Thanks to its growing subscriber base, Brazil’s second largest wireless carrier, TIM, saw its profit double in the third quarter from the same period a year ago.
TIM Participações S.A. (BOVESPA: TIMP3; and NYSE: TSU), which controls directly TIM Celular S.A. and Intelig Telecomunicações Ltda., said net income totaled U.S. $180.8 million. TIM’s earnings before interest, taxes, dividends and amortization reached $660 million, an increase of 11.3%; EBITDA margin registered 26.4% compared with 28.2% a year ago. TIM’s capital expenditures totaled $480 million in the quarter, reaching $1.06 billion for the first nine months of 2011.
During a conference call with reporters and analysts, TIM Brazil’s CEO Luca Luciani highlighted the company’s prepaid strategy. TIM closed the third quarter with 59.2 million users, up 26.1% from the same period last year, backed by strong growth in both prepaid customers, up 27.3%, and postpaid subscribers, up 19.6%.
The importance of mobile broadband in TIM’s strategy was noted. TIM registered a year-over-year increase of 47.6% in gross data revenues, to $476.6 million, which accounted for 16% of total mobile revenues, up from 13% in the third quarter last year. Smartphone penetration of TIM’s base reached 19.5%, a huge increase compared with 8% a year ago. TIM is also working to expand Infinity, the carrier’s mobile Internet prepaid offering, which reached 2.2 million unique users per day, about seven times as many users as during the same period last year.
In the postpaid segment, TIM noted an increase of 50% compared with the third quarter of 2010. “Of 3,164 cellphones sold, 71% are smartphones that drive mobile broadband growth,” chief marketing officer Rogério Takayanagi said. Takayanagi highlighted the end of subsidies to postpaid clients, contributing to an increase in the products’ revenues.
Focus on infrastructure investments
TIM set a guideline of investments of $4.85 billion between 2011 and 2013. Through September this year, TIM spent $1.1 billion, mostly on improving and increasing infrastructure. Network and IT accounted for nearly all that amount, and TIM executives said they plan to keep that strategy in place.
TIM also completed its acquisition of AES Atimus, a Brazilian telecom infrastructure and solutions provider, during the third quarter and is now focusing on rolling out fiber optical base products, such as fixed broadband for residential users. “With AES Atimus’ fiber optical network, we are going to connect our antennas and improve our capacity. We will be able to offer speeds on mobile broadband service very similar to 4G LTE,” Takayanagi said. Luciani added that AES Atimus’ network optimizes the current spectrum.
In addition, TIM aims to start offering fixed broadband services to end users sometime next year.
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