TIM Results Presentation 4Q16

2. 2
Results Presentation
Investor Relations
2016: A Turn Around Year
Source: Company, except where other wised indicated
¹ Normalized for towers sale and other effects
Macro scenario still tough but
improving looking forward…
Inflation back to control but GDP is
still contracting
…along with deep operational turnaround…
...showing consistent recovery in
2016 results
+17% in 2016
 Less uncertainty on
political scenario
Real (BRL)
appreciation
Mobile Service Net Revenues
(%YoY)
Normalized1 EBITDA
(%YoY)
Source: IBGE
-9.2%
-6.8%
-3.0%
-1.5%
1Q16 2Q16 3Q16 4Q16
Faster & Wider
MBB deployment
1,255
cities w/ 4G
(up from 411
in 2015)
23.5% of
total base
(up from 20%
in 2015)
-12%
YoY
in OPEX¹
Focus on
postpaid
Strong Cost
efficiency
10.7%
6.3%
6.5%
2015 2016
Other relevant
improvements
 Better consumer
confidence index
 Decreasing interest
rate
Target limit
+9% YoY
at R$19
ARPU growth
(in 4Q16)
Improving user
base value
Improving Profitability & Cash Generation
33.5% of
EBITDA
margin in
2016
Back to
Positive
FCF
GDP
Growth YoY -3.8% -3.5%
IPCA (12M)
-13.5%
-6.5%
0.5%
5.8%
1Q16 2Q16 3Q16 4Q16

3. 3
Results Presentation
Investor Relations
Value Proposition Evolution
Voice
Community
Focus on Prepaid
2009-2013 2012-2014 2015-2016 2017…
Voice Community
+ Limited Data
Prepaid + some
Controle
Voice Off-net
+ Data
Prepaid + Controle
TLC
Full services
(voice + data)
+ Bundled Digital
Services
Across all segments
Voice Centered Transition to Data Data Centric
2G + 3G 2G + 3G 2G + 3G + 4G
Bundling
Digital Services
Partnership with magazines
and newspapers
40 titles
available
40 mln songs
available
E-Reading: TIM Banca
Partnership with DeezerMusic: TIM Music
Network
Evolution
Utilities: Cloud, Recipes, Jobs etc Multiple partnerships

4. 4
Results Presentation
Investor Relations
Customer Base Reshape to Higher Value
dec/15 jun/16 dec/16
Postpaid Mobile Number Portability
(thousand lines)
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
Postpaid net adds
(thousand lines)
Net Migrations Prepaid to Postpaid
Control Plan
Performance
Net Adds
(thousand lines)
Churn rate
(%)
ARPU
(R$)
Dec-15 Dec-16 Dec-15 Dec-16
Customer Base Breakdown
(mln lines; %YoY)
13.6 14.9
52.7 48.5
66.2
63.4
2015 2016
+10%
-8%
-4%
Postpaid
Prepaid
1Q16 2Q16 3Q16 4Q16
(thousand lines)
4.9% 4.4% 4.0% 3.7%
1Q16 2Q16 3Q16 4Q16
1Q16: -33
2Q16: +211
3Q16: +483
4Q16: +640

5. 5
Results Presentation
Investor Relations
“More for More” Approach: Win-Win Combination
Prepaid
Control
Postpaid
Towards
recurring
approach
Upsell
Prepaid to
Control plans
Market inflow
New
Proposition
to sustain
MNP
From Daily to Weekly
From R$7 to R$9/R$10
Fast growing Best value for money
SIM Card Consolidation
Full bundling services
Differentiated caring
Improving customers’ usage & value
Data usage
(Mbytes of use per data customers; %YoY)
ARPU new trajectory
(R$)
OTT
Value added services bundled
in all plans
609
896
Dec/15 Dec/16
17.6
17.2 17.2
18.4
19.2
4Q15 1Q16 2Q16 3Q16 4Q16
Voice
Data
Incoming
Voice and
Data
Consumption based Recurring based
+9%
YoY
+39%
From
Market
4Q15 4Q16

6. 6
Results Presentation
Investor Relations
90%
7.7
11.6
4Q15 4Q16
1,839
2,833
4Q15 4Q16
~70
~76
4Q15 4Q16
Head Start in 4G Coverage, while fast improving on 3G
Transport Network Evolution
Km of Fiber (‘000)4G sites (‘000)
+4,000
sites YoY
2x more cities
than
2nd player
Cities covered with 4G
Taking advantage of 1,800 MHz refarming to secure 4G leadership
+844 new
cities
Sites connected with own
backhaul (%)
Access Network Evolution
59% 74%
Cities covered with 3G
+994 cities
YoY
+5,600 Km
YoY
411
1,255
4Q15 4Q16
% of urban pop
82% 89%% of urban pop
4Q16

7. 7
Results Presentation
Investor Relations
39%
17%
59%
34%
Traffic in 4G devices (%) Traffic in 4G Network (%)
Dec/15 Dec/16
59.1
46.6
4Q15 4Q16
7.1
16.9
4Q15 4Q16
4G Revolution is Changing Usage and Revenue Profiles
Data users per technology
VAS ARPU
(R$; %YoY)
Source: Anatel
(mln lines; %YoY)
Smartphone penetration
68%
72%
4Q15 Nov/16
(%; YoY)
2G & 3G4G
6.9
8.6
4Q15 4Q16
+25%
~100% of
sales are
smartphones
4G Traffic
(% of total traffic;YoY)
x2
+4p.p
+137%
-21%
x1.5
Users with 4G
smartphones
accelerate traffic
shift when
coverage arrives

8. 8
Results Presentation
Investor Relations
-248
-159
-114 -101 -86
Business Generated Growth
Mobile Services Revenues
ex-incoming (%YoY)
Innovative Revenues
VAS ex – SMS (R$ mln; %YoY)
Delta Incoming per Quarter
(R$ YoY; %YoY)
-3.1%
-5.7%
-4.0%
-0.3%
0.9%
4Q15 1Q16 2Q16 3Q16 4Q16
4,683
5,642
2015 2016
-41%
-35%
-32%
-28%
-25%
4Q15 1Q16 2Q16 3Q16 4Q16
Revenues Performance: Back to Business Generated Growth
Incoming Voice Traffic
(%YoY)
-4.0%
1.9%
7.4%
10.4%
13.0%
4Q15 1Q16 2Q16 3Q16 4Q16
Mobile Service Net Revenues
(R$ mln; %YoY)
14,727
13,968
-9.2%
-6.8%
-3.0%
-1.5%
1Q16 2Q16 3Q16 4Q16
YoY
2016
-5.1%
+20%
2015
Positive Business Generated and
improving trend in Incoming
Revenues is driving MSR recovery

9. 9
Results Presentation
Investor Relations
11.7
10.4
0.3
0.1 0.1
0.9
Opex Breakdown Analysis
(R$ bln; %YoY)
Opex Trends: Strong Cost Control Accelerating Savings
-15% -1%
-3%
“Personnel,
G&A, Other”
“Network
ITX”
“Selling/Mkt
Bad Debt”
Traffic
Driven
Process
Driven
Market
Driven
2015 2016COGS
-47%
R$1.2 bln
saving out
of R$1.7 bln
plan 2016-18
F
E
Front Loaded Efficiency
Opex ex - COGS
(R$ bln; %YoY)
9.8
9.4
2015 2016
-5%
-12%
2016 Savings Breakdown
(R$ bln)
-1.2
-0.5
-0.2
-0.5
Process
Driven
Traffic
Driven
Market
Driven
“Selling/Mkt
Bad Debt”
“Network
ITX”
“Personnel,
G&A, Other”
Total

10. 10
Results Presentation
Investor Relations
Fourth Quarter Opex in Details
587
396
985
1,015
917
854
150
218
4Q15 4Q16
2,640
2,483
-6%
Opex Breakdown Analysis
(R$ mln; %YoY)
Confirming selective approach on handset strategy. 4Q YoY
analysis affected by changing handset rebates allocation (from
commercial cost to COGS) retroactively in 4Q15 with no impact
on FY value comparison.
Efficiency on network Opex fully offsets off-net traffic and
network components growth impacts. 4Q16 result also
benefits from the effect of leased lines regulated price
reductions (Anatel resolution 639/14). 2Q and 3Q numbers
were booked on 4Q16 (~R$30 million).
QoQ growth reflects further improvements in postpaid
commercial KPI’s and outgoing revenues driven costs
partially offset by efficiency actions. Consistent trend YoY
(4Q16 vs 4Q15) comparison notwithstanding one-off clean up
of customer base in 4Q15 which impacts were offset by the
above mentioned handset rebates re-allocation.
Accelerating efficiencies thanks to full impacts of lay-off
program (-24.5% YoY in headcount) and strong reductions in
G&A (-35% YoY).
COGS
Traffic
Market
Process
COGS
Traffic
Market
Process
+45%
-7%
+3%
-33%

11. 11
Results Presentation
Investor Relations
-742
68
2015 2016
-5.3%
-13.5%
-6.5%
0.5%
5,8%
4Q15 1Q16 2Q16 3Q16 4Q16
¹ Normalized for towers sale and other effects (e.g. lay-off program)
EBITDA Growth Back on Track
Normalized1 Free Cash Flow
EBITDA Growth
(R$ mln)
(%YoY)
Normalized1 EBITDA Margin
(%; YoY)
EBITDA and margins improvements
backed by:
 Well executed efficiency plan
 Lighter impacts from MTR
 Improved revenues mix
(more data and less handsets)
Normalized1
EBITDA
Source: Company
31.5%
33.5%
2015 2016
+2 p.p
Quarterly Evolution of Normalized¹ FCF
(R$ mln; YoY)
708
852
4Q
FY
-1,626
172
670 852
1Q16 2Q16 3Q16 4Q16