TIM Brasil: Q2 net income falls short of market forecasts

31 Jul 2012

Brazilian telecoms operator TIM Participacoes (TIM Brasil), which is owned by Telecom Italia, booked net profits of BRL346.8 million (USD170 million) for the three months ended 30 June 2012, broadly unchanged year-on-year, but below the BRL397 million average estimate forecast by a Reuters’ survey of analysts. In a securities filing yesterday, TIM Brasil noted that the firm’s performance was hit by a cooling economy and stiffer competition – particularly from Brazilian-owned rival Oi SA which is ramping up its spending to retake market share. TIM Brasil, which has been one of the fastest growing players in the local market, booked revenue of BRL6.781 billion in the period under review, up 10% year-on-year, but a slower rate than the 20% annual growth seen in the past four quarters. EBITDA climbed 6% y-o-y to BRL1.214 billion, but below the BRL1.264 billion forecast by the Reuters’ poll.

TIM Brasil notes that the impact of tighter regulation may continue to affect it in the third quarter. The firm has been hardest hit by the regulator Anatel’s decision to bar three top cellcos from selling new mobile phones until they present plans to improve quality of service (QoS) – following a wave of consumer complaints. Last week, TIM Brasil committed to doubling its investment in QoS to BRL451 million per annum through 2014.

Brazil, TIM Brasil