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Institutional Presentation 3Q19

TIM Brasil held an institutional presentation for the third quarter of 2019. The presentation provided an overview of TIM's business including its position in the Brazilian market, operational and financial highlights, and outlook. It noted that TIM is the #2 mobile service revenue operator in Brazil with national presence and the best 4G coverage. It also discussed the Brazilian telecommunications market trends including growing data usage and shift to postpaid plans. The presentation contained sections on TIM's strategy, operating and financial evolution, and future opportunities in areas like 5G and fiber broadband.

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TIM Brasil Institutional Presentation 3RD QTR 2019
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 | 3Q19
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 TIM. READY FOR THE FUTURE. Institutional Presentation | 3Q19
4TIM Participações – Investor Relations ABOUT TIM Institutional Presentation | 3Q19
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 → >90 thousand km of Fiber optical Network throughout the country MOBILITY → IoT: pioneer in Agribusiness vertical solutions, connected car and value added services SOLUTIONS → >500k Residential Broadband Clients → 100% of the Base with High Speed (>34 Mbps) → Presence in 20 cities with FTTH coverage → 1,9 MM Homes Passed with FTTH → Residential Broadband offered through Mobile Network RESIDENTIAL ~R$ 30 billion market capitalization Institutional Presentation | 3Q19
6TIM Participações – Investor Relations 2018 financial highlights show strong execution 6 R$ 17.1 Bi Net Revenue (+4.7% YoY) R$ 6.6 Bln Highest EBITDA1 in TIM’s history (+10.3% YoY) 38.5% Highest EBITDA margin2 in the market +R$ 2.9 Bln YoY Operational Cash Flow3 R$ 392 MM TIM Live Revenue (Fixed Broadband) (+38.4% YoY) (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. Institutional Presentation | 3Q19
7TIM Participações – Investor Relations 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 (4 independents) 3 members (3 independents) 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 (1) Not considering 5 items non applicable to TIM; (2) According to EY 2018 report. vs 65% on average2 24% 41% 35% 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% → 40% of independent members: 2x of required → 20% 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 Institutional Presentation | 3Q19
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 | 3Q19
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 | 3Q19
10TIM Participações – Investor Relations MARKET OVERVIEW Institutional Presentation | 3Q19
11TIM Participações – Investor Relations Despite slow recovery, structural drivers point to a better environment 5,9 6,5 5,8 5,9 6,4 10,7 6,3 3,0 3,8 2,9 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19 IPCA (% p.a.) 7,5 4,0 1,9 3,0 0,5 -3,5 -3,3 1,3 1,3 1,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M19 GDP Growth (% YoY) (1) GDP growth at market prices: accumulated rates for the past four quarters (in relation to prior year’s same period). Source: IBGE, BACEN, FGV. 10,8 11,0 7,3 10,0 11,8 14,3 13,8 7,0 6,5 5,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19 Interest Rate (% p.a.) 1,67 1,88 2,04 2,34 2,66 3,90 3,26 3,31 3,87 4,16 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19 Exchange Rate (R$ / US$, EOP) Institutional Presentation | 3Q19
12TIM Participações – Investor Relations Brazilian population by social class The consumers still feels the impact from past years crisis, influencing the sector dynamics During the past year, class B decreased, while classes D/E increased A B C DE 5 MM 44 MM 101 MM 60 MM 2.5% 21.0% 48.1% 28.5% Source: IPC Maps 2019 and 2019/ABEP 2019, Worlddata (2018), Exchange rate as of October 11st, 2019 (R$/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 3Q19 2012 14 16 1813 15 17 Sep-19 106,1 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 Sep-19 2012 14 16 1813 15 17 Sep-19 (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 | 3Q19
13TIM Participações – Investor Relations Brazilian market is relevant globally with room for ARPU growth (1) Selected countries. Source: Merrill Lynch – Global Wireless Matrix 2T19 (1Q19 data). 207 226 277 409 925 1.570 Russia Brazil Indonesia USA India China 5th Mobile Customer Base Ranking (MM) 16,6 19,6 20,2 58,1 129,6 174,2 Brazil Germany Korea Japan China USA 9th Mobile Service Revenues Ranking (US$ Bln / year) 107% 154% 170% 172% 180% 181% Brazil Portugal South Africa UAE Austria Finland 29th Mobile Penetration Ranking (MM) 6,1 29,7 35,2 35,6 36,2 39,5 Brazil Qatar Norway USA Switzerland Canada 35th Mobile ARPU Ranking (US$ / mo) 0,6% 0,7% 0,8% 0,8% 0,9% 1,3% France USA Brazil Japan Colombia South Africa 19th Mobile Wallet Share1 (Mobile ARPU / per capita GDP) Institutional Presentation | 3Q19
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 | 3Q19
15TIM Participações – Investor Relations Traditional services have been losing relevance in this new framework and internet has been gaining prominence Source: Anatel. 25% 27% 31% 34% 36% 37% 42% 44% 2011 2012 2013 2014 2015 2016 2017 2018 Fixed Broadband Penetration (% of households) 16% 32% 26% 26% < 2 Mbps 2 - 12 12 - 34 > 34 Fixed Broadband Connections Speed 31.2 MM lines 31% 47% 56% 66% 71% 74% 2011 2012 2013 2014 2015 2016 2017 2018 Mobile Internet Users (% of >10 years population) 21% 25% 28% 29% 28% 27% 26% 25% 2011 2012 2013 2014 2015 2016 2017 2018 Pay TV Penetration (% of households) 17.5 MM accesses 69% 69% 69% 67% 64% 61% 58% 53% 2011 2012 2013 2014 2015 2016 2017 2018 Fixed Voice Penetration (% of households) 37.5 MM lines Institutional Presentation | 3Q19
16TIM Participações – Investor Relations Change in Market structure combined with new consumption habits resulted in a transformation in the base profile 197 199 201 203 204 206 208 209 123% 131% 135% 138% 126% 118% 115% 110% 2011 2012 2013 2014 2015 2016 2017 2018 Mobile Penetration Population (MM) Penetration 2,03 2,00 1,96 1,94 1,73 1,64 1,54 1,44 2011 2012 2013 2014 2015 2016 2017 2018 SIM Cards per Unique User (Unit) 0,42 0,36 0,32 0,24 0,16 0,10 0,06 0,03 2011 2012 2013 2014 2015 2016 2017 2018 MTR Evolution (R$ / min) (1) Human Postpaid (ex-Data, Modem + M2M). Source: Anatel, CETIC. 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. 198 211 212 213 185 165 149 130 36 37 44 51 56 62 70 77 2011 2012 2013 2014 2015 2016 2017 2018 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. 229 MM SIM Cards 144 MM people Institutional Presentation | 3Q19 115 124 130 137 139 138 142 144 69% 74% 76% 79% 80% 79% 80% 80% 2011 2012 2013 2014 2015 2016 2017 2018 Unique user >10 years (MM) Penetration Unique User Penetration
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 | 3Q19
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) All: on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts (2014-18); (2) TIM, Vivo and Oi: with IFRS 9 and 15 (1H18, 2019); (3) AMX: with IFRS 9, 15 and 16 (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) Institutional Presentation | 3Q19 -1.0% CAGR +1.7% CAGR 53% 55% 47% 45% 86,9 86,1 9M18 9M19 46,2 47,5 9M18 9M19 18,9 17,4 1,9 2,0 29,7 30,4 35,7 36,0 13,8 14,2 9M18 9M19 12,2 11,6 3,6 3,6 18,6 19,7 41,0 40,8 24,6 24,3 9M18 9M19
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% 9% 32% 22% 32% 25% 49% 29% 29% 26% 10% 31% 17% 16% 32% 5% 30% 1% Others (1) Claro considers participation of Nextel in the SMP; (2) Mobile and Pay TV are considering Aug/19 results. Source: Anatel. Nextel Institutional Presentation | 3Q19 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 | Sep-192)
20TIM Participações – Investor Relations TIM has different opportunities in terms of regionality 2nd Leader 3rd 4th TIM’s Position YoY p.p. Source: Anatel. Institutional Presentation | 3Q19 NE 32.8% 30.1% 26.1% 11.0% +0.2 p.p. BA/SE 34.6% 24.7% 21.5% 19.1% RJ/ES 35.9% 28.2% 15.9% 13.8% SP Capital 39.6% 25.2% 19.1% 10.0% SP Interior 33.6% 32.1% 22.7% 8.6% MG 41.4% 21.6% 20.2% 11.5% RS 46.8% 31.6% 13.0% 8.3% PR/SC 52.2% 19.9% 17.2% 10.1% CO 38.1% 34.3% 15.4% 11.7% NO 36.5% 23.7% 20.7% 19.1% BRASIL Pen: 109.5% 32.3% 24.8% 24.0% 16.4% -0.9 p.p. +1.2 p.p. (Market Share | Aug-19) -1.7 p.p. -0.1 p.p. -1.2 p.p. -0.2 p.p. -1.9 p.p. +3.1 p.p. -0.1 p.p.
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 331 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 → Possibility of conversion of the renewal fee for investments → Radiofrequency transferal between operators PGMU³ (2018) → Investment of the balance generated with the flexibilization of PGMU (Plano Geral de Metas de Universalização) rules in 4G network expansion projects 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 the 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 | 3Q19
22TIM Participações – Investor Relations STRATEGY AND POSITIONING Institutional Presentation | 3Q19
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 | 3Q19
24TIM Participações – Investor Relations TIM is well positioned to attend the new demand, with no legacy to defend 41,2 39,6 37,5 34,8 2016 2017 2018 Sep-19 Fixed Line Base (MM) 18,8 18,1 17,5 16,3 2016 2017 2018 Aug-19 Pay-TV Base (MM) 62,1 69,7 77,5 80,8 2016 2017 2018 Aug-19 Human Postpaid Base (MM) 26,9 28,9 31,2 32,7 2016 2017 2018 Sep-19 Broadband Base (MM) -6.0% CAGR Fixed-mobile substitution Traditional-OTT ssubstitution Source: Anatel. +16.8% CAGR Market +10.3% CAGR +11.9% CAGR Market -5.1% CAGR Market +7.6% CAGR +23.5% CAGR Market Institutional Presentation | 3Q19
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 | 3Q19
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 | 3Q19
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 | 3Q19
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 – Feb-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 0 400 800 1200 2018 2019 2020 2021 FTTC FTTH High-single to Low-Double digit growth (CAGR) • ~2.5x customer base growth NOTE: Ultra BB: > 34 Mbps / very low BB penetration: < 34Mbps. SOURCE: Anatel December 2018, IPC Maps 2018. Institutional Presentation | 3Q19
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 | 3Q19
30TIM Participações – Investor Relations OPERATING PERFORMANCE Institutional Presentation | 3Q19
31TIM Participações – Investor Relations Institutional Presentation | 3Q19 Customer base transformation process, driven by pre-postpaid migration, supported an evolution at the top of the pyramid (1) Revenues on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts; (2) Other revenues considering non-TIM clients, interconection and other revenues (according to the earnings release split). Source: Anatel. 77% 70% 64% 61% 20% 27% 32% 32% 3% 3% 5% 7% 2016 2017 2018 Sep-19 TIM Base Mix Data Only Postpaid (Modem + M2M) Human Postpaid Prepaid +1.2 p.p. YoY -4.0 p.p. YoY 44% 39% 32% 30% 43% 49% 57% 60% 13% 11% 11% 10% 2016 2017 2018 9M19 Mobile Service Revenue Prepaid Postpaid Other +2.5 p.p. YoY -2.2 p.p. YoY
32TIM Participações – Investor Relations 23,1% 21,2% 22,9% 21,6% 38,4% 42,6% 40,3% 39,5% 21,1% 18,3% 21,0% 22,1% 16,7% 13,1% 11,0% 11,9% 2012 2013 2014 2015 2016 2017 2018 Aug-19 Market Share | Human Postpaid TIM Vivo Claro Oi 28,3% 29,5% 27,5% 27,4% 27,2% 24,5% 25,3% 25,8% 24,7% 25,4% 25,4% 25,0% 19,5% 20,0% 21,0% 21,1% 2012 2013 2014 2015 2016 2017 2018 Aug-19 Market Share | Prepaid TIM Vivo Claro Oi Customer base management momentum: “from volume to value” 8,7 10,5 10,8 11,9 13,0 15,8 17,7 17,4 2,1 1,8 1,8 1,7 1,9 2,0 2,5 3,8 2012 2013 2014 2015 2016 2017 2018 Sep-19 TIM Base | Postpaid (MM) Human Postpaid Data only (Modem + M2M) Source: Anatel. 70,4 73,4 75,7 66,2 63,4 58,6 55,9 54,5 59,7 61,1 63,2 52,7 48,5 40,8 35,7 33,3 2012 2013 2014 2015 2016 2017 2018 Sep-19 TIM Base | Total and Prepaid (MM) Total Prepaid Institutional Presentation | 3Q19
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 23,3 37,6 11,7 Total Postpaid Prepaid Mobile ARPU (R$ / mo, Pro-forma1) 2015 2016 2017 2018 9M19 7,1 16,9 27,6 34,5 37,2 10,7% 26,6% 47,1% 61,7% 68,3% 2015 2016 2017 2018 Sep-19 Base 4G (MM) 4G Base Penetration 397 640 1.198 2.184 2.874 2015 2016 2017 2018 9M19 BOU (MB / mo) (1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts. +10.0% CAGR -2.2% CAGR +3.4% 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 | 3Q19
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 | 3Q19
35TIM Participações – Investor Relations TIM Live Exploring accelerated growth opportunities: Residential broadband 306 392 467 507 2016 2017 2018 1H19 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 80,9 2016 2017 2018 9M19 TIM Live Fiber ARPU (R$ / mo, Pro-forma1) 22 cities166 cities +25.2% CAGR +14.3% CAGR Institutional Presentation | 3Q19 (1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
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 | 3Q19
37TIM Participações – Investor Relations INFRASTRUCTURE Institutional Presentation | 3Q19
38TIM Participações – Investor Relations 3 5 5 1 20 20 20 11 21 185 3 4 5 35 26 29 43 1322 29 25 24 20 21 44 43 20 117 148 177 93 Spectrum Distribution (Average of MHz / population) Spectrum distribution reflects available capacity, though user experience will also depend on network management 14 MHz 90 MHz 80 MHz 20 MHz 150 MHz 135 MHz 100 MHz 190 MHz 450 MHz 700 MHz 850 MHz 900 MHz 1,800 MHz 2,100 MHz 2,300 MHz 2,500 MHz 450 MHz 700 MHz 850 MHz 900 MHz 1,800 MHz 2,100 MHz 2,500 MHz <1 GHz = Coverage [35%l----l40%] >1 GHz <3 GHz = Capacity [30%l----l40%] Mobile Total (1) Considers the mobile spectrum (SMP), (2) Spectrum caps calculated by the Regulator based on the spectrum share in each city. Spectrum Cap Institutional Presentation | 3Q19
39TIM Participações – Investor Relations Coverage expansion supported by a robust infrastructure 411 1.255 3.003 3.272 3.355 - 2 916 1.426 1.644 2015 2016 2017 2018 3Q19 4G Coverage (# cities) Total 700 MHz 97% with VoLTE 70,3 75,8 85,2 90,1 94,9 2015 2016 2017 2018 3Q19 Backbone + Backhaul Evolution (‘000 km) Start of robust infrastructure via acquisition strategy: Intelig (2009), AES (2012). 15,0 17,3 18,2 18,8 19,6 2015 2016 2017 2018 3Q19 Total Sites (‘000) (1) Full coverage is not equal to the sum of technologies, as there is an overlapping area (brownfield). 5 5 5 5 5 - - 2 11 20 2015 2016 2017 2018 3Q19 TIM Live Coverage1 (# cities) FTTC FTTH 2,1 2,1 3,2 3,5 3,6 - - - 1,1 1,9 2015 2016 2017 2018 3Q19 Covered Households1 (MM) FTTC FTTH 4.3 5.1 14 22 Institutional Presentation | 3Q19
40TIM Participações – Investor Relations Spectral capacity management to ensure a high level of customer experience 197 1.848 287 2.203 288 2.293 2,1 GHz 1,8 GHz Spectrum Refarming for 4G (# cities) 3Q19 3Q18 3Q17 61,4 71,9 72,1 82,4 P4 P3 P2 TIM 4G Availability¹ (% of time) 1º 72,5 69,6 62,7 60,9 P4 P2 P3 TIM 4G Latency1 (ms) 1º (1) According to Tecnoblog, Jul-19. Source: Anatel. 6,4 6,8 7,2 7,4 6,7 6,9 7,0 7,3 2015 2016 2017 2018 Anatel Survey | Postpaid (General Satisfaction: 0-10) TIM Market 6,5 6,7 6,8 7,16,6 6,8 6,8 7,2 2015 2016 2017 2018 Anatel Survey | Prepaid (General Satisfaction: 0-10) TIM Market 7,9 7,6 7,5 7,2 6,6 6,3 6,2 6,4 2015 2016 2017 2018 Anatel Survey | Broadband (General Satisfaction: 0-10) TIM Market Institutional Presentation | 3Q19
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 | 3Q19
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 | 3Q19
43TIM Participações – Investor Relations FINANCIAL EVOLUTION Institutional Presentation | 3Q19
44TIM Participações – Investor Relations Strategy and execution adjustments have recovered TIM's results and set the company’s path to financial sustainability 14,7 14,0 14,7 15,3 11,5 0,7 0,8 0,8 0,9 0,7 15,4 14,7 15,5 16,2 12,2 2015 2016 2017 2018 9M19 Service Net Revenues (R$ bln, Pro-forma1) Mobile Fixed 15,4 14,7 15,5 16,2 12,2 1,8 0,9 0,8 0,8 0,6 17,1 15,6 16,2 17,1 12,8 2015 2016 2017 2018 9M19 Net Revenues (R$ bln, Pro-forma1) Service Handset 0,6 0,7 1,8 2,7 2,3 2015 2016 2017 2018 9M19 EBITDA – CAPEX (R$ bln, Pro-forma1) 5,4 5,2 5,9 6,6 4,2 31,5% 33,5% 36,6% 38,5% 37,1% 2015 2016 2017 2018 9M19 EBITDA e EBITDA Margin (R$ bln, Pro-forma1) EBITDA EBITDA Margin +3.9%-8.9% +5.0% +5.1%-4.3% +4.7% +13,7%-3,2% +10,3% (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts. Institutional Presentation | 3Q19
45TIM Participações – Investor Relations Efficiency plan leveraged by digitalization initiatives 2,2 0,7 1,0 2017 2018 2019 2020 2021 OPEX Efficiency (R$ bln, Pro-forma1) Plan Act Our efficiency program forecasts 50% of the savings related to digitalization initiatives. Institutional Presentation | 3Q19 (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
46TIM 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) Institutional Presentation | 3Q19(1) ¹Inflation from Focus (18th January 2019). Source: BACEN.
47TIM Participações – Investor Relations Solid financial position: Maintaining a strong balance sheet and increasing distribution to shareholders 6,7 5,6 3,7 1,9 1,7 2015 2016 2017 2018 3Q19 Cash (R$ bln) 8,4 8,3 6,4 3,3 3,6 2015 2016 2017 2018 3Q19 Gross Debt (R$ bln, Pro-forma1) BNDES; 21% Leasing; 36% Debentur es; 28% KFW; 10% Others; 5% Debt by Lender 0,75 0,37 0,47 0,34 0,95 ~1,00 2015 2016 2017 2018 2019 Remuneração de Acionistas (R$ bln) 1,7 2,7 2,7 1,5 1,9 2015 2016 2017 2018 9M19 Net Debt (R$ bln, Pro-forma1) 0,32x 0,52x 0,45x 0,22x 0,39x Endividamento / EBITDA1 Institutional Presentation | 3Q19 (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
48TIM Participações – Investor Relations Investing in a smart and efficient way: Focusing on 4G and fiber optic infrastructure 3,5 2,9 2,9 2,7 1,9 0,8 0,9 0,7 0,7 0,5 0,2 0,2 0,1 0,1 0,3 0,5 0,5 0,3 0,3 4,8 4,5 4,1 3,9 2,6 2015 2016 2017 2018 9M19 CAPEX Evolution (R$ bln, Pro-forma1) Others Licences (new + renewal) TI Network CAPEX / Net Revenues1 (ex-license) 23%26%28%28% 20% Institutional Presentation | 3Q19 (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
49TIM Participações – Investor Relations OUTLOOK Institutional Presentation | 3Q19
50TIM Participações – Investor Relations 1,1% 1,3% 5,1% 4,7% Net Service Revenues (% YoY) EBITDA and Margin Expansion (R$ bln; %) MKT 5,7 6,3 35,5% 37,2% 2017 2018 2021e2019e EBITDA Margin EBITDA ≥ 39% 2020e2017 2018 2021e2019e 2020e % over Net Revenues Increasing Profitability and Cash Generation EBITDA Capex Mid-single digit growth (CAGR) +2% (CAGR) ~12.0 (∑‘19-’21) 11.1% 15.2% ≥ 20% 2017 2018 2019e 2020e 2021e 4,0 3,8 2017 2018 2019 2020 2021 EBITDA - CAPEX (R$ bln; %) CAPEX (R$ bln) Institutional Presentation | 3Q19
51TIM 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 | 3Q19
Vicente Ferreira E-mail: vdferreira@timbrasil.com.br Móvel: +55 21 98113-1400 Bernardo Guttmann E-mail: bguttmann@timbrasil.com.br Móvel: +55 21 98113-1408 Camila Assano E-mail: cacruz@timbrasil.com.br Móvel: +55 21 98113-4236 Lucas Carneiro E-mail: lmcarneiro@timbrasil.com.br Móvel: +55 21 98113-1141 Guilherme Kopke E-mail: gknascimento@timbrasil.com.br Móvel: +55 21 98113-0583 Visit our Website ri.tim.com.br E-mail: ri@timbrasil.com.br 850 João Cabral de Melo Neto Avenue – South Tower - 12th floor Barra da Tijuca – 22775-057 – Rio de Janeiro, RJ For Further Information

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Institutional Presentation 3Q19

  • 1.
  • 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 | 3Q19
  • 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 TIM. READY FOR THE FUTURE. Institutional Presentation | 3Q19
  • 4.
    4TIM Participações –Investor Relations ABOUT TIM Institutional Presentation | 3Q19
  • 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 → >90 thousand km of Fiber optical Network throughout the country MOBILITY → IoT: pioneer in Agribusiness vertical solutions, connected car and value added services SOLUTIONS → >500k Residential Broadband Clients → 100% of the Base with High Speed (>34 Mbps) → Presence in 20 cities with FTTH coverage → 1,9 MM Homes Passed with FTTH → Residential Broadband offered through Mobile Network RESIDENTIAL ~R$ 30 billion market capitalization Institutional Presentation | 3Q19
  • 6.
    6TIM Participações –Investor Relations 2018 financial highlights show strong execution 6 R$ 17.1 Bi Net Revenue (+4.7% YoY) R$ 6.6 Bln Highest EBITDA1 in TIM’s history (+10.3% YoY) 38.5% Highest EBITDA margin2 in the market +R$ 2.9 Bln YoY Operational Cash Flow3 R$ 392 MM TIM Live Revenue (Fixed Broadband) (+38.4% YoY) (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. Institutional Presentation | 3Q19
  • 7.
    7TIM Participações –Investor Relations 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 (4 independents) 3 members (3 independents) 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 (1) Not considering 5 items non applicable to TIM; (2) According to EY 2018 report. vs 65% on average2 24% 41% 35% 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% → 40% of independent members: 2x of required → 20% 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 Institutional Presentation | 3Q19
  • 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 | 3Q19
  • 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 | 3Q19
  • 10.
    10TIM Participações –Investor Relations MARKET OVERVIEW Institutional Presentation | 3Q19
  • 11.
    11TIM Participações –Investor Relations Despite slow recovery, structural drivers point to a better environment 5,9 6,5 5,8 5,9 6,4 10,7 6,3 3,0 3,8 2,9 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19 IPCA (% p.a.) 7,5 4,0 1,9 3,0 0,5 -3,5 -3,3 1,3 1,3 1,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 9M19 GDP Growth (% YoY) (1) GDP growth at market prices: accumulated rates for the past four quarters (in relation to prior year’s same period). Source: IBGE, BACEN, FGV. 10,8 11,0 7,3 10,0 11,8 14,3 13,8 7,0 6,5 5,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19 Interest Rate (% p.a.) 1,67 1,88 2,04 2,34 2,66 3,90 3,26 3,31 3,87 4,16 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-19 Exchange Rate (R$ / US$, EOP) Institutional Presentation | 3Q19
  • 12.
    12TIM Participações –Investor Relations Brazilian population by social class The consumers still feels the impact from past years crisis, influencing the sector dynamics During the past year, class B decreased, while classes D/E increased A B C DE 5 MM 44 MM 101 MM 60 MM 2.5% 21.0% 48.1% 28.5% Source: IPC Maps 2019 and 2019/ABEP 2019, Worlddata (2018), Exchange rate as of October 11st, 2019 (R$/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 3Q19 2012 14 16 1813 15 17 Sep-19 106,1 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 Sep-19 2012 14 16 1813 15 17 Sep-19 (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 | 3Q19
  • 13.
    13TIM Participações –Investor Relations Brazilian market is relevant globally with room for ARPU growth (1) Selected countries. Source: Merrill Lynch – Global Wireless Matrix 2T19 (1Q19 data). 207 226 277 409 925 1.570 Russia Brazil Indonesia USA India China 5th Mobile Customer Base Ranking (MM) 16,6 19,6 20,2 58,1 129,6 174,2 Brazil Germany Korea Japan China USA 9th Mobile Service Revenues Ranking (US$ Bln / year) 107% 154% 170% 172% 180% 181% Brazil Portugal South Africa UAE Austria Finland 29th Mobile Penetration Ranking (MM) 6,1 29,7 35,2 35,6 36,2 39,5 Brazil Qatar Norway USA Switzerland Canada 35th Mobile ARPU Ranking (US$ / mo) 0,6% 0,7% 0,8% 0,8% 0,9% 1,3% France USA Brazil Japan Colombia South Africa 19th Mobile Wallet Share1 (Mobile ARPU / per capita GDP) Institutional Presentation | 3Q19
  • 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 | 3Q19
  • 15.
    15TIM Participações –Investor Relations Traditional services have been losing relevance in this new framework and internet has been gaining prominence Source: Anatel. 25% 27% 31% 34% 36% 37% 42% 44% 2011 2012 2013 2014 2015 2016 2017 2018 Fixed Broadband Penetration (% of households) 16% 32% 26% 26% < 2 Mbps 2 - 12 12 - 34 > 34 Fixed Broadband Connections Speed 31.2 MM lines 31% 47% 56% 66% 71% 74% 2011 2012 2013 2014 2015 2016 2017 2018 Mobile Internet Users (% of >10 years population) 21% 25% 28% 29% 28% 27% 26% 25% 2011 2012 2013 2014 2015 2016 2017 2018 Pay TV Penetration (% of households) 17.5 MM accesses 69% 69% 69% 67% 64% 61% 58% 53% 2011 2012 2013 2014 2015 2016 2017 2018 Fixed Voice Penetration (% of households) 37.5 MM lines Institutional Presentation | 3Q19
  • 16.
    16TIM Participações –Investor Relations Change in Market structure combined with new consumption habits resulted in a transformation in the base profile 197 199 201 203 204 206 208 209 123% 131% 135% 138% 126% 118% 115% 110% 2011 2012 2013 2014 2015 2016 2017 2018 Mobile Penetration Population (MM) Penetration 2,03 2,00 1,96 1,94 1,73 1,64 1,54 1,44 2011 2012 2013 2014 2015 2016 2017 2018 SIM Cards per Unique User (Unit) 0,42 0,36 0,32 0,24 0,16 0,10 0,06 0,03 2011 2012 2013 2014 2015 2016 2017 2018 MTR Evolution (R$ / min) (1) Human Postpaid (ex-Data, Modem + M2M). Source: Anatel, CETIC. 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. 198 211 212 213 185 165 149 130 36 37 44 51 56 62 70 77 2011 2012 2013 2014 2015 2016 2017 2018 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. 229 MM SIM Cards 144 MM people Institutional Presentation | 3Q19 115 124 130 137 139 138 142 144 69% 74% 76% 79% 80% 79% 80% 80% 2011 2012 2013 2014 2015 2016 2017 2018 Unique user >10 years (MM) Penetration Unique User Penetration
  • 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 | 3Q19
  • 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) All: on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts (2014-18); (2) TIM, Vivo and Oi: with IFRS 9 and 15 (1H18, 2019); (3) AMX: with IFRS 9, 15 and 16 (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) Institutional Presentation | 3Q19 -1.0% CAGR +1.7% CAGR 53% 55% 47% 45% 86,9 86,1 9M18 9M19 46,2 47,5 9M18 9M19 18,9 17,4 1,9 2,0 29,7 30,4 35,7 36,0 13,8 14,2 9M18 9M19 12,2 11,6 3,6 3,6 18,6 19,7 41,0 40,8 24,6 24,3 9M18 9M19
  • 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% 9% 32% 22% 32% 25% 49% 29% 29% 26% 10% 31% 17% 16% 32% 5% 30% 1% Others (1) Claro considers participation of Nextel in the SMP; (2) Mobile and Pay TV are considering Aug/19 results. Source: Anatel. Nextel Institutional Presentation | 3Q19 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 | Sep-192)
  • 20.
    20TIM Participações –Investor Relations TIM has different opportunities in terms of regionality 2nd Leader 3rd 4th TIM’s Position YoY p.p. Source: Anatel. Institutional Presentation | 3Q19 NE 32.8% 30.1% 26.1% 11.0% +0.2 p.p. BA/SE 34.6% 24.7% 21.5% 19.1% RJ/ES 35.9% 28.2% 15.9% 13.8% SP Capital 39.6% 25.2% 19.1% 10.0% SP Interior 33.6% 32.1% 22.7% 8.6% MG 41.4% 21.6% 20.2% 11.5% RS 46.8% 31.6% 13.0% 8.3% PR/SC 52.2% 19.9% 17.2% 10.1% CO 38.1% 34.3% 15.4% 11.7% NO 36.5% 23.7% 20.7% 19.1% BRASIL Pen: 109.5% 32.3% 24.8% 24.0% 16.4% -0.9 p.p. +1.2 p.p. (Market Share | Aug-19) -1.7 p.p. -0.1 p.p. -1.2 p.p. -0.2 p.p. -1.9 p.p. +3.1 p.p. -0.1 p.p.
  • 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 331 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 → Possibility of conversion of the renewal fee for investments → Radiofrequency transferal between operators PGMU³ (2018) → Investment of the balance generated with the flexibilization of PGMU (Plano Geral de Metas de Universalização) rules in 4G network expansion projects 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 the 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 | 3Q19
  • 22.
    22TIM Participações –Investor Relations STRATEGY AND POSITIONING Institutional Presentation | 3Q19
  • 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 | 3Q19
  • 24.
    24TIM Participações –Investor Relations TIM is well positioned to attend the new demand, with no legacy to defend 41,2 39,6 37,5 34,8 2016 2017 2018 Sep-19 Fixed Line Base (MM) 18,8 18,1 17,5 16,3 2016 2017 2018 Aug-19 Pay-TV Base (MM) 62,1 69,7 77,5 80,8 2016 2017 2018 Aug-19 Human Postpaid Base (MM) 26,9 28,9 31,2 32,7 2016 2017 2018 Sep-19 Broadband Base (MM) -6.0% CAGR Fixed-mobile substitution Traditional-OTT ssubstitution Source: Anatel. +16.8% CAGR Market +10.3% CAGR +11.9% CAGR Market -5.1% CAGR Market +7.6% CAGR +23.5% CAGR Market Institutional Presentation | 3Q19
  • 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 | 3Q19
  • 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 | 3Q19
  • 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 | 3Q19
  • 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 – Feb-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 0 400 800 1200 2018 2019 2020 2021 FTTC FTTH High-single to Low-Double digit growth (CAGR) • ~2.5x customer base growth NOTE: Ultra BB: > 34 Mbps / very low BB penetration: < 34Mbps. SOURCE: Anatel December 2018, IPC Maps 2018. Institutional Presentation | 3Q19
  • 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 | 3Q19
  • 30.
    30TIM Participações –Investor Relations OPERATING PERFORMANCE Institutional Presentation | 3Q19
  • 31.
    31TIM Participações –Investor Relations Institutional Presentation | 3Q19 Customer base transformation process, driven by pre-postpaid migration, supported an evolution at the top of the pyramid (1) Revenues on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts; (2) Other revenues considering non-TIM clients, interconection and other revenues (according to the earnings release split). Source: Anatel. 77% 70% 64% 61% 20% 27% 32% 32% 3% 3% 5% 7% 2016 2017 2018 Sep-19 TIM Base Mix Data Only Postpaid (Modem + M2M) Human Postpaid Prepaid +1.2 p.p. YoY -4.0 p.p. YoY 44% 39% 32% 30% 43% 49% 57% 60% 13% 11% 11% 10% 2016 2017 2018 9M19 Mobile Service Revenue Prepaid Postpaid Other +2.5 p.p. YoY -2.2 p.p. YoY
  • 32.
    32TIM Participações –Investor Relations 23,1% 21,2% 22,9% 21,6% 38,4% 42,6% 40,3% 39,5% 21,1% 18,3% 21,0% 22,1% 16,7% 13,1% 11,0% 11,9% 2012 2013 2014 2015 2016 2017 2018 Aug-19 Market Share | Human Postpaid TIM Vivo Claro Oi 28,3% 29,5% 27,5% 27,4% 27,2% 24,5% 25,3% 25,8% 24,7% 25,4% 25,4% 25,0% 19,5% 20,0% 21,0% 21,1% 2012 2013 2014 2015 2016 2017 2018 Aug-19 Market Share | Prepaid TIM Vivo Claro Oi Customer base management momentum: “from volume to value” 8,7 10,5 10,8 11,9 13,0 15,8 17,7 17,4 2,1 1,8 1,8 1,7 1,9 2,0 2,5 3,8 2012 2013 2014 2015 2016 2017 2018 Sep-19 TIM Base | Postpaid (MM) Human Postpaid Data only (Modem + M2M) Source: Anatel. 70,4 73,4 75,7 66,2 63,4 58,6 55,9 54,5 59,7 61,1 63,2 52,7 48,5 40,8 35,7 33,3 2012 2013 2014 2015 2016 2017 2018 Sep-19 TIM Base | Total and Prepaid (MM) Total Prepaid Institutional Presentation | 3Q19
  • 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 23,3 37,6 11,7 Total Postpaid Prepaid Mobile ARPU (R$ / mo, Pro-forma1) 2015 2016 2017 2018 9M19 7,1 16,9 27,6 34,5 37,2 10,7% 26,6% 47,1% 61,7% 68,3% 2015 2016 2017 2018 Sep-19 Base 4G (MM) 4G Base Penetration 397 640 1.198 2.184 2.874 2015 2016 2017 2018 9M19 BOU (MB / mo) (1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts. +10.0% CAGR -2.2% CAGR +3.4% 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 | 3Q19
  • 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 | 3Q19
  • 35.
    35TIM Participações –Investor Relations TIM Live Exploring accelerated growth opportunities: Residential broadband 306 392 467 507 2016 2017 2018 1H19 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 80,9 2016 2017 2018 9M19 TIM Live Fiber ARPU (R$ / mo, Pro-forma1) 22 cities166 cities +25.2% CAGR +14.3% CAGR Institutional Presentation | 3Q19 (1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
  • 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 | 3Q19
  • 37.
    37TIM Participações –Investor Relations INFRASTRUCTURE Institutional Presentation | 3Q19
  • 38.
    38TIM Participações –Investor Relations 3 5 5 1 20 20 20 11 21 185 3 4 5 35 26 29 43 1322 29 25 24 20 21 44 43 20 117 148 177 93 Spectrum Distribution (Average of MHz / population) Spectrum distribution reflects available capacity, though user experience will also depend on network management 14 MHz 90 MHz 80 MHz 20 MHz 150 MHz 135 MHz 100 MHz 190 MHz 450 MHz 700 MHz 850 MHz 900 MHz 1,800 MHz 2,100 MHz 2,300 MHz 2,500 MHz 450 MHz 700 MHz 850 MHz 900 MHz 1,800 MHz 2,100 MHz 2,500 MHz <1 GHz = Coverage [35%l----l40%] >1 GHz <3 GHz = Capacity [30%l----l40%] Mobile Total (1) Considers the mobile spectrum (SMP), (2) Spectrum caps calculated by the Regulator based on the spectrum share in each city. Spectrum Cap Institutional Presentation | 3Q19
  • 39.
    39TIM Participações –Investor Relations Coverage expansion supported by a robust infrastructure 411 1.255 3.003 3.272 3.355 - 2 916 1.426 1.644 2015 2016 2017 2018 3Q19 4G Coverage (# cities) Total 700 MHz 97% with VoLTE 70,3 75,8 85,2 90,1 94,9 2015 2016 2017 2018 3Q19 Backbone + Backhaul Evolution (‘000 km) Start of robust infrastructure via acquisition strategy: Intelig (2009), AES (2012). 15,0 17,3 18,2 18,8 19,6 2015 2016 2017 2018 3Q19 Total Sites (‘000) (1) Full coverage is not equal to the sum of technologies, as there is an overlapping area (brownfield). 5 5 5 5 5 - - 2 11 20 2015 2016 2017 2018 3Q19 TIM Live Coverage1 (# cities) FTTC FTTH 2,1 2,1 3,2 3,5 3,6 - - - 1,1 1,9 2015 2016 2017 2018 3Q19 Covered Households1 (MM) FTTC FTTH 4.3 5.1 14 22 Institutional Presentation | 3Q19
  • 40.
    40TIM Participações –Investor Relations Spectral capacity management to ensure a high level of customer experience 197 1.848 287 2.203 288 2.293 2,1 GHz 1,8 GHz Spectrum Refarming for 4G (# cities) 3Q19 3Q18 3Q17 61,4 71,9 72,1 82,4 P4 P3 P2 TIM 4G Availability¹ (% of time) 1º 72,5 69,6 62,7 60,9 P4 P2 P3 TIM 4G Latency1 (ms) 1º (1) According to Tecnoblog, Jul-19. Source: Anatel. 6,4 6,8 7,2 7,4 6,7 6,9 7,0 7,3 2015 2016 2017 2018 Anatel Survey | Postpaid (General Satisfaction: 0-10) TIM Market 6,5 6,7 6,8 7,16,6 6,8 6,8 7,2 2015 2016 2017 2018 Anatel Survey | Prepaid (General Satisfaction: 0-10) TIM Market 7,9 7,6 7,5 7,2 6,6 6,3 6,2 6,4 2015 2016 2017 2018 Anatel Survey | Broadband (General Satisfaction: 0-10) TIM Market Institutional Presentation | 3Q19
  • 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 | 3Q19
  • 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 | 3Q19
  • 43.
    43TIM Participações –Investor Relations FINANCIAL EVOLUTION Institutional Presentation | 3Q19
  • 44.
    44TIM Participações –Investor Relations Strategy and execution adjustments have recovered TIM's results and set the company’s path to financial sustainability 14,7 14,0 14,7 15,3 11,5 0,7 0,8 0,8 0,9 0,7 15,4 14,7 15,5 16,2 12,2 2015 2016 2017 2018 9M19 Service Net Revenues (R$ bln, Pro-forma1) Mobile Fixed 15,4 14,7 15,5 16,2 12,2 1,8 0,9 0,8 0,8 0,6 17,1 15,6 16,2 17,1 12,8 2015 2016 2017 2018 9M19 Net Revenues (R$ bln, Pro-forma1) Service Handset 0,6 0,7 1,8 2,7 2,3 2015 2016 2017 2018 9M19 EBITDA – CAPEX (R$ bln, Pro-forma1) 5,4 5,2 5,9 6,6 4,2 31,5% 33,5% 36,6% 38,5% 37,1% 2015 2016 2017 2018 9M19 EBITDA e EBITDA Margin (R$ bln, Pro-forma1) EBITDA EBITDA Margin +3.9%-8.9% +5.0% +5.1%-4.3% +4.7% +13,7%-3,2% +10,3% (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts. Institutional Presentation | 3Q19
  • 45.
    45TIM Participações –Investor Relations Efficiency plan leveraged by digitalization initiatives 2,2 0,7 1,0 2017 2018 2019 2020 2021 OPEX Efficiency (R$ bln, Pro-forma1) Plan Act Our efficiency program forecasts 50% of the savings related to digitalization initiatives. Institutional Presentation | 3Q19 (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
  • 46.
    46TIM 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) Institutional Presentation | 3Q19(1) ¹Inflation from Focus (18th January 2019). Source: BACEN.
  • 47.
    47TIM Participações –Investor Relations Solid financial position: Maintaining a strong balance sheet and increasing distribution to shareholders 6,7 5,6 3,7 1,9 1,7 2015 2016 2017 2018 3Q19 Cash (R$ bln) 8,4 8,3 6,4 3,3 3,6 2015 2016 2017 2018 3Q19 Gross Debt (R$ bln, Pro-forma1) BNDES; 21% Leasing; 36% Debentur es; 28% KFW; 10% Others; 5% Debt by Lender 0,75 0,37 0,47 0,34 0,95 ~1,00 2015 2016 2017 2018 2019 Remuneração de Acionistas (R$ bln) 1,7 2,7 2,7 1,5 1,9 2015 2016 2017 2018 9M19 Net Debt (R$ bln, Pro-forma1) 0,32x 0,52x 0,45x 0,22x 0,39x Endividamento / EBITDA1 Institutional Presentation | 3Q19 (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
  • 48.
    48TIM Participações –Investor Relations Investing in a smart and efficient way: Focusing on 4G and fiber optic infrastructure 3,5 2,9 2,9 2,7 1,9 0,8 0,9 0,7 0,7 0,5 0,2 0,2 0,1 0,1 0,3 0,5 0,5 0,3 0,3 4,8 4,5 4,1 3,9 2,6 2015 2016 2017 2018 9M19 CAPEX Evolution (R$ bln, Pro-forma1) Others Licences (new + renewal) TI Network CAPEX / Net Revenues1 (ex-license) 23%26%28%28% 20% Institutional Presentation | 3Q19 (1) Financial KPIs on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
  • 49.
    49TIM Participações –Investor Relations OUTLOOK Institutional Presentation | 3Q19
  • 50.
    50TIM Participações –Investor Relations 1,1% 1,3% 5,1% 4,7% Net Service Revenues (% YoY) EBITDA and Margin Expansion (R$ bln; %) MKT 5,7 6,3 35,5% 37,2% 2017 2018 2021e2019e EBITDA Margin EBITDA ≥ 39% 2020e2017 2018 2021e2019e 2020e % over Net Revenues Increasing Profitability and Cash Generation EBITDA Capex Mid-single digit growth (CAGR) +2% (CAGR) ~12.0 (∑‘19-’21) 11.1% 15.2% ≥ 20% 2017 2018 2019e 2020e 2021e 4,0 3,8 2017 2018 2019 2020 2021 EBITDA - CAPEX (R$ bln; %) CAPEX (R$ bln) Institutional Presentation | 3Q19
  • 51.
    51TIM 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 | 3Q19
  • 52.
    Vicente Ferreira E-mail: vdferreira@timbrasil.com.br Móvel:+55 21 98113-1400 Bernardo Guttmann E-mail: bguttmann@timbrasil.com.br Móvel: +55 21 98113-1408 Camila Assano E-mail: cacruz@timbrasil.com.br Móvel: +55 21 98113-4236 Lucas Carneiro E-mail: lmcarneiro@timbrasil.com.br Móvel: +55 21 98113-1141 Guilherme Kopke E-mail: gknascimento@timbrasil.com.br Móvel: +55 21 98113-0583 Visit our Website ri.tim.com.br E-mail: ri@timbrasil.com.br 850 João Cabral de Melo Neto Avenue – South Tower - 12th floor Barra da Tijuca – 22775-057 – Rio de Janeiro, RJ For Further Information