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Mar 08, 2023 275 likes •403 views

2Q Main Highlights ts: : Accel eler erat ated ed Recoveri vering ng Path Postpaid Net Adds in New Rhythm Mobile Net Service Revenues (Thd lines) (%YoY) 509 445 5.0% 211 3.7% +12 pp -33 -1.5% -3.0% 1Q16 2Q16 1Q17 2Q17 -6.8%

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Results Presentation Investor Relations

  • 33

211 445 509 1Q16 2Q16 1Q17 2Q17

2Q Main Highlights ts: : Accel eler erat ated ed Recoveri vering ng Path

Postpaid Net Adds in New Rhythm

(Thd lines)

Mobile Net Service Revenues

(%YoY) ¹ Normalized for towers sale and other items

EBITDA¹ Growth

(%YoY) 1H Net Adds 178K 954K

4G Coverage Leadership Enhancement

(Cities covered with LTE) 579 1,850 2Q16 2Q17 3x

  • 6.8%
  • 3.0%
  • 1.5%

3.7% 5.0% 2Q16 3Q16 4Q16 1Q17 2Q17

  • 6.5%

0.5% 5.8% 8.7% 15.5% 2Q16 3Q16 4Q16 1Q17 2Q17 5x

+22 pp +12 pp

80% Coverage in June

Source: Anatel

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Results Presentation Investor Relations

Portfol folio

  • Evoluti

ution

  • n:

: More Focus on P Postpa paid id and C Changi ging ng Prepaid id Profil ile

  • Launched in June, 2017
  • No price change (same as 2016)
  • Reinforce communication with postpaid users: back to top brand

awareness ranking after 18 months

  • Gathering all benefits into one plan
  • Offering Service + Handset with lock-in

Unlimited Calls

  • Weekly plan focus : 40% of gross additions in 2Q (> 50% in July)
  • Top-up incentives campaigns
  • Facebook partnership: dedicated monthly package for R$ 9.90

Pure Postpaid Prepaid

Partnering to produce content, shows, festivals and singers Additional features for the music platform differential

Smartphone with 12m retention and no subsidy 500 minutes 2 GB of internet

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Results Presentation Investor Relations

28% 43% Jun/16 Jun/17

Custo tome mer r Base Evoluti tion

  • n:

: Focus us on V Value e vs vs Volume me

User Base and Acquisition Dynamics

(Net MNP ‘000; base mln lines; EoP) Positive MNP balance against all players in every region Pre to Post migrations remain strong 2x

User Base Evolution

(mln lines; EoP)

  • 10%

Strict disconnection policy Avoiding one-off effects

Recurring Offers Over Gross Adds

(%)

Prepaid

Value vs Volume

Postpaid

Gaining Traction Recharge by Segment

(%)

ARPU Breakdown

(%)

Gross Adds + Migrations (Pre-Post)

(lines; % YoY) +32% 2Q16 3Q16 4Q16 1Q17 2Q17 13.8 15.8 Base MNP Old New Portfolio Old New Portfolio Postpaid Controle Postpaid Pure

+25% +11%

2Q16 2Q17 Source: user base data from Anatel ¹TIM Pre recurring

+20% gross adds after TIM Black launch

25% 40% 2Q16 2Q17 + 15% YoY >50% in July TIM Pre¹+Turbo TIM Infinity Young 50.2 49.0 48.5 46.5 45.0 2Q16 3Q16 4Q16 1Q17 2Q17

Market:

  • 10%
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Results Presentation Investor Relations

Network k Evolut utio ion: n: 4G F Fastest t Roll Out

4G Cities Coverage Evolution

(# of cities)

4G Traffic Evolution

(% of traffic generated by 4G devices)

80% of

urban pop. covered

>90%

sites w/ proprietary backhaul

528

new cities in 2Q

Enhancing Capacity and Efficiency with 1,800 MHz & 700MHz

(bandwidth serving 4G) 2,600 MHz 1,800 MHz 700 MHz Larger spectrum availability for 4G Client is limited to a fraction

  • f 4G network capacity

Client is able to access full 4G network capacity

Carrier Aggregation Strategy

Utilizing multiple bandwidth strategy to promote capacity increase and higher speed experience 1x 2x >4x Coverage in km 48% 71% 2Q16 2Q17

# 1 coverage

1,276 1,291 1,322 1,360 1,465 1,850 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17

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Results Presentation Investor Relations

Network: k: Speedin ing g Up 4G U Under er 700 0 MHz

10 states capitals activated with 700 MHz

Sites with 2.6 MHz Sites with 1.8 MHz Sites with 700 MHz

Signal Propagation Effect

Before x After 700 MHz Continues Refarming

  • f 1800

MHz

SpeedTest – 4G 1,800 MHz Download rate

4G traffic increased 65% in Brasilia after the full speed operation of 700 MHz

Reaching Rio de Janeiro State and São Paulo interior (from 10 MHz to 15 MHz)

HD Voice (VoLTE)

For The Customer

Launched in cities with 700 MHz availability

For New Revenues and Costs Optimization

 100% service transparency  Improved voice quality  Faster Call Setup  Optimization of the battery life  Improved indoor coverage  IMS platform available for new services  Increase the voice coverage area: WiFi + LTE 700 MHz  VoLTE spectrum efficiency  Simplified the network architecture  Infrastructure reutilization for VoLTE, WiFi Calling and

  • ther services

Download speed enhanced 60%

6/1/17 6/8/17 6/15/17 6/22/17 6/29/17 7/6/17 7/13/17

10 MHz 15 MHz

(Mbps)

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Results Presentation Investor Relations

Strong revenue performance backed by solid user base expansion. High value customer mix is boosting ARPU levels. Investments in customer experience and network quality are perceived by the clients.

+23%

User Base

(‘000)

Net Revenues

(R$ mln)

User Base Mix (>=50Mb)

(Volume ‘000)

ARPU

(R$)

ANATEL Satisfaction Survey

(2016, General Satisfaction in points; 0-10)

Netflix ISP Speed Index

(Jun/17, Mbps)

Leader 23x in the last 26 months

TIM Live: e: Another r Great Quart rter er For the Ultra Broadba band nd Busines ess

284 348 2Q16 2Q17 2Q16 2Q17 2Q16 2Q17 2Q16 2Q17

Growth Value Offer Customer Experience

+11% +32% +11%

P1 P3 P6 P4 3.2 3.1 2.9 2.4 2.1

#1 net adds in SP & Rio (Apr/May)

7.8 7.1 6.9 6.8 5.3 TIM P3 P1 P8 P4 7.4 6.8 6.6 6.3 5.9 TIM P7 P3 P6 P1 Rio de Janeiro São Paulo

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Continuous nuous Revenue nue Recov

  • ver

ery: y: New Traject ctory

  • ry Confirme

rmed d

+7.5% YoY

Data on Mobile Net Service Revenues

(% of VAS Revenues over MSR)

Business Generated (excl. incoming rev.)

(%YoY)

MTR Exposure

(% VU-M/Service Revenues)

ARPU

(R$)

  • 210

bps

Net Service Revenues

(%YoY) 3,570 +5.0% +6.6% 3,750 2Q16 Mobile Fixed 2Q17 45% 60% 2Q16 3Q16 4Q16 1Q17 2Q17 +5.0%

  • 4.0%

7.5% 2Q16 3Q16 4Q16 1Q17 2Q17 5.8% 3.7% 2Q16 3Q16 4Q16 1Q17 2Q17

+15.5% YoY ARPU

  • utgoing

+12.6% YoY

17.22 19.38 2Q16 2Q17

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COGS

456 444 922 952 966 924 273 232 2Q16 2Q17

Opex: Second Quarte ter r in D Details

2,616 2,552

  • 2%
  • Trend following reduction in prepaid handset sales and targeted

lock-in contracts expansion.

  • ITX: lower cost after MTR (VU-M) cut partially offset by off-net

traffic growth and negative one-off impact of TU-RL dispute*.

  • Rental & Power: growth driven by network expansion .
  • Network: positive one-off impact of 639 resolution* (already

booked starting from 4Q16) and structural lower leased line costs (EILD).

  • Stronger postpaid sales (+32%) driving SAC increase.
  • Higher postpaid CB (+15%) generating increase in customer

management opex (customer care, billing and collection, bad- debt), partially offset by efficiencies.

  • Positive impact from recharge channels revision

Traffic Market Process

COGS Traffic (Network + ITX) Marketing (Selling & Market + Bad Debt) Process (Personnel + G&A + Other)

  • 15%
  • 4%

+3%

  • 3%
  • Lower process driven costs mainly due to third party services

contracts renegotiation, FUST/FUNTTEL reduction partially offset by higher personnel costs

Efficiency Plan Recap

(R$ bln)

Normalized Opex Breakdown Analysis

(R$ mln; %YoY) "Original" Plan 2016-18 Realized until 2016 Residual Savings Additional 2017-19 New Plan 2017-19

Efficiency Plan Completion

(%)

Main Actions

  • Digitalization of business and

administrative processes

  • Sales channels redesign
  • Project zero leased lines
  • IT and Network vendors rationalization
  • Zero based budget

2019 2017 2018

~60%

R$1.1 bln R$0

1.7

  • 1.2

0.5 0.6 1.1 * The one-off events offset each other with no impact on EBITDA

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74 219 2Q16 2Q17 26% 21% 32% 35% 2Q16 2Q17

EBITDA A and Profi fita tabi bili lity ty: : Cash Genera rati tion

  • n

Normalized EBITDA¹ yearly Evolution

(%YoY)

Normalized EBITDA¹

(R$ mln)

Normalized EBITDA¹ – CAPEX as % of Revenues

(R$ mln; %)

Normalized EBIT¹ Margin

(R$ mln; %)

Reported Net Income

(R$ mln) 253 399 2Q16 2Q17 10.1% 6.6% EBITDA

  • CAPEX

EPS 0.03 0.09 ~3 x EBIT Margin EBIT ¹ Normalized for tower sales and other items 6 p.p 14 p.p.

229 582

Margin CAPEX

  • ver Rev

~2.5x

  • 6.5%

0.5% 5.8% 8.7% 15.5% 2Q16 3Q16 4Q16 1Q17 2Q17 1,204 1,391 2Q16 2Q17

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58% 70% Jun/16 Jun/17

2Q17 Main Takeaway ways: s: Busines ess Progre ressi ssing ng Across the Board

Improved Revenue Mix Customer Experience Revenues at new frontier EBITDA Margin Improvement and High FCF Yield Network Infrastructure Advances

new proposition for high value segment  Speed up of digital transformation initiatives  Dedicated caring for high value customers  Big Data analyses driving marketing and network decisions  TIM Live remains as #1 fixed ultra broadband quality of services

Turnaround Progressing

2Q16 3Q16 4Q16 1Q17 2Q17

  • +

To mid 30s From High 20s “All you can eat” bundle Low Double Dig. Low Single Dig.

Bundle Offers* Pay per use * Bundle offers = postpaid + weekly prepaid bundle

 Acceleration in 4G coverage (YTD)

2,000 cities covered by end of July

 Cities with 700 MHz

62 Cities

  • /w 10 Capitals

 Launch of VoLTE

July 2017

EBITDA % FCF Yield

Young (MSR excl. incoming)