Brazilian telco TIM seen struggling with earnings growth in 2023

Brazilian telco TIM, the country's third largest operator, is set to face bottom-line pressure this year due to a challenging macroeconomic environment. 

The assessment comes from analysts at local investment bank Bradesco BBI, who forecast that TIM's earnings growth, as well as that of other operators, will be lower this year due to elevated interest expenses.

"We expect interest expenses to weigh on TIM's net profits in 2023", analysts Otavio Tanganelli and Camila Koga, wrote in the report.

As a result, they downgraded the recommendation for the TIM shares to neutral from buy, following a similar downgrade for Telefônica Brasil (Vivo).

In its latest quarterly report, TIM reported interest expenses of 2.09bn reais in January-September, up 76.4% year-over-year. Net earnings for the period amounted to 1.20bn, down 15.9%.

The company is due to report its results for the fourth quarter and 2022 on February 9.

THE SALE OF TOWERS

Bradesco BBI is handling the sale of a set of towers that TIM took over from local rival Oi as part of its acquisition of the latter’s mobile operations at the end of 2020.

TIM has not been able to find a buyer yet for the towers although there are talks taking place.