1. 1Q11 Results
Presentation
P i
TIM Brasil
1Q11 Results
Presentation
Investor Relations
São Paulo, May 3rd 2011

2. Agenda
1Q2011: Main Achievements
1Q2011: Financial Results
Q
Full Year 2011: Business Outlook
1

3. What’s TIM Brasil?
Innovation is in our DNA… …consistent value creation
"Voice is Good" Q1 Results
Infinity breakthrough
- Local as Long Distance • Customer Base +25% YoY
- Price per call concept
• Top Line +14% YoY
14%
Infinity Mais (Off-net M2F): 3x traffic growth in 5
months • Service Revenues +9% YoY
Liberty (postpaid): 2x MOU; churn below 2% per month
Profitability
"New Data Approach" • EBITDA +9% YoY
4x
4 smartphones sold i a “zero-subsidy”
t h ld in “ b id ” • EBITDA (excluding +23% YoY
approach subsidy capitalization)
Unlimited even for data concepts
p • EBIT +109% YoY
- Prepaid: pay per day • EBITDA-CAPEX +186% YoY
. Infinity Web/SMS take-up
• Net Income
et co e +291% YoY
- Postpaid: on/off payment concept per month
. Liberty Web (smartphone, tablet, modem) • Net Debt -35% YoY
2

4. Acceleration of Growth:
Customer Base and Revenues
Customer Base Revenues
Mln clients, Base EoP 8,5 Mln R$
5,5
Gross Adds +55%
3.463
Service 3.176
Net Adds +45% +9,0%
1,25 1,82 Δ% YoY Revenues
3.752
3.296
52,8 +25%
42,4 7,7 +16%
Post-paid 6,6 Total
T t l
CB 45,1 Revenues +13,8%
35,8 +26%
Pre-paid
Q1'10 Q1'11
Q1'10 Q1'11
Gross Adds Net Adds Total Revenues Service Revenues
Q1 YoY Q1 YoY Q1 YoY Q1 YoY
Tot. +55% Tot. 45%
Q1'10 +3,1% Q1'10 5,6%
Pre +63% Pre 45% Q2'10 ,
+1,3% Q2'10 6,6%
Q3'10 +6,1% Q3'10 6,4%
Post Voce -2% Post Voce 20%
Q4'10 +9,9% Q4'10 6,0%
Post Web +256%
256% Post Web +265%
Q1'11 +13,8% Q1'11 9,0%
3

5. Drivers of Revenues Acceleration
Mobile - Voice Out Mobile - Voice In
YoY growth YoY growth
Q1'10 12,3% -11,3% Q1'10
Q2'10 13,8% -7,8% Q2'10
Local: +16.3%
Q3'10 14,0% LD: +21.0% -7,2% Q3'10
Q4'10 11,0% -6,2% Q4'10
Q1'11 17,3% -2,4% Q1'11
"Talking more"
Talking more "Lower erosion"
Lower erosion
Mobile - Data Revenues Intelig Revenues*
YoY growth
g YoY growth
g
Q1'10
Q1'10 15,0%
12,7%
Q2'10 13,9% Q2'10 26,0%
Q3 10
Q3'10 14,0% Q3'10 29,0%
Q4'10 31,4% Q4'10 37,0%
Q1'11 32,3% Q1'11 30,6%
"Data take up"
Data take-up "Intelig on track"
Intelig track
* Net revenues 4

6. Prepaid (Infinity): Enlarging TIM Community
Customer Base Pre MoU Out Market Share LD
Mln Min
+26%
Total 48,3%
CB 33,8%
+40%
27,7%
20,6%
20 6%
17,2%
90%
(90%) 11,5% 17,0%
Infinity
CB 11,5%
(60%)
1Q'10 1Q'11 2007 2008 2009 Jun/10 Dec/10
Infinity ‘Mais’ Infinity Torpedo
Volume of SMS sent
Customer Base Off-net TIM-Fixed Traffic Volume: X 5
Millions Mln minutes/day
40,0
8,5
lions
35,0
Mill
30,0
25,0
20,0
3X
15,0
10,0
5,0
0,0
00
01/01/2011
05/01/2011
09/01/2011
13/01/2011
17/01/2011
21/01/2011
25/01/2011
29/01/2011
02/02/2011
06/02/2011
10/02/2011
14/02/2011
18/02/2011
22/02/2011
26/02/2011
02/03/2011
06/03/2011
10/03/2011
14/03/2011
18/03/2011
22/03/2011
26/03/2011
30/03/2011
03/04/2011
07/04/2011
11/04/2011
Oct/10 Mar/11 Oct/10 Mar/11
5

7. Liberty: Driving Postpaid Growth
Customer Base Post Churn Reduction
Mln lines, EoP
Growth
Churn Voice Consumer
% YoY
% monthly
7,7 Gross adds
+16%
Total CB 6,6 Net adds
-1,2 pp
12
Total churn rate
+600% 2,5 % monthly
Liberty CB
8% 32%
(90%) 2010 3,1%
-0,4p.p.
2011 2,7%
2 7% Liberty
MoU Post Liberty: driving MoU increase Success
Min/month, Outgoing only Min/month
~8 x
+36%
~ 230
Total Post Infinity controle Old Plans Liberty
Q
Q1'10 Q
Q1'11
6

8. Smartphone Sales: boost Data take-up
Handsets/Smartphones Sales Pre-Paid: Infinity Web success
Mln R$, ‘000 handsets, R$ Unique users, Average, mln clients
>1.3
5x
29%
3
3
+ 142% 2,3
12% 0,28
Product
Revenues 2
+64% 4x more Aug/10 Sep/10 Oct/10 Nov/10 Dec/10 Jan/11 Feb/11 Mar/11
smartphones
Total 1,4 1,4
Volume
2
sold in a “Zero
Handsets
Post-Paid: New Offering
1
Subsidy” rule
1,2
, approach
0,9
1
x4
Smartphone/
Webphone 0,2
0
Q1 10
Q1'10 Q1 11
Q1'11
% Smart-Webphone
on Total 16% 40%
Unit price +48%
87 128
(mix effect)
7

9. KPI’s evolution
MoU SAC & SAC/ARPU
Minutes per line per month
+27% 126 SAC/ARPU
Total 100 (monthly)
3,1
SAC Unitary
112 (R$)
Out 82 +37% -44%
75 1,8
In 18 -22% 14 -51% 36
Q1 10 Q1 11
Volume Total 12,4 +58% 19,7
(Bln Out 10,2
10 2 +71% 17,5
17 5 Q1 10 Q1 11
minutes) In SAC Total (Mln R$) 408 -24% 309
2,2 -3% 2,2
Bad Debt ARPU
R$ Mln, % Gross Revenues R$
• Out: -13% Pré: Estável
2,0% Pós: -11%
• In: -21%
0,8% -14%
-1,2pp 24,0
93 20,8
20 8
-55%
42
Q1 10 Q1 11 Q1 10 Q1 11
8

10. Intelig “on track”
R$ Mln
Net Revenues Major Commercial Achievements
Intelig
Key & Large
Focused Approach
+31%
31%
RJ Government RJ City Hall SP Government
Government
Q1'10 Q1'11 Success in the main
...of which... Government bids
Military games
SME Top Clients
MVNO First Mover in Brazil
+39%
+26%
Q1'10 Q1'11 Q1'10 Q1'11 ... and more new Partnerships i progress...
d P t hi in
9

11. Agenda
1Q2011: Main Achievements
1Q2011: Financial Results
Q
Full Year 2011: Business Outlook
10

12. EBITDA analysis: Q1 2011 YoY
R$ Mln
Subsidies analysis
2011 2010 ΔYoY
Revenues 289 120 +169
Fistel: -R$50 MM Q1’10 Q1’11
CRC: R$29
CRC -R$29 MM
COGS (333) (136) (197) R$ Mln R$ Mln
Net at P&L (44) (16) (28) Recharge: -R$28 MM
341
+9.0% Considering 350
8 350
Subsidies 300 300
Capitalization 251
250 250
+241 (22) (28)
115 200 200
(106) 333
1.033 150
289 150
947 (1) 100 100
8 120 136
50 50
115 0 0
Prod rev. C OGS Prod rev. C OGS
Reported at P&L Capitalized Costs
+23% Handsets sold (Mln)
1,4
, +64% 2,3
,
EBITDA Business Business Product Commercial Others EBITDA
1Q10 Generated Received Contribution expenses expenses* 1Q11
(Outgoing (incoming) (Rev. – COGS)
– ITX costs)
Subsidy per handset (R$)
% YoY +14.8%
+14 8% -2.5%
-2 5% +171.8%
+171 8% +13.4%
+13 4% +0.0%
+0 0% +9.0%
+9 0%
95 -76% 23
* Personnel, Network, G&A , Bad Debt and Other Expenses
11

13. Impact of “Zero Handset Subsidy” on Financial Results
R$ Mln, %
YoY
EBITDA Margin
Margin w/o subsidy
capitalization
EBITDA EBITDA
+9%
Subsidy
Capitalized
EBITDA w/o +23% -107 Mln of
subsidy Cash Generation subsidy included
capitalization
on P&L and CAPEX
947
EBITDA 1.033
1 033
9,3% YoY
5,1% CAPEX 689
% of Revenues +420bp
297
350
EBIT 167 +109% Q1'10 Q1'11
EBITDA - CAPEX
Q1'10 Q1'11 Absolute 258 +186% 736
% of sales 7,8% +11,8 p.p. 19,6%
5,7% YoY
1,7%
+400bp
% of Revenues
Net 213
Income +291%
55
Q1'10 Q1'11
12

14. Net Debt Evolution
R$ Mln
Net Debt 1Q 2011 Net Debt Profile
Gross Debt: R$ 3.26 bln (of which 70% in the long term)
~23% of debt is denominated in foreign currency (100% hedged)
Seasonality: 4Q Average Annual Cost: 10.6% in the 1Q’11 vs. 9.9% in the 1Q’10 and
CAPEX payment 10.1% in the 4Q’10
and yearly Fistel (March) (688) 1.671
30% 100%
984
963
12%
6%
28% 428
1.587
NFP 4Q10 1Q'11 NET CASHFLOW NFP 1Q'11 3.259
30% 876
Net Debt 1Q 2010
1.671
991
1.684
1 684 (874) 2.558
2 558
Change in Debt 1Q 2011 vs Q1 10 C ash <12M 12<36M 36<60M +60M Total NF P
D ebt
(700) +187 (887)
From Operating to Net Cash Flow 1Q
OperFCF Interest & taxes Others Net Cash Flow
Q1 11 (549) (136) (2) (687)
Q1 10 (718) (113) (43) (874)
Vs YA +169 (23) +41 +187
13

15. Agenda
1Q2011: Main Achievements
1Q2011: Financial Results
Full Year 2011: Business Outlook
14

16. Outlook
Market Scenario TIM Strategy
Mobile over Fixed: acceleration of FMS trend No legacy in FMS: “The largest pure mobile in
Brasil”
B il”
MTR cut glide path as of H2
Low MTR cut exposure:
Intensification of Mobile competition (still 42% 30%
(Incoming –ITX)/ 23%
rational): Ebitda
- More chip-only, less handset subsidy (%) Q1'09 Q1'10 Q1'11
- New services (long distance via mobile, SMS)
mobile
Focus on value (#2 in Revenue Share)
Fast Data take-up (#3 worldwide in growth rate), - The largest community (Infinity >41MM)
p g
while voice market still expanding - MOU Accretion: outgoing Revenues at double digit
g g g
growth
- Zero-subsidy strategy on handsets
- Data take-up via smartphone penetration (4x)
Brazilian mobile market attractiveness •Innovation in go-to-market…
(large and fast growing)
…Enhancing shareholder value
15

17. Drivers of Growth
Now Full Competitive in
the 3 waves
Community FMS Internet
Expansion (CB) (MoU) (Data)
Speed-up small screen data
Double digit Customer Base Double digit outgoing voice
Revenues through Smartphone
growth Revenues growth
penetration
16

18. Smartphone penetration take-up
in a zero subsidy approach
Smartphone penetration* in the World
% of customer base 2011E vs 2010
44% North America +12,8 p.p.
+12 8 p p
32% 32% Europe +8,3 p.p.
24%
With a zero subsidy approach
15% Avg. World +3,3 p.p.
11% 12% Impact on accounts
10% 115
9% Central and Latin +3,7 p.p.
7% Ameica
7%
2% 85
2007 2008 2009 2010 2011 “Catch up the Best” 64 Less advantage on
-107 P&L in contrast to a
lower CAPEX
25
8
Smartphone penetration* in TIM Brasil
% of customer base Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11
2011E vs 2010
18%
+8 p.p.
12%
10%
8%
2010 2010 Year End 2010 March 2011 Year End
September
*Smartphone penetration as % of total mobile subscriber reported (dongle x M2M excluded)
Source: Global Wireless Matrix (28° april 2011); BofA Merrill Lynch 17

19. A better Capital Allocation
(benefits of zero-subsidy approach)
1Q 2011 CAPEX evolution Full Year 2011 CAPEX expected
R$ Bln, R$ Bln,
322 689 297 • 2011 CAPEX Guidance : R$2,9 Bln
R$2 9
• Better mix
25% 15%
Commercial 51% % of Total 19,7% 19,6%
Revenues
75% 85% 2.7
27 2.8
28
Total
T l
49% 19% <10%
Infrastructure Commercial 33%
Total 67% 81% >90%
Commercial Q1 09 Q1 10 Q1 11 Infrastructure
Subsidy 80 115 8
2009 2010 2011
Comodato 87 62 35
Drivers Backhauling Backbone
% of sites connected with 000 km More Make, Less Buy
Increase network capacity to own backhauling 26,5 28,3 Buy
support voice (2G) 20,7
20 7 20%
Full coverage prospective (3G) 16,0
35%
Fiber to the antenna’s in main 20% 65%
cities 7,0 80%
65%
Develop Wi-fi hot spots 35%
complementary to 3G '09 10 11 12 13 Make
> 80% of Brazilian major cities '09 10 11 12 13 2009 2011 2013
connected via fiber by 2013
18

20. Conclusions – Take-aways from 1Q
Operations: acceleration of growth in terms of customer base, services,
smartphone penetration and usage of voice
Economics: "double-digit top line , "triple-digit bottom line"
double digit line", triple digit line
Profitability: High single digit EBITDA growth, double digit normalized (+23%)
for the "zero subsidy approach"
zero-subsidy approach
Cash generation, better CAPEX allocation
The 3 drivers of growth strategy is now in place:
- Community expansion
- FMS on voice
- Small screen mobile data, via fast smartphone penetration
19