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Tim meeting with investors - nov 2017

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Tim meeting with investors - nov 2017

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Tim meeting with investors - nov 2017

  1. 1. 1 Meeting with Investors Investor Relations TIM Brasil Company’s Presentation November, 2017
  2. 2. 2 Meeting with Investors Investor Relations Visit our website and download our IR app: www.tim.com.br/ir TIM IR app (English) TIM RI app (Portuguese) Agenda About us ………………………………………………………….……………….... 3 Market Overview and TIM Positioning ……………………..….…… 7 3Q17 Results ……………………………………………………………….……… 13 Regulatory Update ……………………………………………………………. 32 Strategic Plan 2017-19 ….…………………………………………………… 35 Appendix .…………………………………………………………………………… 41 23Network ………………..………………………………………………………..….. Residential Solutions …….……………………………..……………………. 27 19Efficiency Plan & Digitalization ..………………….……………….……
  3. 3. 3 Meeting with Investors Investor Relations About Us
  4. 4. 4 Meeting with Investors Investor Relations 31% 44% 49% 51% 52% 2012 2013 2014 2015 2016 26.7% 26.1% 28.4% 31.5% 33.5% 2012 2013 2014 2015 2016 1.9 2.3 3.5 4.7 5.6 2012 2013 2014 2015 2016  Presence in Brazil since 1998  22nd largest Private Company in Brazil*  Approximately R$25 billion of Market Capitalization Innovative Net Revenues (R$ bln; VAS Revenues excluding SMS) Data Penetration (data users over total base) EBITDA Margin (%) CAGR +32% *Source: Exame Magazine - 2016 +700 Bps TIM: A Solid Path in a Changing Industry Leader in 4G Coverage  ~1,465 cities covered with 4G  >75% of urban population in 4G  Total of 3,460 cities covered with 2G/3G/4G High focus on infrastructure development  >21 thousand Sites  ~5,250 sites connected with fiber  ~76,100 km of optical fiber network 2nd in Revenue Share  61.3 million customers  25.3% Market Share  ~R$4.5 billion invested in FY2016 (ex-licenses) Growth via M&A 1.7x
  5. 5. 5 Meeting with Investors Investor Relations Joined UN Global Compact in 2008 Member of ISE (Sustainability Index) for 10 consecutive years ISO 14001 certified since 2010, 1st Brazilian telco and ISO9001 Quality Certification for Billing and Networking processes Sustainability TIM Stands out in Sustainability Founded in July, 2013 MISSION: We are committed to creating and strengthening resources and strategies for the democratization of science and innovation that promote human development in Brazil, with mobile technology as one of the main facilitators. In public schools  185,000 children and 6,300 professors In museums and science and technology centers  More than 70,000 people  R$2.5 million in funding In public administration  Participatory Urban Caretaker o 4 municipalities  Cultural maps o 7 municipalities and RS & CE government In the federal institutions of professional and technological education  TIM Tec o MOOC platform  Partnership with 5 federal institutes Corporate Social Responsibility BNDES is a strategic partner of Instituto TIM playing and important role financing part of the investments.
  6. 6. 6 Meeting with Investors Investor Relations  Statutory Audit Committee: • Report to Board of Directors • Oversight Financial reporting • Analyze anonymous complaints  Compensation Board and Internal Control and Risk Board operate indefinitely and act independently  Whistleblower channel website Brazilian Law “Lei das S.A” Legal Requirements Demand for transparency and disclosures Highest level of Corporate Governance Requirement of protection for minority shareholders Unique Telco company listed on the Novo Mercado Committees to Reinforce and Guarantee Solid Corporate Governance 10 members (3 independents) 3 members (3 independents) 3 members (3 independents) 3 members (1 independent) 5 members (2 independents) 8 members  Equal rights: vote, dividends and tag along  Higher liquidity • Single class of share (ordinary shares)  Greater independence of Board of Directors (at least 20%)  Strict disclosure policy Corporate Governance
  7. 7. 7 Meeting with Investors Investor Relations Market Overview and TIM Positioning
  8. 8. 8 Meeting with Investors Investor Relations ¹Datas from May-17; 1- Mobile revenue considers only the 5 major players. Oi numbers are adjusted to include corporate mobile and on 4Q16 the company has reviewed its numbers from 2014 to 2016. With that, the historical revenues share have changed. Source: Anatel and players’ financial statements. Brazilian Telcos X-Ray Mobile Revenues Share Nextel Oi Claro TIM Vivo The industry mobile revenue (service + handsets) represented 52,1% of the total industry revenues in 3Q17 Mobile Fixed Fixed BB Pay-TV¹ Grupo Customers 3Q17 (000´s) 59,390 713 376 n.a. 60,478 Market share 3Q17 24.64% 1.73% 1.39% n.a. - Net Adds 12M (000´s) -4,028 188 70 n.a. -3,770 Net Revs 3Q17 (R$ Mln) 3,884 4,083 ARPU 3Q17 (R$) 20.5 n.a. n.a. n.a. - 200 Mobile Fixed Fixed BB Pay-TV¹ Grupo Customers 3Q17 (000´s) 60,398 10,838 8,737 9,511 89,483 Market share 3Q17 25.05% 26.31% 32.33% 51.02% - Net Adds 12M (000´s) 227 -285 348 -9,848 -9,558 Net Revs 3Q17 (R$ Mln) 2,913 8,844 ARPU 3Q17 (R$) 15.0 n.a. n.a. n.a. - 5,931 Mobile Fixed Fixed BB Pay-TV¹ Grupo Customers 3Q17 (000´s) 41,911 13,852 6,235 1,390 63,389 Market share 3Q17 17.39% 33.62% 23.07% 7.46% - Net Adds 12M (000´s) -227 -477 -22 145 -581 Net Revs 3Q17 (R$ Mln) 2,085 5,918 ARPU 3Q17 (R$) 16.1 n.a. n.a. n.a. - 3,833 Mobile Fixed Fixed BB Pay-TV¹ Grupo Customers 3Q17 (000´s) 74,562 14,257 7,610 1,714 98,143 Market share 3Q17 30.93% 34.61% 28.16% 9.09% - Net Adds 12M (000´s) 784 -155 133 -48 713 Net Revs 3Q17 (R$ Mln) 6,610 10,970 ARPU 3Q17 (R$) 28.4 39.3 52.2 99.2 - 4,276 39,1% 40,2% 40,3% 40,7% 40,5% 41,5% 41,1% 22,7% 22,7% 23,0% 23,5% 23,3% 23,5% 23,9% 18,2% 17,6% 17,5% 17,1% 17,9% 17,5% 17,8% 14,2% 13,8% 13,7% 13,5% 13,3% 12,8% 13,1% 5,7% 5,7% 5,5% 5,2% 5,0% 4,7% 4,1% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
  9. 9. 9 Meeting with Investors Investor Relations SP Cap 33.7% 29.0% 20.9% 12.4% SP Int RJ/ES MG 37.2% 23.4% 22.1% 12.3% BA/SE 31.9% 24.7% 24.0% 19.5% NE 32.9% 31.4% 26.6% 9.1% NO 39.1% 25.7% 20.2% 15.1% CO 37.4% 34.1% 15.6% 12.6% PR/SC 53.6% 19.8% 17.2% 9.1% RS 46.5% 29.6% 14.5% 9.4% BRAZIL 30.9% 25.1% 24.6% 17.4% 35.6% 32.1% 13.9% 13.7% 37.4% 32.2% 19.3% 8.0% Market share analysis for the whole country can be misleading Mobile Market Share Analysis: Significant Differences by Geographic Area TIM: 2nd place TIM: leader TIM: 3rd place TIM: 4th place Population in million people Source: Anatel. September of 2017
  10. 10. 10 Meeting with Investors Investor Relations 12 13 14 15 16 0.41 0.42 0.42 0.42 0.42 0.36 0.32 0.24 0.16 0.10 0.06 0.03 0.02 07 08 09 10 11 12 13 14 15 16 17e 18e 19e Voice to Data Substitution MTR Cuts Stabilization Data traffic booming x Voice slowdown Changing Customer Base Mix Expansion Consolidation Total base in mln customers TIM’s MOU Source: Internal figures and Anatel R$ Transition Phase TIM’s BOU Change on Customer Base Profile Prepaid Postpaid 23 51 7998 211 166 121 262 245 07 08 09 10 11 12 13 14 15 16 Total Business Generated: VAS x Voice Revenues over Business Generated (in R$ mln) BOU (Mbytes of use per data customers) and MOU (min) 26% 48% 74% 52% 12 13 14 15 16 VAS Voice
  11. 11. 11 Meeting with Investors Investor Relations Strategy Path: Pillars of TIM Turnaround Mobile Offer based on Customer Segmentation (Advanced Analytics and Big Data) to maximize ARPU Attack Residential UBB market through FTTH/WTTX Push on 3/4P Convergent Offer in selected regions taking benefit of our Zero Legacy approach 3 Infrastructure 4 Offer 3 Efficiency 5 Customer Experience Accelerate 4G expansion in 700MHz to reaffirm UBB Leadership in coverage and quality Push Fiber rollout to sustain E2E CEx in Data and support Residential UBB coverage expansion Use Big Data and CEx driven approach to drive Network Capex 4 Culture 1 Digitalization 2 Continue to focus on recurring Efficiency in Industrial Cash Cost (zero base approach, strategic sourcing, make vs buy) Disruptive Efficiencies from Digital Transformation 5 Accelerate Digital Capabilities deployment in both commercial and administrative IT systems Increase Digitalization of Customer”s Interactions along the entire lifecycle to improve CEx and allow disruptive efficiencies 2 Accountability and “Sense of Ownership” as part of a deep cultural transformation 1 Redesign the Customer Experience of our clients to become the Best TLC Provider leveraging our Leadership position as an Ultra-Broadband player and our Smart Offer proposition Shift internal Culture from “Excusability” to Accountability, redesign Platforms and Processes from analogue to Digital to allow a full Digital Transformation.
  12. 12. 12 Meeting with Investors Investor Relations TIM Brasil Mobile Go-to-Market: Distinct and targeted approach Prepaid Controle Postpaid “More for More” strategy, delivering the best value proposition (voice + data + content) Offer Evolution: + data + unlimited calls Combo launch (service loyalty + device) Offer Evolution: + VAS + Data Price up Q1 Q2 Q3 Q4 ... Main Speech: High value top-up incentive Offer Evolution: Turbo 7 – TIM Pré Main Speech: TIM Pre 1GB Recurring Main Speech: TIM Pre 1GB with 1GB bonus in recurring Recurring portfolio evolution focus Repositioning with TIM Black launch: More data, unlimited minutes Back to the game in handsets Exclusive contents New handset discount offer (lock in) Offer evolution (more data, +content) New Express offers Launch of TIM Black with unlimited calls New Family offer New discount offer (lock in) New data bonus to push acquisition New VAS partnerships Video as new premium content Bundle Video Offer
  13. 13. 13 Meeting with Investors Investor Relations 3Q17 Results
  14. 14. 14 Meeting with Investors Investor Relations 3Q17 Highlights: Solid Trends in All Fronts Accelerating Growth State of the Art Profitability Customer Experience Supported by Leadership in 4G Net MSR +5.8% YoY  Mobile Net Service Revenues accelerating from +5% YoY in 2Q 445 509 935 1Q17 2Q17 3Q17 Postpaid Net Adds +1.9 mln lines in 2017  Fixed Ultra BB (TIM Live) Net Revenues jumping from +32% YoY in 2Q Fixed Ultra BB Net Adds +70k subs in 2017 17 26 27 1Q17 2Q17 3Q17 Highest 3Q Normalized EBITDA in TIM’s history (R$ mln) Cities covered with 4G Pure Postpaid Customer Satisfaction Survey¹ (1) Source: Customer Satisfaction Index (CSI) model by University of Michigan, survey conducted by CFI Group as of Jun/17 2,401 P4 P3 P1 TIM EBITDA Margin 37.4% in 3Q UBB Revs +54% YoY 1,527 3Q13 3Q14 3Q15 3Q16 3Q17 Total Gross Service Revenues +2.0% YoY Total Net Service Revenues +5.9% YoY %YoY 0.7% 6.4% 0.5%-2.7% 17.2% Dec-16 Jul-17 3rd 1st 2x vs. ‘16 2x vs. ‘16
  15. 15. 15 Meeting with Investors Investor Relations 3Q16 3Q17 3Q16 3Q17 3Q16 3Q17 Improving Value Through Customer Base Transformation Postpaid (Gross + Migration) (lines; % YoY) Client Generated ARPU (% YoY) Further Evolving in the Go 2 Market Pure Postpaid Plans: focus on loyalty and churn reduction Prepaid Postpaid +4% +8% Prepaid Recurring Offers (bundles) over Gross Adds (% YoY) Control Plan better value for money at R$55 offer Prepaid New Offer, encouraging the recurrence : +9 p.p. CB Reshaping Towards Recurrence (% of total base)  Promotions on services and/or handset with 12 months lock-in contracts  ~40% of Pure Postpaid gross comes from customers with lock-in contracts 1GB+ 1GB Bonus Unlimited calls TIM-TIM + 100 minutes off-net Unlimited Whatsapp messaging +39 p.p.  Up-sell between Control Plans: ~90k users to Control R$55 in Sep/17 ~70% <50% ~10% ~25% ~20% >28% 3Q16 3Q17 Postpaid Non Recurring Prepaid Client Generated Revenue Mix >70% <30% Recurring Prepaid 1GB+500MB 1GB+1GB1GB 1st renewal 2nd renewal 3rd renewal 1GB+250MB Mix of gross + migration on R$55 plan 3Q16 3Q17 +64% Jan Sep
  16. 16. 16 Meeting with Investors Investor Relations +8.9% -17.9% -14.0% +7.0% -15.3% Consolidating Revenue Improvements with More Focus on Bundle Offers Total Mobile ARPU (R$; % YoY) Total Net Revenues Breakdown (R$ bln; %YoY) +4.7% 18.4 20.5 3Q16 3Q17 Revenues Mix from Bundled1 Offer (% of TIM Client Generated Revenues ) Client Generated2 Revenue Growth (% YoY) -1.4% 0.0% 4.8% 7.2% 8.0% 3Q16 4Q16 1Q17 2Q17 3Q17 Client Generated² +11% Bundle 7th quarter of ARPU uplift 3.9 4.1 +8% (1) Bundle Revenues = Revenues from postpaid packages (off-bundle services not included) and recurring prepaid offers (2) Client Generated Revenues = MSR excluding interconnection and other revenues Pure Postpaid Control Postpaid Prepaid Recurring Prepaid Non-Recurring Improving Revenue Predictability and monetizing Customer Base Upgrade Loyalty Upsell Upsell Loyalty Upgrade Upsell Upgrade Upsell 0% 25% 50% 75% 100% 3Q16 4Q16 1Q17 2Q17 3Q17 Bundle No-Bundle >60%
  17. 17. 17 Meeting with Investors Investor Relations 469 444 470 967 952 960 1,050 924 926 202 232 200 1Q17 2Q17 3Q17 Opex Dynamics: Efficiency Continues to be a Driver COGS Traffic (Network + ITX) Marketing (Selling & Market + Bad Debt) Process (Personnel + G&A + Other) Normalized Opex Breakdown Analysis (R$ mln; %YoY) 2,688 2,552 2,557 - -4.3% +7.7% -13.7% COGS • Reduction in volume due to lower sales to prepaid customers, postpaid users represents ~80% of total sales (+ ~35% YoY). • Lower acquisition price from vendors. • ITX: lower cost after MTR (VU-M) cut partially offset by off-net traffic growth. • Rental & Power: growth driven by network expansion and inflation. • Network: leased line price cut after Res. 639 (last quarter of “comparability” benefit) and efficiency gains thanks to “zero leased lines” project. • Higher postpaid Customer Base and sales generating increase in customer management opex (customer care, billing and collection, bad- debt) partially offset by digital efficiencies. • Positive impact of Fistel (-11.8% YoY in 3Q17) and recharge fees in prepaid. • Commissioning costs growth, +10.0% YoY, due to postpaid gross adds. Traffic Market Process • Personnel (+4.1% YoY) and G&A (+2.8% YoY) grew low single digit, close to inflation, thanks to impact efficiency program gains • Other Operating (income) expenses, +26.4% YoY, trend impacted by higher provisions for labor lawsuits of mainly third parties from previous years. -1.5% Δ YoY Efficiency Plan Recap (R$ bln) Efficiency Plan Completion (%) R$1.1 blnR$0 2017 2018 2019 ~90%1.1 1.7 -1.2 0.5 0.6 + + - + + - - + - -
  18. 18. 18 Meeting with Investors Investor Relations Solid EBITDA Growth Boosting Bottom Line and Cash Generated Normalized EBITDA¹ Growth (%YoY) ¹ Normalized for tower sales and other items ² License 700MHZ Margin Expansion (% Normalized EBITDA Margin) 0.5% 5.8% 8.7% 15.5% 17.2% 3Q16 4Q16 1Q17 2Q17 3Q17 Reported Net Income (R$ mln) 184 279 3Q16 3Q17 EPS 0.08 0.12 Operating Free Cash Flow Ex-License² (R$ mln) 511 320 213 26 -334 737 OFCF 9M16 Δ EBTIDA (yoy) Δ CAPEX (yoy) Δ WC (yoy) Δ Non-Recurring Items (yoy) OFCF 9M17 33.4% 37.4% 3Q16 3Q17 +4 p.p. + 1.1bln 9M17 Normalized EBITDA up 13.9% 9M17 Normalized EBITDA Margin at 34.9% 16 quarters of YoY EBITDA margin expansion: from mid 20’s to high 30’s Service EBITDA Margin at 39.7% in 3Q17 and 37.1% 9M17 9M17 EBITDA - Capex of R$1.7 bln, (+2x YoY), 14.1% on Net Revenues, (+7p.p. YoY) ~1.5x
  19. 19. 19 Meeting with Investors Investor Relations Efficiency Plan & Digitalization
  20. 20. 20 Meeting with Investors Investor Relations 2017 2018 2019 ~90% >0.1 ~0.25 >0.1 ~0.5 Efficiency Plan: Strong Execution Execution until 3Q17 Normalized Opex Evolution (R$Bln) 11.8 10.4 11.8 2015a 2016a 2017e 2018e 2019e Rationalization of Discretionary and Support Costs’ Optimization and Process reengineering Zero Leased Lines Project Optimization of IT and Network Costs Sales Channels Redesign 2017 Updated Estimate Detailing 9M17 Efficiency (R$ bln) Efficiency Plan (R$ bln) 1.7 1.2 0.5 0.6 1.1 2017 Monitoring (R$ bln) 5,2 >0.2 >0.2 ~0.2 ~0.5 5.3 Main Actions
  21. 21. 21 Meeting with Investors Investor Relations 9M16 9M17 Sep/16 Sep/17 Sep/16 Sep/17 Sep/16 Sep/17 Digital Transformation Across the Company to Improve CEX and Process Efficiency IT Initiatives: Infrastructure & Digital Capabilities Enablers helping to reduce costs and accelerate revenues Digital Evolution of Customer Journey Sales in Digital Channels (# of digital activations) +3x Control Recurring Prepaid Improving Trends for Customer Satisfaction¹ #1 General Satisfaction #1 in Pure Postpaid #1 in Prepaid Digital Caring Process Efficiency 150 Projects Network Planning SQM Big Data API TAX Management +2.6x +23p.p AI (1) Source: Customer Satisfaction Index (CSI) model by University of Michigan, survey conducted by CFI Group as of Jun/17 Unique Users of App or Website Digital Interactions/ Total interactions SALES & ACTIVATION CUSTOMER MGMT & CARING BILLING PAYMENT E-Billing (# of online invoices) E-Payment (credit card, bank account and internet) +15% Sep/16 Sep/17 +13% Billing Platforms Procurement to Payment 9M16 9M17 +80%
  22. 22. 22 Meeting with Investors Investor Relations Addressing Other Types of Efficiencies Telecom Italia Finance TIM Brasil TIM Part TIM S.A. (new denomination of Intelig) Telecom Italia Finance TIM Brasil TIM Part TIM Celular Intelig Abroad Brazil Minorities Minorities Generating operational and financial synergies through restructuring process From: To: INTEREST OVER EQUITY R$190 mln via IOE o Anticipation of 2017 results distribution o Fiscal efficiency o Minority saving perception of +9.75% (34%-15%-9.25% = 9.75%) o Process optimization, system integration, simplification of billing, commissioning, BI and control systems o Unification of fixed and mobile services facilitating bids and convergent services o Elimination of intercompany transactions inefficiencies
  23. 23. 23 Meeting with Investors Investor Relations Network
  24. 24. 24 Meeting with Investors Investor Relations 746 2,401 3Q16 4Q16 1Q17 2Q17 3Q17 Further Advancing on Infrastructure 4G Coverage Evolution (# of cities) P1 P3 P4 301 Cities with 4G 700MHz 177 Cities with VoLTE Leadership in 4G coverage 86% of urban pop TIM1st in Latam and unique operator in Brazil Network Data Usage (% of data traffic by technology) 17,7859,858 +80% 4G Sites 30% 51% 70% 49% 3Q16 4Q16 1Q17 2Q17 3Q17 4G 2G + 3G 65% 79% 3Q16 4Q16 1Q17 2Q17 3Q17 P1 P3 P4 TIM Best 4G Coverage leveraged by 1.8GHz refarming and Leadership in LTE 700MHz Brazil (Ookla Speedtest;% of tests in 4G Network) 77% 88% 3Q16 4Q16 1Q17 2Q17 3Q17 79% 90% 3Q16 4Q16 1Q17 2Q17 3Q17 P1 P3 P4 TIM P1 P3 P4 TIM São Paulo (Ookla Speedtest;% of tests in 4G Network) Rio de Janeiro (Ookla Speedtest;% of tests in 4G Network) 75.5%* of traffic generated by 4G Devices * * 3Q17 until Aug/17 EoY > 90% EoY >1.000 cities EoY >1.000 cities
  25. 25. 25 Meeting with Investors Investor Relations Opportunity 2018 2.600 MHz 1.800 MHz 700 MHz About 50% indoor coverage About 60% indoor coverage About 99% indoor coverage 2x indoor Coverage 1,6x Data Traffic in 24 days Benefits 4G + LTE 700Mhz Network Effect 63% i.e. Benefits of the 700Mhz deployments in Brasilia Vol. Traf. Total (MB) Vol. Traf. 700 (MB) Vol. Traf. 1800 (MB) Vol. Traf. 2600 (MB) 3G 4G Churn 1,6x 3G 4G Usage (GB) 2,5x Throughput (Mbps) 3G 4G 3,2x Customer Effect 59% Urban pop. 69% GDP 2018 2017 700 MHz + Differential on Coverage and Quality with
  26. 26. 26 Meeting with Investors Investor Relations Use spectrum opportunities to maximize TIM assets 2015 2016 2017 2018 2019 2020 LTE 2600MHz 2100MHz* 1800MHz 900MHz 850MHz 700MHz ND ND LTE 10 Mhz LTE 10 Mhz LTE 10 Mhz LTE 10 Mhz UMTS 10 MHz UMTS 10 MHz UMTS 10 MHz UMTS 10 MHz GSM 2,5 MHz GSM 2,5 MHz GSM 2,5 MHz GSM 2,5 MHz GSM 2,5 MHz GSM 2,5 MHz GSM 20 MHz GSM 15 MHz GSM 10 MHz UMTS 10 MHz UMTS 10 MHz UMTS 10 MHz LTE 10 MHz LTE 10 MHz LTE 10 MHz LTE 10 MHz LTE 10 MHz LTE 10 MHz LTE 10 MHz LTE 10 MHz 10 MHz 15 MHz 30 MHz 35 MHz 50 MHz 50 MHz UMTS 5 MHz LTE 5 MHz UMTS 5 MHz LTE 5 MHz LTE 5 MHz LTE 10 MHz GSM 10 MHz LTE 10 MHz LTE 15 MHz GSM 5 MHz LTE 15 MHz GSM 5 MHz UMTS 5 MHz LTE 5 MHz Spectrum Refarming Plan (average Brazil) * 10MHz Refarming for LTE will take place in areas where TIM owns the 850MHz band, keeping the UMTS in this frequency. In the other areas it will be refarmed 5MHz for the LTE, keeping the other 5MHz to the UMTS. Carrier Aggregation 2017 2018 2019 2020 25% 75% 100% 100% 20% 70% 100% 10% 75% 70% 100% 100% 100% 40% 100% 100% 100% 5% 10% 20% 10% 20% 2x CC 3x CC 4x CC Optimize Spectrum Performance LTE Evolution (4,5G)
  27. 27. 27 Meeting with Investors Investor Relations Residential Solutions
  28. 28. 28 Meeting with Investors Investor Relations Major Brazilian cities accounts for 97% of national UBB Broadband penetration by region¹ • Low penetration (<40%) in 19 of 27 states and only São Paulo and Federal District with penetration above 60%... • ...demands an assertive approach to obtain good results > 60% 20% - 40%0 – 20% 40% – 60% % BB penetration in HHs, Aug/17 UBB: Only 12 cities³ (all from SP) with penetration UBB above 20% Broadband penetretion 42% 34% 0% 32%BB (< 34 Mb) 37%36% 1% 2% 3% 36% 6% Aug-16 38% 42%39% Aug-17 32% UBB Aug-15 35% Aug-14Aug-13 Penetration of fixed broadband by city profile² 53% 54% 77% 97% 96% 47% 46% 23% 3 3% BB (Mln) 27 HH (Mln) UBB (Mln) 5.570 67 População (Mln) Cidades 206 4% • Potential to grow in top 4% of Brazilian cities which has 77% of broadband connections and 97% of national UBB market due to its low UBB penetration (8%)... • …and also potential in other 96% of cities (~50% population) which also has low penetration of 20% on average Group B: other cities (5.320) Group A: cities most populated (250) Fixed broadband penetration (excludes SMP and includes SME BB) 42% 21% 60% State of Group A cities: • SP: 64 • RJ: 26 • MG: 23 • Other States: 137 6% 0% 10% Source: ¹ Teleco ² Teleco, IBGE, Cetic, Anatel Note: ³ Vinhedo, São Caetano do Sul, Valinhos, Indaiatuba, Santos, São José dos Campos, São Paulo, Barueri, Santana do Parnaíba, Praia Grande, Americana and Itatiba
  29. 29. 29 Meeting with Investors Investor Relations 3Q16 3Q17 57 29 7 -27 P4 P3 +26% User Base (‘000; %YoY) Net Revenues (R$ mln; %YoY) Occupation Rate (% of ports used) SAC/ARPU (months; %YoY) TIM Live: Growing its Importance Every Quarter with Solid Results +9p.p.+54% -14% +16% ARPU (new clients) (R$; %YoY) ARPU (user base) (R$; % YoY) +27% Net Promoter Score (%; Jul 17; Bridge Research) Netflix ISP Speed Ranking (Mbps, Sep 17) Growing at robust double digit rates Efficient approach guaranteeing profitability Extracting value with new portfolio: upselling and pricing Leadership in customer experience 2.14 2.39 2.88 3.00 3.09 OI Algar Vivo Fibra net virtua Live tim P6 P4 P3 P1 P1 Leader 33x in the last 36 months TIM Live 299 376 3Q16 3Q17 3Q16 3Q17 3Q16 3Q17 3Q16 3Q17 3Q16 3Q17 +36% YoY Addressable HH
  30. 30. 30 Meeting with Investors Investor Relations Customer base • Soft launch: more than 2k customers • High attractiveness of the higher speed offer (average ARPU of ~R$ 105) Coverage Customer Experience Customers quotes: “I recommend the internet to my neighbors” “I use my internet to browse, play online and watch videos” “I knew the offer through a Facebook group” • Usage: - 80% uses all data package - ~40% uses to watch videos and movies online • Before acquiring WTTX service: - 72% did not have broadband - 21% did not have paid TV • Levered on LTE 700Mhz project using idle capacity of the constructed network • Focus on regions with limited offer and quality regions • 2017 commercial launch in 16 cities (in 12 states) WTTX “Fast Guide” Q2 2017 Q4 2017 Device Source internal infos • Welcome call for all new customers • Customers with high satisfaction index (76% vs 57% of Broadband market) • Equipment delivery in 7 days • 83% of recommendation Traffic measurement (July 3rd) 00:00 230006:00 12:00 18:00 0 GB 06 GB 12 GB 18 GB Youtube Cyphered Facebook Netflix Whatsapp Google Others WTTX started with great results
  31. 31. 31 Meeting with Investors Investor Relations Residential solutions: opportunities expansion through own networkNetworkefficiencyNewtechnologies Broadband Solutions • Replacement of some boards by VDSL2+ boards • Higher speeds and ARPU over the alreadyconstructed network • Focus on high value areas with low sales performance • Fast time-to-market • Low investment to increase offer value • Increase of capacity on alreadysaturated areas • Focus on alreadysuccessful areas • Exploitation of already approached buildings • Synergy with network upgrade strategy (use of replaced boards) • Innovative product that delivers a full, accessible and simple solution ofresidential broadband • Fixed ultrabroadband evolution: unique solution for who wants to go where nobody has arrived • Focus on customers with limited broadband services mostlyon cities suburbs and smaller cities • Broadband through 4G - 700Mhz network • Plug’n’play solution • Voice and video included in data package • Focus on high value customers and high customer experience standards • Smart strategy coverage with launch in new cities • Partnership with content providers • Digital and multichannel caring (website, APP/Chatbot, service/URA) WTTx FTTH FTTC network upgrade FTTC capacity increase
  32. 32. 32 Meeting with Investors Investor Relations Regulatory Update
  33. 33. 33 Meeting with Investors Investor Relations Brazilian Spectrum - Caps and Distribution Band 850 MHz 900 MHz 1.800 MHz 2.100 MHz 2.500 MHz 700 MHz Regulated Spectrum Cap (FDD Applications) (12.5+12.5) MHz (2.5+2.5) MHz (25+25) MHz (15+15) MHz (30+30) MHz (20+20) MHz Global Cap of 80 MHz < Σ of Sub-Caps Specific Caps 4G Spectrum 3G Spectrum 1 Disregarding P Band (2.550 to 2.510 MHz / 2.620 to 2.630 MHz). 1,800 MHz900 MHz850 MHz 2,500 MHz ¹2,100 MHz 700 MHz 11 18 21 5 5 4 3 43 35 29 26 24 22 25 29 20 20 40 40 20 20 20 0 20 40 60 80 100 120 140 Oi TIM Claro Vivo 11 18 21 5 5 4 3 20 24 22 25 29 Nextel Oi TIM Claro Vivo 14 35 20 40 40 20 20 20 20 Nextel Oi Claro Vivo TIM
  34. 34. 34 Meeting with Investors Investor Relations Main Regulatory Topics 4Q17 November DecemberOctober 3Q17 August SeptemberJuly Public Consultations • Numbering (ANATEL) • Digital Strategy (MCTIC) 700 MHz (Switch Off) • Salvador/BA and Fortaleza/CE, Sobral and Juazeiro postponed to 2018 Zero Rating (CADE) • Not an anti-trust infraction (archived) TAC (TEF) • Approved with recommendation s (TCU) Restricted Radiation • Res. 680/2017 700 MHz (Available) • >2.000 cities GIRED for LTE 700 MHz (Switch Off) • Recife/PE Public Consultation • Quality (ANATEL) up to 08/01/18 • RIA Methodology (Casa Civil) • Public Policies Decree (MCTIC) • CGI Governance Data limits on Fixed Broadband to • Discussion Postponed (ANATEL) 700 MHz (Switch Off) • Rio de Janeiro, Belo Horizonte and São Paulo Interior . Spectrum Management • Public Consultation expected PLC 79/2016 • New Telecom Framework still under debate PERT • Ongoing ANATEL Telecom Network Plan discussion PGMC/RHORPA • Revision Expected (ANATEL) 700 MHz (Available) • >3.000 cities GIRED for LTE TAC (Oi) • Rejection by ANATEL
  35. 35. 35 Meeting with Investors Investor Relations Strategic Plan 2017-19
  36. 36. 36 Meeting with Investors Investor Relations 72%59% 74% ~90% 95% 2015 2016 2017e 2018e 2019e Deploying a Faster and Wider Broadband Network Cities covered Population covered (%) (# of cities) 4G 3G 2016-2018 Plan (Feb 2016) 2017-2019 Plan 2016-2018 Plan (Feb 2016) 2017-2019 Plan 82% 84% 89% 92% 2015 2016 2017e 2018e 2019e 700MHZ 1,839 2,833 ~3,200 2015 2016 2017e 2018e 2019e South and southeast: additional 1,800MHz spectrum availability in 2017 to boost speed and customer experience North, northeast and middle east: beginning of the 700MHz frequency roll out will guarantee more capacity and better coverage 3G coverage evolution will support customers adopting data services and customers that are not using 4G yet 411 1,255 >2,000 ~3,600 2015 2016 2017e 2018e 2019e
  37. 37. 37 Meeting with Investors Investor Relations 2015 2016 2017e 2018e 2019e 63.8 61.6 2015a 2016e 2017e 2018e 2019e Mobile Market Scenario & TIM Revenue Share Evolution Customer base mix Mobile Market & TIM Revenue Share* (Mobile Service Net Revenues; R$ bln; %) ARPU Trend (R$) Best “value for money” positioning will support Revenue share rebound 16.7 18.0 2015 2016 2017e 2018e 2019e -3.4% Mobile Market Revenues TIM Revenue Share *TIM Revenue Share and Mobile Market Revenues consider Revenues from top 5 players, including SME CAGR ~+3% ~23% ~23% ~25% Prepaid PostpaidPostpaid mix 21% 66.2 mln >35% >60 mln (customers) Mobile Convergence in SP/RJ and Selected Regions Fixed Voice Mobile Voice On + Off Data Messaging (SMS + WhatsApp) Innovative Revenues will support total ARPU growth
  38. 38. 38 Meeting with Investors Investor Relations Efficiency: Executing on Plan Main Actions Optimization and Process reengineering Rationalization of Discretionary and Support Costs’ Zero Leased Lines Project Sales Channels Redesign Optimization of IT and Network Costs 11.7 10.4 ~11.7 2015 2016 2017e 2018e 2019e Normalized Opex Evolution (R$ bln) Efficiency Plan Evolution (R$ bln) R$ 1.2 bn delivered R$ 1.1 bln new plan R$ 2.3 bln Total + Detailing Delivered Savings (R$ bln) 1.2 0.5 0.2 0.5 Process Driven Market Driven Volume Driven Total (Network & Interconnection) (Selling and Marketing & Bad Debt) (Personnel, G&A & Other) > New savings will maintain costs flat in 2015-2019 period despite inflation pressures and Company’s structural growth < 1.7 1.2 0.5 0.6 1.1 "Original" Plan 2016-18 Done until 2016 Remaining Savings Additional 2017-19 New Plan 2017-19
  39. 39. 39 Meeting with Investors Investor Relations Improving Profitability and Cash Generation Capex Plan (R$ bln) 2017-19 <12 bln 2016-18 ~12.5 bln EBITDA-Capex (R$ bln) Consistent Growth in Profitability: improving EBITDA Margin and Free Cash Flow Run Rate Cash Cost Reduction supported by efficiency program, offsetting Inflation and Structural Growth Impacts Significant Capex Reduction even though a Strong Upside in Network Coverage: Capex optimization and contracts negotiations Normalized EBITDA Margin (%) 2016-2018 Plan (Feb 2016) 2017-2019 Plan Normalized by non-organic events 4.5 3.8 4.7 2015 2016 2017e 2018e 2019e EBITDA Capex 95% of urban pop.: 4G Coverage Completion 4.7 4.5 5.4 5.2 2015 2016 2017e 2018e 2019e 31.5% 33.5% >36% 2015 2016 2017e 2018e 2019e
  40. 40. 40 Meeting with Investors Investor Relations 2017-2019 Strategic Plan Guidance Summary KPIs Short Term Targets Positive in all quarters Service Revenues (Mobile) EBITDA EBITDA-Capex (% on revenues) Revenue share ~25% in 2019 EBITDA Margin >36% in 2019 Long Term Targets > 15% < R$12 bln 2017-19 period 3G/4G Coverage >92% Capex ~R$4 bln -5% 4.5 bln ~4% -3% 2016 High single digit
  41. 41. 41 Meeting with Investors Investor Relations Appendix
  42. 42. 42 Meeting with Investors Investor RelationsSource: Anatel 3G 4G Mobile Market Share TIM Postpaid Base Evolution (% over customer base) Nextel Oi Claro TIM Vivo Market Share per Technology Mobile Base Analysis 16,4% 16,4% 19,0% 22,5% 28,2% 3Q13 3Q14 3Q15 3Q16 3Q17 24,1% 24,1% 24,2%24,1% 23,4% 22,7% 32,5% 32,0% 32,3% 17,3% 17,8% 17,9% 3Q16 4Q16 1Q17 2Q17 3Q17 35,5% 33,8% 27,7% 27,1% 19,3% 22,2% 15,5% 15,7% 3Q16 4Q16 1Q17 2Q17 3Q17 29,3% 30,9% 25,2% 24,6%25,3% 25,1% 18,5% 17,4% 3Q16 4Q16 1Q17 2Q17 3Q17
  43. 43. 43 Meeting with Investors Investor Relations Total Mobile Base Overview Base (mil) 59.390 74.562 60.398 41.911 2.622 2.179 241.063 Δ MoM -1,6% 0,0% -0,1% -0,3% 1,0% 0,8% -0,5% Δ YoY -6,1% 1,5% -4,9% -9,6% 4,5% 15,2% -4,0% Market Share 24,64% 30,93% 25,05% 17,39% 1,09% 0,90% Δ MoM(p.p.) -0,29 0,14 0,09 0,03 0,02 0,01 Δ YoY(p.p.) -0,6 1,7 -0,2 -1,1 0,1 0,2 Net Adds (mil) -963 -9 -60 -114 26 16 -1.105 Δ MoM 536,4% -116,5% -150,7% -234,8% -2,9% -28,3% -807,3% Δ YoY 260,6% -135,1% -63,6% -83,5% -9,4% -16,6% 4,9% Net Share -87,2% -0,8% -5,4% -10,4% 2,3% 1,5% Δ MoM(p.p.) 9,7 -36,1 -81,1 -64,7 -14,7 -13,2 Δ YoY(p.p.) -61,8 -3,3 10,2 55,7 -0,4 -0,4 Net YTD (mil) -4.028 784 227 -227 34 205 -3.004 Δ YoY 34,8% 246,4% -109,2% -86,6% 1085,1% 61,5% -55,7% Net Share YTD -134,1% 26,1% 7,6% -7,6% 1,1% 6,8% Δ YoY(p.p.) -90,0 22,8 43,8 17,4 1,1 5,0 TOTAL BASE TOTAL NEXTEL OUTRASTIM VIVO CLARO OISeptember,17 Source: Anatel
  44. 44. 44 Meeting with Investors Investor Relations Total Postpaid Base Overview Base (mil) 16.771 35.665 19.340 9.201 2.574 1.170 84.721 Δ MoM 2,2% 0,9% 1,7% 0,1% 0,8% 1,2% 1,2% Δ YoY 17,8% 9,7% 11,9% 0,6% 2,6% 31,4% 10,6% Market Share 19,80% 42,10% 22,83% 10,86% 3,04% 1,38% Δ MoM(p.p.) 0,18 -0,16 0,10 -0,12 -0,01 0,00 Δ YoY(p.p.) 1,2 -0,3 0,3 -1,1 -0,2 0,2 Net Adds (mil) 359 306 322 14 21 14 1.036 Δ MoM -0,4% -0,8% 76,9% 56,6% 4,9% -53,0% 13,9% Δ YoY 156,2% 4,9% 74,8% -19,7% -25,5% -38,9% 51,3% Net Share 34,6% 29,5% 31,1% 1,3% 2,0% 1,3% Δ MoM(p.p.) -5,0 -4,4 11,1 0,4 -0,2 -1,9 Δ YoY(p.p.) 14,2 -13,1 4,2 -1,2 -2,1 -2,0 Net YTD (mil) 1.889 2.274 1.028 -37 -11 210 5.353 Δ YoY 185,7% 59,6% 61,8% -108,2% -550,7% 62,2% 62,2% Net Share YTD 35,3% 42,5% 19,2% -0,7% -0,2% 3,9% Δ YoY(p.p.) 15,3 -0,7 -0,1 -14,2 -0,3 0,0 Net Adds (ex-M2M) (mil) 324 201 238 -11 21 -5 768 Δ MoM 5,7% -17,5% 83,5% -53,4% 4,9% -658,3% 13,3% Net Share (ex-M2M) 42,2% 26,2% 31,0% -1,4% 2,8% -0,7% Δ MoM(p.p.) -3,1 -9,8 11,9 2,0 -0,2 -0,8 BASE PÓS-PAGO TOTALSeptember,17 TIM VIVO CLARO OI NEXTEL OUTRAS Source: Anatel
  45. 45. 45 Meeting with Investors Investor Relations Total Prepaid Base Overview Base (mil) 42.620 38.897 41.058 32.710 48,45 1.009 156.342 Δ MoM -3,0% -0,8% -0,9% -0,4% 10,5% 0,2% -1,4% Δ YoY -13,0% -5,1% -11,2% -12,1% 6994,1% 0,8% -10,4% Market Share 27,26% 24,88% 26,26% 20,92% 0,03% 0,65% Δ MoM(p.p.) -0,47 0,14 0,11 0,20 0,00 0,01 Δ YoY(p.p.) -0,8 1,4 -0,2 -0,4 0,0 0,1 Net Adds (mil) -1.322 -315 -382 -128 4,59 2 -2.141 Δ MoM 158,5% 24,2% 496,6% -268,5% -27,8% -136,6% 184,1% Δ YoY 224,7% 18,5% 9,5% -82,0% 30513,3% -178,7% 23,2% Net Share -61,8% -14,7% -17,9% -6,0% 0,2% 0,1% Δ MoM(p.p.) 6,1 18,9 -9,4 -16,1 -0,6 1,0 Δ YoY(p.p.) -38,3 0,6 2,2 35,0 0,2 0,3 Net YTD (mil) -5.917 -1.490 -801 -190 45,49 -5 -8.357 Δ YoY 62,2% 24,3% -74,1% -91,1% 12677,8% 102,5% -17,1% Net Share YTD -70,8% -17,8% -9,6% -2,3% 0,5% -0,1% Δ YoY(p.p.) -34,6 -5,9 21,1 19,0 0,5 0,0 TOTALNEXTEL OUTRASSeptember,17 TIM VIVO CLARO OI BASE PRÉ-PAGO Source: Anatel
  46. 46. 46 Meeting with Investors Investor Relations Total Voice & Data (modem+M2M) Postpaid Base Overview Modem M2M Modem M2M Modem M2M Modem M2M Modem M2M Modem M2M Modem M2M Base (mil) 341 1.656 1.643 5.854 1.165 4.940 167 1.407 41 0 8 634 3.366 14.491 Δ MoM -0,5% 2,2% -4,0% 1,8% -1,2% 1,7% -1,9% 1,8% -4,5% n.d -1,5% 3,1% -2,6% 1,9% Δ YoY -21,1% 15,2% -31,8% 22,5% -30,1% 16,5% -22,7% 12,5% -49,7% n.d -26,6% 64,9% -30,1% 19,8% Market Share 10,14% 11,43% 48,82% 40,40% 34,62% 34,09% 4,95% 9,71% 1,21% n.d 0,25% 4,37% Δ MoM(p.p.) 0,22 0,03 -0,73 -0,02 0,50 -0,05 0,03 -0,01 -0,02 n.d 0,00 0,05 Δ YoY(p.p.) 1,2 -0,5 -1,2 0,9 0,0 -1,0 0,5 -0,6 -0,5 n.d 0,0 1,2 Net Adds (mil) -2 35 -69 105 -14 84 -3 25 -2 0 0 19 -89 269 Δ MoM -72,7% -34,9% -12,7% 61,0% -73,1% 60,5% -51,5% -23,3% 7,6% n.d -48,4% -32,8% -38,0% 15,6% Δ YoY -78,3% -2468,3% 57,1% 94,7% -51,4% 51,4% -49,1% 462,3% -64,6% n.d -48,2% 101,4% -2,0% 119,5% Net Share -1,7% 13,0% -77,0% 39,2% -15,3% 31,5% -3,6% 9,2% -2,1% n.d -0,1% 7,2% Δ MoM(p.p.) 2,2 -10,1 -22,4 11,1 20,0 8,8 1,0 -4,7 -0,9 n.d 0,0 -5,2 Δ YoY(p.p.) 6,1 14,2 -29,0 -5,0 15,6 -14,1 3,3 5,6 3,8 n.d 0,1 -0,6 Net YTD (mil) -62 134 -611 841 -395 464 -37 105 -26 0 -2 211 -1.134 1.755 Δ YoY 141,7% -24,2% 6,8% 56,7% 8,5% -457,9% -43,9% -27,9% -63,7% n.d -33,9% 575,0% 2,7% 130,9% Net Share YTD -5,5% 7,6% -53,9% 47,9% -34,9% 26,5% -3,2% 6,0% -2,3% n.d -0,2% 12,0% Δ YoY(p.p.) -3,1 -15,6 -2,1 -22,7 -1,9 43,5 2,7 -13,1 4,3 n.d 0,1 7,9 TIM VIVO CLARO OI NEXTEL OUTRAS TOTAL September,17 Source: Anatel
  47. 47. 47 Meeting with Investors Investor Relations Fixed Broadband - TIM Live area Base (000) 375,6 1.568 2.436 740 119 5.238 Δ MoM 2,1% 0,0% 0,1% 0,0% 1,3% 0,2% Δ YoY 25,6% 4,2% -1,3% -1,4% 20,8% 2,3% Market Share 7,17% 29,93% 46,50% 14,12% 2,28% Δ MoM(p.p.) 0,13 -0,07 -0,06 -0,03 0,02 Δ YoY(p.p.) 1,33 0,6 -1,7 -0,5 0,3 Net Adds (000) 7,7 0,0 2,5 0,1 1,5 11,8 Net YTD (000) 69,8 43,9 -16,2 -10,7 12,5 99,3 OI TOTAL BASE TOTALSeptember,17 OTHERSTIM VIVO Source: Anatel
  48. 48. 48 Meeting with Investors Investor Relations • A longer then expected process of fiscal adjustments and a greater level of uncertainties in politics continues to trim economic activity • Government and market consensus have postponed a resume in GDP growth to 2017 • Following new government commitment to converge inflation to its target in 2017 market expects an important decrease in interest rates • Interest rate have its reduction path and the Central Bank projection is to reach 7.00% in the of 2017 Source: IBGE, Central Bank Inflation report (as of Dez/16) for Government Estimates and Bloomberg GDP Forecast (% YoY growth) Inflation Forecast (% IPCA - 12 months) Interest Rate Forecast (% Selic Target p.y. - year end) FX Rate Forecast (R$/U$ - end of period) Market Consensus Government Estimates Macro scenario outlook 0.70 2.51 2.80 0.20 -3.80 -3.60 0.73 2.40 2013a 2014a 2015a 2016a 2017e 2018e 3.09 4.00 6.20 6.30 10.70 6.29 3.50 4.03 2013a 2014a 2015a 2016a 2017e 2018e 7.00 7.00 10.00 11.75 14.25 13.75 7.00 7.00 2013a 2014a 2015a 2016a 2017e 2018e 3.21 3.30 2.40 2.70 4.00 3.25 3.25 3.30 2013a 2014a 2015a 2016a 2017e 2018e
  49. 49. 49 Meeting with Investors Investor Relations Tax Burden Composition (R$ mln in 2016) Tax Burden over Net Revenues (over mobile phone services - voice) Source Teleco study of July 2014 Tax Burden 7,621 PIS/COFINS ICMS FUST/ FUNTTEL FISTEL/ Others IR/CSLL Total 34% over Gross Revenues * *CPMF, IOF, INSS and others
  50. 50. 50 Meeting with Investors Investor Relations Historical Data: P&L Description 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 3Q17 vs 3Q16 Gross Revenues 25.771.500 5.738.493 5.623.766 5.624.961 5.758.370 22.745.590 5.566.509 5.502.436 5.674.580 0,9% Service Gross Revenues 23.124.634 5.387.853 5.243.026 5.291.900 5.445.040 21.367.819 5.276.318 5.189.650 5.397.036 2,0% Mobile Service Gross Revenues 22.121.450 5.106.852 4.952.140 4.996.041 5.133.929 20.188.962 4.989.243 4.871.563 5.064.857 1,4% Gross Revenue Fixed Services 1.003.185 281.001 290.886 295.859 311.110 1.178.856 287.075 318.087 332.179 12,3% Product Gross Revenues 2.646.866 350.640 380.740 333.060 313.330 1.377.771 290.191 312.786 277.544 -16,7% Taxes and Discounts (8.629.235) (1.884.147) (1.803.615) (1.725.686) (1.714.728) (7.128.176) (1.615.135) (1.560.044) (1.591.219) -7,8% Taxes and discounts on services (7.737.407) (1.769.198) (1.672.765) (1.602.585) (1.603.017) (6.647.565) (1.532.428) (1.439.446) (1.491.584) -6,9% Taxes and discounts on product sales (891.828) (114.950) (130.849) (123.101) (111.711) (480.611) (82.707) (120.598) (99.635) -19,1% Total Net Revenues 17.142.265 3.854.346 3.820.151 3.899.274 4.043.642 15.617.413 3.951.373 3.942.392 4.083.361 4,7% Net Revenues Services 15.387.227 3.618.655 3.570.260 3.689.315 3.842.023 14.720.253 3.743.890 3.750.204 3.905.452 5,9% Mobile Service 14.726.779 3.437.810 3.387.088 3.502.730 3.640.861 13.968.489 3.565.249 3.554.874 3.705.796 5,8% Client generated 12.939.020 3.064.145 3.061.837 3.148.485 3.283.101 12.557.567 3.211.047 3.281.964 3.401.275 8,0% Voice Local (Usage and Monthly fee) 5.595.440 1.197.219 1.189.458 1.203.625 1.301.041 4.891.342 1.070.476 889.693 898.433 -25,4% Voice Long Distance 1.814.065 387.400 361.906 342.180 324.337 1.415.823 291.919 263.773 250.694 -26,7% Data and Content VAS 5.529.515 1.479.526 1.510.473 1.602.680 1.657.723 6.250.402 1.848.653 2.128.499 2.252.148 40,5% Interconnection 1.521.917 298.014 243.896 254.473 264.637 1.061.019 227.703 176.260 196.263 -22,9% Other Revenues 265.842 75.652 81.356 99.773 93.123 349.903 126.498 96.651 108.258 8,5% Fixed Service 660.449 180.845 183.172 186.585 201.162 751.765 178.640 195.330 199.656 7,0% Net Revenues Products 1.755.038 235.691 249.891 209.959 201.619 897.160 207.484 192.188 177.909 -15,3% Operating Expenses (10.528.854) (2.733.363) (2.579.034) (2.620.042) (2.475.607) (10.408.046) (2.688.572) (2.553.793) (2.556.555) -2,4% Personnel expenses (1.043.852) (304.744) (218.959) (249.388) (232.206) (1.005.296) (222.873) (236.087) (235.290) -5,7% Selling & marketing expenses (3.742.720) (895.254) (852.395) (887.093) (962.359) (3.597.101) (902.130) (868.859) (868.944) -2,0% Network & interconnection (3.823.481) (985.650) (965.956) (968.419) (853.757) (3.773.782) (1.050.497) (924.342) (926.450) -4,3% General & administrative (610.974) (145.454) (141.690) (132.063) (121.279) (540.487) (137.834) (137.748) (135.818) 2,8% Cost Of Goods Sold (1.856.668) (254.360) (272.576) (231.311) (217.711) (975.959) (202.190) (232.240) (199.675) -13,7% Bad Debt (230.357) (71.356) (69.160) (73.223) (52.703) (266.442) (64.932) (82.895) (91.135) 24,5% Other operational revenues (expenses) 779.198 (76.544) (58.298) (78.545) (35.592) (248.979) (108.115) (71.622) (99.244) 26,4% Operating Expenses (Normalized) (11.739.834) (2.692.050) (2.616.062) (2.596.660) (2.482.614) (10.387.386) (2.688.439) (2.551.872) (2.556.556) -1,5% EBITDA 6.613.411 1.120.983 1.241.117 1.279.233 1.568.035 5.209.367 1.262.802 1.388.599 1.526.806 19,4% EBITDA Margin 38,6% 29,1% 32,5% 32,8% 38,8% 33,4% 32,0% 35,2% 37,4% 14,0% EBITDA (Normalized) 5.402.431 1.162.295 1.204.089 1.302.615 1.561.028 5.230.027 1.262.934 1.390.520 1.526.805 17,2% EBITDA Margin (Normalized) 31,5% 30,2% 31,5% 33,4% 38,6% 33,5% 32,0% 35,3% 37,4% 11,9% Depreciation & Amortization (3.361.971) (909.582) (951.241) (944.275) (980.074) (3.785.172) (988.953) (991.329) (993.667) 5,2% Depreciation (1.851.261) (500.220) (528.431) (529.051) (526.339) (2.084.041) (540.252) (538.244) (535.335) 1,2% Amortization (1.510.710) (409.362) (422.809) (415.224) (453.735) (1.701.131) (448.702) (453.085) (458.332) 10,4% EBIT 3.251.440 211.400 289.877 334.958 587.961 1.424.196 273.849 397.270 533.139 59,2% EBIT Margin 19,0% 5,5% 7,6% 8,6% 14,5% 9,1% 6,9% 10,1% 13,1% 52,0% Net Financial Results (250.406) (68.822) (164.802) (75.906) (101.349) (410.880) (103.225) (127.247) (148.126) 95,1% Financial expenses (1.115.524) (291.931) (292.674) (292.866) (279.015) (1.156.485) (280.110) (241.442) (266.906) -8,9% Net exchange variance 2.410 (3.485) (1.961) 283 318 (4.845) (692) (2) (766) -371,0% Financial income 862.708 226.594 129.832 216.677 177.347 750.450 177.578 114.197 119.546 -44,8% Income Before Taxes 3.001.034 142.578 125.074 259.052 486.611 1.013.316 170.624 270.023 385.013 48,6% Income Tax and Social Contribution (915.591) (14.671) (50.625) (74.975) (122.618) (262.889) (38.533) (51.097) (105.920) 41,3% Net Income 2.085.443 127.907 74.449 184.077 363.994 750.427 132.091 218.925 279.093 51,6%
  51. 51. 51 Meeting with Investors Investor Relations Historical Data: Operational Description 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 3Q17 vs 3Q16 Brazilian Wireless Subscriber Base (000`s) 257,814 257,811 253,408 251,028 244,067 244,067 242,790 242,124 241,063 -4,0% Estimated Total Penetration 125,67% 125,42% 124,00% 121,64% 118,04% 118,04% 117,20% 116,73% 115,93% -5,71 p.p Municipalities Served (GSM) 3.448 3.460 3.460 3.460 3.460 3.460 3.460 3.460 3.460 0,0% Market Share - TIM 25,69% 26,09% 25,25% 25,20% 25,98% 25,98% 25,5% 25,12% 24,64% -0,56 p.p Total Lines - TIM (000's) 66.234 67.269 63.988 63.247 63.418 63.418 61.868 60.831 59.390 -6,1% Prepaid Lines (000's) 52.654 53.721 50.229 49.005 48.537 48.537 46.541 44.996 42.620 -13,0% Postpaid Lines (000's) 13.581 14 13.759 14.242 14.881 14.881 15.326 15.835 16.771 17,8% Gross Additions (000's) 34.201 7.552 7.128 7.812 8.966 31.458 7.017 6.924 6.918 -11,4% Net Additions (000's) -9.486 1.035 -3.281 -741 171 -2.816 -1.550 -1.036 -1.441 94,5% Churn 59,1% 9,5% 15,6% 13,4% 13,9% 52,4% 13,6% 12,9% 13,8% 0,42 p.p Total ARPU (R$) 16,7 17,2 17,2 18,4 19,2 18,0 19,0 19,4 20,5 11,4% Total MOU 119 119 118 116 113 117 107 107 111 -4,6% SAC 30 29 32 28 27 29 34 43 40 40,4% Handsets Sold (000's) 4.659 363 358 283 272 1.276 248 304 266 -5,9% CAPEX (R$ Mln) 4.764 710 975 1.122 1.695 4.502 669 809 1.009 -10,1% Organic CAPEX (R$Mln) 4.767 710 975 1.065 1.695 4.446 669 809 1.009 -5,3% Employees 13.062 12.297 12.104 9.956 9.863 9.863 9.687 9.482 9.404 -5,5%
  52. 52. 52 Meeting with Investors Investor Relations Historical Data: Cash Flow Description 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 Initial Net Financial Position 1.276 1.733 3.476 3.957 3.455 1.733 2.721 4.372 4.400 EBITDA Normalized 5.402 1.162 1.204 1.303 1.561 5.230 1.263 1.391 1.527 Capex (4.764) (710) (975) (1.122) (1.695) (4.502) (669) (809) (1.009) EBITDA Normalized - Capex 638 452 229 181 (134) 728 594 582 518 D Working Capital (628) (1.870) 123 579 1.149 (19) (1.089) (215) 349 Non recurring operating items - (41,3) 37 (23,4) 7,0 (21) (0,1) (1,7) - Operating Free Cash Flow Ex-licenses 10 (1.459) 389 736 1.022 688 (495) 365 867 Clean UP 700MHZ (370) - - - - - (859) - - Operating Free Cash Flow Reported (360) (1.459) 389 736 1.022 688 (1.354) 365 867 Financial investments - - - - - - - - - Asset disposal 2.503 3 108 4 25 140 - 15 - Net impact of financial interests (487) (132) (230) (144) (166) (672) (178) (201) (211) Taxes Payments (385) (86) (134) (55) (75) (350) (72) (50) (33) Others impacts (1.368) (69) (154) (39) (72) (334) (47) (13) (53) Net Cash Flow before dividends and change in equity (97) (1.743) (21) 502 734 (528) (1.651) 116 570 Dividends (360) - (460) - - (460) - (144) (2) Change in Equity - - - - - - - - - Net Cash Flow (457) (1.743) (481) 502 734 (988) (1.651) (28) 568 Final Net Financial Position 1.733 3.476 3.957 3.455 2.721 2.721 4.372 4.400 3.832
  53. 53. 53 Meeting with Investors Investor Relations Stock Performance (base 100)* Year to date *Last price as of 11/23/2017 Source: Bloomberg Structure and Stock Performance Shareholders Structure Treasury Shares: 1,711,311 (0.07%) Total Shares: 2,421,032,479 75 100 125 150 Nov-16 Jan-17 Apr-17 Jul-17 Oct-17 TSU +35.4% TIMP3 +39.5% Ibovespa +14.4%
  54. 54. 54 Meeting with Investors Investor Relations Investor Relations Team Avenida João Cabral de Melo Neto, n 850, South Tower, 12th floor – Barra da Tijuca 22775-057 Rio de Janeiro, RJ E-mail: ri@timbrasil.com.br Vicente Ferreira E-mail: vdferreira@timbrasil.com.br Phone: +55 21 4109-3360 Pedro Yagelovic E-mail: pybsantos@timbrasil.com.br Phone: +55 21 4112-6990 Rafaela Gunzburger E-mail: rgunzburger@timbrasil.com.br Phone: +55 21 4112-5119 Luiza Macedo E-mail: ldcmacedo@timbrasil.com.br Phone: +55 21 4112-6828 Visit our Website www.tim.com.br/ir Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the “Company”, or “TIM”), that are not historical fact constitute “forward looking statements” that involve factors that could cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward looking statements. The Company cautions users of this presentation not to place undue reliance on forward looking statements, which may be based on assumptions and anticipated events that do not materialize. Safe Harbor and IR Contacts Safe Harbor Statements
  55. 55. 55 Meeting with Investors Investor Relations

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