2. A Quarter in Few
3Q13
YoY
6M13
YoY
Total Revenues
5,083
7.6%
9,655
7.1%
− Service
4,207
2.6%
8,152
1.9%
− VAS
1,362
21.5%
2,377
25.0%
876
40.9%
1,503
47.9%
EBITDA
1,252
4.2%
2,456
3.0%
CAPEX
1,175
52.3%
1,593
-0.4%
3Q13
YoY
6M13
YoY
Postpaid (mln users)
11.9
16.4%
11.4
13.9%
MOU (min)
150
8.4%
146
15.1%
R$ 18.6
-1.6%
R$ 18.3
-2.2%
Financial
R$ Million
− Handset
Operational
ARPU
2

3. Network Check Point: Mobile BB Plan & Backhauling
Backhauling
Evolution
Key Steps for Improvement: MBB/FTTS Project
POP MW
 Own fiber reaching ~85% of antennas at major
cities.
POP MW
BSC-RNC Site
 Targeting 38 main cities till year end.
 FTTS: From 2-8 Mbps link to +100 Mbps.
POP MW
POP MW
 Caching, Peering, Web Acceleration.
POP MW
 Macro coverage fine tuning for mobile
broadband.
Results for Recife
Our 1st out of 38 cities
Downlink throughput (Kbps)
4x
MBB Coverage
Q2
Q3
2,394
1,660
TIM
979
Market Average
574
Apr/13
Source: TIM
Sep/13
3G (HSPA)
MBB (HSPA+ DC)
3

4. Network Check Point: Backbone Evolution
HLR
Resiliency
Amazon Fiber
Backbone
Project Details:
Boa Vista Macapá
Manaus
Belém
Jurupari Tucuruí
Maceió
Porto Velho
Increasing
number of HLR
Centrals.
From 3 to 8.
Fortaleza
Salvador
Cuiabá
Rondonópolis
Brasília
Goiânia
Belo Horizonte
Vitória
Campo Grande Preto
Rib.
Rio de Janeiro
Umuarama São Paulo
Curitiba
Santa Maria Florianópolis
Porto Alegre
 ~R$200 million
 27 cities
 1,757 km
 Capacity:
75 x 100 Gbps
Existing network
Network in construction
LT Amazonas network
98-08
PURE MOBILE
INFRASTRUCTURE
2009
INTELIG
ACQUISITION
2011
ATIMUS ACQUISITION
FIBER TO THE
2013
RJ & SP
AMAZON
2016
MASSIVE LD
BACKBONE
Fiber
Timeline
0 KM of FIBER
+ 15,000 KM of FIBER
20,500 KM of FIBER
46,000 KM of FIBER
By YE13
65,000 KM of FIBER
4

5. Operational Performance (1/2): Base Evolution & Quality Indicators
Customer Base Evolution
Mix of Post Paid
(Million lines; Source: Anatel; TIM)
(%; Source: Anatel)
D% YoY
69.4
70.3
71.2
72.2
72.9
10.7
10.9
11.4
11.9
59.6
60.8
29%
Market Share
+16%
60.3
(Lines; Market Share; Source: Anatel)
+5%
10.3
4G Update…
Post
Paid
59.1
3Q12 14.8%
61.0
29%
+3%
3Q13 16.4%
Pre
Paid
May/13
3Q12
4Q12
1Q13
2Q13
20%
23%
Jun/13
26%
Jul/13
Aug/13
Prudent strategy in the auction &
efficient roll-out paying-off
3Q13
Customer Care Performance
(Points; Complaints over 1000 lines; Average monthly claims. Source: Anatel (last reported); SINDEC)
Anatel IDA - Index of Caring Performance
99.9
98.0
92.8
94.9
0.7
93.0
84.9
Claims at Consumer’s Protection
Agency (SINDEC - Procon)
Anatel Complaints
0.5
0.4
76.1
0.3
0.2
0.2
62.6
Jun-12
Oct-12
Feb-13
Jun-13
0.3
0.3
Jun-12
TIM
Oct-12
P1
Feb-13
P3
Jun-13
7,192
7,075
4,176
6,692
4,518
2,961
3,801
2,722
3Q12
4Q12
1Q13
2Q13
3Q13
P4
5

6. Operational Performance (2/2): Strong Efficiency
Gross Additions
SAC* & SAC/ARPU
Bad Debt
(Million lines; Source: TIM)
(R$/gross adds; months)
(R$ Million; % of Gross Revs.)
SAC/
ARPU 1.8
(months)
% of
Gross
Revs.
33.6
9.7
Commercial
1.6
-31%
30.5
8.7
3Q12
3Q13
3Q12
3Q13
Total Traffic
(R$ million)
32.8
28.7
3Q12
*Subscriber Acquisition Cost
3Q13
Leased Lines Costs
(Bln minutes)
Network
56
Bad
Debt
SAC
(R$)
3Q12
0.7%
80
-9%
+17%
1.1%
0%
+14%
3Q13
3Q12
3Q13
6

7. Marketing: Keeping the Innovative Approach
Liberty Controle Express
 Pushing on Postpaid migration
 Payment via credit card
 TIM SIM blister for each
team.
 Increase Stickiness
~7x
Recent
Past
jan/13
Young
Chip Torcedor
 Young segment positioning
 Member get member through
social network since 2010.
14 Teams alread
sponsored
+56%
sep/13
sep/12
VOICE
DATA
Recarga Troco
Nonstop
Innovation
sep/13
International LD
Infinity Web + SMS
TIM Music
 Talk unlimited on-net for
R$2 for 2 days.
 Capture extra “charge”.
 Leveraging on micro
recharge on physical
PoS.
 Up selling approach,
targeting only customer
base.




 Internet + unlimited SMS
on/off-net.
 Pay per day.
 Combining Web and
SMS offers.
 Cross selling WEB and
SMS .




US:R$0,20/min.
+ 8 countries: R$0,50/min
FMS initiative.
Capturing the unexplored
mobile international calls
market.
 Market attended Today
through fixed carries.
Unlimited download.
Pay R$0.50/day.
Over the top service.
Increase customer
stickiness.
 Network friendly.
 13 million songs already
downloaded.
7

8. Marketing: Smartphone Supporting Data Growth
Smartphone Sales
Smart/Web phone Penetration
(% total handset sale)
(% over total base of lines)
3Q12
42%
30%
4Q12
46%
1Q13
46%
2Q13
3Q13
28%
19%
35%
24%
57%
13%
Webphone
39%
30%
21%
67%
Smartphone
 Smartphone approach to support
data usage growth.
43%
46%
50%
52%
 EBITDA neutral. No subsidy Policy!
 Leadership position in market of
handset (3Q13)
22%
39% market share of
smartphones sold
21%
3Q12
Essencial
4Q12
1Q13
2Q13
Jul 13
Launching entry-level 3G tablet
Data Users
VAS Revenue Growth
(% of Data Users in CB; million users)
(% of Mobile Services Gross Revenues; R$ Million)
34%
29%
Devices Share at Sales
23%
VAS/Revs. 19%
56%
46% Notebook
44%
19.9
3Q12
+23%
24.5
3Q13
1,362
VAS
Gross
Revs.
1,122
36% Tablets
+22%
17% Desktop
3Q12
3Q13
2010
2012
2014
2016
8

9. Live TIM: Maintaining the High Speed Mode
Net Adds
 Accelerating
improving ARPU;
sales
and
Customer Base
(000 Clients; Source: TIM)
(000 Clients; Source: Anatel)
42.6
9.7
1.6
4Q12
1Q13
2Q13
3Q13
3Q12
Clients highly satisfied
Clients highly satisfied
Network Evolution
(000 Addressable Households ; Source: TIM)
804
881
609
General Satisfaction
38 neighborhoods in SP
34 neighborhoods in Rio
1Q13
2Q13
8,3
GVT
7.1%
7,5
OTHER
5.6%
9,0
7,2
8,0
8,0
Conection Quality
3Q13
7,5
Phone Attending
6,9
6.0
6,6
7.0
3Q13
2Q13
TIM
7,3
Bill
257
1Q13
(UBB >34MB ; Source: Anatel)
P2
6,9
Offer
522
4Q12
Market Share SP+RJ (August)
Source: TNS Market Research
P1
4Q12
16.3
6.6
1.2
3Q12
3Q12
26.4
10.1
8.1
 Reference as UBB service
provider ( >50% net share).
16.2
13.3x
 Taking the lead as #1
challenger in Rio and São Paulo;
7,9
9,1
8,7
NET
8.9%
7,7
8.0
LIVE
TIM
48.5%
VIVO
22.0%
9.0
10.0
OI
7.8%
9

10. Financials: Evolution Analysis
EBITDA Analysis
Net Revenue Evolution
(R$ Million)
(R$ Million, % YoY)
Thousands
+7.6%
Service
4,722
+151
-45
+4.2%
+254
5,083
1,201
+2.6%
4,100
+107
+40.9%
622
-97
25.4%
4,207
+10
-6
25.3%
EBITDA Margin
31.0%
Handset
+38
31.5%
Service EBITDA Margin
1,252
24.6%
30.5%
876
Revenue
3Q12
Δ Mobile
Services
Δ Fixed
Services
Δ Handset
ΔYoY
+3.9%
-22.3%
EBITDA
3Q12
ΔServ.
Revs
ΔHandset
Margin
ΔMkt
and Sales
ΔYoY
+40.9%
Revenue
3Q13
+2.6%
-55.2%
+10.4%
ΔNetwork
and ITX
ΔPers./G&A EBITDA
and others
3Q13
-0.7%
+1.2%
From EBITDA to Net Income
(R$ Million)
3,708
-2,045
3Q13:
R$315 mln
-15.6% YoY
1,663
-202
-454
1,007
EBITDA
9M13
ΔYoY
Depreciation/
Amortization
EBIT
Net Financial
Result
Taxes and
Others
Net Income
9M13
+3.4%
+2.2%
+4.9%
+48%
-1.9%
+2.1%
10

11. Financial Position
Capex
~94% in
infrastructure
(R$ Mln)
D Working Capital
(R$ Mln)
987
1,175
+52%
853
-10%
252
LT Amazonas
772
+139%
413
923
3Q11
3Q12
OFCF
320
3Q13
D OFCF YoY: +R$471
3Q11
+29%
3Q12
3Q13
Net Debt
(R$ Mln)
(R$ Mln)
1,458
1,314
1,550
1,446
252
+56%
LT Amazonas
843
624
+35%
1,194
3Q11
3Q11
3Q12
3Q13
Net DEBT /
EBITDA
(trailing 12m)
0.32
3Q12
0.29
3Q13
0.28
11

12. Conclusions

13. Conclusions & Outlook
Infrastructure
Strategy & Offer Evolution
 Continuous deployment of fiber
to support data traffic growth.
 FTTS will now reach 38 cities by
YE2013 from 14.
 New backbone routes to
increase resilience.
 Signed first vendor agreement
on small cell coverage to
improve network access and
quality.
 Continuous improvement in
network related complaints.
 Finalized implementation of new
call center and data center
architecture.
 Accelerated Capex.
 Postpaid continuous growth,
better customer mix.
 Maintaining solid data services
growth.
 Continuous offer evolution
backed by innovative DNA.
− International calls.
− Infinity Web + SMS.
− “Recarga Troco” - “Change”
top-up.
− +70% of smartphones over
new sales.
− Good progress on Intelig and
Live TIM.
Efficiency
 Commercial side:
− Low SAC.
− Payback (SAC/ARPU) under
control.
− Bad debt stable at low levels.
 Network side:
− Increasing MOU with stable
leased lines costs.
− Proprietary infrastructure
deployment.
Triennial Plan 2014-16 to be disclosed on November 8th.
13