Q4 2023 TIM SA Earnings Call

Operator: Good morning, ladies and gentlemen, welcome to the GNSA 2023 fourth quarter results video conference call. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation. There will be a replay of this call on the company's website.

Good morning, ladies and gentlemen, welcome to Ciena say 2023 fourth quarter results Videoconference call. We would like to inform you that these event is being recorded in all participants will be in listen only mode. During the company's presentation. There will be a replay for this call on that.

Company's website. After <unk> remarks are completed there will be a question and answer section four participants at that time further instructions will be given.

Operator: After the GNSA remarks are completed, there will be a question and answer section for participants. At that time, further instructions will be given. Hello, everyone, and welcome to TSA's Earnings Conference for the fourth quarter and full year 2023. Thank you for joining us.

[music].

Vicente Ferreira: I'm Vicente Ferreira, Head of Investor Relations. Today, we'll share our highlights in video, and then we'll begin our live Q&A session with our CEO, Alberto Griselli, and our CFO, Andrea Viegas. Before we can discuss our results and new guidance, I remind you that management may make, and this presentation may contain, forward-looking statements. Therefore, please refer to the disclaimer on the screen, which will also be available in our earnings materials and on our Investor Relations website. With that, we move on to our results. Hi everyone.

And then we will begin our live Q&A session, we have our CEO Alberto Chris Daily and our CFO Andre Avi I guess before we can discuss our results and your guidance I remind you that management may make in this presentation may contain forward looking statements. So please refer to the disclaimer on the screen, which one.

Also be available in our earnings materials, and our investor relation website with that we move to our results.

[music], hi to everyone, Alberta, Sadly CEO of Tim in Brazil, I am very pleased that 2023 was an outstanding year with great achievement and record high results as we explained during our Investor day in November the Brazilian mobile market is healthier than ever supporting a more for more strategy.

Alberto Griselli: I'm Alberto Griselli, CEO of TIM in Brazil. I'm very pleased that 2023 was an outstanding year with great achievements and record-high results. As we explained during our Investor Day in November, the Brazilian mobile market is healthier than ever, supporting a more formal strategy. New market dynamics and favorable demand are driving our results to improve across the board. Our service revenues grew 10.7% year-on-year in 2023, totaling more than R$23 billion. With costs under control, our EBITDA grew more than 14% to reach the highest number in our history, R$11.7 billion. In this context, our 2023 margin expanded to almost 49%, the highest among the large tech companies in Brazil and Latin America. Another metric that measures our efficiency in allocating resources is the CapEx-to-Sale ratio.

Market dynamics and favorable demand are driving our results to improve across the board. Our service revenues grew in 2023 10, 7% year on year totaling more than 23 billion reais with cost under control, our EBITDA grew more than 14% to reach the highest number in our <unk>.

Sorry, 11, 7 billion Reais in this context, our 2023 margin expanded to almost 49% the highest among the largest telco in Brazil, and Latin America. Another metric that measures our efficiency in allocating resources is the capex to sales ratio, we close 2023.

Alberto Griselli: We closed 2023 with the best result ever, just below 19%, contributing to our operating free cash flow growing more than 58% year-on-year and summing to R$4.2 billion. To complete this short summary, our net income rose to R$2.7 billion after expanding more than 50% year-over-year. These results explain why we were confident in November in raising our shareholder remuneration target to R$2.9 billion. To generate such strong numbers, we are developing the best value proposition based on the three Bs strategy: best service, best network, and best offer. During 2023, we will work extensively to deliver improvements in the customer experience. We seek the best service by digitalizing the interaction to accelerate and improve demand resolution, and we are best in class in all resolution rankings in Brazil. At the same time, if a human attendant services a client, the satisfaction with this interaction must be best in class, and we can deliver that.

With the best result ever just below 19% contributing to our operating free cash flow growing more than 58% year on year summit to $4 2 billion Reais to complete this small summary, our net income rose to $2 7 billion reais that after expanding more than <unk>.

50% year over year. These results explained why we were confident in November in raising our shareholder remuneration target to $2 9 billion reais generate such strong numbers that we are developing the best value proposition based on the three BS strategy Best Service Best Network and best offer during.

2023, we work extensively to deliver improvements in customer experience, we seek the best serviced by Digitalized in the interaction to accelerate and improve them and resolution and we are best in class in all resolution rankings of Brazil at the same time, if a human attendant services our client.

Satisfaction with this interaction must be best in class and we can deliver that call center NPS improved more than 40% in the fourth quarter. Meanwhile, we are consolidating our leadership in network coverage and quality in Brazil, we have the largest <unk> and <unk> coverage being the only operator to cover.

Alberto Griselli: Call center improved more than 40% in the fourth quarter. Meanwhile, we are consolidating our leadership in network coverage and quality in Brazil. We have the largest 4G and 5G coverage, being the only operator to cover all the cities of Brazil. Our network was also the most awarded among Brazilian operators.

All the city of Brazil. Our network was also the most awarded among the Brazilian operators.

Alberto Griselli: We ranked number one in consistent quality, the most relevant KPI to measure a customer's actual experience. To complete, we are innovating to create the best offer, leveraging new concepts and partnerships to generate novelty and distinctiveness. We have launched the first trial offer in Latin America to encourage customers to test our service.

We ranked number one inconsistent quality the most relevant kpis to measure our customers' actual experience to complete we are innovating to create the best offer leveraging new concepts and partnership to generate novelty and distinctiveness. We have launched the first trial offer in Latin America to encourage.

Customers to test our service, we expect this tool to be relevant in changing client perception of our quality. We just launched commercially our partnership with Ambev, we are expanding the benefits for prepaid customers using the cash back in the day delivery App SL loyalty tool and it is working today, we have the highest blended ARPA.

Alberto Griselli: We expect this tool to be relevant in changing clients' perceptions of our quality. We have just launched our partnership with Ambev. We are expanding the benefits for prepaid customers using the cashback in the Z Delivery app as a loyalty tool. And it is working.

Alberto Griselli: Today, we have the highest blended ARPU in the industry, close to 30 Reais and growing nearly 13% year over year. We saw a similar performance in postpaid and prepaid ARPUs, which expanded at a mid-teens pace in 2023. At the same time, we are improving churn in postpaid, increasing upsell results with up for migrations, and seeing a rise in prepaid spending. Behind these financial and operational numbers is a clear strategy, though, to craft the next generation team. Under this framework, the four pillars, mobile, B2B, broadband, and efficiency, are developed integrating our people, society, and the environment into our business strategy. Examples of that are the project in business, B2B, where we develop a new growth avenue and bring connectivity to the countryside of Brazil, which also has positive social and environmental impacts.

In the industry close to 30, Reais and growing nearly 13% year over year, we saw a similar performance in postpaid and prepaid <unk>, which expanded at mid teen space in 2023 at the same time, we're improving churn in postpaid increasing upsell results with up for migrations and seeing arise.

In prepaid spending behind these financial and operational numbers, a secondary strategy, though to craft. The next generation team under this framework. The four pillars mobile b to B broadband and efficiency are develop integrating our people society and the environment into our business strategy examples.

That are the projecting business would be to be where we develop a new growth Avenue and bring connectivity to countries. Brazil also produced positive social and environmental impacts the partnership with <unk> helps us differentiate our offer to telco customers, while providing access to affordable health services.

Alberto Griselli: The partnership with Cartel de Todos helps us differentiate our offer to telco customers while providing access to affordable health services. This integration prepares our ESG practices to be recognized as one of the most developed in the country. Team ranked 12th among the best companies to work for in Brazil in the Great Place to Work selection. Sustainalytics also awarded us as ESG Industry Top Rated.

This integration prepares our ESG practices to be recognized as one of the most developed in the country themed ranked 12, among the best companies to work for in Brazil in the great place to work collections sustain Alex also awarded US as ESG industry top rated standard and Poor's Lisa team among the most.

Andrea Viegas: Standard & Poor's leads the team among the most sustainable telco companies in the world. And last but not least, we are the most diverse and inclusive company in Latin America and the number one telco in the world ranked by Refinitiv. Our CFO, Andrea, will now provide additional details on our financial performance. Hello to all. I'm Andrea Viega, CFO of TEAM in Brazil.

<unk> Telco company in the World and last but not least we have the most diverse and inclusive company in Latin America and the number one telco in the awards are ranked by definitive our CFO Andrea will now provide additional details on our financial performance Hello, Joel <unk> CFO of <unk>.

Andrea Viegas: To reach sound numbers and go above our original target for 2023, we closed the year at an excellent pace. In the fourth quarter, SESI revenue grew more than 7% year-on-year, with Mobiley rising 7.6%, while Broadband expanded 9.5%. With costs under control and reaping the benefits of the M&A transaction, our EBITDA grew in the quarter by 7.5% to reach R$3.2 billion, with the margin expanding to 50.2%. Accounting for the leases, EBITDA after lease grew even faster at a 15% pace, amounting to R$2.5 billion. This performance benefits massively from the sharp execution of our decommissioned project. We ended the year with 4.4 thousand sites decommissioned and 3.8 with contracts canceled. As a consequence of a better depreciation number due to lease reduction and the tax shield generated by the interest on capital, our net income presented a robust expansion of more than 50% year-over-year. With this, net profits reached one of the highest results in SESI's history, summing R$900 million in the fourth quarter. Additionally, we saw vigorous cash generation in the fourth quarter, with operation free cash flow growing more than 50% year-over-year and margin expanding to nearly 19%. For the full year, EBITDA after leases minus CAPEX over revenues stood close to 18%.

Sure It sound numbers and go above our original targets for 'twenty three we closed the year at an excellent pace in the fourth quarter SaaS revenue grew more than 7%.

With mobile resume seven 6%, while broadband spanned at nine 5% with cost under control and reaping the benefits of the M&A transaction RMB grew in the quarter by seven 5% share at $3 2 billion in <unk> with Nomura.

Expanding to 50 points Hillcrest sales accounting for the leases EBITDA after lease will even faster at the 15% base amounting to two 5 billion.

This performance benefit massively from this sharp is a question of are the commission projects. We ended the year with $4 4000 sites the commissions and three eight with contracts counsel as a consequence of a better depreciation number.

Lease reduction and the tax shield generated by the interest on cash.

Our net income presents a robust expansion of more than 50% year over year.

With these net profits rich one of the highest results in <unk> history.

900, <unk> in the fourth quarter.

We saw a vigorous cash generation in the fourth quarter with operational free cash flow growing more than 6% year over year in the minds expanded to nearly 19% for the full year a bit less than lease in minus capex over revenues stood close to eight.

10%.

Alberto Griselli: With a strong cash position, our net debt fell to R$11.6 billion, taking our leverage ratio to one-time EBITDA. All those numbers confirm what a remarkable year we had in 2023. To wrap up this results discussion, I hand it back to Alberto. When we started the year, we set challenging but achievable targets. As we executed our plan, results began to come faster, which led to the best performance of Teams' history in many KPIs. We completed a quarter of a century of existence by delivering on every front.

Our strong cash position, our net debt fell to 11 6 billion, taking our leverage ratio to one time, maybe each of them all of those numbers confirm what a remarkable year. We had inc. 2000 vintage III to wrap up these results discussion I'll hand, it back to <unk> when we started the year.

We said challenging but achievable targets as we executed our plan results became two count faster, which led to the best performance of Tims history in many kpis, we completed a quarter of a century of existence over delivering on every front, we set our SaaS to grow high single digit in service revenue and delivered.

Alberto Griselli: We set ourselves to grow high single-digits in service revenue and deliver double-digits, proving our ability to operate multiple revenue levers. We forecasted low double-digit growth for EBITDA and closed 2023 with meetings, showing significant operational leverage. Our CAPEX on revenue was expected to go just below 20%.

Digits proving our ability to operate multiple revenue levers, we forecasted low double digit growth for EBITDA and close 2023 with mid teens showing significant operational leverage our capex on revenue was expected to go just below 20%, we delivered below 19% with the best coverage.

Alberto Griselli: We delivered below 19%, with the best coverage and largest mobile network in Brazil. This is a clear demonstration that we are improving our capital allocation strategy. The expectation for operating free cash flow was double-digit growth, and we delivered close to 60% expansion. We initially pointed to R$2.3 billion for shareholder remuneration, but we decided to raise our target in November to more than R$2.9 billion and delivered on that. These notable achievements have been made possible by the contribution of every Team employee.

And largest mobile network in Brazil. This is a clear demonstration that we are improving our capital allocation strategy. The expectation for operating free cash flow was double digit growth and we delivered close to 60% expansion. We initially pointed to two 3 billion reais for shareholder remuneration, but we decided.

To raise our target in November to more than $2 9 billion and delivered on that there's notable achievements have been made possible by the contribution of every team employee and I'm proud to lead the team of committed and hardworking colleagues, winning an engagement level of above 90% 2023 was an outstanding year.

Alberto Griselli: And I'm proud to lead a team of committed and hard-working colleagues with an engagement level of above 90%. 2023 was an outstanding year, but we are already in 2024 and on a long journey to become the most preferred telco. We are updating our guidance to adjust to new market conditions and the macro environment. Service revenues are expected to grow above inflation and a notch faster than last year's plan. EBITDA is forecast to sustain a solid growth pace with a positive margin contribution. Nominal CAPEX should remain broadly stable, with a clear focus on developing infrastructure to drive revenue growth. For operating free cash flow, we confirmed the growth pace we set during the old plan. On March 7, the team group will host Capital Market Day in Italy.

We are already in 2024 and on a long journey to become the most preferred that we are updating our guidance to adjust to new market conditions and the macro environment service revenues are expected to grow above inflation and notch faster than last year's plan EBITDA is forecasted to sustain a solid growth.

Faced with a positive margin contribution nominal capex should remain broadly stable with a clear focus on developing infrastructure to drive revenue growth for operating free cash flow, we confirm the growth pace. We set during the old plan on March seven the 10 group will host the capital market day in Italy, We plan to.

Disclosed an updated target for shareholder remuneration there among other elements that complement our strategic plan. Please join us in this event that will set the direction of a new teen growth now, let's move to the live Q&A session.

Thank you Mr. Alberto we are now going to start the question and answer section. If you wish to ask a question. Please click on rates hit but if your question has already been answered you can leave the queue by clicking on the same button. You can also sand written questions via a Q&A button wait while we pull for questions.

Operator: We plan to disclose an updated target for shareholder remuneration there, among other elements that complement our strategic plan. Please join us for this event that will set the direction of a new team group. Now, let's move to the live Q&A session. Thank you, Mr. Roberto.

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Our first question comes from Marcelo Santos from JP Morgan.

Please Mr. Marcello My phone is open.

Hi, Thank you for allowing us to ask questions. Thank you for the presentation. My first question is regarding the sources of growth going forward in mobile revenues.

Operator: We are now going to start the question and answer section. If you wish to ask a question, please click on the Raise Your Head button. If your question has already been answered, you can leave the queue by clicking on the same button.

In the past couple of years in general Jim didn't add so much volume and a lot of the revenue growth came from our side is.

Marcelo Santos: You can also send written questions via the Q&A button. Wait while we pull for questions. Our first question comes from Marcelo Santos from JP Morgan. Please, Mr. Santos, your microphone is open.

Is it something expected to continue in the coming years or should we see more like growth on the volume side and a little bit less on the arb will just wanted to see your thoughts there and the second question is regarding the pricing environment, how do you see that for 2024.

Marcelo Santos: Hi. Thank you for allowing us to ask questions. Thank you for the presentation. My first question is regarding the sources of growth going forward in mobile revenues. In the past couple of years, in general, TIM didn't add so much volume.

Thank you.

Okay. Thank you Marcelo So let me address the two questions.

So when we look at the revenue growth dynamic.

We look at that.

So we've got a number of different levers in our hands. So you've got the volume.

Alberto Griselli: And a lot of the revenue growth came from the ARPU side. Is this something expected to continue in the coming years? Or should we see more growth on the volume side and a little bit less on the ARPU side? Just wanted to see your thoughts there.

<unk> got the more for more strategy and you also have the.

Interplay in migration that we carry out our customer base meaningfully to control and control to control controle to postpaid so.

Alberto Griselli: And the second question is regarding the pricing environment. How do you see that for 2024? Thank you.

When you look at the way the way we want to move forward. There is basically a mixture of all of these elements. So yes.

Alberto Griselli: Okay, thank you, Marcelo. Now, I'll address the two questions. And so when we look at the revenue growth dynamic, we look at that in, we've got a number of different levers in our hand. So you've got the volume, you've got the more formal strategy, and you also have the inter-plane migration that we carry out in our customer base, meaning free to control and control to control, control to postpaid. So when you look at the way we want to move forward, it's basically a mixture of all these elements. So when you say that we focus more on ARPU versus volume, it depends a bit on which horizon, the temporal horizon, you're looking at. So if you look at the performance for postpaid after the oil migration that ended in the first quarter last year, you will see that our postpaid growth quarter on quarter is difficult to see still year on year. It's basically driven by the composition and the blending of all these three levers.

When you see that we focus more on Apple versus volume it depends a bit on that.

Arrives on the temporary horizon Youre looking at so if you look at the performance for postpaid after the integration.

Immigration that ended in the first quarter last year, you would see that.

Postpaid growth quarter on quarter, it's difficult to see still year on year is basically driven by.

Yeah.

The composition and the blending of all these three levers. So we are growing in volumes, we are growing because of the more for more strategy and then we go into the second question and we are growing impacting the artful basically by migrating customers to better plan that where they have the right benefits for the price that they are paid.

<unk>.

Youre looking for or that I see in postpaid a combination of all these three levers.

In <unk> the situation is different because basically the market is.

It sort of evenly divided that by.

The three operators.

Alberto Griselli: So we are growing in volumes. We are growing because of the more formal strategy. And then I will go into the second question. And we are growing, impacting the ARPU basically by migrating customers to better plans where they have the right benefits for the price that they're paying for. So looking forward, I see in postpaid a combination of all these three levers.

And therefore, I think that the.

<unk> lever is going to be more dominant for that specific segment.

So when you go then to be.

<unk> dynamics and what we're expecting to do in terms of pricing.

Okay.

Basically the main messages of fall.

Relative dynamics remained quite rational and if we look at what we did in 2023 is something that we want to do in 2024. So adjusted recapping what happened last year last year in the second quarter, we applied our more for more strategy for postpaid.

Alberto Griselli: In prepaid, the situation is a bit different because, basically, the market is sort of evenly divided by the three operators. And therefore, I think that the price lever is going to be more predominant for that specific segment. So when you go then to the competitive dynamics and what we are expecting to do in terms of pricing, basically, the main message is the following. The competitive dynamics remain quite rational, and if we look at what we did in 2023, it's something that we want to do in 2024. So, just recapping what happened last year.

Bolt on.

We call the front book and back book prices. So this happened in the second quarter last year and by the end of last year, we decided to upgrade our prepaid offer. So what we are going to do this year is roughly or we intend to do this year is roughly similar in the second quarter. This year.

We're going to upgrade our front book and back book prices for postpaid.

This has already been decided and is being coded in our it systems.

The decision has not been taken yet for prepaid we just need a move.

Alberto Griselli: Last year in the second quarter, we applied our more formal strategy for postpaid, both on what we call front book and back book prices. So this happened in the second quarter last year, and by the end of last year, we decided to upgrade our prepaid offer. So what we are going to do this year is roughly, or what we intend to do this year is roughly similar. So in the second quarter this year, we are going to upgrade our front book and back book prices for postpaid. This is already being decided, and it's being coded in our IT systems. However, the decision has not been taken yet on prepaid.

Recently, so we need to see what the customer reaction is was the complete competitors' reaction Isa.

<unk>.

And then and made a final decision, but the plan that we're looking for is to do some further adjustment.

By the end of this year, so basically at the same timing we did last year.

Thank you and what about control.

Controls as well as the postpaid is pure postpaid and.

Our control. So we are going to do the two things together in the second quarter, but as we did last year and.

He is going to be inflation, plus on a more for more strategy and just adding a bit more on that.

We provide extra benefits to our customers when we do this movement. So he is going to happen in the second quarter. This year for control and postpaid exactly as it had been.

Alberto Griselli: We just did a move recently, so we need to see what the customer reaction is, what the competitor's reaction is, and then make a final decision. But the plan that we're looking for is to do some further adjustments by the end of this year, so basically at the same time we did it last year. Thank you. And what about control?

Last year in the second quarter.

Perfect. Thank you very much.

Our next question comes from Leonardo Olmos from UBS.

Please Mr. Leonardo Yeah My phone is open.

Hi, good morning, everyone.

First of all congratulations on the on beating the guidance was very very positive.

Alberto Griselli: Control is going to be, when I say postpaid, it's pure postpaid and control. So we're going to do the two things together and in the second quarter, as we did last year. And it's going to be inflation plus on a more formal strategy. Just adding a bit more on that; you know that we provide extra benefits to our customers where we do this movement. So it's going to happen in the second quarter this year for control and postpaid, exactly as it happened last year in the second quarter. Perfect, thank you very much. The next question comes from Leonardo Olmos from UBS. This is Mr. Leonardo. Your microphone is open.

And I think the four months of the of the Q&A and the call is very good. So good to see you all in face to face when when answering your question. So I've got a couple of questions here.

The first one is a double click on Marcellus question on on mobile.

Yeah in terms of what where do you see the most of four communities to better monetize your plan. So.

We heard you and and competitors talking a lot about prepaid and social media, having unlimited data allowance.

And it may be cross selling with other with other subscriptions, where do you see the opportunities in terms of product and how the packaging of your plants could could be done in 'twenty four.

Leonardo Olmos: Hi. Good morning, everyone. First of all, congratulations on beating the guidance. It was very, very positive. And I think the format of the Q&A and the call is very good. So good to see you all face-to-face when answering our questions. So I've got a couple of questions here. The first one is a double click on Marcelo's question on mobile.

That's my first question and I'll do the other after you answer thank you.

Okay. So thanks.

Thanks for your nice comments at the beginning of your question. So when we look at the way we what we have.

If you look what we shared at Investor Day in November basically is that we see favorable conditions on the demand side. So if you go if you look at demand and this is across the board across all plants.

Leonardo Olmos: In terms of where do you see the most opportunities to better monetize your plans? So, we heard you and your competitors talking a lot about prepaid and social media having an unlimited data allowance and maybe cross-selling with other subscriptions. Where do you see the opportunities in terms of products and how the packaging of your plans could be done in 2024? That's my first question. I'll do the other after you answer.

Basically we see in essential services.

Is sort of a cheaper and utilization user is fairly low, especially in prepaid and controls. So there is actual opportunity to implement the more for more strategy. So the more for more strategy.

A combination of a number of elements and I think that the win so basically it's an extra data allowance, especially for lower end plans as our prepaid and control.

Alberto Griselli: Thank you. Okay, so Leonardo, thanks for your nice comments at the beginning of your question. So when we look at the way we, what we are, if you look at what we shared at Investor Day in November, basically, we see favorable conditions on the demand side. So if you look at demand, and this is across the board, across all plans, basically, we see an essential service that is sort of cheap, and utilization is fairly low, especially in prepaid and control. So there is an actual opportunity to implement the more for more strategy. So the more for more strategy is a combination of a number of elements.

Because the resale limited use still compared to other markets and so there is the opportunity to monetize that and.

And then there is another set of services that is related to the beach the life of our customers that we are constantly including into our portfolio and then there is the final item, which is OTT, which is.

We will address the last one so the more for more strategy in terms of increased data allowance.

What we have been doing over the last year.

And I think we will keep on doing this going forward, but across the board.

Because when you look at prepaid and postpaid that we need to maintain a clearance of the plants among themselves. So if we move something we need to upgrade the the other side of it. So if we move control then we need to prepay debt.

Alberto Griselli: And I think that when, basically, it's extra data allowance, especially for lower-end plans, so prepaid and control, because there is limited use still compared to other markets. And so there is the opportunity to monetize that. And so there is the opportunity to monetize that. And then there is another set of services that are related to the digital life of our customers that we are constantly including in our portfolio. And then there is the final item, which is OTT, which I will address as the last one.

To have the right incentives then to move customers from one plant to the other one so the more for more strategy on data usage is fairly unchanged.

And what we're doing with success is to providing extra benefits to our customers.

Without impacting that match, our our margins.

Like for example, the last one that we launched with Ambev.

Alberto Griselli: So the more for more strategy in terms of increased data allowance is what we have been doing over the last year. And I think we will keep on doing this going forward across the board, even because when you look at prepaid and postpaid, we need to maintain a coherence of the plans among themselves. So if we move something, we need to upgrade the other side of it.

Goodbye.

Any prepaid customers deems, Brazil recharges.

Gets back.

A cashback in delivery product that remember that last year, we introduce prime video for prepaid. So today, if you are a prepaid.

You have.

When you do a recharge it you've got access to prime video for bills for the length of the offer for those charges and then starting from January you also have.

The benefit the benefit from Ze delivery and when we look at these services. There are two ways. We monetize them one is to provide extra benefits to the customers trade away that tends to manifest in a longer lifecycle longer lifetime of that customer with us so churn reduction.

Alberto Griselli: So if we move control, then we need to upgrade prepaid to have the right incentives, then move customers from one plan to the other one. So the more for more strategy on data usage is fairly unchanged. Then what we are doing with success is providing extra benefits to our customers without impacting our margins that much. Like, for example, the last one that we launched with Ambev, whereby if any prepaid customer at Teams Brazil recharges, he gets back a cashback in the delivery product.

Other way to monetize is to engage our partners in fact kind of equity or commercial terms like capital dollars. For example that we launched last year. So in terms of capital. These orders, which is more similar to <unk> or what we are doing with other digital services, whereby we are getting the benefits of.

Alberto Griselli: Remember that last year we introduced Prime Video for prepaid. So today, if you are prepaid, when you do a recharge, you've got access to Prime Video for the length of the offer, for the recharge. And then, starting from January, you also have the benefit of delivery. And when we look at these services, there are two ways we monetize them. One is to provide extra benefits to the customers straight away. That tends to manifest in a longer lifetime of the customer with us. So chain reduction. The other way.

The partnership.

There is hand, it over to the customers and partners is an extra revenues for us. So it's another way to monetize our customer base. So even we gave the benefits all of it to the customer like Ambev Ora.

Part of these benefits that comes to us in terms of either equity or commissioning revenues.

When it goes so I don't know if I have managed to make myself clear, but these are the levers that we.

We use.

Okay. So and then there is another one that.

If you have been using for a while.

We started with the migration of prepaid to control. So basically we look at the profiling of our customer base.

Alberto Griselli: Monetize it is to engage our partners in some kind of equity or commercial terms, like Cartaudi Todos, for example, that we launched last year. So in terms of Cartaudi Todos, which is more similar to C6 or what we are doing with other digital services, whereby we get the benefits of the partnership, part is handed over to the customers, and part is extra revenue for us. So it's another way to monetize our customers. So even if we give the benefits, all of it to the customer, like Ambev, or part of these benefits come to us in terms of either equity or commissioning revenue. When it goes, so I don't know if I managed to make myself clear, but these are the levers that we use.

We see.

People that.

Maybe let's see but benefits to move to a larger plan and that we migrate like prepaid to control it but we do a lot of Controle to postpaid also so you don't see in the number of pure postpaid customer base evolution, but it's been growing double digit for a while and this tends to increase our postpaid ARPA as a blended number.

<unk>.

The last one that has been on the news and has been.

As discussed by the sector and by US for some time is the OTT. So as you all know we got a zero rate.

The number of plans and this is something that has been introduced in the market.

<unk>, where the OTT was a novelty and.

At the same time, it was a novelty with a low consumption of data.

Alberto Griselli: And, okay, so then there is another one that we have been using for a while. We started with the migration of prepaid customers to control, so basically, we look at the profiling of our customer base. We see people that may perceive the benefits of moving to a larger plan, and we migrate, like prepaid to control, but we do a lot of control to postpaid also. So you don't see the number of pure postpaid customer base evolution, but it's been growing double digits for a while. And this tends to increase our postpaid output as a blended number. The last one that has been on the news and has been discussed by the sector and by us for some time is the OTT. So, as you all know, we got a zero rate on a number of plans, and this is something that was introduced in the market a few years ago when the OTT was a novelty, and at the same time, it was a novelty with a low consumption of data.

Over the last year things changed.

Because everybody now is offering this OTT.

OTT services.

Customer doesn't perceive the value business because it's included in the data allowance.

And at the same time, we have some let's say.

Negative effect in our network planning because the services has been there.

Launching new feature that put a further constraint on our net like live streaming or the sort of stuff and this makes our capital allocation of less efficient and less difficult to control because things happen without our knowledge. So basically we just have an increase in traffic. So what has been going on for <unk>.

<unk> is the.

Our intent to reduce OTT.

<unk>.

And we need to do this in a way that is viable and acceptable to the customer base. So a couple of years ago, We think that we Facebook from prepaid and we substituted the services with the prime video and with the delivery of <unk> more recently and so we are planning to move ahead with this.

Alberto Griselli: Over the last year, things have changed because everybody is now offering these OTT services. The customer doesn't perceive the value, which is because it's included in the data allowance. And at the same time, we have some, let's say, negative effects in our network planning because the services have been a launching new feature that puts a further constraint on our network, like live streaming or this sort of stuff. And this makes our capital allocation less efficient and less difficult to control because things happen without our knowledge.

Strategy and reduce our dependence on zero rate.

Making this.

In let's say in an acceptable way for customers. So we're going to start probably in plants, where the effect that can be compensated with another set of benefits.

Perfect I'll back debt. That's why that was the point of my question happy to hear about the timing of does that delivery promotions is we're so close to current level. My second question, if I may about leasing.

Alberto Griselli: So basically, we just have an increase in traffic. So, what has been going on for some time is our intent to reduce OTT, and we need to do this in a way that is viable and acceptable to the customer base. So a couple of years ago, we took Facebook away from prepaid, and we substituted the services with Prime Video and with delivery on Cartel de Todos more recently. And so we are planning to move ahead with this strategy and reduce our dependence on zero rate, making this, let's say, in an acceptable way for customers. So we're probably going to start with plants where the effect can be compensated for with another set of benefits. Perfect, Alberto. That was the point of my question. I was happy to hear about the timing of the Z delivery promotion since we're so close to carnival. My second question, if I may, is about Lizzie.

A very positive surprise on the numbers, 7% lower figures the cash generation was way above what we expected, but when we look.

At 2020 for what's your expectations on decommissioning and how can we conciliate that well with the five G increasing coverage.

Okay, well I will I will.

I'll ask Andre to address this first and then.

Yes.

Let me start with a more general comments on the list when you look at the leases.

<unk> got a number of plus and minus effects.

And so there is if you look at the decommissioning exercise. So this is a sort of one off exercise right and we've got the we got the towers and they came back from <unk> and we are we have been the commissioning at the quite fast pace.

It was not useful to us.

At the same time that you have.

Uh huh.

Leonardo Olmos: A very positive surprise on the numbers, 7% below our figures. The cash generation was way above what we expected. But when we look at 2024, what are your expectations for decommissioning? And how can we conciliate that with the 5G increasing coverage? Okay, I will ask Andrea to address this first, and then let me start with a more general comment on the list.

Contractual adjustment of that cost base, because part of this cost needs to be adjusted by inflation basically and you have an increased footprint.

So we reached all municipalities with four G, but nonetheless.

Special in B to B, and some kind of obligation we need to put more site on the ground and so.

Our footprint increases over time, and then as you correctly mentioned, you've got five geos. So so the effect of <unk> that we need to put in additional antennas on our tower depending on the contract. This is additional wind space and so additional costs at the end of the day.

Alberto Griselli: When you look at the list, you've got a number of plus and minus effects. And so, if you look at the decommissioning exercise, this is a sort of one-off exercise, right? And we got the towers and the equipment from OI, and we are, we've been decommissioning at a quite fast pace what was not useful to us. At the same time, you have a contractual adjustment of that cost base because part of this cost needs to be adjusted by inflation, basically. And you have an increased carbon footprint.

And then there are potential mine all set that have been discussed we have been discussing in the investor day, which are related to the fact that.

We have.

Ongoing initiatives to optimize discussed from technical innovation.

Negotiation with our partners so that our companies.

<unk> got the <unk> around sharing agreement.

Veeva has been.

And reactivated let's put this way that of course reduce resources and so you've got all the pieces set of.

Alberto Griselli: So we reached all municipalities with 4G, but nonetheless, especially in B2B and some kind of obligation, we need to put more sites on the ground. And so our footprint increases over time. And then, as you correctly mentioned, you've got 5G also.

Movement, some are positive and some negative of course, what we want to ensure is the sustainability of this cost line over time as we increase our footprint.

And.

Deploying new technology to improve the quality of service to our customers.

And so we've got all these initiatives that.

Basically we're putting in place to compensate or to partially compensate for the cost pressure that we have either for a price adjustment that either for increased footprint on our on our on our on our network.

Alberto Griselli: So the effect of 5G is that we need to put additional antennas on our towers. Depending on the contract, this is additional wind space and, therefore, additional costs at the end of the day. And then there are potential minors that we've been discussing at investor day, which are related to the fact that we have ongoing initiatives to optimize this cost from technical innovation to negotiation with our partners so that our companies. We got the 4G around sharing agreement with Vivo that has been reactivated. Let's put it this way: that, of course, reduced resources. So you've got all these sets of movements, some are positive, and some are negative.

Of course, the lower inflation is is something that is positive going forward because it would be negative.

Fairly negative over the last year is looking more positive to go.

And so basically what we want to have it delivered and our place in our handset to ensure the sustainability and the optimization of the cost line. That's what we've got a robust plan.

In place I will ask Andre to go towards to elaborate on the commission plan is doing quite well.

Yeah.

Almost everything.

Alberto Griselli: Of course, what we want to ensure is the sustainability of this cost line over time as we increase our footprint and deploy new technology to improve the quality of service to our customers. And so we've got all these initiatives that basically we're putting in place to compensate or to partially compensate for the cost pressure that we have, either through price adjustment or for increased footprint on our network. Of course, lower inflation is something that is positive going forward because it's been negative or fairly negative over the last year, and it looks more positive with a year to go.

Everything that relates to the commission in the physical plant. We finished so we have very good results in this quarter, we will continue to have some.

Good results and transport them, but it's not the affirmation we have the price adjustment.

In February and March we have the the huge impact of this pricing adjustment and also <unk>, although not necessarily gen. Eight new sites will have to occupy more space on the site. So we have some kind of adjust adjust.

Adjustments in this.

But.

What we expect from now on is <unk> initial Shaw, who find it another ways of again put achieved in the lease sites.

Alberto Griselli: So basically, what we want to have is delivered in our hands to ensure the sustainability and the optimization of the cost line. And so we've got a robust plan in place. I will ask Andrea to elaborate on the commissioning plan, which is going quite well. Alberto almost said everything, but related to the commission, in the fiscal terms, we finished, so we have very good results this quarter. We will continue to have some good results in the first quarter, but as Alberto mentioned, we have the price adjustment in February and March; we have the huge impact of this price adjustment. And also, 5G, although it does not necessarily generate new sites, we have to occupy more space on the site, so we have some kind of adjustment in this expense. But what we expect from now on is to continue to look for another way of, again, productivity in the lease site. The lead sides of our negotiations, especially with the major contracts that we all still have. Very interesting. Okay. Thank you very much, Alberto, Andrea, Vicente, and Luisa. Have a great day!

That's helpful.

Patients tested with the.

Major.

Naturally it will still happen.

Yeah.

Very interesting okay. Thank you very much I'll bet Andre are you thinking <unk> have a great day.

Thank you Leila.

Yeah.

Okay.

Our next question comes from Fred Mendes from Bank of America. Please Mr. Mendez, Yeah microphone shopping.

Hello, Good morning, everyone and thanks, Thanks for the call I have two questions here as well. The first one is on Capex, especially on the guidance. It was slightly ahead slightly above where you had I guess, we all know the bullish France, but just trying to understand if there's like a liner will not be focusing more of let's say <unk> or <unk>.

That's that could eventually exploring.

This is let's say higher capex at least for now our expectation or at least Thats basically network improvement basically business as usual this will be the first one.

And then the second one if you can just comment on where to how is it going to be the structure.

Now the Leonardo kept if you went to Ti.

Fred Manges: Thank you, Leo. Our next question comes from Fred Manges from Bank of America. Please, Mr. Manges, your microphone is open.

If you continue to help on the operations from there you're going to have a new structure anything you can you can comment on that so I think it would be great. Thank you.

Fred Manges: Hello, good morning everyone, and thanks for the call. I have two questions here as well. The first one is on CAPEX, especially on the guidance. It was slightly ahead, slightly above what it had. I guess we were on the bullish front, but just trying to understand if there is like a line you're going to be focusing more on, let's say IT or 5G, that could eventually explain this, let's say, higher CAPEX, at least from our expectations, or if that's basically a network And then the second one, if you can just comment, Alberto, on how the structure will be now that Leonardo Capodiviu has gone to TI. If you continue to help with the operations from there, you're going to have a new structure. Anything you can comment on that, I think would be great for us. Thank you. Okay, let me take the first and second one, and then I will ask Andrea to discuss a bit about capex.

Okay. Let me let me take the first the second one and then I'll ask him to discuss a bit about capex. So when it comes to the structure of Cta or the <unk> structure has been removed and so basically it's this is something that has happened.

I think it was.

Got it.

In the last year or the beginning of this year alignment minimal, but basically what happened is that Marco Dicostanzo and was the former chief.

Technology Officer, and one of my title, which was the former Chief Information Officer, and now reporting directly to me. So these are two executives that have been with us for many many years.

And so the structure has been basically a move from one report to report.

Our strategy doesn't change as a result of that of course.

We will continue with it and so our focus is always in terms of.

Correct capital allocation and our leadership.

Leadership.

In network quality of service and.

When it comes to the innovation and strong support on.

Our go to market. So this has been already done for Ida and.

Alberto Griselli: So when it comes to the structure of CTI, or the CTI structure is being removed. And so basically, this is something that has happened. I think it was either last year or the beginning of this year. I don't remember anymore.

The executive than had been promoted as being with us for the.

20 years both of them.

Yeah Yeah.

Fashion later, our guidance the Capex, just lumping more or less than that.

Previous guidance.

We are as I said.

<unk> 456 on the Capex.

Alberto Griselli: But basically, what happened is that Marco Di Costanzo, who was the former chief technology officer, and Awana Matar, who was the former chief information officer, are now reporting directly to me. So these are two executives that have been with us for many, many years. And so the structure has been basically from one report to report. But our strategy doesn't change as a result of that, of course. So we've got it in full continuity.

Yeah.

Still months remains with.

The client quality and remember that in <unk>, you would have a comparison on Capex and then we'll also have opex related to the cloud.

Okay.

Perfect very clear. Thank you. Thank you. Thank you I'm, sorry, essentially has a good day.

Yes.

Okay.

Our next question comes from Vitor Tomita from Goldman Sachs.

Please Mr Tanta, yeah microphone children.

Alberto Griselli: And so our focus is always in terms of correct capital allocation and leadership in terms of natural quality of service. And when it comes to IT, it's innovation and strong support for our go-to-market. So this has already been done, Fred.

Hello, Good morning, all and thanks for taking my questions two questions from our side as well.

First one is regarding the anti six revenue growth guidance the longer term guidance does that already assume a relevant contribution from your <unk> strategy. Our other fronts or are those more of a longer term driver and then those three years the growth is likely to be primarily driven by mobile.

Andrea Viegas: And the executives that have been promoted have been with us for, I think, 20 years, both of them. Yeah, related to our guidance, CAPEX is maintaining more or less the previous guidance that we already said 4.4, 4.6 on CAPEX. We still must remain with the 5G deployment quality and remember that in IT, we have a component on CAPEX, and we also have optics related to the cloud. Perfect, perfect.

And the second question from our side is on.

Migration of users from prepaid to Controle plans, which you mentioned just.

Just now you've been doing that for a long time at this point so how much more room do you see to increase the percentage of postpaid in our user base and how high do you believe that percentage with gas in the longer term as you continue to capitalize on this driver. Thank you.

Fred Manges: Very clear. Thank you. Thank you, Alberto. Thank you, Andrea. Thank you, Lisa.

Vitor Tomita: Good morning. Our next question comes from Vitor Tomita from Goldman Sachs. Please, Mr. Tomta, your microphone is open. Hello, good morning, all.

Vito sorry, we lost your question for some reason you got frozen I don't know if on your side on our side, Matt to repeat the question.

Vitor Tomita: And thanks for taking our questions. Two questions from our side as well. The first one is regarding the 2026 Revenue Growth Guidance, the longer-term guidance. Does that already assume a relevant contribution from your B2B strategy or other fronts? Or are those more of a longer-term driver?

Sure no problem. So the first question would be on the longer term 2026 revenue growth guidance does that guidance already assume a relevant contribution from your beach B strategy or is that more of a longer term driver and the second question would be on migration.

Alberto Griselli: And in those three years, the growth is likely to be primarily driven by mobile? And the second question from our side is the migration of users from prepaid to controller plans, which you mentioned just now. You've been doing that for a long time at this point.

<unk> users from prepaid to Controle, there, which you mentioned that you mentioned just now you've been doing that for a long time at this point so how much more room do you see to increase the percentage of postpaid in your user base and how high do you believe that percentage could get eventually thank you.

Alberto Griselli: So how much more room do you see to increase the percentage of postpaid in your user base? And how high do you believe that percentage could get in the longer term as you continue to capitalize on this driver? Thank you. Vito, sorry, we lost your question. For some reason, you got frozen.

Hey, so.

On the on the first one.

We don't share the except breakdown of DD.

The different component of.

Of our revenue drivers for salt.

Vitor Tomita: I don't know if it's on your side or on our side. May I ask you to repeat the question? Sure, no problem.

You will see that basically where growth. So let me give you a piece of information so the assumption of inflation on our plan at this point in time is around 4%.

Vitor Tomita: So the first question would be on the longer term 2026 revenue growth guidance. Does that guidance already assume a relevant contribution from your B2B strategy, or is that more of a longer term driver? And the second question would be on migration of users from prepaid to controller, which you mentioned just now. You've been doing that for a long time at this point.

DCF for PCA, and then going down to $3 five years ago. So the main assumption.

Is that well be able to grow.

Consistently above inflation in the short term and in 2526 already and so this is driven by the overall.

Our portfolio of our revenue generation initiatives. So of course, so we have a mobile app, which is.

Our cash flow is important one will be sold market rationality and then we've got exponential growth in the <unk>. For example, we got some kind of high single digit on broadband and we've got a customer platform and.

Alberto Griselli: So how much more room do you see to increase the percentage of postpaid in your user base? And how high do you believe that percentage could get eventually? Thank you. Victor, on the first one, we don't share the exact breakdown of the different components of our revenue drivers. But, you will see that basically we're growing. So, let me give you a piece of information.

And so when you look at.

For example, <unk> to go to your specific question.

We will share with you in November that we have.

Contracted revenues of 300 million so over the over the last 18 months or so this year, we shared in the presentation that we're having 200 additional contracted revenues in 2023, sorry, and these contracted revenues.

Alberto Griselli: So, the assumption on inflation in our plan at this point in time is around 4% this year for EPCA and then going down to 3.5 in the years to go. So, the main assumption is that we'll be able to grow consistently above inflation in the short term and in 2025-2026 already. And so, this is driven by the overall portfolio of our revenue generation initiatives. So, of course, we have mobile, which is our cash flow, the important one with this whole market rationality. And then we've got exponential growth in B2B, for example.

And on a period of.

Let's say five years and so they will build up over time and.

So we are starting from almost zero as we show in November a couple of years ago, and we are quickly ramping up. So if you move to the end of the forecast in video and you keep the speed of our growth.

You pile it up overtime.

Center of the composition of the B to B revenue said that we are expecting.

At the end of our triangle plan.

And so this is basically.

Alberto Griselli: We got some kind of high single-digit broadband, and we got a customer platform. And so, when you look at, for example, B2B, to go to your specific question, we shared with you in November that we had contracted revenues of $300 million over the last 18 months. So, this year, we shared in the presentation that we're having 200 additional contracted revenues in 2023, sorry. But these contracted revenues extend over a period of, let's say, five years. And so they will build up over time.

Anything that could contribute to.

Something to our growth revenue, so overall, it's not going to be.

It's going to be small compared to mobile but in terms of all the initiatives.

<unk> been a bit to be and the customer platform are important for the speed of revenue growth.

Okay.

Yeah.

The second part was with the second one was.

Okay.

<unk>.

You are correct. The migration is that something that we have been doing for a while.

But.

I would say that we will keep doing this for a while so there is something there is always something new so for example, we've been working extensively on the OE customer base over the last 12 months.

Alberto Griselli: And so, we are starting from almost zero, as we showed in November a couple of years ago, and we are quickly ramping up. So, if you move to the end of the forecasting period and keep the speed of our growth and pile it up over time, you get a sense of the composition of the B2B revenues that we are expecting at the end of our tri-annual plan, and so this is basically something that can contribute to point something to our growth revenue. So overall, it's not going to be, it's going to be small compared to mobile, but in terms of all the initiatives, broadband, B2B, and the customer platform are important for the speed of revenue growth. The second one, guys, was a bit of a letdown.

And there was a sort of new lake.

If you look at the churn market is quite dynamic and so you got people that are improved.

Let's say economic conditions, and therefore are more.

We have the opportunity to move them up so if you consider the macro environment.

Got that.

The purchasing power of Brazilians overtime is going to improve according to the scenario that we're looking at today can be dynamism of that specific segment.

I think that we will continue to migrate prepaid debt to control customer at the speed that we are used to in the last 12 months.

Thank you very much.

Okay.

Our next question comes from Marco Nardini throne XP.

Please Mr Nodine.

Some children.

Hello. Good morning. Thank you for taking my questions I actually have two here on my side. This quarter you deliver a solid EBITDA margin alongside the highest ARPA and also reported strong guidance top line and EBITDA growth going forward could you provide insights into the expected margin dynamics for the coming quarters of 2024.

Alberto Griselli: My immigration, okay. Immigration is, you are correct, immigration is something that we have been doing for a while. But I would say that we will keep doing this for a while. So there is something, there is always something new. So, for example, we've been working extensively on the oil customer base over the last 12 months, and that was a sort of new lake.

Alberto Griselli: If you look at the churn market, it's quite dynamic. So you've got people that improve their, let's say, economic conditions and, therefore, are more attractive, where we have the opportunity to move them up. So if you consider the macro environment, the fact that the purchasing power of Brazilians is going to improve over time according to the scenario that we're looking at today, and the dynamism of that specific segment, I think that we will continue to migrate prepaid customers to control customers at the speed that we have been used to in the last 12 months. Thank you very much.

And my second question is regarding sticks at broadband I understand that you report at 19, 5% growth in tea moved a few brown, but its contribution to consolidated revenues remained relatively low at what do you expect on fixed broadband growth in 2024 can you make tax I mean, M&A year or do you believe that there is cheap.

Room within the asset light model. Thank you.

So I will ask Andre to address the first one I will take the second one.

Marco Nardini: Our next question comes from Marco Nardini from... Please, Mr. Nardini, your microphone is open. Hello, good morning. Thank you for taking my questions. I actually have two here on my side.

And racism.

The emerging fleets to we still want to continue to do so.

But essentially and this actually is imagine that where we expect more results because of the commission and all that the then these effects net origination but we.

Marco Nardini: This quarter, you delivered a solid EBITDA margin alongside the highest ARPL and also reported strong guidance for top-line and EBITDA growth going forward. Could you please provide insights into the expected margin dynamics for the upcoming quarters of 2024, please? And my second question is regarding fixed broadband.

We will continue with our focus in growing with.

More productivity.

Sorry productivity.

And then just.

Just to add it up but you know that.

The let's say cost control productivity discipline in capital allocation.

It's something that is really in our DNA. So.

Marco Nardini: I understand that you reported 9.5% growth in TIM UltraFibra, but its contribution to consolidated revenues remains relatively low. What do you expect for fixed broadband growth in 2024? Can we expect some M&A here, or do you believe that there's still room within this asset-light model? Thank you. I will ask Andrea to address the first one; I will take the second one. Hi, Marco.

We got the revenue growing above inflation, so some variable cost.

Related to that are we got a scenario of lower inflation at least versus previous years and our commitment to increase our operating free cash flow at the end of the day and this then would be broken down at EBITDA level and the EBITDA after lease level and the Capex in terms of capital allocation.

Going to Europe to your second question in terms of broadband.

Let me take a step back in terms of where we stand or where what we see in terms of market dynamics, where we stand.

When you look at broadband.

Andrea Viegas: In relation to the margins, we still, we still want to continue to do so. Robots, especially on the beach, that are actually emerging there where we expect more results because of the decommissioning and all the light, these effects that we have already mentioned, but we we are, we will continue with our focus on growing with more productivity productivity, sorry, for the championship. And just to add it up, you know that cost control, productivity, discipline, and capital allocation are something that is really in our DNA.

That basically we've got a 2% revenue share in that specific market and.

If that is quite competitive at this point in time, one of the large player just lower prices.

A couple of weeks ago on the entry levels at plants.

And so the market remains competitive.

We don't see any impact on not being a convergent at this point in time and this is primarily because the market is highly fragmented and so.

More than 50%.

Let's say almost 75% of the market share is in the hands of a.

Single business ISP. So convergence is not a problem for our bromine business and at the end of the day, we are sort of a pure mobile.

Alberto Griselli: So we've got revenues growing above inflation, so some variable costs are related to that. We've got a scenario of lower inflation, at least versus previous years, and we've got our commitment to increase operating free cash flow at the end of the day. And this then will be broken down at the bidder level and the bidder after lease level, and the CAPEX in terms of capital allocation.

Company because it's.

Charity of our revenue center and profits and cash flow come from mobile.

We are around the underrepresented on broadband given the strength of our brand.

The credibility of team.

Broadband is a nice market for us so that we could command.

Alberto Griselli: Going to your second question, in terms of broadband, let me take a step back in terms of where we stand or what we see in terms of market dynamics. Where we stand. So when you look at broadband, you know that basically we've got a 2% revenue share in that specific market, and that is quite competitive at this point in time. One of the large players just lowered prices a couple of weeks ago on the entry-level plans, and so the market remains competitive. We don't see any impact on not being convergent at this point in time, and this is primarily because the market is highly fragmented. And so more than 50%, say almost 75%, of the market share is in the hands of single business ISPs.

Higher revenue share or market share.

But we're not just looking for revenue growth that we are looking for revenue growth and something that is as a business is accretive to our profitability and margin expansion. So in the context of.

The market dynamics that are quite competitive this is a bit more challenging value proposition. So if you look at for example, the evolution of our net additions over the last months. So you will see that we decrease them a bit and this format, because we decided to optimize our commercial for printer taking a.

Some of our let's say partners.

We're a bit more pushy and therefore didn't ensure the level of quality of gross addition that we are after so we are rebalancing, our commercial footprint and that impact the gross additions.

Alberto Griselli: So convergence is not a problem for our broadband business, and at the end of the day, we are sort of a pure mobile company because the majority of our revenues, profits, and cash flow come from mobile, but we are underrepresented on broadband. Given the strength of our brand and the credibility of TIM, broadband is a nice adjacent market for us where we could command a higher revenue share or market share. But we are not just looking for revenue growth; we are looking for revenue growth and something that is an accretive business to our profitability and margin expansion. So in a context of market dynamics that are quite competitive, this is a bit more challenging value proposition. So if you look at, for example, the evolution of our net additions over the last month, you will see that we decreased them a bit.

When you do it in a measure like that and.

The positive impact, which is churn reduction is going to happen a few months down the road. So.

We are now looking at just for growth, but we are looking for profitable growth.

And the market conditions.

Today make this a bit more challenging nonetheless, we think we have a quite distinctive approach. If you look at our auto is the highest in the market that if you look at our NPS is the highest in the market.

If you look at the third party measurement of quality of service, especially network reliability. According to be seeking though we got the highest consistent quality and so we are defending more niche value proposition that bacterin sure.

Alberto Griselli: And this is primarily because we decided to optimize our commercial footprint, taking away some of our, let's say, partners that were a bit more pushy and therefore didn't ensure the level of quality of gross addition that we are after. So we are rebalancing our commercial footprint a bit. And that impacts gross additions when you do a measure like that.

A balance between growth and profitability.

Of course as we shared in November we are open and we are active we are in active sponsor on nonorganic.

Opportunities and so we're looking at that and if something attractive comes along that we will we will look at it.

Perfect. Thank you.

Okay.

Once again, if you wish to ask a question used to resend button or tap it down on the Q&A button.

Alberto Griselli: And the positive impact, which is churn reduction, is going to happen a few months down the road. So we are not just looking for growth; we are looking for profitable growth. And the market conditions today make this a bit more challenging. Nonetheless, we think we have a quite distinctive approach. If you look at our ARPU, it is the highest in the market. If you look at our NPS, it is the highest in the market. If you look at third-party measurement of quality of service, especially natural reliability, according to Obesigna, we have the highest consistent quality.

Wait while we pool for questions.

Our next question comes from Carlos League Arena throne E <unk> BBA.

Please Mr. Carlos you know my phone shopping.

Two questions here.

Mr. Carlos We lost your the beginning of your question. Please if you can repeat.

Sure sure.

Great. Thank you.

The first question is.

On the equipment side I understand obviously, it's a small part of the business.

Just trying to understand you do seem to have in the fourth quarter, a nice increase in the volume of handset sold yet the revenue contribution is actually lower year over year.

Alberto Griselli: And so we are defending a more niche value proposition that better ensures a balance between growth and profitability. Of course, as we shared in November, we are open, and we are active. We have an active stance on non-organic opportunities, and so we are looking into that. And if something attractive comes along, we will look at it. Perfect, thank you. Again, if you wish to ask a question, use the raise hand button or type it down on the Q&A button.

On the full year, you actually have the opposite dynamic do you have lower number of handsets and then increasing the product revenue side.

I understand handsets are not the only equipment that yourself, but if you could talk about.

A little bit of help to reconcile that.

But going forward.

Secondly.

Double clicking on broadband.

Fixed broadband I mean.

Is the.

The penetration that you have of customers over total homes passed is relatively low and I don't know if you conceptualize.

Target penetration rates.

Target for Tim but if.

We could talk about if you have this metric in mind as a target.

Operator: Wait, while we pull for questions... Our next question comes from Carlos de Liguerita from Itaubba. Please, Mr. Carlos, your microphone is open. Two questions here. Mr. Carlos, we lost the beginning of your question. Please, if you can repeat.

<unk> EBIT near future or in what timeframe that would also be very helpful. Thank you.

Okay sure.

We go with the first one on a more commercial terms and I will leave under that to comment on the numbers that you see so when it comes to the to our commercial approach on handsets.

Carlos de Liguerita: Sure, sure; I was just reading them. Thank you. The first question is, on the equipment side, I understand, obviously, it's a small part of the business. But I was just trying to understand, you do seem to have a nice increase in the volume of handsets sold in the fourth quarter, yet the revenue contribution is actually lower year over year. But for the full year, you actually have the opposite dynamics; you have a lower number of headsets and an increase in product revenue. So I understand that handsets are not the only equipment that you sell, but if you could talk about a little bit about how to reconcile this and what to expect going forward. And secondly, double clicking on broadband or fixed broadband, I mean, the penetration that you have of customers over total homes is relatively low. And I don't know if you conceptualize target penetration rates as a target for TIM, but if you could talk about whether you have this metric in mind as a target number in the near future or in what time frame, that could also be very helpful.

Basically we are we do we implement our commercial policies.

With three potential benefits in mind. So the first one is.

It's been attractive to competitors' customers. So basically we want to put together a nice.

Offer for a potential cost trends interested to switch. So this is the first.

This is the first objective and it is for example, the Apple one initiative.

That we launch.

The third quarter last year.

Second objective that we're looking at that is.

We want to increase.

The life cycle of those customers in our customer base.

The side too.

Two two.

To apply to that specific offer with the handset included that.

And the third one is the article uplift so generally we tend to apply subsidies.

In the highest plan.

Because we can generate for our fleet and we know that the quality of these either acquisitions or.

Alberto Griselli: Okay, so I will go with the first one on more commercial terms, and I will leave Andrea to comment on the numbers that you see. So when it comes to our commercial approach to handsets, basically, we implement our commercial policies with three potential benefits in mind. So the first one is being attractive to competitors' customers. So basically, we want to put together a nice offer for potential customers interested in switching. So this is the first objective. And this is, for example, the Apple One initiative that we launched in the third quarter last year. The second objective that we are looking at is to increase the lifecycle of those customers in our customer base that decide to apply for that specific offer with the handset included. And the third one is the ARCO uplift.

Let's see not retention is a cross sell into our customer base.

<unk> quality and so in the quarters, we generally put together the three components of it depending on the moment.

Specifically in the last quarter would be a bit more aggressive on the subsidies and that specific the specific.

Performance of the quarter and because we are always assessing oligos and.

We need to do some fine tuning or adjustment.

To our commercial strategy.

And if you look at the overall numbers of deals I believe this is.

Yes.

Last quarter, we have to dispose of any typical consider that they have the black Friday and the Christmas period. So we concentrate subject in this part of the year.

Alberto Griselli: So generally, we tend to apply subsidies in the highest plans because we can generate the ARCO uplift, and we know that the quality of these either acquisitions or, let's say, not retention, it's cross-selling to our customer base, is of the best quality. And so in the quarters, we generally put together these three components, depending on the moment. And specifically in the last quarter, we've been a bit more aggressive on subsidies and the specific performance of that quarter because we are always assessing how it goes and if we need to do some fine-tuning or adjustment to our commercial strategy. And if you look at the overall numbers for the years, I believe this one, right?

Do you look for the total year, we have more volume this year relates to place the temperature.

For the full year, we have an increase in revenue and cost for the acquired five pocket. They have this doesn't have much of that.

It's too big commercial.

That points.

Okay.

Carlos <unk> to the second question was about penetration of broadband.

Yes, it's again, so when you look at our model, which is basically <unk> of broadband right because we operate in an asset light model and.

One of the benefits is that generally.

Less interested.

Coupon rates.

Because these are not part of our contracts and this is actually an advantage. So we can operate on a larger footprint.

Andrea Viegas: Yes. In the last quarter, we have this seasonality because we have Black Friday and the Christmas period. So we concentrate subsidy in this part of the year. When you look at the total year, we have more volume this year compared to 2022. So for the full year, we have an increase in revenue and cost. For the four quarters, we have this seasonality of these two big commercial points. Carlo, going to the second question, which was about the penetration of broadband. So when you look at our model, which is basically we are an MVNO for broadband, right, because we operate on an asset-light model. And one of the benefits is that, generally, we are less interested in occupancy rates because these are not part of our contracts. And this is actually an advantage.

So it's like we launch a lot of chat.

That orca and we take the customers on a larger footprint.

Without having the need of increasing penetration and take up rates on the specific big streak of that specific city and.

Generally Butch put a lot of commercial pressure on filling up the net or quickly in order to have payback. So this is actually one of the main benefit of.

The asset light model and this is also the reason why we are rebalancing of beat our go to market approach. It in terms of commercial net also because we want to rely more on it Paul.

Alberto Griselli: So we can operate on a larger footprint. So it's like we launch a larger network, and we take the customers on a larger footprint without having the need for increasing penetration and take-up rates in this specific district or that specific city. And that generally puts a lot of commercial pressure on filling up the network quickly in order to get payback. So this is actually one of the main benefits of the asset-light model.

Component versus the Bush component, so we're not having the need or the.

We don't need to be worried on filling up the network very quickly we generally want to add.

Web and mobile like go to market approach.

Which is quite a.

Aligned to what we know how to do well and at the end of the day these ensure quality.

That ensure a better tradeoff, but in between revenue growth and profitability.

Alberto Griselli: And this is also the reason why we are rebalancing a bit our go-to-market approach in terms of commercial networks because we want to rely more on a pull component versus the push component. So not having the need or not, we don't need to be worried about filling up the network very quickly. We generally want to have a mobile-like go-to-market approach, which is quite aligned to what we know how to do well. And at the end of the day, this ensures quality that ensures a better tradeoff between revenue growth and profitability. That's super clear. I really appreciate your comments, and I will also praise the formatting as very efficient. Good to see everybody.

That's super clear I really appreciate your comments and I will also praised the formats like very efficient.

This year everybody.

Thank you. Thank you.

Our next question comes from Fannie, Canada Murray from HSBC. Please Fannie.

Okay.

Thanks, everyone for taking my question so.

I have a couple of questions.

The first one is related to our shareholder remuneration, which.

It was on the 17th of March.

Trying to understand.

They are more decision points to be made.

Uh huh.

Since that.

Did you already know devoted in order to show no difference there.

Carlos de Liguerita: Thank you. Thank you. Our next question comes from Fanny Cannemarie from HSBC. Blue's Fanny, you're my puncher.

I'm going to take some time before we think that they shouldn't or you're still waiting for some other actions happening outside.

Fanny Cannemarie: Thank you everyone for taking my questions. The first one is related to your, you know, shareholder remuneration, which you said you'd disclose on the 7th of March. So I'm trying to understand if there are more decision points to be made, or in the sense that, did you already know, did you already know the decision, and you're just going to take some time before revealing the decision, or are you still waiting for some other actions happening outside to finalize the shareholder immune issue? We are finalizing the number with our, Fanny, in the discussion that we have internally. And the message here is that we, in the previous guidance, say that continuous improvement in shareholder remuneration. So this is what we have been doing over the last many years. We moved from one to two, then 2.3 in November.

And finally shareholder remuneration.

But we are finalizing.

Finally, the number with our.

In the discussion that we have with them.

Internally.

<unk>.

The message here is that.

We.

In the previous guidance, we say that continuous improvement in shareholder remuneration. So this is what we have been doing.

Over the last.

In many years.

We move for one to two to three in November we have.

Since our plan was going faster.

Yes.

Respect to the to.

What we had initially planned we moved from two three to $2 nine and so.

Sure.

We are entering 2024 at a faster speed and we are finalizing the number and we just communicate the new floor December to March.

Yeah.

Okay.

Yes, thanks for that.

Alberto Griselli: Since our plan was going faster in respect to what we initially planned, we moved from 2.3 to 2.9. And so we are entering 2024 at a faster speed. And we are finalizing the number, and we will just communicate the new floor on the 7th of March. Thanks for that, Alberto.

The second question is related to your.

Operating free.

Free cash flow.

The leases the Martin is it.

18%.

Uh huh.

And your guidance suggests that it could go up significantly.

And the next two to three years. So what do you think you could be comfortable leasing that your margin would be.

Fanny Cannemarie: The second question is largely related to your operating free cash flow after leases. The margin is at around 18 percent, and your guidance suggests that it will go up significantly in the next two to three years. So what do you think where you could be comfortably saying that your margin would be in two to three years' time? Well, we're expecting that we will grow in the coming years, so like when we put in the guidance for double digit growth, but what we expect is the continued growth in the coming years. If I may, Andre, I think we have released pretty broad guidance, as we usually do. We have five to six KPIs that we expect at least to help you to model our business. Of course, unfortunately, we cannot give guidance on every single KPI.

In two to three Years' time.

Oh, well, we expect that we will grow in the coming years, so likely put into Kansas.

Double digits.

Growing but what.

What do we expect it to continue to continue growing the core.

Yes.

If I may.

I think we have.

Please pretty broad guidance as we usually do and we have five to six kpis that we.

<unk> at least to help you model our business.

Of course, Unfortunately, we cannot.

Got it on every single API. So this bond we are missing.

Uh huh.

We will let you guys calculate that but considering what we expect on revenues considering what we expect on EBITDA and <unk>.

EBITDA for these minus capex.

It's not going to be left up.

And if you guys need any additional help on the qualitative elements, we can give that to you in the coming weeks.

Andrea Viegas: So this one we are missing; we will let you guys calculate that. But considering what we expect on revenues, considering what we expect on EBITDA, EBITDA, absolute minus capex, I think it's not going to be that tough. And if you guys need any additional help on qualitative elements, we can give that to you in the coming weeks, so we can improve the way you calculate any other metrics. Perfect, yeah. Thank you. Thank you, Fanny.

Getting into the way you calculate any of the other metrics.

Yeah. Thank you anyway.

Thank you.

Our next question comes from Gabriele <unk> from Morgan Stanley.

Please Mr Lima, Yeah, my phone shopping.

Two questions on my end.

In the first quarter of 2020.

The highlight in terms of the market.

You already did that.

You have the Yasir al.

Yeah.

Pasteurize mentioned buying just once you get some color, how you're performing and the.

Fanny Cannemarie: Our next question comes from Gabriel Belima from Morgan Stanley. Please, Mr. DeLima, your microphone is open. Two questions on my end. First, anything you're seeing in the first quarter of 2021 that is worth highlighting in terms of the market? You already did the, you have the offer of the, test drive for some time, just learned to get some color on how you're performing, and the second question is a follow-up on the M&A question you were looking at: when you think you're active, you mean that you are targeting every you you are looking at everything in the market or your approach is to smaller companies and things like that. Just wanted to get a sense of, for instance, So when you look at the first quarter, you know the first quarter is generally a very seasonal quarter. It's a very seasonal quarter because you've got people coming back from holidays in January. We have an early carnival in Brazil in February.

Second question is a follow up on the M&A question.

You were able to act.

You mean that you are targeting at you you were looking at everything in the market.

Your approaches.

To a smaller companies and things like that just wanted to get a sense if.

Since the oil assets that are on sale is an opportunity for ciena.

Okay. So let me go with.

With the with the first question is when you look at the first quarter you know the first quarter is generally a very seasonal.

Very seasonal quarter, because you got.

People coming back from holidays in January and we got an early currently well in Brazil in February.

So everything is moving ahead according to our clients so no specific.

Let's see.

<unk>.

This continually versus what we saw in the first quarter in previous years.

We have.

Gabriel Belima: And so everything is moving ahead according to our plan. So there is no specific, let's say, element of discontinuity versus what we saw in the first quarter of previous years. What we have versus last year is that at this time last year, we didn't have any communication or commercial activities going on. So if you look at what we did in 2023, in the first quarter, we were not having specific campaigns. In this quarter, on the opposite, we have what we call a summer campaign, which is the Z delivery campaign. And we announced the partnership in November. We are implementing it now in January because it fits well with the necessity of recharge and getting a cold drink associated with it.

Versus last year is that.

At this time last year, we didn't have.

Any communication or commercial activities going on so if you look at what we did in 2023 in the first quarter, we were not having specific campaigns in this in this quarter on the opposite.

What we call a.

Summer campaign, and it which is that delivery campaign, and we announced the partnership in November we are implementing now in January and because it fits well with the.

The receptivity of our recharge and getting.

Our cold drink.

Associated so we have more commercial activities on our side that we just launched the delivery results to date.

Alberto Griselli: So we have more commercial activities on our side. We just launched delivery. Results to date are pretty good. And when it comes to the test drive, let me elaborate a bit on the commercial intent of that campaign.

A pretty good and when it comes to the test drive up.

Let me, let me elaborate a bit on that.

On the commercial intent of that campaign and so when you look at.

Alberto Griselli: So when you look at our positioning on quality of service, basically, you can see that we have closed the gap that we have with our competitors in terms of quality, actual quality delivered to our customers, and we have been consolidating since June last year our position in leadership. And we look at this KPI, which is called excellent quality of service as the main indicator measured by OpenSignal.

Our positioning on the quality of service basically you can see that.

We closed over the last year, the GAAP, but that we have with our competitors in terms of quality and actual quality and deliver to.

To our customers and we have been consolidating.

Since June last year, our position in leadership.

And we look at these kpis, which is called excellent quality of service as the main indicator is measured by open signal now Nonetheless, there is a mismatch.

Alberto Griselli: Now, nonetheless, there is a mismatch that exists between our actual performance and the perception of our customers. And so when you look at the communication initiatives in the marketplace, every competitor has its angle. And so we are always looking at different angles to market our network superiority in coverage, in quality, in 5G. And the test drive is one element of the strategy.

That exists between our actual performance and the perception of our customers and so when you look at the communication initiatives in the marketplace.

Every competitor angle and so.

We are looking always at two different angles.

Market, our network superiority in coverage and quality in five G and test drive, but it's the one element of the strategy. So it's a new sort of communication campaign that whereby basically we put the final test on consumer handset and so we invite guy.

Alberto Griselli: So it's a new sort of communication campaign whereby, basically, we put the final test in consumers' hands. And so we invite customers to test our network. It's more of a communication, let's say, original communication campaign than a product where we want to do a lot of gross additions. Of course, every time there is an event with a significant number of customers and that we generally use to put this in place, the response is quite nice, but it applies to specific circumstances, like, for example, carnival in a few days. And so this is for the first quarter's commercial activities, put it this way. Going back to our active stance, so at this point in the market, basically, we have got a lot of companies that are out there looking to be acquired by somebody. And so it's not like we are looking out, and we are reaching out to buy somebody because there are a lot of people that are looking to be acquired.

So MRSA.

Two types of our network, but it's more of a communication, let's say your original communication campaign than a product where we want to do a lot of gross additions of course every time to reset.

An event with a number of significant number of customers and then we generally use to put these in place. The response is quite nice, but it applies on our specific circumstances. For example Academy model in a few in a few days and and so this is for the.

For the first quarter and commercial activities put this way at going back to the our active stance.

In this point in the market that basically got.

A lot of cash a lot of companies that are out for us.

Absolutely.

I want to be acquired by somebody and and so it's not like we are looking out and we are reaching out to buy somebody because it's a lot of people that are looking.

To be acquired and so what we are doing is that we don't need to go actively outside looking for targets because they are all coming to us.

Alberto Griselli: And so what we are doing is that we don't need to go actively outside looking for targets because they are all coming to us. And so we are analyzing all the opportunities that are presented to us. We, let's put it this way, with the caveats that I mentioned in the previous questions, whereby the market is actually not quite attractive. It's full of players.

And so we are.

Analyzing.

All the opportunities that are presented to us.

We let's put the way we the caveats.

I mentioned in the previous questions whereby the market is actually not quite attractive it's full of players.

Alberto Griselli: We like to be a pure mobile player at the end of the day. I think that our strategy is quite neat. We have a growth opportunity in front of us, and we can capture it when we want. And it's not just a revenue growth opportunity; it needs to be for us an opportunity to increase revenues and free cash flow margin at the end of the day. Bruce Toklir, thank you. Our next question comes from David Lopez from New Street Research. Please, Mr. Lopez, your microphone is open.

We don't we like to be a pure mobile player at the end of the day.

I think that our strategy is quite unique.

We've got a great opportunity in front of us.

We can capture it when we want and but it's.

It's not just a revenue growth opportunity needs to be to us an opportunity to increase.

Revenues and.

And free cash flow matching at the end of the day.

Okay.

Crystal clear thank you.

Yeah.

Okay.

Our next question comes from David Loftus from New Street Research.

Mr Law. Please.

David Lopez: Hi, hello. Thank you for taking my questions and congratulations on a solid set of results. And just add one on the balance sheet, please. Your net leverage is quite low now. I was wondering what the optimal leverage in the future will be? I know you cannot comment much on the shareholder remuneration today, but should we expect leverage to continue to go close to zero, or are you going to go up at some point? And what would be the optimal level, please?

Phone shopping.

Hello, and thank you for taking my questions and congratulations on the solid set of results.

I just had one on the balance sheet.

Your next Rev. Reg is quite sure now I was wondering what the optimal leverage in the future I know you cannot comment much on the shoulder and nourish them today, but should we expect leverage to continue to grow close to zero or are you going to go up at some point what would be the optimal level. Please.

Andrea Viegas: Hi, yes, our leverage is really very, very low after the acquisition of oil, and we are in this very good result. And For now, we will still continue on the same path. Of course, we will have some discussions about what happens if we have a change in income taxes from the government. And when we have this information, we will start some, some position on our infrastructure. But for now, we are not we are not thinking about changing our leverage. 1, Maybe it's worth adding, David, that if there is another discussion that you guys are quite interested in, being quite interested in the previous month, in the previous quarter, that was the interest in equity, and that could be a trigger to rethink something.

Hi, This is yes, our leverage is really valuable.

After the acquisition of <unk>.

We are in this.

Very good.

And so.

And.

For now we are still.

We will still continue in the same class of.

Of course, that's it.

We will have some discussions about oh, what's happened if we haven't changed in the income.

Income taxes from the partner in that.

And when we have this information.

Some.

Some position about dollar and Congress for strategy, but for now yeah. There's nothing that we are not thinking about oh.

Changing our leverage.

Sensation.

Maybe it's for lobbying.

That is the recent other discussion that you guys are quite interest had been by these trends seen in the previous months.

Previous quarter that was the interest on equity.

That could be a three go to retain some tingling since the discussion now has been.

Andrea Viegas: Since the discussion now has been postponed for potential implementation at the earliest in 2025, that's another element that is part of our discussion, that when we look at that, and today we got a pretty nice instrument to address effective tax rate and support our increasing shareholder remuneration, and of course there's been a lot of discussion here if this instrument was going to exist in the future, being modified in the future, and so this is something that has been studied internally, but since, let's say, the discussion has been postponed, it's something that is going to be probably discussed again throughout 2024, when we see progress in the government news on this front. Let's put it this way.

Postpone for a potential implementation at the earliest in 2025.

Uh huh.

Another element that is part of our discussion that when we look at that and today, we've got a pretty nice instrument.

To address our effective tax rate and.

Supports our increased shareholder remuneration and of course, there's been a lot of discussion here.

If this instrument that was going to exist in the future being more defined in the future and so this is something that has been started internally about since let's say the discussion has been postponed is something that is going to be probably discuss again throughout 2024.

When we see progress in the government.

News on this front, let's put this way.

Alberto Griselli: Okay, yeah, thank you very much. Thank you. Our next question comes from Philip Chang from Santander. Please, Mr. Chang, your microphone is open.

Okay. Thank you very much very clear.

Our next question comes from Filipe Cheng from Santander. Please Mr. Cheng Yeah microphone shopping.

Philip Chang: Hi, good morning, everyone. Thank you for taking my question. Quick question on my side. I just wanted to understand if there is any update on the Fistel payment discussions and if you are still working with the base case of not having to pay Fistel this year.

Hi, Good morning, everyone. Thank you for taking my question quick question on my side I just wanted to understand if there is any update on the <unk> payments discussions unless you are still working with the base case of not having to pay for start. This year. So just wanted to see if there is any update there. Thank you.

Andrea Viegas: So just wanted to see if there's any update there. Thank you. I think we are still in the same position. Nothing has changed related to the fiscal payment.

I think we are still in the same are the same position.

Nothing changes relate to the sale payments.

Philip Chang: So we will maintain our previous position. Perfect. If I may just do one quick follow-up, I just wanted to understand in the mobile segment how the performance has been for high-end consumers, right? I just wanted to understand if, given that you now have the highest ARP in the market, how do you see your relative performance among high-end customers, right? Pure post-paid, if you have been able to gain a lot of traction there, has this been an important driver here for ARP expansion?

So we will maintain our previous position.

Yeah.

Perfect if I may.

They just do.

One quick follow up I, just wanted to understand that the mobile segments. How the performance has been on the high end consumers right. Just wanted to understand if a given that you have now the highest startup with the the markets. How do you see your relative performance among high end customers right pure postpaid if you have been able to gain a lot.

Traction there has been an important driver here for auto expansion and eventually if we should continue to see this as an important driver for service revenue growth going forward.

Alberto Griselli: And eventually, whether we should continue to see this as an important driver for service revenue growth going forward. This is a very good question, because at the end of the day, when you look at postpaid, we've got 22 percent of the market share, while the market leader is 44.

China is very good.

Question because at the end of the day when you look at postpaid, we got 22% market share the market leaders 44. So this is an area where we can grow.

Alberto Griselli: So this is an area where we can grow. I mentioned in a previous answer that we are doing quite well. So if you look at that, we have when you look at postpaid, we divide the plants into families. One, we call it internally, like pure postpaid, which is basically something above 100 reais. And the other one is a hybrid plant that we call internally controlled.

I mentioned.

In the previous answer that we are doing quite well. So if you look at that we have when you look at <unk>, we divide the plants into families.

We call it internally like pure postpaid.

She is basically something above.

One on the re Isa and the other one is hybrid plants that we call internally control and we.

Alberto Griselli: And we have been growing double digits on pure postpaid. And all the efforts that we are doing on our commercial strategy that is based on the famous three Bs: best service, best network, and best offer. It's exactly to increase the perception among the high-value customers that we have these three B's with us and, therefore, to attract them. So it's it's a journey because to change perception, it takes time.

We have been growing double digits on the pure postpaid and <unk> and <unk>.

All the efforts that we're doing.

On our commercial strategy that is based on the famous three be best service Best network and.

And best offer is exactly to increase the perception among the high value customers that we.

We have these three BS with us and and therefore track them. So.

It's a journey and because to change perception is it takes time.

Alberto Griselli: We are putting all the elements together. And like in the test drive that I just mentioned in the previous question to Carlos, basically, we are working to improve our position in the high segment. And when you look at the hard numbers, it looks good because we're going double digital.

We are putting all the elements together and like in the test drive that I just mentioned.

In the previous question the two catalysts basically we are.

Working to improve our position in the high segment and.

When you look at the hard number it looks good because we're growing double digits, but I think there is a long journey to go in front of us.

Alberto Griselli: But I think there is a long journey to go in front of us. When and when you look at some of the additional things that we have been doing on our offer, the Apple partnership, it's exactly driven by our intention to increase perception. We are high-value customers. When you look at it, you live in Brazil. So if you fly domestically goal and a lot of our team black customers, so team black is the high level plan family that we have here, including free communication in the in the flight on us. If you look at one of what was considered, let's say, a gap in our high post paid plans offer.

When you look at the Additionally, there is some of the things that we have been doing on our offer.

The Apple partnership it's exactly.

Driven by <unk>.

Our our.

Intention to increase the perception with high value customers.

When you look at.

You are live in Brazil. So if you if you fly domestic.

<unk> goal.

In Latam our team black customers, So Tim Black is the high level plan.

Family that we have here.

Include.

Free communication yet in the in the in flight on Us.

If you look at the one of what was considered.

Let's see a gap in our high postpaid plans offer that was international Rominger, we've closed the gap last year and now we've got the most attractive international roaming offer. So we are doing a number of initiatives.

Alberto Griselli: There was international roaming. We closed the gap last year, and now we have the most attractive international roaming offer. So we are doing a number of initiatives to sustain our quest to increase our position in the high end. Very clear.

Two.

Sustain that our our quest to increase our position in the high end customers.

Very clear. Thank you all about a day of distinction and with us and congratulations on the strong fourth quarter results.

Philip Chang: Thank you, Alberto, Andrea, and Luisa, and congratulations on the strong fourth quarter result. Thank you. Thank you. Lindsay, ladies and gentlemen, since there are no further questions, I'm returning the floor to Mr. Alberto Grisali for his final remarks. Please, Mr. Grisali, you may proceed. So, guys, thank you to everybody for staying with us. I hope you like the new format that we put together. I invite all of you to participate in the hour, in the new group, on Telecom Italia Group Capital Day, the 7th of March. And I'm looking forward to meeting all of you in the one-to-one meetings that we have in the following days. Thank you, everybody. And have a nice carnival for those living in Brazil.

Thanks.

Thank you Lindsay ladies and gentlemen, since there are no further questions I am returning the floor to Mr. Alberto <unk> for his final remarks placement sector. Sally you May proceed.

So guys. Thank you to everybody for staying with US I hope you like the new four months.

Together.

I invite all of you to participate to the hour.

New group to Telecom Italia group capital D. The seventh of March and I am looking for or to meeting all of you in the one to one meetings that we have in the following days. Thank you everybody and have a nice.

It's currently about for those living in Brazil.

Alberto Griselli: Bye-bye. This thus concludes the fourth quarter of 2023 conference call of TIMSA. For further information and details of the company, please access our website at tim.com.br slash ir. You can now disconnect from now on, and thank you once again. Have a wonderful day. Goodbye.

Bye bye.

This does concludes the fourth quarter of 2023 conference call of Ciena site for further information and details of the company. Please access our website at <unk> Dot on top PR Slash IR you can now disconnect right now one and thank you once again have a wonderful day.

Yeah.

[music].

Goodbye.