of the offer have not been disclosed, but the TI board has cleared the way for management to begin negotiations with the group behind the bid. TI says a sale of TIM Brasil would ensure the group’s financial stability going forward and help with planned network upgrades and expansions.

Brazil, TIM Brasil