2. 2
Results Presentation
Investor Relations
-33
211
445
509
1Q16 2Q16 1Q17 2Q17
2Q Main Highlights: Accelerated Recovering 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
3. 3
Results Presentation
Investor Relations
Portfolio Evolution: More Focus on Postpaid and Changing Prepaid Profile
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
4. 4
Results Presentation
Investor Relations
28%
43%
Jun/16 Jun/17
Customer Base Evolution: Focus on Value vs Volume
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%
5. 5
Results Presentation
Investor Relations
Network Evolution: 4G Fastest 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
of 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
6. 6
Results Presentation
Investor Relations
Network: Speeding Up 4G Under 700 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
of 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
other 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)
7. 7
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$)
ANATEL Satisfaction Survey
(2016, General Satisfaction in points; 0-10)
Netflix ISP Speed Index
(Jun/17, Mbps) Leader 23x
in the last
26 months
TIM Live: Another Great Quarter For the Ultra Broadband Business
284
348
2Q16 2Q17 2Q16 2Q17
2Q16 2Q17 2Q16 2Q17
Growth
Value
Offer
Customer
Experience
+11%
+32% +11%
P1
P3
P6
P4
3.2
3.1
2.9
2.4
2.1
#1 net adds
in SP & Rio
(Apr/May)
7.8
7.1
6.9
6.8
5.3
TIM
P3
P1
P8
P4
7.4
6.8
6.6
6.3
5.9
TIM
P7
P3
P6
P1
Rio de Janeiro São Paulo
8. 8
Results Presentation
Investor Relations
Continuous Revenue Recovery: New Trajectory Confirmed
+7.5%
YoY
Data on Mobile Net Service Revenues
(% of VAS Revenues over MSR)
Business Generated
(excl. incoming rev.)
(%YoY)
MTR Exposure
(% VU-M/Service Revenues)
ARPU
(R$)
- 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
outgoing
+12.6%
YoY
17.22
19.38
2Q16 2Q17
9. 9
Results Presentation
Investor Relations
COGS
456 444
922 952
966 924
273 232
2Q16 2Q17
Opex: Second Quarter in 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
20192017 2018
~60%
R$1.1 blnR$0
1.7 -1.2
0.5
0.6
1.1
* The one-off events offset each other with no impact on EBITDA
11. 11
Results Presentation
Investor Relations
58% 70%
Jun/16 Jun/17
2Q17 Main Takeaways: Business Progressing 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
30sFrom
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
o/w 10 Capitals
Launch of VoLTE
July 2017
EBITDA %
FCF Yield
Young
(MSR excl. incoming)
