SAO PAULO, May 5 (Reuters) - TIM Participaçoes SA , Brazil's second-largest wireless phone company, posted a 16 percent drop in first-quarter profit from a year ago due to weak sales and rising expenses.
Net income fell to 313 million reais ($102 million), according to a securities filing on Tuesday, close to an average estimate of 308 million reais in a Reuters poll of four analysts.
Services revenue fell 4 percent from a year earlier, as consumer spending contracted in the face of rising unemployment, steep inflation and expectations of a sharp economic recession.
The Brazilian unit of Telecom Italia braced for the downturn with cost cutting and tighter controls on its user base. Provisions for bad customer debt fell 26 percent from a year earlier, while selling and marketing expenses were flat.
As a result, earnings before interest, taxes, depreciation and amortization edged up 2 percent from a year earlier to 1.34 billion reais, in line with the average forecast.
Greater investments led to a 12 percent rise in depreciation in the quarter and hedging costs boosted financial expenses by 39 percent, hurting TIM's bottom line.
$1 = 3.06 Brazilian reais Reporting by Brad Haynes; Editing by Ken Wills