TIM Brasil: weak sales, rising costs impact on profits in Q1

1 May 2013

Brazil’s second largest mobile operator by subscribers TIM Participacoes (TIM Brasil) reported first-quarter net profit climbed 14% year-on-year to BRL306 million (USD153 million), but fell short of market expectations as rising labour costs and weak sales growth impacted on its bottom line. The company said net revenue rose by only 5.4% to BRL4.71 billion – roughly one-third the growth posted in the year-earlier period and the slowest expansion since Q1 2011. Earnings before interest, taxes, depreciation and amortisation (EBITDA), an indicator of operating profitability increased by 4% year-on-year to BRL1.22 billion, but fell short on an average forecast of EBITDA of BRL1.26 billion in the Reuters survey. Although TIM Brasil trimmed its marketing costs by 7% y-o-y, it reported that personnel expenses climbed 14% y-o-y and administrative costs increased by 20% due to spiralling ‘third-party’ service fees.

Operationally speaking, TIM Brasil closed out March 2013 with 71.232 million lines in service, up 6% compared to the same time a year earlier. Of the total, some 10.9 million were on monthly contracts (up 13.2% y-o-y) and 60.3 million were on pay-as-you-go phones (+4.8%). Blended monthly ARPU stood at BRL18.5, down 3.6% y-o-y from BRL19.1 previously. Average minutes of use (MOU) stood at 145 minutes, compared to 126 minutes in Q1 2012.

Brazil, TIM Brasil