TIM Brasil's 4Q19 institutional presentation provides an overview of the company, the Brazilian telecommunications market, TIM's strategy and financial results. Some key points:
- TIM is Brazil's second largest mobile service provider and has the best 4G network coverage nationwide. It is expanding its fiber network and residential broadband customer base.
- The Brazilian economy showed slow recovery in 2019 but structural drivers point to improving conditions. Mobile internet usage is growing while traditional fixed services decline.
- TIM's strategy focuses on leveraging infrastructure investments, expanding fiber broadband and driving digital transformation. In 4Q19 it achieved its highest ever EBITDA and margin as well as strong cash flow growth.
As banks shrink their balance sheets, the restructuring and lending landscape is developing more like in the US market, with alternative lenders in Europe and asset based lenders playing a bigger role. Deloitte expects their influence to strengthen further in 2015, though some of the newer funds are yet to be tested on the success of their investment strategies.
Postal Automation System Market by Component (Hardware, Software, and Services), Technology (Culler Facer Canceller, Letter Sorter, Flat Sorter, Parcel Sorter), Application (Government, and Courier, Express & Parcel), and Region - Global Forecast to 2023
ParcelCommerce is a carefully developed ecommerce solutions tailored to the unique requirements of courier companies.
We’ll deliver a fully integrated business portal that will act as the focal point of all your business activities.
Simplified User Interface
Multi-courier Integration
Pricing & Margins Management
Orders Management
Reporting & Analysis
As banks shrink their balance sheets, the restructuring and lending landscape is developing more like in the US market, with alternative lenders in Europe and asset based lenders playing a bigger role. Deloitte expects their influence to strengthen further in 2015, though some of the newer funds are yet to be tested on the success of their investment strategies.
Postal Automation System Market by Component (Hardware, Software, and Services), Technology (Culler Facer Canceller, Letter Sorter, Flat Sorter, Parcel Sorter), Application (Government, and Courier, Express & Parcel), and Region - Global Forecast to 2023
ParcelCommerce is a carefully developed ecommerce solutions tailored to the unique requirements of courier companies.
We’ll deliver a fully integrated business portal that will act as the focal point of all your business activities.
Simplified User Interface
Multi-courier Integration
Pricing & Margins Management
Orders Management
Reporting & Analysis
BCG has launched its Telco Sustainability Index, designed to capture the four dimensions most relevant to a telco’s environmental strategy. The index tracks the company’s commitment to sustainability, its emissions intensity and that of its upstream and downstream partners, its elimination of waste, and its customer enablement.
BCG has launched its Telco Sustainability Index, designed to capture the four dimensions most relevant to a telco’s environmental strategy. The index tracks the company’s commitment to sustainability, its emissions intensity and that of its upstream and downstream partners, its elimination of waste, and its customer enablement.
Global Entertainment and Media Outlook 2014-2018Planimedia
La 15ª versión del estudio anual de PwC con las previsiones, tendencias y perspectivas globales de 13 segmentos (publicidad en televisión, televisión de pago, cine, música, videojuegos, sector editorial, publicidad online, prensa y revistas) en 54 países.
The 2021 State Of Ecosystem & Application Integration SurveyConnorHolbert
n 2021, companies find themselves with a new perspective,
better understanding, and a more purposeful urgency to modernize
their supply chain integration solutions.
See how the world’s leading integration experts plan to leverage
Ecosystem Integration to accelerate growth going forward.
See more here: https://www.cleo.com/reports
Financial Results for the First Half of the Fiscal Year Ending March 2019KDDI
The figures included in the following brief, including the business performance target and the target for the number of subscribers are all projected data based on the information currently available to the KDDI Group, and are subject to variable factors such as economic conditions, a competitive environment and the future prospects for newly introduced services.
Accordingly, please be advised that the actual results of business performance or of the number of subscribers may differ substantially from the projections described here.
Cross Border: The Disruptive Frontier (Accenture Post and Parcel Industry Res...accenture
Customers expect cross-border delivery to match domestic services: fast, free, trackable and easy returns. Five actions can help postal organizations win the cross border delivery race.
Telecom strategy review 2015: Europe (part 2)tmtventure
Orange SA, Telenor Group, Vimpelcom, Vodafone, Deustche Telecom, Telefonica and other leading European telecommunication companies.
2nd part of global telecoms strategy review. Total companies to be reviewed is about 16-18. We looked through their reports, interviews and made our own view on their strategy.
Feel free to contact us with your commentary or if you've found any mistakes.
Supply chain is about speed of delivering what your customers need when they need it at the cost they're willing to pay for it. there's no single Supply chain at any company. Each company runs several Supply chains which compete against competitors' Supply Chains.
Webinar: Future of supply chain-20 April 2019
YouTube Link: https://youtu.be/MYIJ8UJWKjc
Contacts us on:
Egypt: +20 101 6611332
KSA: +966 53 867 0487
UAE: +971 56 392 9251
Mail: Training@symbios-Consulting.com
Website: www.symbios-consulting.com
linkedin: https://www.linkedin.com/company/symbios-consulting/
Zinnov Zones for Product Engineering Services 2017Zinnov
Zinnov Zones is an annual rating for Global Technology Service Providers evaluating their prowess in PES, Digital Tech, IoT, M&T, Robotic Automation among others. More at www.zinnovzones.com
TAM AdEx-Mirroring Y 2020 report for Digital AdvertisingSocial Samosa
The TAM AdEx-Mirroring Y 2020 report for Digital Advertising highlights an overview of advertising on various digital platforms throughout the year. This includes trends during lockdown and unlockdown period, leading web publishers, leading brands and more.
BCG has launched its Telco Sustainability Index, designed to capture the four dimensions most relevant to a telco’s environmental strategy. The index tracks the company’s commitment to sustainability, its emissions intensity and that of its upstream and downstream partners, its elimination of waste, and its customer enablement.
BCG has launched its Telco Sustainability Index, designed to capture the four dimensions most relevant to a telco’s environmental strategy. The index tracks the company’s commitment to sustainability, its emissions intensity and that of its upstream and downstream partners, its elimination of waste, and its customer enablement.
Global Entertainment and Media Outlook 2014-2018Planimedia
La 15ª versión del estudio anual de PwC con las previsiones, tendencias y perspectivas globales de 13 segmentos (publicidad en televisión, televisión de pago, cine, música, videojuegos, sector editorial, publicidad online, prensa y revistas) en 54 países.
The 2021 State Of Ecosystem & Application Integration SurveyConnorHolbert
n 2021, companies find themselves with a new perspective,
better understanding, and a more purposeful urgency to modernize
their supply chain integration solutions.
See how the world’s leading integration experts plan to leverage
Ecosystem Integration to accelerate growth going forward.
See more here: https://www.cleo.com/reports
Financial Results for the First Half of the Fiscal Year Ending March 2019KDDI
The figures included in the following brief, including the business performance target and the target for the number of subscribers are all projected data based on the information currently available to the KDDI Group, and are subject to variable factors such as economic conditions, a competitive environment and the future prospects for newly introduced services.
Accordingly, please be advised that the actual results of business performance or of the number of subscribers may differ substantially from the projections described here.
Cross Border: The Disruptive Frontier (Accenture Post and Parcel Industry Res...accenture
Customers expect cross-border delivery to match domestic services: fast, free, trackable and easy returns. Five actions can help postal organizations win the cross border delivery race.
Telecom strategy review 2015: Europe (part 2)tmtventure
Orange SA, Telenor Group, Vimpelcom, Vodafone, Deustche Telecom, Telefonica and other leading European telecommunication companies.
2nd part of global telecoms strategy review. Total companies to be reviewed is about 16-18. We looked through their reports, interviews and made our own view on their strategy.
Feel free to contact us with your commentary or if you've found any mistakes.
Supply chain is about speed of delivering what your customers need when they need it at the cost they're willing to pay for it. there's no single Supply chain at any company. Each company runs several Supply chains which compete against competitors' Supply Chains.
Webinar: Future of supply chain-20 April 2019
YouTube Link: https://youtu.be/MYIJ8UJWKjc
Contacts us on:
Egypt: +20 101 6611332
KSA: +966 53 867 0487
UAE: +971 56 392 9251
Mail: Training@symbios-Consulting.com
Website: www.symbios-consulting.com
linkedin: https://www.linkedin.com/company/symbios-consulting/
Zinnov Zones for Product Engineering Services 2017Zinnov
Zinnov Zones is an annual rating for Global Technology Service Providers evaluating their prowess in PES, Digital Tech, IoT, M&T, Robotic Automation among others. More at www.zinnovzones.com
TAM AdEx-Mirroring Y 2020 report for Digital AdvertisingSocial Samosa
The TAM AdEx-Mirroring Y 2020 report for Digital Advertising highlights an overview of advertising on various digital platforms throughout the year. This includes trends during lockdown and unlockdown period, leading web publishers, leading brands and more.
Financial Results for the Fiscal Year Ended March 2019KDDI
Statements made in these documents with respect to the KDDI Group‘s performance targets, projected subscriber numbers, future forecasts and strategies that are not historical facts are forward-looking statements about the future performance of the KDDI Group, based on company’s assumptions and beliefs in light of the information available at the time they were made. They therefore include certain risks and uncertainties. Actual results can differ from these statements due to reasons including, but not limited to, domestic and overseas economic trends, competitive position, formulation, revision or abolition of laws and ordinances, regulations or systems, government actions or intervention and the success or lack thereof of new services.
Consequently, please understand that there is a possibility that actual performance, subscriber numbers, strategies and other information may differ significantly from the forecast information contained in these materials or other envisaged situations.
2. 2TIM Participações – Investor Relations
Disclaimer
Financial results are presented disconsidering
impacts from IFRS 9, 15 and 16 adoption, unless
otherwise stated.
This presentation contains declarations that
constitute forward looking statements
regarding the intent, belief or current
expectations of the customer base, estimates
regarding future financial results and other
aspects of the activities.
Analysts and investors are cautioned not to
place undue reliance on those forward looking
statements, which speak only as of the date of
this presentation. TIM Part undertakes no
obligation to release publicly the results of any
revisions to these forward looking statements.
Such forward looking statements are not
guarantees of future performance and involve
risks and uncertainties, and actual results may
differ materially from those projected as a
result of various factors.
Institutional Presentation | 4Q19
3. 3TIM Participações – Investor Relations
Agenda
ABOUT TIM
MARKET OVERVIEW
INFRASTRUCTURE
STRATEGY AND POSITIONING
OPERATING EVOLUTION
FINANCIAL EVOLUTION
OUTLOOK
04
10
22
30
37
43
49
Institutional Presentation | 4Q19
4. 4TIM Participações – Investor Relations
ABOUT TIM
Institutional Presentation | 4Q19
5. 5TIM Participações – Investor Relations
Challenger with relevant role in the telecom sector
→ #2 in Mobile Service Revenues
→ Operator with National Presence
→ Best and Wider 4G Coverage
→ #1 in Prepaid, despite the transformation in the customer base
→ >100 thousand km of Fiber optical Network throughout the country
MOBILITY
→ IoT: pioneer in Agribusiness vertical solutions, connected car and value added
services
SOLUTIONS
→ >550k Residential Broadband Clients
→ 100% of the Base with High Speed (>34 Mbps)
→ Presence in 23 cities with FTTH coverage
→ 2,3 MM Homes Passed with FTTH
→ Residential Broadband offered through Mobile Network
RESIDENTIAL
~R$ 40 billion market
capitalization
Institutional Presentation | 4Q19
6. 6TIM Participações – Investor Relations
2019 financial highlights show strong execution
6
R$ 17.4
Bi
Net Revenue
(+2.2% YoY)R$ 6.9
Bln
Highest EBITDA1
in TIM’s history
(+5.8% YoY)
39.8%
Highest EBITDA
margin2 in the
market
+R$ 1.0
Bln YoY
Operational Cash
Flow3
R$ 503
MM
TIM Live Revenue
(Fixed Broadband)
(+28.5% YoY)
Institutional Presentation | 4Q19(1) Normalized; (2) Normalized, Among Top 5 Players in the Telecom Market; (3) Ex-licenses; (4) Financial KPIs presented on Pro-forma basis, excluding IFRS 9,
15 and 16 impacts.
7. 7TIM Participações – Investor Relations 7
Institutional Presentation | 4Q19
UNIQUE TELCO COMPANY LISTED ON
THE NOVO MERCADO
82%
8%
10%
Adopted
Partially adopted
Not adopted
SHAREHOLDERS’ STRUCTURE COMMITTEES TO REINFORCE AND
GUARANTEE SOLID CORPORATE
GOVERNANCE
10 members
(3 independents) 3 members
3 members
(3 independents)
3 members
5 members
(2 independents)
7 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
→ Member of ISE for 11 years
Shareholders’ structure and highest level of corporate governance
Corporate Governance Form1
vs 65% on
average2
29%
39%
32%
Institutional Shares
Brazil
USA
Rest of World
Telecom Italia S.p.A.
Telecom Italia
Finance S.A.
TIM Brasil Serv. E
Part. S.A.
Minority
TIM Participações
S.A.
TIM S.A.
100%
100%
67% 33%
100%
→ 30% of independent members
→ 30% of female representation: >3x B3-
Novo Mercado average
General Assembly
Board of Directors Fiscal Council
Statutory Audit
Committee
Compensation
Board
Control and Risk
Board
Statutory Board of
Officers
8. 8TIM Participações – Investor Relations
(since 2013)
SUSTAINABILITY IN BUSINESS
ISO 14001 Environmental Certification for
Management and Operation Network
process (1st Brazilian telco) and ISO 9001
Quality Certification for Billing and
Management Network processes
Commitment to corporate social responsibility
MAIN PROJECTS
MISSION: To create and strengthen resources and strategies for
the democratization of science, technology and innovation that
promote human development in Brazil, with mobile technology as
one of its main enablers.
→ + than 700,000 people involved
→ Partnership with 3 Ministries: MINC, MEC e MCTIC
→ Present in ~ 500 cities and 26 states (+DF)
→ 500,000 students, 4,000 Public Schools and 16,000 teachers
GARATEA-ISS
INSTITUTO TIM-OBMEP
SCHOLARSHIP
PRINCIPLES AND
STRATEGIES
Education Work Application Inclusion
Incentive in renewable energy sources, approximately 29% of the
company's electricity consumption performed in 1Q19.
Self-generation: 6 Hydroelectric Generating Centers (5 in Minas Gerais
and 1 in São Paulo); 1 Biogas Power Plant (Methane burning from landfill)
→ Energy purchase: Free energy market
GRI 302-1 Standard
Joined UN Global
Compact in 2008
Member of ISE (Corporate
Sustainability Index) for
11 consecutive years
Member of ICO2
(Carbon Efficient Index)
for 7 years
Member of CDP (Carbon
Disclosure Project), responding
Investor and Supply Chain
questionnaires, since 2010
2018
Sustainability
Report based on
GRI Standard
GHG Inventory
verified by 3rd
Part: Gold Stamp
ACADEMIC WORKING
CAPITAL
Institutional Presentation | 4Q19
9. 9TIM Participações – Investor Relations
Milestones: Innovation DNA
Start-up
1998
Beginning of Long
Distance Services
2003
The end of differentiated
call tariffs (MTR) between
operators
2015
GSM launch
National Presence
2002
3G and Mobile
BroadbandLaunch
2008
Infinity and Liberty
Leadership in national LD
Intelig Incorporation
2009
AES Atimus Acquisition
Migration to Novo
Mercado
2011
4G License Acquisition –
2.5GHz
Launch of Live TIM in
SP
2012
Launch of InstitutoTIM
2013
4G License Acquisition –
700MHz
TIM Live reaches 100
thousand customers
2014
New Positioning
& New brand
2016
Comercial and financial
turnaround
2017
TIMLIVE / Fiber/WTTx
Digitalization
2018
5G Trials
TIM Live reaches 500 thousand
customers
2019
Institutional Presentation | 4Q19
12. 12TIM Participações – Investor Relations
Brazilian population by social class
The consumers still feels the impact from past years crisis,
influencing the sector dynamics
During the past year, class B decreased, while classes D/E
increased
A
B
C
DE
5
MM
44
MM
101
MM
60
MM
2.5%
21.0%
48.1%
28.5%
Source: IPC Maps 2019 and 2019/ABEP 2019, Worlddata (2018), Exchange rate as of October 11st, 2019 (R$/US$ 4,11), IBGE, BACEN, FGV.
Average
income
Benchmark
countries
6.9 6.5
12.0 11.6
Unemployment Rate
(% in the last quarter of the year)
39.6
43.8
46.3
42.4 42.7
Household Debt
(%, EOP)
2012 14 16 1813 15 17 2019 2012 14 16 1813 15 17 2019
106.1
86.4
73.4
93.0
Consumer Confidence
(0-200)
104.5
86.9
78.4
96.1
Business Confidence
(0-200)
> 100 = optimism > 100 = optimism
2012 14 16 1813 15 17 2019 2012 14 16 1813 15 17 2019
(US$ 6.262)
(US$ 4.872)
(US$ 3.203)
(US$ 2.596)
(US$ 1.681)
(US$ 1.137)
(US$ 959)
(US$ 804)
(US$ 711)
(US$ 299)
(US$ 217)
(US$ 151)
US$ 6.217
US$ 1.373
US$ 426
US$ 176
US$ 734
Institutional Presentation | 4Q19
13. 13TIM Participações – Investor Relations
0.8%
1.3%
1.4%
1.5%
1.5%
1.9%
Brazil
South Africa
Iraq
Marocco
Malaysia
Nigeria
Mobile Wallet Share1
(Mobile ARPU / per capita GDP)
Brazilian market is relevant globally with room for ARPU growth
(1) Selected countries.
Source: Merrill Lynch – Global Wireless Matrix 4Q19 (3Q19 data).
209
226
288
419
948
1,597
Russia
Brazil
Indonesia
USA
India
China
5th
Mobile Customer Base Ranking
(MM)
16.2
19.4
20.3
66.0
122.6
175.8
Brazil
India
Korea
Japan
China
USA
9th
Mobile Service Revenues Ranking
(US$ Bln / year)
108%
162%
168%
173%
182%
183%
Brazil
UAE
Hong Kong
South Africa
Austria
Finland
30th
Mobile Penetration Ranking
(MM)
6.0
30.5
35.2
36.9
37.5
41.1
Brazil
Japan
USA
Norway
Switzerland
Canada
39th
Mobile ARPU Ranking
(US$ / mo)
Institutional Presentation | 4Q19
19th
14. 14TIM Participações – Investor Relations
New consumer habits reinforce data service as essential,
especially over mobile network
3%
56%
40%
Internet users by device
Only computer
Only mobile
Both
+7 p.p
A/A
24%
10%
63%
3%
Internet users
Only Wi-Fi
Only mobile
Both
Don't know
73%
96%
66% 59%
37%
27%
6%
Whatsapp Facebook Youtube Instagram Twitter
Time spent per day
2º3º2º 2º
(Global ranking position)
2º Internet – 9h29m
2º Social Network – 3h34m
Social network penetration
(% population)
50%
64%
71%
2017 2018 2019
38%
20%
Movies and series Music
Paid streaming and car app users
(% of smartphone users)
+21 p.p.
Source: We are Social, Mobile Time, Statista.
Institutional Presentation | 4Q19
15. 15TIM Participações – Investor Relations
Traditional services have been losing relevance in this new
framework and internet has been gaining prominence
Source: Anatel.
(1) Number of households in 2019 estimated by TIM. (2) Source: CGI.br/NIC.br; last update as of 2018.
27% 31% 34% 36% 37%
42% 44% 45%
2012 2013 2014 2015 2016 2017 2018 2019
Fixed Broadband Penetration
(% of households)
12%
25%
23%
41%
< 2 Mbps
2 - 12
12 - 34
> 34
Fixed Broadband Connections Speed
32.6 MM
lines
31%
47%
56%
66%
71% 74%
2012 2013 2014 2015 2016 2017 2018 2019
Mobile Internet Users2
(% of >10 years population)
25% 28% 29% 28% 27% 26% 25%
22%
2012 2013 2014 2015 2016 2017 2018 2019
Pay TV Penetration
(% of households)
15.8 MM
accesses
69% 69% 67% 64% 61% 58%
53%
46%
2012 2013 2014 2015 2016 2017 2018 2019
Fixed Voice Penetration
(% of households)
33.5 MM
lines
Institutional Presentation | 4Q19
16. 16TIM Participações – Investor Relations 16
Institutional Presentation | 4Q19
Change in Market structure combined with new consumption
habits resulted in a transformation in the base profile
199 201 203 204 206 208 209 210
131% 135% 138% 126% 118% 115% 110% 97%
2012 2013 2014 2015 2016 2017 2018 2019
Mobile Penetration
Population (MM) Penetration
2.00 1.96 1.94
1.73 1.64 1.54 1.44 1.37
2012 2013 2014 2015 2016 2017 2018 2019
SIM Cards per Unique User
(Unit)
0.36 0.32
0.24
0.16
0.10 0.06 0.03 0.02
2012 2013 2014 2015 2016 2017 2018 2019
MTR Evolution
(R$ / min)
The maintenance of a high interconnection tariff
pushed the “community effect (on-net)” through the
possession of multiple SIM cards.
Mobile market has been experiencing organic growth
in total unique users.
Penetration is decreasing due to the reduction of total
SIM cards: weakening of the “community effect” due to
the decrease in ITX tariff (off-net reduction) and
dissemination of communication apps.
SIM consolidation despite the growing number of
mobile users.
211 212 213
185 165 149 130 117
44 51 58 62 67
73 80 85
2012 2013 2014 2015 2016 2017 2018 2019
Prepaid Human Postpaid
Mobile Base per Segment
(MM)
Postpaid base already represents ~50% of unique
users, besides that >60 MM Brazilians are in the credit
bureau blacklist.
227 MM
SIM Cards
124 130 137 139 138 142 144 146
74%
76%
79%
80%
79%
80% 80%
79%
2012 2013 2014 2015 2016 2017 2018 2019
Unique user >10 years (MM) Penetration
Unique User Penetration 146 MM
people
17. 17TIM Participações – Investor Relations
Three major players working in integrated manner, TIM with
relevant performance in mobile and selected approach in broadband
Integrated Pure
Regional / Niche
ISPs
MVNOs
Selected
broadband
(Mobile)
(Pay TV)
Acquired
4-play
(In JR)
Institutional Presentation | 4Q19
18. 18TIM Participações – Investor Relations
51% 52% 54%
49% 48% 46%
119.3 118.5 116.9
2016 2017 2018
Mobile Fixed
60.7
61.8
62.8
2016 2017 2018
Market revenue dynamic indicates mobile growth, and highlights
TIM’s evolution
(1) 2016-2018 comparison on pro-forma basis; (2) 2019 vs 2018 disconsidering Nextel figures and excluding impacts from IFRS 16 adoption (except for Claro in
2019).
Source: Operators’ Earnings Releases.
20.9 19.7 18.5
2.8 2.3 1.9
29.3 29.4 30.0
34.6 35.6 35.7
12.3 13.1 13.9
2016 2017 2018
13.8 13.0 12.0
5.5 4.4 3.5
17.6 17.8 19.2
40.1 41.1 40.9
23.0 23.8 24.4
2016 2017 2018
Total Services Net Revenues Share
(%)
Mobile Service Net Revenue Share
(%)
Nextel
TIM
Oi
Claro
Vivo
Nextel
TIM
Oi
Claro
Vivo
Market | Total Services Net Revenues
(R$ MM)
Market | Mobile Service Net Revenues
(R$ MM)
-1.0%
CAGR
+1.7%
CAGR
53% 55%
47% 45%
113.9 113.1
2018 2019
59.9
61.7
2018 2019
19.0 17.5
30.3 31.1
36.5 36.8
14.2 14.7
2018 2019
12.6 11.9
19.3 20.7
42.5 42.1
25.6 25.4
2018 2019
Institutional Presentation | 4Q19
19. 19TIM Participações – Investor Relations
Mobile and broadband market are competitive, but have been
showing evolution towards more rationality. Changes in market
structure may reinforce this path
0%
3%
2%
24%
8%
32%
22%
33% 24%
49%
29%
29%
26%
10%
31%
16%
16%
33%
5%
31%
1%
Others
(1) Claro considers participation of Nextel in the SMP.
Source: Anatel.
Nextel
HHI Index
0 0.25 0.5 0.75 1
0 0.25 0.5 0.75 1
0 0.25 0.5 0.75 1
0 0.25 0.5 0.75 1
Level of competitiveness
+ -
(Market Share | Dec-19)
Institutional Presentation | 4Q19
21. 21TIM Participações – Investor Relations
Regulatory updates promoting major changes in the sector
Anatel and Relevant Regulators
4 MAIN REGULATORY
CHAPTERS
→ License and Spectrum
→ Competition
→ Quality and Consumer Protection
→ Universalization Policy and
Broadband
ORGANIZATION
Anatel is subject to special authority regime and bound to the
Communication Ministry, with the function to regulate the Brazilian telecom
sector (LGT, Art. 8º)
Independent Antitrust Agency (coordination with Anatel to sectoral
matters)
Important in the intersectoral regulation (infrastructure)
Tribunal de Contas da União¹: surveillance of Anatel’s operating activities;
final instance on matters “related to costs” (RF auctions, liquidation
agreements etc.)
Independent system for consumer protection on national, regional and local
levels; not integrated entities that work in parallel (and overlapping) to
Anatel
~1,500
Public
agents
~5,000
Control items
26 Regional
Offices
336
Resolutions
in force
Recent important changes
Law nº 13.879/2019 (PLC 79)
(presidential approval on 10/04/2019)
Fixed
→ Option to migrate from concession to authorization model
→ Additional broadband investment plan: balance of concession
exchange to authorization, reversible goods and public politics area
Mobile Spectrum
→ Successive renewals of the authorization (not limited to 2 periods)
→ Possibility of conversion of the renewal fee for investments
→ Radiofrequency transferal between operators (secondary market)
RQUAL (2020)
→ Approved in Dec, 2019 to introduce responsive regulation to reach
better quality of telecom services. Replaces pecuniary sanctions for
alternative measures according to the risk identified.
TAC² –Conduct Adjustment Term (Sep/19)
→ First agreement approved with a major operator, with a reference value
of R$ 627 million, to generate improvements in three operating pillars:
client experience, quality and infrastructure
SPECTRUM CAP (Nov/18)
→ <1GHz frequencies: stablished the limit of up to 35% concentration
→ Between 1GHz and 3GHz bands: up to 30%
In both cases, participation can be extended up to 40%, with conditioning
(1) Government Accountability Office.
(2) Agreement for Conduct Adjustment – agreement that operators can reach with Anatel to substitute fines for investment in less favored regions.
(3) Universalization Plan.
Institutional Presentation | 4Q19
23. 23TIM Participações – Investor Relations
Evolving proposition for consistent and sustainable growth
Quality
Price
2017-
2018
2016
Today
2016-2018 Turnaround Strategy
Quality
Price
2017-
2018
2016
2019-21
2019-2021
2019-21 Consolidation Strategy
2008
2012
Quality
Price
2008-2016
Accelerate the Digital Transformation and increase Customer Experience with
better Quality and Value Proposition, leveraging on 2nd wave of Mobile Upselling,
FTTH and other sources of revenues (e.g. B2B, digital services).
Institutional Presentation | 4Q19
24. 24TIM Participações – Investor Relations 24
Institutional Presentation | 4Q19
TIM is well positioned to attend the new demand, with no legacy
to defend
41.2
39.6
37.5
33.5
2016 2017 2018 2019
Fixed Line Base
(MM)
18.8
18.1
17.5
15.8
2016 2017 2018 2019
Pay-TV Base
(MM)
66.6
72.7
79.8
85.0
2016 2017 2018 2019
Human Postpaid Base (ex-M2M)
(MM)
26.9
28.9
31.2
32.6
2016 2017 2018 2019
Broadband Base
(MM)
-6.6%
CAGR
Fixed-mobile
substitution
Traditional-OTT
ssubstitution
+16.3%
CAGR
Market
+8.4%
CAGR
+10.1%
CAGR
Market
-5.7%
CAGR
Market
+6.6%
CAGR
+22.8%
CAGR
Market
25. 25TIM Participações – Investor Relations
1
Mobile Post Paid Consumer (“the Controle wave”)
• Growth based on a «Mobile Challenger» approach pushing migration from
prepaid and upselling
• Leverage the benefits of 4G coverage leadership
• Customer long term relationship driven by loyalty initiatives
3 B2B & Residential BB
• Fiber deployment acceleration (backbone, backhaul and FTTH), with FTTH
offer in selected regions
• Opportunity to gain relevance in overall business Revenues leveraging on:
o Revision of Value Proposition
o More Convergent approach offering E2E solutions
o Increase in efficiency and sales productivity
2
4 Digital Provider
• New revenue streams: Enable innovative services that meet customers
needs
• Customer Experience: Digitalization of customer care process
• Time to Market: Support current business model with digital capabilities
Mobile Pre Paid
• Offer simplification to improve customer experience with continued
evolution of digital channels
Revenues
B2B & Residential BB
2
3
Mobile Post Paid
4 Digital Provider
Timing
Market
Consolidation
Illustrative Graph.
1 Mobile Pre Paid
Opportunities: TIM Brasil Growth Waves
Institutional Presentation | 4Q19
26. 26TIM Participações – Investor Relations
B2C Mobile: managing client base focusing on upselling and churn
dynamics
Pure
post
Control
Prepaid
Daily – Multi-day packages
Pre - Control
Control - Pure
Control - Control
Pure - Pure
New Offers:
• New TIM Pre Offer1
• New VAS revenues
• Family Plan
• International roaming
• Digital Plan
Strategic Guidelines to Reduce Churn
Mix Pre vs Total Postpaid Blended ARPU (R$/month)
70%
<50%
30%
>50%
Prepaid
Postpaid
20182017 2021e2020e2019e
20.2 22.4
TARGET: Double digit decrease
• More selective migration from Prepaid will reduce early churn
• Stimulate loyalty and digital payment methods (credit card,
digital invoice, automatic debit)
• Proactive lock in of customer base (churn high propensity),
with Handset as a retention tool
• Dedicated retention operation
• Quality War Rooms² focused on eliminating dissatisfaction and
key pain points
20182017 2019e 2020e 2021e
Mid to High single
digit growth (CAGR)
Upselling 2nd Wave: Upselling between and within segments based on profiling
1 TIM Pré Top and TIM Pré Top Mais
2 Collection; Consumer Customer Care; Plans and Offers Information; Voice and Data Service; Billing and Allowance Complaints
Institutional Presentation | 4Q19
27. 27TIM Participações – Investor Relations
B2B (mobile + fixed): penetrate clients through added value
solutions, becoming a business partner
• Increase B2B investment to turnaround
results over the next three years
• Increase efficiency/productivity
– Revise back office and support functions
processes
– Review client caring model (digital)
Vision for B2B segment
(Revenue Growth)
Top
Enterprise
SMB
• Complement top clients offer and portfolio
• Increase sales force productivity and size
• Increase penetration on Brazilian Top
Companies
• Explore new opportunities to sell more
aggregated value solutions (e.g: IoT/Agro)
• Recover growth in Fixed segment
Levers Implications
• Specify value proposition for Enterprise
segment
• Define go-to-market, addressing channel mix
(direct vs indirect) optimization
• Explore convergence opportunities
• Optimized geographic approach to maximize
productivity
• Revise value proposition of SMB segment
• Focus commercial effort in fixed products and
uplift in sales force
• Increase digital channels on sales mix
2018 2021e
25%
• Market share
• Share of wallet
• Market share
• Share of wallet
• Market share
• Share of wallet
Institutional Presentation | 4Q19
28. 28TIM Participações – Investor Relations
Infrastructure: capitalizing on existing infrastructure and expanding
FTTH
Residential Broadband Penetration - Brazil
• Broadband Penetration at 45% of HH; Ultra-
BB Penetration only 12% of HH
• 96% of cities (~50% pop.) have very low BB
penetration (~25%)
• 16% of BB connections have speeds < 2Mbps
Relevant opportunity to capture a strong
unserved demand for Residential
Broadband and Ultra-BB connectivity
0-20%
40-60%
>60%
20-40%
Main trends
• ~3x participation on total revenue
Capitalize
current
assets
Expansion
• Focus on execution excellence
• Optimize go-to-market, exploiting
existing infrastructure
• Leverage fiber coverage from mobile
network (FTTS – fiber to the site)
• Shift in product mix (growth coming
from FTTH) leading to a bigger ARPU
Levers
• Expand FTTH to several new cities in
the next 3 years using cluster approach
76.0
2018 2019e 2020e 2021e
FTTX Customer Base (‘000)
TIM Live ARPU (R$/month)
Geographic Expansion: 22 active
municipalities
Manaus – Oct-18
Salvador – Jul-18
Lauro de Freitas – Fev-19
Feira de Santana – Jul-19
Goiânia – Aug-18
Aparecida de Goiânia –
Oct-18
Anápolis – Jun-19 Rio de Janeiro – Oct-12 (FTTC)
Nov-17 (FTTH)
São Gonçalo – Jun-18
Nilópolis – Aug-18
Duque de Caxias – Nov-12 (FTTC) Jun-19
(FTTH)
Nova Iguaçu – May-14 (FTTC only)
São João de Meriti – Aug-15 (FTTC only)
São Paulo – May-12 (FTTC) Nov-17 (FTTH)
Mauá – Apr-18
Poá – Aug-18
Suzano – Jul-18
+3 – Jun-19 | +1 – Aug-19
Recife – Set-19
+3 – 4Q19
0
400
800
1200
2018 2019 2020 2021
FTTC
FTTH
High-single to Low-Double
digit growth (CAGR)
• ~2.5x customer base growth
Institutional Presentation | 4Q19
29. 29TIM Participações – Investor Relations
New revenue streams: Enable
innovative services that meets
customers needs
Customer Experience: Improve
digital customer service, acquiring
capabilities, customer attendance and
internal processes and systems
Time to Market: Support current
business model with digital capabilities
• New revenues opportunity from being a
Platform provider (analytics, BD, mobile
advertising, etc.)
• Content offer aggregation to support
Mobile + Fixed service revenue growth
• Increased role in IoT growing ecosystem
(beyond connectivity)
~1
Addressable market by 2021
>30bln
Reais
mln
lines
Digital: key strategic pillars to improve customer experience and
exploit new revenue streams
PARTNERSHSIP
ACCELERATION
Open Innovation. API
based development.
DIGITAL FIRST
Works across all
digital devices and all
channels
CUSTOMER ORIENTED
Continuous Customer
Feedback (closed loop)
AGILE DRIVEN
Agile methods and
practices integrated into
the platform
COGNITIVE
Data-driven
architecture providing
actionable information
and automation
ANALYTICS DRIVEN
Customers personalized
experience, marketing,
campaign, NBA
DIGITAL CHANNELS
Evolve platforms and
encourage usage with
offer benefits
TRADITIONAL
CHANNELS
Improve IVR retention
with evolved platform
Institutional Presentation | 4Q19
31. 31TIM Participações – Investor Relations 31
Institutional Presentation | 4Q19
Customer base transformation process, driven by pre-postpaid
migration, supported an evolution at the top of the pyramid
77%
70%
64% 61%
21%
27%
32%
33%
2% 3% 4%
7%
2016 2017 2018 2019
TIM Base Mix
Data Only Postpaid (Modem + M2M) Human Postpaid Prepaid
+0.4 p.p.
YoY
-3.2 p.p.
YoY
49%
42%
34% 31%
45%
52%
59% 61%
6% 6% 7% 8%
2016 2017 2018 2019
Mobile Service Revenue
Prepaid Postpaid Other
+2.0 p.p.
YoY
-2.9 p.p.
YoY
32. 32TIM Participações – Investor Relations
21% 20% 23%
21%
40%
43% 40% 39%
22% 20%
22%
23%
16% 12% 11% 12%
2012 2013 2014 2015 2016 2017 2018 2019
Market Share | Human Postpaid
TIM Vivo Claro Oi
28%
29% 28% 28%
27%
25%
25%
27%
25%
25%
25%
23%
20% 20% 21% 21%
2012 2013 2014 2015 2016 2017 2018 2019
Market Share | Prepaid
TIM Vivo Claro Oi
Customer base management momentum: “from volume to value”
9.5
11.1 11.2 12.3 13.4
16.1
18.1 17.8
1.2 1.2 1.3 1.3 1.5 1.7 2.2
3.6
2012 2013 2014 2015 2016 2017 2018 2019
TIM Base | Postpaid
(MM)
Human Postpaid M2M
Source: Anatel.
70.4 73.4 75.7
66.2 63.4 58.6 55.9 54.4
59.7 61.1 63.2
52.7 48.5
40.8 35.7 33.0
2012 2013 2014 2015 2016 2017 2018 2019
TIM Base | Total and Prepaid
(MM)
Total Prepaid
Institutional Presentation | 4Q19
33. 33TIM Participações – Investor Relations
Approach to ensure higher value captured and sustainable
growth
16.7
40.6
10.4
17.9
37.7
11.3
20.2
39.7
11.5
22.4
39.9
11.5
23.7
38.1
12.0
Total Postpaid Prepaid
Mobile ARPU
(R$ / mo, Pro-forma1)
2015 2016 2017 2018 2019
7.1 16.9 27.6 34.5 38.6
10.7%
26.6%
47.1%
61.7%
71.0%
2015 2016 2017 2018 2019
Base 4G
(MM)
4G Base Penetration
397 640
1,198
2,184
3,009
2015 2016 2017 2018 2019
BOU
(MB / mo)
(1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
+10.6%
CAGR
-1.8%
CAGR
+4.2%
CAGR
Change in customer base mix, with greater postpaid relevance, was a lever
for Total ARPU growth. Upgrade to higher value plans will ensure this
continuous and robust increase.
Reduction due to
Postpaid mix, with
greater importance of
Control plans.
Institutional Presentation | 4Q19
34. 34TIM Participações – Investor Relations
“More for more”: Stepped portfolio addressing consumer wishes
through relevant partnerships
(1) Core offer for three users.
POSTPAID
ENTERTAINMENT HUB FOR
THE FAMILY
Communication
Services
TIM banca
virtual
Trial +R$ 15/mo after
unlimited calls
TIM Controle
TIM Black
TIM Black Família
from 2GB
Social
unlimited calls
from
5GB
unlimited calls
from
8GB
unlimited
calls
from 60GB1
Entertainment
international
roaming
1x
GB
GB bonus for
portability
shared
benefits
(monthly fee included)
TIM Pré Top
GB bonus for
portability
≥R$ 20.00/two weeks ≥R$ 49.99/mo ≥R$ 119.99/mo ≥R$ 269.99/mo
Increase CEX with better Quality and Value Proposition
Institutional Presentation | 4Q19
35. 35TIM Participações – Investor Relations
TIM Live
Exploring accelerated growth opportunities: Residential
broadband
306
392
467
566
2016 2017 2018 2019
Broadband Base
(Mil)
FIBER
Internet (WTTx)
Ultra
Ultra Fibra
speed from
40 mbps
to 60 mbps
speed from
100 mbps
to 2 gbpsallowance of 30 GB
to 80 GB
Plans
Value-Added
Services Protection
+ VoD
Partnerships
+ Content (VoD, TIM
Banca, Ensina)
+ Power Wi-Fi
57.9
67.3
76.0 80.8
2016 2017 2018 2019
TIM Live Fiber ARPU
(R$ / mo, Pro-forma1)
25 cities166 cities
+27.9%
CAGR
+14.3%
CAGR
(1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
Institutional Presentation | 4Q19
36. 36TIM Participações – Investor Relations
Not Only B2C: Evolving from Connectivity to Value-Added Service
and Solutions Provider
Porto Seguro Conecta
→ New M2M customer base: vehicle/fleet
tracking and financial services (POS);
→ New SIM card management platform:
upselling opportunity for value-added
services.
ConectarAGRO
→ New farm covered: Amaggi;
→ Partnership to promote 700MHz 4G in
countryside;
→ Implemented solutions:
Connected Car
→ Development of agreements with car
manufacturers;
→ Connected sensors to monitor, protect, and
maintain the car;
→ Management using new e-SIM platform;
→ Upselling opportunity for human lines and
VAS.
2.5
0.81.8
3.3
2Q18 2Q19
M2M Base
(MM)
+77.3%
Porto
Conecta
EM CONSTRUÇÃO
Institutional Presentation | 4Q19
41. 41TIM Participações – Investor Relations
New Network Initiatives
5G: Steps towards commercial launch
→ 5G tests on real network in the 3.5GHz frequency
→ Registered download speeds greater than FTTH (>1Gbps) with
more efficient capacity distribution between users
→ Edge computing (decentralization) and core virtualization for
better service responsiveness
Future
Increasing assets efficiency
→ MOU with Vivo to discuss sharing opportunities aiming quality
improvement and CAPEX / OPEX efficiency
✓ 2G network in a single grid model
✓ 4G network infrastructure in 700Mhz band – cities with
<30.000 inhabitants (could be expanded)
✓ Other frequencies and technologies
✓ Efficiency and cost reduction regarding Network
Operations and Maintenance
→ Use of 5G technologies to improve 4G capacity: massive MIMO
✓ Greater spectrum capacity: 2 to 3x improvement in live
tests
✓ 4th operator in the world to deploy this approach
Today
Institutional Presentation | 4Q19
42. 42TIM Participações – Investor Relations
5G Protagonism: Exploring Applications and Building a Readiness
Ecosystem to the Technology Launch
Applications
→ Network virtualization: 37
data centers until 2021
→ 5G-ready equipment:
network migration through
software update
→ RFP Process: 4G and 5G
vendors for the next three
years
Network
Preparation
→ Trials on real network: all
vendors involved (Huawei,
Ericsson, Nokia)
→ Trials in stores: engaging
customers with 5G
technology in >10 stores
Trials
→ 5G Auction:
expected for
2H20, conditions
still under
discussion by
Anatel
Regulatory
IoT
MOOC
Telemedicine
VR
360º
Streaming
Connected
Band
Drones
Games
GB
Rate
Smart
Cities
Augmented
Reality
Industry
4.0
FWA
Institutional Presentation | 4Q19
45. 45TIM Participações – Investor Relations
Leverage on Efficiency Plan to maintain OPEX below inflation1
throughout the plan period
Caring (Digital Interactions) E-Billing (% on total invoice)
2021e2018
+12MM
2018 2021e
+22p.p.
Digital Top Up
(% on Total Top Ups)
2018 2021e
+12p.p.
2018 2021e
+31p.p.
E-Payment
(% on total payments)
Accelerate Digital Transformation Initiatives
• Customer facing: digital interactions, e-billing, e-payment,
customer acquisition, recharges, IVR
• Internal process and systems: automation of support
processes, upgrade and strengthen IT Architecture
• Accelerate the adoption of automatic debit in stores
Sustain and Develop Traditional Initiatives
Description – Plan 2019-21
Risk/PDD
• Create new credit models
• Implement new fraud model and collection channels
Legal
• Re-structure multi-functional team to mitigate entries of
new lawsuits
• Introduce variable incentives scheme for the external offices
HR • Assess internalization vs. outsourcing
Purchasing • Review purchasing practices for key categories
Energy
• Cleaner electricity matrix and less exposed to the regulated
market movements and regulations
• Put in operation the first biogas power plant of solid urban
residue
Efficiency Plan 2019-21: ~R$ 1.2 bln
(Full plan 2017-21 R$ 2.2 bln)
(1) ¹Inflation from Focus (18th January 2019).
Source: BACEN.
Institutional Presentation | 4Q19
50. 50TIM Participações – Investor Relations
LONG TERM TARGETS
SHORT TERM (2019)
TARGETS
Capex on Revenues:
Low 20’s
Capex:
~R$ 12.0 bln
(∑‘19-’21)
• Increase cash flow from operations
• Continue with debt and tax rate
optimization
• Accelerate digitalization efficiencies
• Maintain zero-based approach and
traditional initiatives
• Improve risk management models
• Further improve mobile ARPU
• Expand Residential BB Revenues
contribution
• Tap B2B opportunity
GOALS DRIVERS
Revenue
Growth
Sustainability
Expand Cash
Generation
Improve
Profitability
EBITDA Margin:
≥39% em 2020
EBITDA-Capex on
Revenues:
≥20% em 2021
Service Revenues
Growth
Mid single digit
(CAGR ‘18-’21)
EBITDA Growth:
Mid to High single digit
growth (YoY)
EBITDA-Capex on
Revenues:
>15%
Service Revenues Growth
3% – 5% (YoY)
• Additional Capex to grow fiber and
improve mobile capacity
Infrastructure
Development
TIM Brasil 2019-’21 Targets
Institutional Presentation | 4Q19
51. Vicente Ferreira
E-mail: vdferreira@timbrasil.com.br
Phone: +55 21 98113-1400
Bernardo Guttmann
E-mail: bguttmann@timbrasil.com.br
Phone: +55 21 98113-1408
Camila Assano
E-mail: cacruz@timbrasil.com.br
Phone: +55 21 98113-4236
Lucas Carneiro
E-mail: lmcarneiro@timbrasil.com.br
Phone: +55 21 98113-1141
Guilherme Kopke
E-mail: gknascimento@timbrasil.com.br
Phone: +55 21 98113-0583
Visite o nosso site
www.tim.com.br/ir
E-mail: ri@timbrasil.com.br
Avenida João Cabral de Melo Neto, 850 –
Torre Sul - 12º andar
Barra da Tijuca – 22775-057 – Rio de Janeiro, RJ
For Further Information