U.S. Markets closed

TIM Brasil quarterly profit rises 8 percent from year ago

SAO PAULO, Feb 13 (Reuters) - TIM Participaçoes SA , Brazil's second-largest wireless phone company, posted a larger-than-expected profit on Thursday as investments in fiber optic lines helped bring down network rental costs.

Fourth-quarter profit at the Brazilian unit of Telecom Italia rose 8 percent from a year earlier to 499 million reais ($207 million), beating an average estimate of 427 million reais in a Reuters survey.

Still, revenue rose less than expected, advancing largely on sales of loss-leading smartphones in a trend underscoring the competitive pressures and economic headwinds in Brazil.

Net revenue rose just 3 percent from a year earlier, half as much as expected and half the pace of consumer inflation. Service revenue increased less than 1 percent, while handset sales jumped 19 percent.

TIM managed to hold back operating costs in spite of swelling payrolls and administrative overhead, thanks to recent investments in the backbone of its high-speed data network by the TIM Fiber division. As a result, network and interconnection costs, the largest category of operating expenses, fell 7 percent from a year ago.

Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, rose 5 percent to 1.499 billion reais, above an average estimate of 1.39 billion reais.