Oscar Gruss Downgrades TIM Participacoes (TSU) to Reduce After Q1 Results

May 7, 2009 8:38 AM EDT

Oscar Gruss downgrades TIM Participacoes (NYSE: TSU) from Hold to Reduce. Price target $16.00.

Oscar analyst says, "Tim Participações held its 1Q09 earnings conference call on 5/6/09. The results managed to fall well short of even our rather pessimistic estimates. Despite the valiant efforts of the new CEO, Mr. Luca Luciani, we do not believe that a turn-around in the Company’s performance is imminent. In fact, we expect its main competitors to turn up the heat on the Company as it is in the midst of operational transition...We believe the recent positive run for the Company’s shares was based mostly on the expectation by some market participants of stronger 1Q09 results and a reaffirmation of previous FY09E guidance; neither in fact, turned out to be forthcoming. In the case of the ADR, the valuation has also received a substantial tailwind from the recent appreciation of the Brazilian Real versus the U.S. Dollar. We expect a difficult year ahead for the company in terms of revenue growth, despite some progress on cost control. We are lowering our revenue and EBITDA estimates for the 2Q09E and FY09E accordingly."

TIM Participacoes SA is a wireless provider in Brazil. The Company primarily uses the global system for mobile communications technology (GSM), to provide mobile telecommunications services throughout Brazil.

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