2. 2
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Disclaimer
Financial results are presented considering
impacts from IFRS 16 adoption, except otherwise
indicated.
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.
3. 3
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Agenda
ABOUT TIM
MARKET OVERVIEW
INFRASTRUCTURE
STRATEGY AND POSITIONING
OPERATING EVOLUTION
FINANCIAL EVOLUTION
OUTLOOK
04
11
23
28
40
51
55
IMAGINETHE
POSSIBILITIES
5. 5
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Challenger with relevant role in the telecom sector
→ Operator with National Presence
→ Best and Wider 4G Coverage
→ High Relevance in the Prepaid Market, despite the transformation in the customer base
→ >100 thousand km of Fiber optical Network throughout the country
MOBILITY
→ IoT: pioneer in Agribusiness vertical solutions, connected car and value added
services
SOLUTIONS
→ >600k Residential Broadband Clients
→ 100% of the Base with High Speed (>34 Mbps)
→ Presence in 27 cities with FTTH coverage
→ 2.8 mln Homes Passed with FTTH
→ Residential Broadband offered through Mobile Network
RESIDENTIAL
~R$ 35 billion market
capitalization
(1) Market cap as of 21-Aug (Bloomberg).
6. 6
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TIM Participações – Investor Relations
2019 financial highlights show strong execution
6
R$ 17.4
bln
Net Revenue
(+2.3% YoY)
R$ 8.1
bln
Highest EBITDA1
in TIM’s history
46.7%
Highest EBITDA
margin2 in the
market
R$ 491
mln
TIM Live Revenue
(Fixed Broadband)
(+30.6% YoY)
(1) Normalized; (2) Normalized, Among Top 5 Players in the Telecom Market.
7. 7
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7
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 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 12 years
Shareholders’ structure and highest level of corporate governance
Corporate Governance Form1
vs 65% on
average2
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
→ 30% of female representation: >3x B3 Novo
Mercado average
General Assembly
Board of Directors Fiscal Council
Statutory Audit
Committee
Compensation
Board
Control and Risk
Board
Statutory Board of
Officers
(1) Share position as of Mar-2020; (2) According to EY 2018 report.
32%
36%
32%
Institutional Shares (% of free float)
Brazil
USA
Rest of
World
8. 8
Institutional Presentation | 2Q20
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ESG: TIM Brasil is committed to a positive transformation
TIM Brasil plans to improve its ESG practices based on its Materiality Matrix
→ Increasing efficiency and taking advantage of green energy cost reduction
→ Developing infrastructures and Data-Center to give more to our customer with
less impact from operations
Environmental
We want to be green
→ Improving internal workforce valorization and talent management
→ Accessing Brazilian Top Employer ranking based on diversity issues
→ Promote digital capabilities and ESG Culture among the employees
→ Developing the digital education to support demand for connectivity
Social
We believe that new
capabilities are a key
factor to maintain the
leadership
→ TIM recognized as a company with highest level of commitment to sustainability
and corporate governance
→ Reinforcing and disseminating the ESG principles to the high risk suppliers
→ Adopting best practices regarding compliance, information security and privacy
protection ("LGPD“)
Governança
Efficient Mecanisms to
balance in a fair way the
interests of all
stakeholders, enhancing
transparency and control.
Indirect Emissions -70%
Eco-efficiency +75%
Employees Engagement >MQ3
Digital Capability
Development
1k people
Employees trained on
ESG Culture
>95%
2025
2022
Carbon neutral by 2030
New Market and ISE Mantain
ISO 27001 and ISO 37001 Obtain
United Nations Agenda: 10 relevant goals for TIM Brasil
Brasil
Long Term Targets (TIM Brasil)
ISO 14001 (Network – 1st
Brazilian Telco) and ISO
9001 (Billing and Network)
Signatory of UN
Global Compact
since 2008
Member of ISE (Corporate
Sustainability Index) for
12 consecutive years
Membr of CDP (Carbon Disclosure Project) – Investor
and Supply Chain Questionnaires (since 2010)
Sustainability Report - GRI
GHG Inventory
verified by 3rd
Part -Gold Stamp
9. 9
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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
SCHOLARSHIPS
PRINCIPLES
AND
STRATEGIES
Education Work Application Inclusion
ACADEMIC WORKING
CAPITAL
(since 2013)
Instituto TIM’s initiatives have reached all 26 States and
the Federal District
Instituto TIM: Commitment to a positive transformation of society
10. 10
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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
Broadband Launch
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 500k customers
2019
TIM Black Família > 500k
and TIM Live >600k
customers
2020
12. 12
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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 4,3
2,1
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q20
IPCA
(% p.y., LTM)
7,5
4,0
1,9
3,0
0,5
-3,5 -3,3
1,3 1,3 1,1 0,9
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20
GDP Growth
(% YoY, YTD)1
(1) GDP growth at market prices: YTD accumulated rates (in relation to prior year’s same period), 2Q20 to be released in Sep 1st.
Source: IBGE, BACEN, FGV.
10,8 11,0
7,3
10,0
11,8
14,3 13,8
7,0 6,5
4,5
2,3
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q20
Interest Rate – Selic Target
(% p.y., EOP)
1,67 1,88 2,04 2,34 2,66
3,90
3,26 3,31
3,87 4,10
5,48
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q20
Exchange Rate
(R$ / US$, EOP)
Brazilian economy was showing early signs of improvement when social distancing measures were adopted to contain the spread of the novel
coronavirus in the country. The 2nd quarter of 2020 was probably the mostly impacted so far. The latest projections reported by Brazilian Central
Bank’s Boletim Focus pointed to a 5.52% YoY decrease of Brazilian GDP in 2020.
13. 13
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Brazilian population by social class
The consumers still feels past years crisis and COVID-19 outbreak
impacts, influencing the sector dynamics
During the past year, class B decreased, while classes D/E
increased
A
B
C
DE
5
mln
44
mln
101
mln
60
mln
2.5%
21.0%
48.1%
28.5%
Source: IPC Maps 2019 and 2019/ABEP 2019, Worlddata (2018), Exchange rate as of October 11th, 2019 (R$/US$ 4,11), IBGE, BACEN, FGV.
Average
income
Benchmark
countries
6,9 6,5
12,0 11,6
13,3
Unemployment Rate
(% EOP)
39,6
43,8
46,3
42,4 42,7
46,5
Household Debt
(%, EOP)
2012 14 16 1813 15 17 19
106,1
86,4
73,4
93,0
71,1
Consumer Confidence
(0-200, EOP)
104,1
86,6
78,0
94,8
80,4
Business Confidence
(0-200, EOP)
> 100 = optimism > 100 = optimism
(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
2Q20
2012 14 16 1813 15 17 19 2Q20 2012 14 16 1813 15 17 19 2Q20
2012 14 16 1813 15 17 19 May-20
14. 14
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1,0%
1,2%
1,3%
1,4%
1,5%
1,8%
Brazil
Iraq
South Africa
Morocco
Malaysia
Nigeria
Mobile Wallet Share1
(Mobile ARPU / per capita GDP)
Brazilian market is relevant globally with room for ARPU growth
(1) Selected countries. Source: Merrill Lynch – Global Wireless Matrix 2Q20 (1Q20 data).
223
274
392
962
1.594
Brazil
Indonesia
USA
India
China
5th
Mobile Customer Base Ranking
(mln)
14,5
20,3
21,9
64,8
123,2
156,2
Brazil
Korea
India
Japan
China
USA
10th
Mobile Service Revenues Ranking
(US$ bln / year)
105%
158%
162%
173%
179%
180%
Brazil
UAE
Morocco
South Africa
Austria
Finland
33th
Mobile Penetration Ranking
5,4
29,8
34,1
34,8
36,7
37,5
Brazil
Qatar
USA
Norway
Switzerland
Canada
38th
Mobile ARPU Ranking
(US$ / mo)
11st
15. 15
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New consumer habits reinforce data service as essential,
especially over mobile network
58%
41%
Internet users by device
(2019 | % of internet users)
Only computer
Only mobile
Both
+2 p.p
YoY
20%
11%
66%
Internet users
(2019 | % of mobile internet users)
Only Wi-Fi
Only mobile
Both
Don't know
77%
99%
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% 74%
2017 2018 2019 2020
51%
28%
Movies and series Music
Paid streaming and car app users
(% of smartphone users)
+24 p.p.
Source: We are Social, Mobile Time (Opinion Box), Statista, CETIC.
16. 16
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Traditional services have been losing relevance in this new
framework and internet has been gaining prominence
(1) Number of households in 2019 estimated by TIM. Source: Anatel, CETIC.
27% 31% 34% 36% 37%
42% 44% 45%
2012 2013 2014 2015 2016 2017 2018 2019
Fixed Broadband Penetration
(% of households)
12%
25%
23%
41%
< 2 Mbps
2 - 12
12 - 34
> 34
Fixed Broadband Connections Speed
32.6 MM
lines
31%
47%
56%
66% 71% 74% 78%
2012 2013 2014 2015 2016 2017 2018 2019
Mobile Internet Users
(% of >10 years population)
25% 28% 29% 28% 27% 26% 25%
22%
2012 2013 2014 2015 2016 2017 2018 2019
Pay TV Penetration
(% of households)
15.8 MM
accesses
69% 69% 67% 64% 61% 58%
53%
46%
2012 2013 2014 2015 2016 2017 2018 2019
Fixed Voice Penetration
(% of households)
33.5 MM
lines
137 MM
people
17. 17
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17
Change in market structure combined with new consumption
habits resulted in a transformation in the base profile
199 201 203 204 206 208 209 210
131% 135% 138% 126% 118% 115% 110% 97%
2012 2013 2014 2015 2016 2017 2018 2019
Mobile Penetration
Population (MM) Penetration
2,00 1,96 1,94
1,73 1,64 1,54 1,44 1,37
2012 2013 2014 2015 2016 2017 2018 2019
SIM Cards per Unique User
(Unit)
0,36 0,32
0,24
0,16
0,10 0,06 0,03 0,02
2012 2013 2014 2015 2016 2017 2018 2019
MTR Evolution
(R$ / min)
The maintenance of a high interconnection tariff
pushed the “community effect (on-net)” through the
possession of multiple SIM cards.
Mobile market has been experiencing organic growth
in total unique users.
Penetration is decreasing due to the reduction of total
SIM cards: weakening of the “community effect” due to
the decrease in ITX tariff (off-net reduction) and
dissemination of communication apps.
SIM consolidation despite the growing number of
mobile users.
211 212 213
185 165 149 130 117
44 51 58 62 67
73 80 85
2012 2013 2014 2015 2016 2017 2018 2019
Prepaid Human Postpaid
Mobile Base per Segment
(MM)
Postpaid base already represents ~50% of unique
users, besides that >60 MM Brazilians are in the credit
bureau blacklist.
227 MM
SIM Cards
124 130 137 139 138 142 144 146
74%
76%
79%
80%
79%
80% 80%
79%
2012 2013 2014 2015 2016 2017 2018 2019
Unique user >10 years (MM) Penetration
Unique User Penetration 146 MM
people
(1) Human postpaid (ex-Data, Modem + M2M). Source: Anatel, CETIC.
18. 18
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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)
19. 19
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TIM Participações – Investor Relations
Market revenue dynamic indicates mobile growth, and highlights
TIM’s evolution
(1) 2016-2017 comparison on pro-forma basis and ≥2018 considering IFRS 16 adoption; (2) Nextel 2019 figures incorporated in Claro.
Source: Operators’ Earnings Releases.
51% 52% 53% 55%
49% 48% 47% 45%
119,3 118,5 116,1 115,3
2016 2017 2018 2019
Mobile Fixed
55% 57%
45% 43%
57,2
56,2
1H19 1H20
31,3 31,8
1H19 1H20
60,7
61,8 62,1
63,9
2016 2017 2018 2019
20,9 19,7 18,7 17,2
2,8 2,3 1,9
29,3 29,4 29,7 32,4
34,6 35,6 35,8 36,0
12,3 13,1 14,0 14,4
2016 2017 2018 2019
13,8 13,0 12,1 11,5
5,5 4,4 3,5
17,6 17,8 18,6 23,4
40,1 41,1 41,0 40,6
23,0 23,8 24,7 24,5
2016 2017 2018 2019
Total Services Net Revenues Share
(%)
Mobile Service Net Revenue Share
(%)
17,6 16,3
1,9
30,3 33,5
36,0 35,9
14,1 14,3
1H19 1H20
Nextel
TIM
Oi
Claro
Vivo
11,6 11,0
3,6
19,5 25,3
40,9 40,1
24,4 23,6
1H19 1H20
Nextel
TIM
Oi
Claro
Vivo
Market | Total Services Net Revenues
(R$ MM)
Market | Mobile Service Net Revenues
(R$ MM)
-1.1%
CAGR
+1.7%
CAGR
20. 20
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TIM 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%
23%
8%
31%
20%
33% 24%
49%
29%
29%
26%
10%
31%
15%
16%
33%
6%
35%
2%
Others
(1) Claro considers participation of Nextel in the SMP. Source: Anatel.
Nextel
HHI Index
0 0,25 0,5 0,75 1
0 0,25 0,5 0,75 1
0 0,25 0,5 0,75 1
0 0,25 0,5 0,75 1
Level of competitiveness
+ -
(Market Share | Jun-20)
21. 21
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TIM has different opportunities in terms of regionality
SP Interior
34.0%
32.0%
21.9%
8.1%
2nd
Leader
3rd
4th
TIM’s Position
NE
31.9%
30.6%
25.3%
12.1%
BA/SE
36.9%
24.8%
19.8%
18.3%
RJ/ES
36.1%
32.6%
17.4%
13.5%
SP Capital
41.6%
24.1%
23.2%
9.3%
MG
43.5%
21.9%
18.3%
10.8%
RS
47.2%
31.4%
13.0%
8.1%
PR/SC
51.8%
20.1%
17.0%
10.4%
CO
37.4%
34.5%
15.9%
11.5%
NO
35.7%
25.6%
19.3%
19.1%
BRASIL Pen: 95.7%
33.0%
24.5%
23.1%
16.3%
(Market Share | Jun-20)
Source: Anatel.
22. 22
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Regulatory updates promoting major changes in the sector
Anatel and Relevant Regulators
4 MAIN REGULATORY
CHAPTERS
→ License and Spectrum
→ Competition
→ Quality and Consumer Protection
→ Universalization Policy and
Broadband
ORGANIZATION
Anatel is subject to special authority regime and bound to the
Communication Ministry, with the function to regulate the Brazilian telecom
sector (LGT, Art. 8º)
Independent Antitrust Agency (coordination with Anatel to sectoral
matters)
Important in the intersectoral regulation (infrastructure)
Tribunal de Contas da União¹: surveillance of Anatel’s operating activities;
final instance on matters “related to costs” (RF auctions, liquidation
agreements etc.)
Independent system for consumer protection on national, regional and local
levels; not integrated entities that work in parallel (and overlapping) to
Anatel
~1,500
Public
agents
~5,000
Control items
26 Regional
Offices
336
Resolutions
in force
Recent important changes
Law nº 13.879/2019 (PLC 79)
(presidential approval on 10/04/2019)
Fixed
→ Option to migrate from concession to authorization model
→ Additional broadband investment plan: balance of concession
exchange to authorization, reversible goods and public politics area
Mobile Spectrum
→ Successive renewals of the authorization (not limited to 2 periods)
→ Possibility of conversion of the renewal fee for investments
→ Radiofrequency transferal between operators (secondary market)
RQUAL (2020)
→ Approved in Dec, 2019 to introduce responsive regulation to reach better quality
of telecom services. Replaces pecuniary sanctions for alternative measures
according to the risk identified.
TAC² –Conduct Adjustment Term (Jun/19)
→ First agreement with a major operator signed by Anatel (Jun/2020) with
a reference value of R$ 639 million, to generate improvements in three
operating pillars: client experience, quality and infrastructure, as well as
a project to cover 300 municipalities with 4G
SPECTRUM CAP (Nov/18)
→ <1GHz frequencies: stablished the limit of up to 35% concentration
→ Between 1GHz and 3GHz bands: up to 30%
In both cases, participation can be extended up to 40%, with conditioning
(1) Government Accountability Office, (2) Agreement for Conduct Adjustment – agreement that operators can reach with Anatel to substitute fines for
investment in less favored regions, (3) Universalization Plan.
24. 24
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Consistent strategy to address challenges and opportunities,
while participating in the creation of a new mobile market
EVOLVE TRANSFORM
→ Move from volume to value to sustain mobile business growth
→ Grow on broadband with financial discipline
→ New operating model to address current and future challenges
→ Additional growth through adjacent markets
INFRASTRUCTURE
Transformational projects to build the future (e.g. 5G, cloud), improve quality
and reduce cost to serve.
1
DISRUPTIVE EFFICIENCY
Holistic approach to address industry challenges.2
MOBILE
From volume to value.3
ULTRABROADBAND
The lever to accelerate business even further, organically and in partnership.4
NEW REVENUE SOURCES
The IoT, mobile advertising and financial services opportunities.5
ESG
Commitment to a positive transformation improving ESG practices based on
materiality assessment.
6
25. 25
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Mobile: Move from volume to value to sustain mobile business
growth, leveraging customer experience
Playing by opportunity: meeting clients true needs.
Increasing “share of wallet”.
Residual growth: churn management becomes
more important.
Ensuring execution and
customer satisfaction to
succeed.
“ Innovation
Low price
Convergence
2014
2019
2022
P2
P3
P4
Premium price
26. 26
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Footprint expansion and operational improvement
Cherry picking deployment, Reduce early churn, Improve care and self-care, Reliable bill to cash processes
Differentiation: UBB + Content
OTT content friendly approach, Wi-Fi experience
2018 2019 2020 2021 2022
TIM Live >30%
CAGR 19-22
TIM Live
Others
FIXED NET REVENUES (R$) FTTx CUSTOMER BASE (mln)
2018 2019 2020 2021 2022
FTTH
FTTC
+15
cities
+42%
households
covered
FROM EVOLUTION…
Broadband: Revenues will be the lever for fixed business growth
27. 27
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(1) Anatel (dec-19), internal analysis.
> 60%
20% - 40%
0% – 20%
40% – 60%
Broadband
Penetration
25 26 26 23
2 3 6 10
27 29 31 33
2016 2017 2018 2019
Others
Fiber +79%
-3%
+7%
CUSTOMER BASE BY
TECHONOLOGY (mln)
BRAZIL’S BROADBAND MARKET
BROADBAND AND FIBER PENETRATION (on HH)
Expanding TIM Live's services with the
right balance between Sales and Capex,
unlocking additional value of this asset
Create in partnership a neutral fiber
infrastructure asset in Brazil
Market sound process with an advisor to
find the right partner out of the telecom
space
…TO TRANSFORMATION
Strategic Partnership
FIBER PENETRATION TOP 5
São Paulo 24%
Santa Catarina 23%
Minas Gerais 23%
Paraná 21%
Ceará 19%
Brasil 16%
CAGR
Broadband: Smart Capex to ensure acceleration
29. 29
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TIM is well positioned to attend the new demand, with no legacy
to defend
41,2
39,6
37,5
33,5
31,5
2016 2017 2018 2019 2Q20
Fixed Line Base
(MM)
18,8
18,1
17,5
15,8
15,2
2016 2017 2018 2019 2Q20
Pay-TV Base
(MM)
66,6
72,7
79,8
85,1 85,6
2016 2017 2018 2019 2Q20
Human Postpaid Base (ex-M2M)
(MM)
26,9
28,9
31,2
33,0 33,8
2016 2017 2018 2019 2Q20
Broadband Base
(MM)
-7.4%
CAGR
Fixed-mobile
substitution
Traditional-OTT
ssubstitution
+12.5%
CAGR
Market
+7.4%
CAGR
+7.9%
CAGR
Market
-6.4%
CAGR
Market
+6.7%
CAGR
+21.6%
CAGR
Market
Source: Anatel.
30. 30
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Customer base transformation process, driven by pre-postpaid
migration, supported an evolution at the top of the pyramid
77%
70% 64% 61% 59%
21%
27%
32% 33% 34%
2% 3% 4% 7% 7%
2016 2017 2018 2019 2Q20
TIM Base Mix
Prepaid Human Postpaid M2M
+0.8 p.p.
YoY
-1.6 p.p.
YoY
49%
42%
34% 31% 30%
45%
52%
59% 61% 63%
6% 6% 7% 7% 8%
2016 2017 2018 2019 1H20
Mobile Service Revenue Mix
Prepaid Postpaid Other
+1.6 p.p.
YoY
-1.7 p.p.
YoY
(1) Revenues on Pro-forma basis, excluding IFRS 9, 15 e 16 impacts until 2019; (2) Other revenues considering non-TIM clients, interconnexion and others.
31. 31
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
21% 20% 23% 21% 20%
40%
43% 40% 39% 39%
22% 24% 26% 27% 28%
16% 12% 11% 12% 12%
2012 2013 2014 2015 2016 2017 2018 2019 2Q20
Market Share | Human Postpaid
TIM Vivo Claro+Nextel Oi
28%
29% 28% 28%
27%27%
25%
25%
27% 27%
25%
25%
25%
23% 23%
20% 20% 21% 21% 21%
2012 2013 2014 2015 2016 2017 2018 2019 2Q20
Market Share | Prepaid
TIM Vivo Claro+Nextel Oi
Customer base management momentum: “from volume to value”
9,5
11,1 11,2 12,3 13,4
16,1
18,1 17,8 17,5
1,2 1,2 1,3 1,3 1,5 1,7 2,2
3,6 3,9
2012 2013 2014 2015 2016 2017 2018 2019 2Q20
TIM Base | Postpaid
(MM)
Human Postpaid M2M
Source: Anatel.
70,4 73,4 75,7
66,2 63,4 58,6 55,9 54,4 52,0
59,7 61,1 63,2
52,7 48,5
40,8 35,7 33,0 30,7
2012 2013 2014 2015 2016 2017 2018 2019 2Q20
TIM Base | Total and Prepaid
(MM)
Total Prepaid
32. 32
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Approach to ensure higher value captured and sustainable
growth
16,7
40,6
10,4
17,9
37,7
11,3
20,2
39,7
11,5
22,4
39,9
11,5
23,7
38,1
12,0
23,4
36,1
11,4
Total Postpaid Prepaid
Mobile ARPU
(R$ / mo, Pro-forma1)
2015 2016 2017 2018 2019 2Q20
7,1 16,9 27,6 34,5 38,6 38,8
10,9%
27,2%
48,5%
64,2%
76,1% 80,5%
2015 2016 2017 2018 2019 2Q20
Base 4G
(MM)
4G Base Penetration
397 640
1.198
2.184
3.009
3.553
2015 2016 2017 2018 2019 2Q20
BOU
(MB / mo)
(1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
+8.1%
CAGR
-1.4%
CAGR
+3.3%
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.
33. 33
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
“More for more”: Stepped portfolio addressing consumer wishes
through relevant partnerships
POSTPAID
TIM Controle
TIM Black
from
2GB
from
2.5GB
from
15GB
international
roaming
TIM Black Família
shared benefits
TIM Pré Top
≥R$ 20/two weeks ≥R$ 50/mo ≥R$ 110/mo
Increase CEX with better Quality and Value Proposition
CONVENIENCE
NEW EXPERIENCES ENABLER
FAMILY ENTERTAINMENT AND SERVICE HUB
Data Stack
Data bonus for ≥R$ 30
in recurrent recharges.
TIM+
Vantagens
The first advantage program
for prepaid client.
TIM Beta
Additional benefits for
digital customers.
TIM + C6
The first joint
effort between a
telco and a
digital bank
34. 34
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Exploring accelerated growth opportunities: Residential
broadband
306
392
467
566 606
2016 2017 2018 2019 2Q20
Broadband Base
(Mil)
57,9
67,3
76,0 80,8 85,0
2016 2017 2018 2019 2Q20
TIM Live Fiber ARPU
(R$ / mo, Pro-forma1)
+21.6%
CAGR²
+11.6%
CAGR²
(1) ARPU on Pro-forma basis, excluding IFRS 9, 15 and 16 impacts.
TIM Live Portfolio
Fiber: freedom to choose content
Internet (WTTx)
Fibra
Ultra Fibra
60 mbps
speed
speed from
100 mbps
to 400 mbpsallowance of 30 GB
to 80 GB
+ Value-Added
Services
≥R$ 115/mo ≥R$ 99/mo≥R$ 60/mo
35. 35
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
(1) Global Data Market Opportunity Forecasts to 2023: Global IoT.
360
184
~750
~400
-
1,0
2,0
3,0
4,0
5,0
6,0
0% 20% 40% 60%
Connections
Share of IoT Revenues
From
(2018)
To
(2022)
From
(2018)
To
(2022)
Transport
Agriculture
IoT MARKET SIZE1
= USD Revenues (mln)
IoT IN LATIN AMERICA DEVELOP AT SCALE AND MONETIZE IOT
VERTICALS
4G TIM no Campo
Sole operator in the
initiative developing
agribusiness solutions based
on IoT.
Connected Car
First mover: agreement
with car manufacturer to
provide in-car connectivity
and automation.
~5 mln
acres with 4G
1
st
place in 4G
coverage in Brazil
>3k
cities with NB-IoT
major partners in agro
Beyond Core: Exploring B2B new services with integrated services
36. 36
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
TIM Ads addressable environment
(1) Latin America Digital Ad Spending 2019 eMarketer, internal analysis.
R$ 24.2 bln
digital ad market in 20221
R$ 19 bln
delivered through
mobile
>2x upside
for TIM
in 2022
Brands1
Ad agency2
Demand side
Platform3
Connection
mechanisms4
Supply side
Platform5
Publisher6
DMP
5%
50%
45%
VALUE
POOL
Beyond Core: The mobile advertising opportunity
37. 37
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
As is To be
Opportunistic
approach
→ SMS to any 3rd
parties
→ ~R$ 190 mln
already generated
in mobile ads
products
Becoming a front
runner
→ Data monetization:
enhancing 3rd parties
campaigns
assertiveness with
customer knowledge
→ Operators
cooperation
→ Aligned with LGPD for
scoring and new
economy
TIM AS AD TECH PLAYER
Leveraging on customer data and ownership
to enhance advertisers knowledge.
TIM AS PUBLISHER
Exploring owned touch-points (digital and
physical) to advertise 3rd parties.
Close the gap
→ Exploring Captive
Portal interactions
to display 3rd
parties ads
→ New trial
contracts signed
in the past 2
months
→ Fine-tuning and
new products
development
~1902019
2020
2022
MOBILE ADS REVENUE (R$ mln)
+35%
+70%
Beyond Core: TIM’s positioning as publisher and ad-tech player
38. 38
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
LOW-END
Access to banking
services.
2
→ Symbiotic partnership
(JV like)
→ Value generated by profit
sharing
HIGH-END
Convenience and
simplicity.
1
→ Full bank offer
→ Commercial partnership
→ Value generated by
commissions in fees +
equity
EXPLORING PARTNERSHIP OPPORTUNITIES
(1) Population > 15 years old (Global Findex Database 2017); (2) Population > 10 years old; (3) Population > 16 years old (Locomotiva).
First mover in telecom +
digital banking services.
Exclusive agreement
with Bank C6.
Partners short list under
analysis.
27%
59%
79%
Credit Card
Debit Card
Mobile
Unique
Users
1
2
FINANCIAL SERVICES IN BRAZIL
OWNERSHIP PENETRATION OF… (% population)
1
45
mln
Brazilians have
no bank account3
817bln
annual transactions of
unbanked population
in Brazilian economy3
R$
83
%
top 5 banks’
market share
EOP 2020
BCB expects to
launch its instant
payment system: PIX.
Beyond Core: FinTech’s playing field is moving fast and we have a
unique window of opportunity
39. 39
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
REDUCE CHURN
Distinguished offer through MFS
and increased engagement with
the clients have a potential to
reduce churn in the core telco
business.
DESCRIPTION TIM C6 BANK
Role Sales channel
Provider of banking licenses,
technology and infrastructure
Target clients
TIM customer base: increase attractiveness on client acquisition
within a differentiated onboarding experience
(potential ‘VIP’ experience for high-end costumers)
Offer Bank and Telecom account, making life easier for consumer
Business structure Hybrid partnership model combining fees and equity
LOWER COLLECTION COST
The bonus is only guaranteed
when the customer pays their
invoice or recharge through the
App C6, lowering the cost of
collection.
Beyond Core: Confirming innovation leadership in telecom
through a hybrid high-end partnership with C6 bank
41. 41
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
IT to the next level in 18-24 months
Network 5 key pillars
Benefits:
Big data
evolution
NBA
roll-out
Application and
architecture review
Catalogue
creation
Cognitive
systems
Data
Growth
5G
ready
New
initiatives
IoT
Fixed
Broadband
New
capabilities
Customers’
Integrated view
Time-to-
market
Automation of
processes and
efficiency increase
Densification and
innovative solutions
Fixed
Wireless
Access
Convergent
architecture
New IoT
businesses
opportunities
Decommissioning
Savings
Evolution Transformation
Infrastructure: Act today to be ready for the future
42. 42
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Data Growth 5G ready IoT
New
initiatives
Fixed
Broadband
New services
requirements:
increasing efficiency
to cope with data
demand
Innovate with 5G,
evaluating spectrum
limitation vs new
services to technology
development
Support fixed BB
growth with agnostic
approach and
consistent convergent
architecture
New opportunities
becoming reality:
"Network slices“ for
service optimization
Decommissioning and
convergence of
network to boost
savings
→ Deep infra sharing
→ 80% of new sites will
be Biosites
→ Indoor sites
densification
→ Massive MIMO
→ IP/Optical
convergence
→ 5G spectrum Auction
→ Launch of main cities
→ Cluster approach
(MAN) at 5G cities
→ Core evolution
→ Content distribution
→ Resilience
improvement
→ FTTH vs FWA
→ Virtualization
through SD-WAN
→ Multi access edge
computing
→ New IoT services
→ NB-IoT expansion
→ E2E legacy
decommissioning
→ Sky coverage
→ Partnerships (MOU
Vivo)
→ 2G/3G consolidation
Network: Transformation initiatives to thrive efficiency and new
business opportunities
43. 43
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
17
19
~22
2018 2019 2020 2021 2022
ACCESS NETWORK (‘000 SITES)
3.272 3.520
>4k
1.426
2.455
2018 2019 2020 2021 2022
Total
700 / 850
MHz
4G COVERAGE (# cities)
76%
75%
92%
2018 2019 2020 2021 2022
TRAFFIC MIX EVOLUTION
4G
2G / 3G
Better indoor
experience.
Network: Mobile shift to 4G network still in progress as a way to
improve quality and reduce cost to serve
44. 44
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
FTTH (# cities)
11
23
~70
2018 2019 2020 2021 2022
HOME PASSED (mln)
1,1
2,3
~5.5
2018 2019 2020 2021 2022
BACKBONE + BACKHAUL (‘000 km)
90
101
>130
2018 2019 2020 2021 2022
FTTCity (# cities)
601
821
~1.5
2018 2019 2020 2021 2022
Transport
Network
UBB
Network: Fiber expansion to support business continuity and
ultrabroadband acceleration
45. 45
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
→ Bad Debt (e.g. new
credit models, collections
systems improvement)
→ Legal processes (e.g.
predictive models to
reduce JEC expenses -
special court for small
cases)
→ Self-Provisioning (e.g.,
Naked SIM)
→ Self-caring: Cognitive
IVR and WhatsApp
services (e.g., second
invoice, balance check
and etc.)
→ Self-healing (e.g.,
technical resolution for
broadband services)
→ Administrative
processes (e.g. ground
leasing)
→ Pay-roll management
IT Planning &
Development
→ Industrial
agreements (e.g. VIVO
MoU)
→ Innovative
Technologies (Massive
MIMO)
→ TIM Live’s
Transformation with
partnership
→ Cloudification (storage
as commodity)
Process efficiency Digital & Automation Make vs buy Smart CAPEX
Being competitive: increase
return on investment by
focusing it where we can
apply differentiation.
Productivity: focus on the
core.
Brazilians are already
digital: unique environment
opportunity.
Gaps as opportunities:
Close gaps and surpass the
benchmark.
Holistic efficiency approach: Disruptive efficiency to address
industry challenges
46. 46
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Spectrum distribution reflects available capacity, though user
experience will also depend on network management
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)
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
Spectrum Cap
(1) Considering mobile spectrum (SMP), (2) Spectrum limits calculated by the Regulator based on the spectrum share in each city.
47. 47
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Coverage expansion supported by a robust infrastructure
411
1.255
3.003 3.272 3.477 3.517
0 2
916
1.426
2.313
2.640
2015 2016 2017 2018 2019 2Q20
4G Coverage
(# cities)
Total 700 MHz
93% with
VoLTE
70,3 75,8
85,2 90,1
100,8 104,1
2015 2016 2017 2018 2019 2Q20
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
21,7
2015 2016 2017 2018 2019 2Q20
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 5
2
11
23
26
2015 2016 2017 2018 2019 2Q20
TIM Live Coverage1
(# cities)
FTTC FTTH
2,1 2,1
3,2 3,5 3,6 3,6
1,1
2,3
2,8
2015 2016 2017 2018 2019 2Q20
Covered Households1
(MM)
FTTC FTTH
4.3
14
25 5.528 5.7
-- -- -
48. 48
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Innovation and spectral capacity management to ensure a
continuous evolution of customer experience
70,2
79,0
79,5
88,2
P4
P3
P2
TIM
4G Availability¹
(% of time)
1º
(1) According to Tecnoblog, Jul-20.
179
2.116
244
2.221
298
2.314
309
2.347
2.1 GHz
1.8 GHz
Spectrum Refarming for 4G
(# cities)
2Q20 2019
2018 2017
Start of robust infrastructure via acquisition
strategy: Intelig (2009), AES (2012).
4,5
5,8
6,2
6,3
P4
P3
P2
TIM
4G Coverage Experience1
(0-10)
1º
6x
throughput
per user23x
data
consumption2
Main results of massive
MIMO approach:
Innovation to better serve the
customer: Massive MIMO application to
network stress situations.
Copacabana New Year’s Eve case:
→ ~3 mln people in 4 km length
→ 36x more simultaneous connections
→ +60% YoY data traffic increase
→ 174k calls (>50% VoLTE )
49. 49
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Network initiatives to increase both capacity and coverage,
exploring all opportunities to become self-sufficient
NETWORK SHARING AGREEMENT
→ Efficient approach to 2G: ~2,700 cities
impacted
→ 3G/4G expansion to new cities with less than
30k inhabitants: 800+ cities (400 each)
→ Potential full single 3G/4G grid in cities with
less than 30k inhabitants: 1,600+ cities
MASSIVE MIMO IMPLEMENTATION
→ Massive MIMO in LTE: spectral and energy efficiencies
→ Network deployment to boost capacity by ~3x
→ Bidding process for vendors concluded: 3 years plan
covered
→ Benefits already in 2020, 200 cities will receive the
technology
UNPPLUGED SITE (100% solar energy + satellite)
→ Network as a service (NaaS) project to close coverage
gaps: roads, highways/freeways, countryside areas, etc.
→ 100% sustainable to cover inaccessible areas
→ Positive NPV from the D0
BEST 4G COVERAGE IN 100% OF BRAZIL CITIES UNTIL 2023
CONDUCT ADJUSTMENT TERM (TAC)
Trading fines for investments:
→ Presence in ~ +1.3k new cities
→ 4G coverage in ~ +1.5k cities
→ Low frequency coverage in ~ +1.9k cities
→ Fiber backhaul to remote cities: ~ +230
5G COMMERCIAL ROLLOUT USING DYNAMIC SPECTRUM SHARING (DSS)
→ 3 cities to be launched in September
→ FWA as primary 5G service
→ Using WTTX experience to leverage the lessons learned from the “trial”
50. 50
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
Improved results set the pace for projects implementation.
Digitalization process is helping the company to deliver a better
experience and new capabilities with important cost efficiency
Digital Journey
Project
During the pandemic, TIM
accelerated 100+ initiatives
that prioritize the digital
experience.
WEBSITE
REDESIGN
PROJECT
KICK-OFF
NAKED SIM
TIM APP
IMPROVEMENTS
DIGITAL
SELF
SERVICE
CUSTOMER
SERVICE
SCHEDULING
ONE CLICK
BUY
RECHARGE
+34% YoY TIM Live
+17p.p. YoY
Control e-Sales
Penetration
+31% YoY
Recharges via
App
(39% of e-recharges penetration)
+6p.p. YoY
Postpaid e-Sales
Penetration
E-Sales Customer Care
-44% YoY
# Human
Interactions
+75%
Non human
interactions driven
by cognitive IVR
>3mln
Interactions with
cognitive IVR
+13% YoY
E-Bills
(70% of penetration)
+23% YoY
E-Payment
(73% of penetration)
+10% YoY
Meu TIM app
unique users
(2Q20)
56. 56
Institutional Presentation | 2Q20
TIM Participações – Investor Relations
≥40%
CAGR 2018-21:
~3%
CAGR 2018-22:
~2%
4,7%
2,4%
0,4% 1,5%
2018 2019 2020 2021 2022
NET SERVICE REVENUES (% YoY)
Mid Single Digit
CAGR 2019-22
10,6 10,6
10,6
10,8
2018 2019 2020 2021 2022
OPEX (R$ bln)
New Plan
Old Plan
6,4 6,8
37,5%
39,1%
2018 2019 2020 2021 2022
EBITDA AND MARGIN EXPANSION (R$ bln; %)
Market
TIM
2,5 2,9
15,0%
16,9%
2018 2019 2020 2021 2022
EBITDA - CAPEX (R$ bln; %)
≥20%
2020-’22 Targets: Key performance indicators (IFRS 15/9)
(1) Released on March 10th, 2020.
57. 57
Institutional Presentation | 2Q20
TIM Participações – Investor Relations(1) KPIs with IFRS 15/9, except when otherwise indicated, (2) Released on March 10th, 2020.
2020-’22 Targets: Guidance
GOALS DRIVERS
SHORT TERM
TARGETS
(2020)
LONG TERM
TARGETS
Revenue
Growth
Sustainability
→ Leverage mobile ARPU
improve
→ Expand Residential UBB
operations
→ Tap B2B opportunity
Service Revenues
Growth:
Mid single digit
(YoY)
Service Revenues
Growth:
Mid single digit
(CAGR ‘19-’22)
Improve
Profitability
→ Accelerate digital
transformation
→ Maintain zero-based budget
approach
→ Reliable bill to cash process
EBITDA Growth:
Mid single digit
(YoY)
EBITDA Margin:
≥40% in 2022
(≥47% w/ IFRS 16)
Infrastructure
Development
→ Smart and selective Capex
approach
Capex on Net
Revenues:
Low 20’s
Capex:
R$ 12.0 - 12.5 bln
(∑‘20-’22)
Expand Cash
Generation
→ Strict financial discipline
→ Continue debt and tax rate
optimization
EBITDA-Capex on
Net Revenues:
>16%
(>20% w/ IFRS 16)
EBITDA-Capex on
Net Revenues:
≥20% in 2022
(≥25% w/ IFRS 16)
Guidance: 2020-2022 Plan
→ Plan assumptions (e.g. GDP growth
of 2% in 2020) no longer represent
current economy situation + The
duration of the pandemic is not
known => More clarity on impacts
from COVID 19 are expected by
the end of 2Q;
→ Commitment to Free Cash Flow:
EBITDA – Capex on Revenues
guidance confirmed: >20% in
2020 (Mid-single digit YoY for
EBITDA-Capex)
58. IMAGINETHE
POSSIBILITIES
Vicente Ferreira
E-mail: vdferreira@timbrasil.com.br
Phone: +55 21 98113-1400
Bernardo Guttmann
E-mail: bguttmann@timbrasil.com.br
Phone: +55 21 98113-1408
Camila Assano
E-mail: cacruz@timbrasil.com.br
Phone: +55 21 98113-4236
Lucas Carneiro
E-mail: lmcarneiro@timbrasil.com.br
Phone: +55 21 98113-1141
Guilherme Kopke
E-mail: gknascimento@timbrasil.com.br
Phone: +55 21 98113-0583
Visite o nosso site
www.tim.com.br/ir
E-mail: ri@timbrasil.com.br
Avenida João Cabral de Melo Neto, 850 –
Torre Sul - 12º andar
Barra da Tijuca – 22775-057 – Rio de Janeiro, RJ
For Further Information