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UPDATE 1-Telefonica Brasil's Q3 helped by lower costs, postpaid growth

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Oct 25 (Reuters) - Telefonica Brasil SA, the biggest telecommunications firm in the country, on Wednesday reported third-quarter net income of 1.223 billion reais ($377 million), up 28 percent from a year earlier, as the company kept a lid on costs and migrated more users to higher quality products.

Profit at the Brazilian unit of Spain's Telefonica beat an average forecast of 1.177 billion reais in a Reuters survey of analysts. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 7.8 percent to 3.677 billion reais versus a consensus estimate of 3.656 billion reais.

The performance of Vivo, as the carrier is branded locally, reflects the company's ongoing emphasis on post-paid growth and other higher-end offerings to boost profits after a three-year economic downturn.

Average revenue per user of mobile services, or ARPU, rose 2.1 percent from a year earlier. Post-paid connections rose 9.7 percent while pre-paid connections fell by 5.1 percent, the company said.

Operational costs fell by 1 percent due to controlled spending across the board and a decrease in interconnection costs.

($1 = 3.24 reais) (Reporting by Gram Slattery; editing by Jason Neely)