May 8, 2019 / 3:24 PM / a year ago

UPDATE 2-Brazil's TIM sees benefits from cost cuts in 2nd half -CEO

(Adds details on net income)

By Gabriela Mello

SAO PAULO, May 8 (Reuters) - Brazilian wireless carrier TIM Participações SA expects to reap the benefits from cost control efforts in the second half of 2019, Chief Executive Officer Pietro Labriola said on Wednesday.

Labriola said TIM’s efficiency plan was evolving better than expected, with 190 million reais ($48.33 million) in cost cuts in the first quarter.

“We have delivered 25 percent of targets set for 2019 in the efficiency plan and we should start seeing benefits later this year, possibly in the second semester,” he told analysts and investors in a call to discuss quarterly earnings.

Labriola, who was appointed to replace Sami Foguel as TIM’s CEO on April 3, also said competition is tough in the Brazilian market, particularly in the pre-paid segment, where rival carriers are pushing aggressive price campaigns.

“We are the most rational operator in pre-paid and we still believe that competition should be about services, innovation, not prices,” he said.

In post-paid, TIM, the local subsidiary of Telecom Italia SpA, also faces challenges, including a high unemployment rate and some deterioration in consumer confidence, he said.

Labriola added that the carrier plans to explore new sources of revenue, including the Internet of Things (Iot), in Brazil and the development of a 5G network that should help TIM to boost its corporate services.

TIM shares were down 2.35 percent at 11.20 reais in morning trade, leading losses among shares listed on the Ibovespa index , which was up 1.6 percent.

On Tuesday night, the company reported that quarterly profit fell 10.4 percent from a year earlier, missing analyst expectations on timid growth in revenue amid a decline in pre-paid lines.

Analysts at Credit Suisse said TIM’s results were weak and highlighted net revenue deceleration. “The first-quarter results reinforce our view that aggressive competition should negatively impact revenues in 2019,” they wrote in a note to clients.

$1 = 3.9314 reais Reporting by Gabriela Mello Editing by Chizu Nomiyama and Susan Thomas and David Gregorio

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