Q1 2024 TIM SA Earnings Call

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As for fixed broadband we are performing well despite a very tough environment. Our revenues grew more than 9% year over year, while our base increased by more than 10%, we maintain the focus on the right balance between growth and profitability.

And this is how we build the next generation team bit by bit.

Andre: Hello, everyone I'm Andre.

Andre: CFO of team on behalf of rent points has just started the inconsistent results. The implementation of our plan is bearing fruit as the long term benefits of the consolidation will become increasingly clear.

Speaker Change: In the first quarter. The topline grew seven three year on year with positive contribution from all revenue lines.

With cost under control Rfps, there grew by almost 11% with the margin increasing by 140 basis points to reach 47, 4% regarding leases at least after lease grew even faster by.

Speaker Change: Transfer Sam and amounted to $2 2 billion highs. This performance continues to benefit from the decommissioning projects, which has reduced recurring lease payments.

Speaker Change: 100, new highs since first quarter 'twenty to 'twenty three the beaches. After lease margin grew impressed by 400 basis points due to efficiency in opex and leases.

Andrea Viegas: Efficiency in OpEx and leases. Despite the negative impact of financial expense, our net income grew by 19%, benefit from the tax shield provided by interest on equity and a consistent performance in D&A. In addition, we record a strong increase in operating cash flow of almost 6%. Seasonality has a negative impact on working capital and CapEx, this is no cause for concern as they are developed in line with our plan and will improve as we move forward this year. In this scenario, we maintain a strong balance sheet while navigating the uncertainties of the Brazilian macro and political environment. Once again, I'm pleased with the figures we are delivering, which makes me confident that we will achieve our guidance by the end of the year.

Despite the negative impact on our financial expenses, our net income grew by 19 firsthand.

Speaker Change: Benefits from the tax shield provided by interests in our own language and the Coke system performance in Germany. In addition, we recorded a strong increase in operational cash flow of almost 6% Susan.

Speaker Change: Seasonality has a net negative impact on working capital impact, but this is no cause for concern as they are they have locked in line with our plan and we will improve as we go for it.

Speaker Change: In this scenario, we maintain a strong balance sheet why navigated the uncertainties of the Brazilian macro and political environment. Once again I'm pleased with the figures we are delivery, which makes me often that we will achieve our guidance by the end of the year.

Speaker Change: The first quarter also marks the moment to disclose the evolution of our ESG initiatives and update of our client all stakeholders in the updated plan. We are committing to one increase black employees and leadership with a target of 25% to be reached by 2025 number.

Alberto Griselli: The Q1 also marks the moment to disclose the evolution of our ESG initiatives and update our plan to all stakeholders. In the updated plan, we are committing to, one, increase black employees in leadership with a target of 25% to be reached by 2025. Two, addressing the digital divide by covering rural areas in a total of 32 million hectares by 2026. Three, expand our solid waste treatment with reuse and recycling to above 95% until 2026. In April this year, Great Place to Work recognized us in diversity and inclusion rankings. We were ranked among the top companies in Brazil on four categories: ethnic, racial, women, LGBTQI+, and people over 50. We are the only telco to have such a solid position. In our journey, we have achieved ESG targets, value diversity, and promoted inclusion. We set off the year at a robust pace.

Speaker Change: Number two addressing the digital divide by covering rural areas in a total of $32 million actors by 2026, and three expand our solid waste treatment that with reuse and recycling to above 95% until 2026.

Speaker Change: In April this year, great place to work recognizing us in diversity and inclusion rankings. We were ranked among the top companies in Brazil on four categories ethnic ratio women LGBTQ, plus and people over 50, and we are the only telco to have such a solid position.

Speaker Change: In our journey, we have achieved ESG targets value diversity and promoted inclusion.

Speaker Change: We set up the year at a robust pace, we posted the best first quarter numbers in the history of Tim Brazil, sustaining a solid financial performance as we accelerate our commercial speeds.

Alberto Griselli: We post the best Q1 numbers in the history of TIM Brasil, sustaining a solid financial performance as we accelerate our commercial speed. We expect to see additional development in our B2B in the coming months, seizing the opportunity we uncover. We will continue to push forward to maintain our network leadership and with the help of 5G, improve customer experience. AI pilots are confirming the potential to improve carrying services, we will continue to testing the models to start full implementation. As for the offers, we are preparing for the arrival of new partnerships and the evolution of our portfolio to keep pushing the boundary of innovation. We are on a long journey to become the most preferred telco in Brazil. This can only be achieved with an outstanding, highly committed, and focused team like ours. Now, let's move to the live Q&A session.

Speaker Change: Expect to see additional development in our beat to be in the coming months. She has seen the opportunity we uncover.

Speaker Change: We will continue to push forward to maintain our network leadership and with the help of <unk> improve customer experience.

Speaker Change: Our pilots are confirming the potential to improve carrying services. So we will continue to protest in the model to start full implementation as for the offers we are preparing for the arrival of new partnerships and the evolution of our portfolio to keep pushing the boundaries of innovation.

Speaker Change: We are on a long journey to become the most preferred telco in Brazil. These can only be achieved with an outstanding highly committed and focused team like ours.

Speaker Change: Now, let's move to the live Q&A session.

Speaker Change: Thank you before starting the Q&A session I will pass the floor to Mr. Roberto precisely to the initial remarks. Please Mr. <unk> you May proceed.

Vicente Ferreira: Thank you. Before starting the Q&A session, I will pass the floor to Mr. Alberto Griselli to the initial remarks. Please, Mr. Griselli, you may proceed.

Roberto: Good morning, everyone. Our last I would like to start this call with a few words about the emergency that we're facing the Rio Grande do Sul, and also anticipating possible questions that arise during the call.

Alberto Griselli: Good morning, everyone. I would like to start this call with a few words about the emergency that we are facing in Rio Grande do Sul and also anticipating possible questions that might arise during the call. In the face of such a dramatic event with loss of life and families' life disrupted, we organized a crisis group to address four main fronts. The first one was to confirm that our employees are 100% unharmed, in safe places, and without risk to their health, and this has been achieved already. The second, which is ongoing, is the tireless effort of our technical team in the field to guarantee the recovery of our infrastructure and the minimization of the outage due to the extreme conditions and power loss.

Roberto: In the face of such a dramatic event with loss of life and the family's lives disrupted.

Speaker Change: Organisers prices group to address four main fronts.

Speaker Change: The first one was to confirm that our employees are 100% unarmed in safe places without the risk to that hub and this is have been achieved already.

Speaker Change: The second which is ongoing is the toggle is F. Four of our technical team in the field to get on PD recovery of our infrastructure.

Speaker Change: And the mineralization of the outages due to the extreme conditions empower power loss.

Speaker Change: The third one was meant to our own clients.

Alberto Griselli: The third one was meant to our own clients and guarantee the possibility to keep on communicating with their families and be updated throughout this period. Therefore, we awarded additional gigabyte to our customer base to be in position to use their services, and we open roaming across all operators to increase the availability of the networks in the region. Finally, we are working with the authorities at all levels and supporting the purchase of materials and products for what is required by the people in Rio Grande do Sul, and we have been using our TIM Institute or Instituto TIM to these objectives. I would like to thank everyone for their effort, and particularly my colleagues from all the other operators who are united with us in the time of crisis. We can move now to the Q&A session, please.

Speaker Change: And guarantee.

Speaker Change: The ability to keep on communicating with their families and be updated throughout this period and therefore, we awarded the additional gigabyte to our customer base to be in position to use their services and we opened rominger.

Speaker Change: Across all operators.

Speaker Change: To increase the availability of the networks in the region.

Speaker Change: Finally, we are working with the authorities at all levels and supporting the purchases of materials and products or what is required by the people in euro going into the zone and we have been using our team Institute or Institute a theme to these objectives I would like to thank everyone for their effort and.

Speaker Change: My colleagues from all the other operators, who are in either with us or in the time of crisis, So who can move now to the Q&A session. Please.

Speaker Change: Thank you Mr. Roberto will now start the Q&A session and if you wish to ask a question. Please press the reason button.

Vicente Ferreira: Thank you, Mr. Alberto. We will now start the Q&A session, and if you wish to ask a question, please press the raise hand button. If your question has already been answered, you can exit the queue by clicking on the same button. You can also send written questions throughout the Q&A button. Wait while we pull for questions. Our first question comes from Marcelo Santos from JPMorgan. Please, Mr. Santos, your microphone's open.

Roberto: If your question has already been answered you can exit the queue by clicking on the same button.

Roberto: You can also send written questions throughout the Q&A button wait while we pull for questions.

Speaker Change: Our first question comes from Marcelo Santos from JP Morgan Please.

Marcelo Santos: Please Mr centers now my pumps open hi.

Marcelo Santos: Hi, Good morning, Thanks for taking my questions I wanted to ask first question about ROE I mean, you're growing a bit above the guidance you gave for the year.

Marcelo Santos: Hi. Good morning. Thanks for taking my questions. I wanted to ask a first question about growth. You're growing a bit above the guidance you gave for the year. Is there upside to the guidance or is there something that you think might wait more on the H2 or in the rest of the year. That's the first question. The second, if you could do a deeper dive on the subscriber versus ARPU dynamics. When we usually look at Anatel numbers, you tend to have a little bit less adds, especially on the postpaid. I'm talking more on the postpaid, a little bit fewer adds on the postpaid, but the ARPU has been coming pretty strong. Just wanted to understand what's the dynamics, why these results come like this. If you could enlighten us, that would be great. Thank you.

Marcelo Santos: Is there upside to the guidance or is there something that you think might wait more on the second half.

Marcelo Santos: Or in the rest of the year. So that's the first question and secondly, if you could do a deeper dive on the subscriber versus harpoon dynamic, but when you. We usually look at Anatol numbers, you tend to have a little bit less ads, especially on the postpaid I'm talking more on the postpaid a little bit fewer.

Marcelo Santos: Fewer adds on the postpaid about the ARPA has been coming pretty strong. So just wanted to understand what's the dynamics are.

Marcelo Santos: Why does the results come like this if you could enlighten us that would be great. Thank you.

Speaker Change: Yeah, So Marcelo let me take.

Alberto Griselli: Yeah. Marcelo, let me take these questions. In terms of guidance, we got a good quarter all in all. A bit, this is a bit early to comment on potential upside because we're just in Q1 and there are a number of moving pieces ahead of us. I think that we are actually in line to what we pretend to do, so increasing revenues above inflation in the range 5% to 7%. We are coming out at seven point something and increasing a bit faster than this and double digit on free cash flow. I would say that we need to wait another quarter to answer you with more profound elements to your questions.

Marcelo Santos: These questions are in terms of guidance out so we've got a good quarter all in all the media is a bit.

Marcelo Santos: These early tool to comment on the potential upside there because we adjust in the first quarter there and there are number of moving these ahead of LASA.

Speaker Change: I think that we are actually in line tool.

Speaker Change: What we pretend to do so increasing revenues above inflation in the range of 5% to 7%, we're coming out with a seven point something good and increasing EBITDA faster than this and double digit on that.

Speaker Change: Free cash flow, so I would say that we need to wait another quarter to have a tool to answer you with more profound element to your question. So when it comes to the subscribers versus auto dynamics I will say that.

Alberto Griselli: When it comes to the subscribers versus ARPU dynamics, I would say that when you look at our postpaid revenue growth, what we are aiming to is to grow on a balanced way in terms of ARPU growth and customer base growth. This is, I think, a balanced way, the way we look at this. Increasing both levers to support our postpaid revenue growth. When it comes to the customer base revenue growth, if you look at our track over the last quarters, you will see that we have been slightly increase our speed across quarters. In the Q2 2023, which is the Q1 clean Oi consolidation, we were growing on postpaid at roughly 1.3% versus our own customer base. We've been increasing the speed, and we reach 1.8% in Q1 2024.

Speaker Change: When you look at our postpaid revenue growth.

Speaker Change: Aiming to is to grow on a balanced way in terms of ARPA growth in customer base growth.

Speaker Change: So this is a I think a balanced way the way we look at this you saw increasing both lever set to support our postpaid revenue growth.

Speaker Change: When it comes to the customer base of revenue growth. If you look at our truck over the last quarters, you would see that we have been that is likely increase our speed across quarters. So in the first quarter of <unk> in the second quarter of last year, which is the first quarter clean alloy consolidation.

Speaker Change: We were growing on postpaid is roughly one 3% versus our own customer base.

Speaker Change: We are meaningfully in the speed and we'll reach one 8% in first quarter 'twenty 'twenty four so I think we are in the right track to slightly increase.

Alberto Griselli: I think we are in a right track to slightly increase the component coming from postpaid customer-based growth. When you look at the ARPU dynamics, basically there are a number of things that we are doing in order to increase ARPU. There is the more for more strategy that we are implementing in this quarter, Q2 2024. We got the migration, so we migrate customers from one plan to a plan which is a bit more expensive but with better benefits. This is the comment, for example, you find in our presentation, which is the 10% increase from prepaid to control, but it is also happening from postpaid to postpaid, control to postpaid. The third lever that we use is primarily add-ons.

Speaker Change: The components coming from postpaid customer base growth. When you look at the article dynamics basically there are number of things that we're doing in order to increase our pool. So there is the more for more strategy that we are implementing in this quarter. So second quarter 2024.

Speaker Change: We got the migration so we migrate customers from us at one plant to a plant, which is a bit more expensive, but with better benefits and this is a comment for example, you'll find that our presentation, which is the 10% increase from prepaid to Controle, but is also happening from postpaid to postpaid controle to postpaid.

Speaker Change: And the third lever that we use is primarily adopt so when you sum up all these that you've got the drivers of the ARPA increase and therefore, when you look at our postpaid revenue growth is a balance between customer base growth on postpaid and ARPA growth.

Alberto Griselli: When you sum up all this, you got the drivers of the ARPU increase, and therefore, when you look at our postpaid revenue growth, it's a balance between customer base growth on postpaid and ARPU growth due to the levers. In Q1 this year, we don't have any price adjustment besides the migration and the plug-in sales.

Speaker Change: Due to the two deliveries in the first quarter. This year, we don't have any price adjustment.

Speaker Change: Besides the migration and the.

Speaker Change: Plugged in sales.

Speaker Change: Okay.

Speaker Change: Perfect. Thank you very much.

Marcelo Santos: Perfect. Thank you very much.

Mark Genie: Our next question comes from Mark corner Genie for own XP. Please Mr. Jeanie know my own children.

Vicente Ferreira: Our next question comes from Marco Nardini from XP Inc. Please, Mr. Nardini, your microphone is open.

Speaker Change: Hello, all back to Andrea Thank you for taking my questions. So regarding capex, we observe a higher than expected investment in the first quarter, particularly due to <unk> are there any adjustments anticipated to meet annual Capex guidance are you like confidence in maintaining our original forecast and regarding five G.

Marco Nardini: Hello, Alberto, Andrea. Thank you for taking my questions. Regarding CapEx, we observed higher than expected investments in Q1, particularly due to 5G. Are there any adjustments anticipated to meet annual CapEx guidance? Are you confident in maintaining your original forecast? Regarding 5G, can you walk us through any updates on the whole rollout and how this can contribute to top line and margin growth going forward? Do you believe that FWA could also have a positive impact on that matter, please?

Speaker Change: Can you walk us through any updates on the rollout and how this can contribute to top line and margin growth going forward and do you believe that SWA could also have a positive impact on that matter. Please.

Speaker Change: Okay. So Michael on the Capex side of that so it's a little seasonal thing here. So we are we will maintain our guidance and so that that's the commitment that we have.

Alberto Griselli: Okay. Marco, on the CapEx side, so it's a bit of seasonal thing here. We will maintain our guidance, so that's the commitment that we have. The fact that we anticipated a bit 5G deployment this year is we wanted to have a head start in the year with something, and this comes to your second question. We anticipated a bit of the deployment 5G because 5G brings to us some benefits that are important to us, and so we wanted to have more quarters in front of us with these benefits already in place. The benefits basically are related to the perception and the delivery of a better network experience. When we deployed 5G, the way we deploy it is that it's meant to support the increase of customer quality in the cities where we deploy this.

Speaker Change: And the fact that we anticipated a bit subdued deployment. This year is if we wanted to have a head start in the year with.

Speaker Change: Something that <unk> come to your second question.

Michael: So we anticipate it will be the deployment of <unk>, because <unk> brings to us some benefits that are important to us and so we wanted to have a more corporates in front of us. So with these benefits already in place and the benefits basically are related to the center.

Speaker Change: Center, Shaun and the delivery of a better.

Speaker Change: Experience so.

Speaker Change: When we deployed five G. The way we the point is that it's meant to support the increase of customer already.

Speaker Change: In the cities, where we deploy this and so we know that <unk> is an important lever to achieve this objective.

Alberto Griselli: We know that 5G is an important lever to achieve this objective. When you look at the metrics that confirm that the customer quality is improving, you will see that this is happening real. If you look at the quality of the network across Brazil and in main capitals, we are number one. When you look at another award, that has been another recognition that we achieved in this quarter, which is another Opensignal. We have today the most reliable experience in Brazil. There are a number of things that we are doing in order to achieve these metrics that are important for our position in terms of network superiority. What we are doing is working, and so that's the reason why we anticipated a bit 5G.

Speaker Change: And.

Speaker Change: When you look at the.

Speaker Change: The metrics that confirmed that the customer.

Speaker Change: All of these improvement you will see that this is happening real so if you look at the quality of the network across Brazil and the main copies also we are number one and when you look at another award that has been.

Speaker Change: The recognition that we achieved in this quarter, which is another open season that we have today the most reliable.

Speaker Change: <unk> experience in Brazil. So there are a number of things that we're doing in order to achieve these metrics that are important for.

Speaker Change: Our position in terms of our network superiority and are what we are doing.

Speaker Change: It's working and so that's the reason why we anticipate it will be <unk> when you come to the to the how is all of this is going to support the top line.

Alberto Griselli: When you come to the how this is going to support the top line. I think that the best answer at this point of deployment of 5G in Brazil is that this supports our more for more strategy. We are providing a better service to our customers, and this is important in terms of retention, and this is important in terms of supporting our growth in postpaid. By changing the perception of our customers in terms of network quality, we are in a better position to attract them. There is another benefit, which is the network efficiency, this is already, let's put it this way, captured by our guidance. This is something that has been designed when we developed our current plan.

Speaker Change: I think that the best answer at this point of deployment of <unk> in Brazil is that this supports our more for more strategy and so we are providing a better service to our customers and this is important in terms of retention and this is important in terms of supporting our growth in postpaid because by.

Speaker Change: Changing the perception of our customers in terms of net.

Speaker Change: Network quality and we are in a better position to attract them at the recent other benefits, which is the network efficiency.

Speaker Change: This is already let's put this way capture by our guidance yet. So this is something that has been designed when we developed our our current plan and so in terms of top line, let's say better quality for our customers. So these translate in a churn reduction and a more appealing value.

Alberto Griselli: In terms of top line, we say better quality to our customers, so this translates in churn reduction and a more appealing value proposition in general for Brazilian customers and for the postpaid and prepaid growth in our strategy.

Speaker Change: Proposition in general for our Brazilian customer center for the.

Speaker Change: The postpaid.

Speaker Change: Prepaid growth.

Speaker Change: And our strategy.

Speaker Change: Thank you Roberto.

Marco Nardini: Thank you, Alberto.

Speaker Change: Our next question comes from the rest salaries from UBS.

Vicente Ferreira: Our next question comes from Andrea Salis from UBS. Please, Mr. Salis, your microphone is open.

UBS: Please Mr salaries and my plants open.

UBS: Hi.

Andrea Salis: Hi. Hi, guys. Can you hear me?

salaries: Hey, guys can you hear me.

Speaker Change: Yes, I can hear you okay. Thank you. So good morning, everyone. Thanks for the presentation in for taking my questions here.

Vicente Ferreira: Yes, we can hear you.

Andrea Salis: Okay. Thank you. Good morning, everyone. Thanks for the presentation and for taking my questions here. I have a couple of questions on the tower renegotiation process. Recently, we saw some news related to IHS Towers being reportedly considering exiting Brazil. Do you see this as a potential risk for the renegotiation of tower contracts? Could this impact the I-Systems operation on your end? Thank you.

salaries: I have a couple of questions on the tower a renegotiation process recently, we saw some news related to IHS towers being reportedly considering exiting Brazil.

Speaker Change: Do you see this as a potential risk for the renegotiation of our contracts and could this impact the eye system operation.

Speaker Change: On your end thank you.

Speaker Change: But under that.

Alberto Griselli: Andrea, the tower renegotiation process. Let's say, when you go to the tower, we got the existing portfolio and the new portfolio. The existing portfolio is the commissioning that we've been discussing over the last quarters. The commissioning basically is sort of completed. When you look at the results of this quarter, basically the results of this quarter already capture all the optimizations that have been running for the last 12 months. When you look at the portfolio going forward, so you got basically two dimensions. The existing portfolio that is subject to what? This is subject to inflation adjustment that basically happens in the Q1, so last quarter and this quarter. Then you have the network expansion on that portfolio.

Speaker Change: Yeah.

Speaker Change: The power of renegotiation process is so the.

Speaker Change: Let's see.

Speaker Change: When you go to the tower, we got the existing portfolio and the new portfolio. So they need the existing portfolio.

Speaker Change: Commission and that we've been discussing over the last quarter or so.

Speaker Change: And is the commissioning basically.

Speaker Change: Completed.

Speaker Change: When you look at the results of this quarter basically the result of this quarter already capture all the optimization of their being branding for the last 12 months. So when you look at the.

Speaker Change: Portfolio going for all the so you've got basically to dimension the existing portfolio that is subject to Walt this is subject to inflation.

Speaker Change: Inflation adjustment that basically happens.

Speaker Change: In the in the first quarter, so last quarter in this quarter and then you have.

Speaker Change: The network expansion on that portfolio and what we put five G. We occupy more space and therefore, we need to be a bit more for the for the rental of the tower and then there are the initiatives that we are doing it in order to optimize our which is basically negotiation set with our company and.

Alberto Griselli: When we put 5G, we occupy more space and therefore we need to pay a bit more for the rental of the tower. Then there are the initiatives that we are doing in order to optimize, which is basically negotiations with the tower company. That's the first thing that we're doing. Then there is the second thing that is related to new towers. The deployment of new towers, where basically we are looking for better conditions for the new towers that we are deploying. IHS is a partner of ours primarily in the existing portfolio and in some of the challenges together with our players. Nothing has changed in the relationship with them so far.

Speaker Change: So that's the first thing that we're doing and then there is the second thing that is related to new tablets and so the deployment of new towers, where basically we want we are looking for better conditions for the news hours that we are the ball. So EHS is a partner of ours in a.

Speaker Change: Primarily in the existing portfolio.

Speaker Change: And some of the challenges together with our players so.

Speaker Change: Nothing has changed in the relationship with them so far and.

Alberto Griselli: There will be no impact in terms of challenging the existing portfolio with the new portfolio, because we got a number of partners contributing to this effort. With IHS or without IHS, we don't see any impact in the objective that we want to achieve.

Speaker Change: Yeah.

Speaker Change: There would be no impact in terms of challenging.

Speaker Change: The existing portfolio with the new portfolio, because we got a number of partners contributed to contributing to this effort. So we then it with IHS or without IHS, we don't see any impact in the objective that we want to achieve.

Speaker Change: Yeah.

Speaker Change: That that was pretty clear about that thank you and could you comment on di system operation do you anticipate any impact on that or I mean, everything that you can comment on that would be helpful for us as well yes.

Andrea Salis: That was pretty clear, Alberto. Thank you. Could you comment on the I-Systems operation? Do you anticipate any impact on that? Everything that you can comment on that would be helpful for us as well.

Alberto Griselli: Yes, Andrea. For the I-Systems, we don't see any operational impact so far. We decide to operate with a neutral network approach. We have two partners that we are using to reach our commercial objective, I-Systems and V.tal. They focus on different geographical areas because their coverage is different. So far we don't see any impact. If they decide to sell, there will be another guy taking over that. We will continue to work with the new guy if this happens. I don't see any change in our strategic positions or so far in our operation activities due to the possible intention of IHS to, let's say, to create value with the assets on a global scale. In Brazil and elsewhere.

Speaker Change: For the ICT them, you know, we don't see any operational impact so far.

Speaker Change: And so.

Speaker Change: Ah, we decided to cooperate with them and they'll turn network approach here. We have two partners that we are using to reach our commercial objectives.

Speaker Change: <unk> and Vitol.

Speaker Change: They focus on different geographical areas because of the their coverages differentiate and so.

Speaker Change: <unk>.

Speaker Change: So far we don't see any impact there if they decide to sell that there would be another guy taking over that and so we.

Speaker Change: We will continue to work with you. If this happens so I don't see any change in our strategic positions or so far in our operation activities due to the possible intention of IHS to let's.

Speaker Change: Let's say to create value with the assets on a global scale is sold in Brazil and elsewhere.

Speaker Change: Got it thank you very much I'll bathroom.

Andrea Salis: Got it. Thank you very much, Alberto.

Speaker Change: Our next question comes from Victor <unk> from Goldman Sachs. Please Mr Doctor and my phone children.

Vicente Ferreira: Our next question comes from Vitor Tomita from Goldman Sachs. Please, Mr. Tomita, your microphone is open.

Victor: Hello, Good morning, all and thanks for taking my questions two questions from our side. The first one is on prepaid if you could give us a bit more color on prepaid ARPA trends and how you expect those to develop going forwards and a second question a bit related to the previous question is if you could give us an update.

Vitor Tomita: Hello. Good morning, all, and thanks for taking our questions. Two questions from our side. The first one is on prepaid. If you could give us a bit more color on prepaid ARPU trends and how you expect those to develop going forward. A second question, a bit related to the previous question, is if you could give us an update on the fiber business, specifically on your strategy of expansion using those neutral networks like Systems and V.tal in some areas, and how that has been faring and how that has been benefiting your overall commercial efforts. Thank you very much.

Speaker Change: The fiber business, specifically on our strategy of expansion using those neutral networks I systems and Vitol in some areas and how that has been faring and how that has been benefiting our overall commercial efforts. Thank you very much.

Speaker Change: In the EU and that basically if you look at this quarter. This quarter is a bit seasonal and so you would see that.

Alberto Griselli: If you look at this quarter, this quarter is a bit seasonal. You would see that if you convert our speed of growth versus the previous quarter, we slow down. This slowdown is basically driven by a few factors. I would say that the first one is the fact that on a year-on-year basis, we don't have a favorable comparison, because last year, I don't know if you guys remember, we migrated 1 million control customers to prepaid. Last year, prepaid was pretty good in Q1 because of this migration. Then I would say that the second element is related to a quarter that we see generally as a sort of negative seasonality versus the previous quarter, so the Q4 of last year. Then there is some activities that we're doing to migrate prepaid customer to control customers.

Speaker Change: If you convert the BB b, our speed of growth versus the previous quarter.

Speaker Change: We slowdown so the slowdown is basically driven by a few factors. So so I would say that the first one is the fact that on a year on year basis, we don't have a favorable comparison because last year I don't know if you guys remember, we migrated 1 million control customers to prepaid and so lastly, our prepaid was pretty close in the first quarter.

Speaker Change: Some of these migration.

Speaker Change: And then I would say that.

Speaker Change: The second element that is related to it.

Speaker Change: It's a quarter, which is generally a.

Speaker Change: Sort of a negative seasonality versus the previous quarter salts. The last quarter of last year and then there is some activities that we're doing to migrate prepaid customers to control customers. So if you take all these elements and this explain a beta.

Alberto Griselli: If you take all these elements, this explain a bit the speed of our prepaid versus the Q4, for example. When we're going and we're looking this forward, some of these things will remain, like the prepaid to control migration. Some of the other things may dissipate. The seasonality, the Q1 could be different in the Q2. When you look at the ARPU, basically the ARPU is a combination customer base and the revenues. I would say that what we look at, we look at spending, and spending is increasing. If spending is increasing, and if given the cancellation policy that is going to remain constant, we should see some kind of ARPU growing in the next quarter. It's not really the metric that we're looking at, because we're looking at spending.

Speaker Change: The speed of our prepaid <unk>.

Speaker Change: This was the fourth quarter for example.

Speaker Change: And we're going and we're looking at these four or the other.

Speaker Change: Yeah.

Speaker Change: Some of these things will remain like the prepaid to Controle migration. Some of it are things that may dissipate. So the seasonality the first quarter could be different in the second quarter.

Speaker Change: So when you looked at the Apple basically the App with a combination of customer base and the revenues and so I would say that what we look at that we look at spending and spending is increasing and so if spending is increasing and if given.

Speaker Change: Given the cancellation policy that is going to remain constant we should see.

Speaker Change: Some kind of also growing in the next quarter, but it's not really the metric that we're looking at because we're looking at spending.

Alberto Griselli: I would say that this is it. Your second question was related to the fiber business. In the fiber business, if you look at the year-on-year performance, it's quite positive. If you look at quarter-on-quarter performance, you will see that we slow down a bit our customer base growth. There is no real change in strategy versus what we discussed in our investor day and what we have been doing over the last quarters. The fact is that the market remains tough, and therefore, we keep being selective on the way we expand our coverage. At the same time, we are adapting our commercial model in a way that we can, let's say, be more efficient in a very competitive market. What does it mean?

Speaker Change: And so I.

Speaker Change: I will say that this is data and then your second question was related to the fiber business. So in the fiber business.

Speaker Change: If you look at the year on year performance is quite positive for if you look at quarter on quarter performance, you will see that we slowed down a bit our customer base growth.

Speaker Change: There is no real change in strategy versus what we discussed in our Investor day, and what we have been doing over the last quarters. The fact is that the market remains tough and therefore, we could keep being selective on the way we expand our coverage and at the same time, Matt we are.

Speaker Change: Adapting our commercial model.

Speaker Change: In a way that we can.

Speaker Change: Let's see.

Speaker Change: Be more efficient in a very competitive market and what does it mean that for example, we are adapting our commercial machine that at relying less on our what we call a bush channel and are relying more on what we call cold channel because the quality is better and so we got a good footprint at this point.

Alberto Griselli: For example, we are adapting our commercial machine, relying less on what we call a push channel, and relying more on what we call pull channel, because the quality is better. We got a good footprint at this point in time with V.tal and the system. We are consolidating our position in the cities where we operate, fine-tuning the commercial machine, and looking at the competitive environment. When we see that the conditions are good, we may expand a bit our footprint going forward, but subject to what I just said.

Speaker Change: And time with Vitol and their sistema.

Speaker Change: Our consolidating the position our position in the cities, where we operate.

Speaker Change: Fine tuning the commercial machine.

Speaker Change: Looking at the competitive environment and why we see that the conditions are good we may.

Speaker Change: Spanned a beat our footprint going forward, but subject to what I just said.

Speaker Change: Very clear thank you very much.

Vitor Tomita: Very clear. Thank you very much.

Speaker Change: Our next question comes from Luca <unk> from Bank of America. Please Mr branching into my punch oven.

Vicente Ferreira: Our next question comes from Luca Begen from Bank of America. Please, Mr. Brengin, your microphone's open.

Luca: Hi, Good morning, everyone. Thank you for taking my questions. I also have two on my side. The first one is more of a follow up from the previous question.

Luca Begen: Hi. Good morning, everyone. Thank you for taking my questions. I also have two on my side. The first one is more of a follow-up from the previous question. On prepaid, specifically talking about the plans, for some regions, I know this will vary from state to state and region to region, but in some regions, you reintroduce your 30 reais per month offer on prepaid. I just wanted to know, how are you seeing the dynamics for prepaid going forward? Is there space for price hikes on the actual plans being offered or not? If the price modifications you did in the past had any impact on the upsell strategy. Second on margins. For the past few quarters, you have had a very positive dynamic in terms of margins. I just wanted to understand how you're thinking about that going forward.

Luca: On prepaid specifically talking about the plans for some regions I know this will vary from state to state and region to region, but in some regions you introduced your 30 high per month offer on prepaid.

Luca: So I just wanted to know how are you seeing the dynamics for prepaid going forward is there a stage for price hikes on the ex co plans being offered.

Luca: Or or not and then that has had any impact on the price.

Luca: Modification as it did in the past had any impact on on the upsell strategy and then second on margins for the past few quarters do you have.

Luca: <unk> had a very positive dynamic in terms of in terms of margins and then but just wanted to understand how youre thinking about that going forward if as long as we have real growth.

Luca Begen: If as long as we have real growth, margins should continue to go up. How are you seeing this in the long term? How high can margins go? If we see some sort of deceleration in growth, if you would be able to maintain margin at current levels. That would be my questions. Thank you.

Luca: Margins should continue to go up or and how are you seeing this in the long term how high can margins go or if we see some sort of deceleration in growth is we do would be able to maintain margin at current levels. So that would be my questions. Thank you.

Speaker Change: So let me take the first one and that was perhaps on the margin one to one brand. So if you look at prepaid just recapping what is happening on prepaid so on prepaid.

Alberto Griselli: Let me take the first one, and then we'll pass on the margin one to Andrea. If you look at prepaid, just recapping what is happening on prepaid. On prepaid, a lot of stuff happened in the last quarters, and it's still happening. You would see that the operators have been changing a bit their offering. There are many changes happening basically that happened or are happening in the last quarter, next year, and first quarter this year. To some extent, these effects are interlinked and within our sector and because of seasonality, and they are interlinked with the context of the macro context in general that we see in Brazil. You got a positively seasonal last four quarter and a positively less, let's say, negatively first quarter this year.

Speaker Change: A lot of stuff happened in the last quarters, and it's still happening so.

Speaker Change: You would see that.

Speaker Change: The operators have been changing a bit their offering and so.

Speaker Change: So there are many changes happening in the basically that happened a lot happening in the last quarter next year and first quarter this year and to some extent that these effects are interlinked.

Speaker Change: And we've within our sector and because of seasonality and they are interlinked with the context of the macro context in general that we see in Brazil, So you've got a positive events positively.

Speaker Change: Seasonal.

Speaker Change: Last four quarter, and a possibly less let's say negatively at first quarter. This year and it is normal but you got different seasonality with a number of things happening.

Alberto Griselli: This is normal, but you've got different seasonality with a number of things happening on our side. What happened in terms of price hikes? In the last quarter next year, we price hiked prepaid. In prepaid, you got basically a couple of offers. You got the monthly offer, and you got the biweekly offer. You've got the communication, which can be different, which is the BRL 30 that you just mentioned. Our main offer is a biweekly offer. We moved the price of this biweekly offer from 15 to 17 last quarter. In some region, we communicate the biweekly offer. In some region, we communicate a monthly offer. We are looking at results in different regions to understand how this impact customer's perception, take up, and recharges and all of this.

Speaker Change: On our side, so what happened in terms of price shocks.

Speaker Change: In the in the last quarter and next year, we price side are prepaid.

Speaker Change: You know <unk> got basically a couple of offers you've got the monthly offer and he called the biweekly offer and then you got the communication.

Speaker Change: She can be different which is the 30 <unk> that you just mentioned our main offer you said biweekly offer and so we moved up the price of these biweekly offer from 15 to 17 last quarter and our and in some region. We communicated the biweekly offer in summary, John we.

Speaker Change: Communicate and monthly offer and we are looking at the results in different regions to understand how this impact a customer's perception take happened recharged isn't on all of this and at the same time muscle. We did that we did this in the last quarter of 20.

Alberto Griselli: We did this in Q4 2023. Vivo did something similar a few months afterwards us. They also changed their offer in a similar way. Whereby Claro is, they operate a monthly offer and where they have two different prices, BRL 25 and BRL 30 primarily. I think they're changing their BRL 25 to BRL 30 in some of the regions. You've got a number of things going on in the prepaid market starting Q4 2023. We see basically when you do a price hike, what you see is that you see the spending going up, and then you see the number of rechargings retracting a bit. These effects are generally temporary.

Speaker Change: 'twenty three now.

Speaker Change: Now vivo did something similar.

Speaker Change: Few months afterwards house and so they also changed their offer in a similar way.

Speaker Change: Yeah.

Speaker Change: Whereby title is they operate a monthly offer and where they have two different prices 25 therapies, primarily and I think theyre changing their 25 to 30 and some of the regions. So you've got a number of themes.

Speaker Change: Going on in the prepaid market starting last quarter.

Speaker Change: <unk> 23, so until we see basically when you redo. It for example, the oil price cycle. What do you see is that do you see the spending going up and then you see the number of recharging retracting a bit and but these effects are generally temporary now since a lot of things is happening yet.

Alberto Griselli: Now, since a lot of things is happening, I guess I will be able to give you a more complete answer of what is resulting out of all this in Q2. Because there are a lot of movements that makes the reading a bit more difficult. The price hikes happen already, are happening in the case of Claro, and we need to see how the market settles down after this to be looking at additional price hikes this year.

Speaker Change: I guess that will be able to give you a more complete answer what is resulting out of all this.

Speaker Change: In the second quarter, because there are a lot of movement says it makes the reading a bit more difficult.

Speaker Change: And so the price hikes happened already or are happening in the case of collateral and we need to see how the market settles down after visa to be looking at Additionally, Brian sites this year.

Speaker Change: Yeah.

Andrea Viegas: Hi, Luca,

Brian: Look I want to be clear because that was a big there is a lot of movements happening in prepaid.

Alberto Griselli: Sorry, Luca, was it clear? Because there's a lot of movements happening in prepaid.

Speaker Change: Yeah, Yeah, very clear right.

Luca Begen: Yeah, very clear.

Speaker Change: Okay.

Alberto Griselli: Okay, cool.

Speaker Change: Hi, Luke.

Andrea Viegas: Hi, Luca. Referring to the margin, yes, we have a very strong results this quarter with the EBITDA growing higher than the revenues. This is a consequence of our continuous efficient process. Looking forward, now in this quarter, we are returning to the margins that we had previous of the Oi acquisition. As we move forward, we will continue to have some kind of increase. These increases will come higher in the EBITDA after this, where we have more efficient effects to appear. We are in continuous working for improving our productive and growing our margins.

Speaker Change: Thanks to the amazing and so we have a very strong results this quarter with the D SIB growing higher than their revenues. This is a consequence of our continuous efficient process.

Speaker Change: Looking for it and we are.

Speaker Change: Now in this quarter.

Speaker Change: But in terms of the margins that we had previous offers in Italy. Please.

Speaker Change: The only acquisition.

Speaker Change: As we move forward, we will continue to have some kind of having.

Speaker Change: These increases will come higher in the east after lease where they have more efficacious.

Speaker Change: Officials FX sharp here, but we are in continuous are working for.

Speaker Change: Improving our processes in growing our margin.

Speaker Change: Okay.

Speaker Change: Okay very clear thank you.

Luca Begen: Okay, very clear. Thank you.

Speaker Change: Our next question comes from Carlos <unk> from BTG Pactual.

Vicente Ferreira: Our next question comes from Carlos Sequeira from BTG Pactual. Please, Mr. Sequeira, your microphone's open.

Carlos: Please Mr Takeda Macaroon shopping.

Carlos: Hi, Thank you, Hey, I'll be often drive essentially either good morning, how are you.

Carlos Sequeira: Hi, thank you. Hey, Alberto, Andrea, Vicente, Luiza. Good morning. How are you? We were discussing, debating here among us here at BTG, what happened to mobile service revenues, the dynamics there, really. Because when you look at postpaid revenues, it grew more than 7%, but prepaid was basically flat. The total service revenues grew almost 8%, when maybe we would have expected it to grow between what grew the prepaid and what grew the postpaid, but not more. Most likely, some other revenues ended up causing the total revenue to grow more than what would have been the average between the two. The first question is, what was that? The second one is, can we expect the same level of these other revenues that impact Q1 in the next quarters? How we model for that.

Speaker Change: So.

Carlos: We were discussing debating here among goes here BTG, what happened to mobile service revenue dynamics, there really because.

Carlos: When you look at postpaid revenues grew more than 7%, but prepaid was basically flat and then the total service revenues grew almost 8%.

Carlos: When maybe you would have expected as you grow you know between Walgreens with prepaid and what were the postpaid but no more.

Carlos: And most likely some module revenues ended up causing the total revenue to grow more than what it would have been the average between the two so the first recognition what was that and the second one is can we expect the same level of these other revenues that impacted the first quarter in the next quarters or how we model for Ford.

Carlos: That.

DS One: So that's question number one maybe we should go for DS One and then I have another one simple one I guess.

Carlos Sequeira: That's question number one. Maybe we should go for this one, and then I have another one, simpler one, I guess.

DS One: Right.

Alberto Griselli: Cadu, let me address this, the first one, and then we move to the second one. You're right. When you look especially of our commercial strategy, you will see that we put a number of improvements in it, and to support the position in specific segments. In the case that I'm going to just mention for the time being, is postpaid. We already commented in previous quarters that we were upgrading something that we felt was important for our postpaid customer, which is the roaming services. This is outgoing roaming services. What does it mean that our postpaid offer for roaming is being boosted since, I would say, Q3, if I remember correctly, last year. What happened with that is that basically we generate more roaming revenues, and that falls into the outgoing revenues that we are looking at.

DS One: So let me address the first one and then we move to the second one and you are right and so when you look at especially of our commercial strategy you would see that we put a number of improvements in it and.

DS One: To support the positioning specific segments or in the case that we're just I'm going to just mention for the time being is postpaid and so are we already commented that in previous quarters that that that we were.

DS One: But it is something that we felt that was important for our postpaid customer which is that the roaming services. So this is outgrowing enrollment services, but doesn't mean that our postpaid offer for roaming has been boosted seen so I would say third quarter, if I remember correctly last year.

DS One: And Oh, what happened with that is that basically we generate.

DS One: More roaming revenues.

DS One: That falls into the outgoing revenues that we're looking at that but since these services tends to be a split this way Rishi profile to some extent we also attract revenues.

Alberto Griselli: Since these services tends to be, let's put it this way, reciprocal to some extent, we also attract revenues from people roaming to Brazil. We got the increase of visitor revenues. This is something that we didn't have in the past because our roaming package was not that attractive. We fixed that because we thought it was important for a specific segment. We got positive effect both on outgoing revenues and visitor revenues. This is one of, for example, the numbers that you would see in this quarter. Now, coming this, are we going to expect this going forward? Since our offer has been structurally improved, I would say that we will tend to have a similar dynamics in the coming quarters. Of course, there is a certain seasonality, because people travel in specific parts of the year.

DS One: Some people wrong into Brazil, and so we got the.

DS One: The increase of visitor revenues and this is something that we didn't have in the past that because of our roaming package. It was not that.

DS One: Our attractive and we fix that up because we thought it was important for a specific segment and so we got positive affect that.

DS One: On the outgoing revenues and digital revenues.

DS One: And this is one of our for example, the number that you would see in this quarter now coming this are we going to expect these going for or the.

DS One: Since our offer has been structurally improved I would say that we will tend to have a similar dynamics.

DS One: In the coming quarters of course, there is a certain seasonality and.

DS One: Because people would probably be in specific parts of the year, but at the end of the day. The offer is structurally better and therefore, you would see is two things that are moving upwards.

Alberto Griselli: At the end of the day, the offer is structurally better, and therefore you would see two things that are moving upwards, with some seasonal impact here and there. With some relevant, sorry, relative delay, because what we generate and what we receive, is not synced 100%, but we should expect a positive trend in the quarters to come.

DS One: With some seasonal impact here and there and the work with some really one source our elite relative delay because of what we generate and what where you receive it.

DS One: It is not seeing 100%, but.

DS One: We should expect a positive transit in the quarters to come.

Speaker Change: Very clear. Thank you got it yeah. So we should expect that you kept coming right against structural change. Okay. That's important yeah. Okay and then the second one so I'll make a second or a third one that you're connected Clobbering prepaid you mentioned that you adjusted the the price point, even though charge of 17 people fall.

Carlos Sequeira: Oh, very clear. Thank you. No, no, got it. Yeah. We should expect it to keep coming, right?

Alberto Griselli: Yeah.

Carlos Sequeira: It's a structural change. Okay. It's important.

Alberto Griselli: Yeah.

Carlos Sequeira: Okay. The second one, I'll make a second and a third one. They're connected. Claro and prepaid, you mentioned that you adjusted the price point. You now charge BRL 17. Vivo followed. What about Claro? What is your expectation? Would they follow the same pattern?

DS One: What about clouded what is your expectation would they follow the same yes.

Alberto Griselli: Yeah, Claro is doing some. We all have a sort of different approaches. Claro, we got a monthly, and basically a biweekly offer, which moved from BRL 15 to BRL 17. Vivo has a sort of a similar offer in general. There are many, many offers. We did our movements on our side. It's very regional, I think that what is happening is that also Claro has updated their monthly offer on a regional basis. I saw, looking at the clippings, that in some regions they are giving more gigabytes as a more for more strategy and moving BRL 25 to BRL 30. Basically they got, when you look at them, they got some region where they got BRL 25 and some region where they got BRL 30.

DS One: So it will sort of different approaches so we got it badly and so basically I biweekly offer which moved from 15 to 17.

DS One: And.

DS One: He was a sort of a similar offsetting general there are many many offers.

DS One: And and so we lead with is our movements are on our side.

DS One: It's very regional but.

DS One: I think that what is happening is that that also cloud reset updating their monthly offer.

DS One: Oh on original advisors about original basis, it's all I saw looking at the clipping said that.

DS One: In some regions there give me more gigabyte, though as a more formal strategy moving 25 to 30, so basically they got the when you look at them. They got some regional where they got 25 in some region, where they've got 30.

DS One: And what I'm looking I think it is just ongoing is theyre moving some of the 25 regional set into the 30 Reais region and so all.

Alberto Griselli: What I'm looking at, I think it is ongoing, is they're moving some of the 25 regions into the BRL 30 region. It's a different approach because it's a monthly offer and this is happening in April. We should ask them this question, Claro, but from what I'm looking in terms of competitive dynamics, I've seen some changes in the month of April. We did that in the Q4, Yeah, I think in October on our side.

DS One: It's a different approach because it's a monthly offer and a and this is happening in April and saw you.

DS One: You should ask them. This question on the cutover, but from what Im looking in terms of competitive dynamics that I've seen some and some changes in the month of April we did that.

DS One: In the.

DS One: Last quarter in the fourth.

DS One: In October.

DS One: Our site.

Speaker Change: Okay, so, but we know way there.

Carlos Sequeira: Okay. We know they are following. They're also increasing the prices, right, in April, even if in the monthly plan. Okay. One final one, that one might be a little, maybe too early. I'll have to keep asking that question in the coming quarters. Brisanet just launched 5G operations in Fortaleza mainly, which is a big city for TIM, right? You have a big presence there. My question is, did you notice any change in the relevant impact in the competitive dynamics after they launched it there?

Speaker Change: Also increasingly prices right in April.

DS One: The monthly plan.

DS One: And one final one and that one might be a little maybe Charlie.

DS One: Asking that question in the coming quarters, but on a bridge on that just launched at the <unk> operations in Fortaleza, mainly which is a big city for Fortunately Ryan do you have a big presence there and my question is did you notice any any changing a relevant impact in the competitive dynamics after the launch it there.

Ryan: Well no not really but now the long term when you look at the if you go if you look at the deployment that they're deploying a lot of the network in the smaller cities.

Alberto Griselli: Well, not really. Now, the launch, if you look at the deployment, they're deploying a lot of the network in the smaller cities.

DS One: And that's so if you look at where they deploy their macro recent series with a less than 30 cane appetizer and Fortaleza Natal Fortaleza. The city itself is more on the outskirts so far we didn't see any material impact on the competitive dynamics are.

Alberto Griselli: If you look at where they deploy the networks, it's in cities with less than 30,000 inhabitants. Fortaleza, it's not Fortaleza the city itself, it's more on the outskirts. So far we didn't see any material impact on the competitive dynamics. Because on Fortaleza, they need to run on roaming or roaming on somebody else. Where they got the most of their deployment, if you look at the end of the data, you would see that the big chunk of it in the smaller cities. We don't see any material impact so far.

DS One: And.

DS One: When you look at.

DS One: Ah the you.

DS One: We need to build out our network, although in order not to eventually be because on Fortaleza, they need to run on bromine or on roaming on somebody else a while ago. The most of their deployment. If you look at the end of the day that you would see that the big chunk of it the industry smaller cities and.

DS One: Uh huh.

DS One: But we don't see any.

DS One: Any in any material impact so far.

Speaker Change: Okay perfect. Thank you very much that's all I have thank you guys.

Carlos Sequeira: Okay, perfect. Thank you very much. That's all I have. Thank you, guys.

Speaker Change: Do you.

Alberto Griselli: To you.

Basu Lima: Our next question comes from company owned vessel Lima from Morgan Stanley. Please Mr. Basu Lima, a Muslim children.

Vicente Ferreira: Our next question comes from Gabriel Vaz Lima from Morgan Stanley. Please, Mr. Vaz Lima, microphone's open.

Basu Lima: Okay. Thank you so much.

Gabriel Vaz de Lima: Hey, thank you so much. Most of my questions were already answered. Just wanted to get a sense in terms of Q2, anything relevant we should keep in mind? I know we're one month in, any seasonal effects, any highlights you would mention for us to keep in mind? Thank you so much.

Basu Lima: Most of my questions were already answered just wanted to.

Basu Lima: Get a sense in terms of second quarter anything relevant we should keep in mind.

Basu Lima: I know, we're one month end, but.

Basu Lima: Any seasonal effects any.

Basu Lima: Highlights you would mentioned core for us to keep in mind. Thank.

Speaker Change: Thank you so much.

Speaker Change: So when you look at the second quarter I think that are the most.

Alberto Griselli: When you look at Q2, I think that the most, one of the activities that we generally run is that we did also in Q2 last year, is the implementation of more for more strategy on control and postpaid. This is happening. This is happening at a lower intensity this year versus last year. I would say that when you look at our commercial operations, this is probably the main event of Q2. The more for more strategy for control and postpaid, this is currently ongoing. What is generally happening, it's, let's say, an ARPU increase. We provide more gigabytes. Generally there is some impact on control recharges and there is some impact on, let's say, churn impact.

Speaker Change: One of the activities that we generally run it said that we need also in the second quarter last year is there more for the implementation of more for more strategy on control and postpaid. So this is happening.

Speaker Change: This is happening at a lower intensity this year versus last year by the let's say that when.

Speaker Change: When you look at our at our.

Speaker Change: Marshall operations. This is probably the main.

Speaker Change: The inventor of the of the second quarter. So the more for more a strategy for control and postpaid had this is currently ongoing.

Speaker Change: He is generally happening it's a.

Speaker Change: Let's say and also increase as we provide more gigabyte.

Speaker Change: So generally there is some impact on our controlled recharges.

Speaker Change: And.

Speaker Change: There is some impact on the let's say churn.

Speaker Change: In fact I saw the buildings that we are managing now is to implement these in a way that it's a more for more so good for customers and therefore, it's a good score customers now.

Alberto Griselli: The two things that we're managing now is to implement this in a way that it's more for more, so good for customers, and therefore if it's good for customers, not having a material impact on a churn or potential churn increase. I would say that this is the main thing.

Speaker Change: Not having a material impact on <unk>.

Speaker Change: The churn or potential churn increase.

Speaker Change: I would say that this is the main thing.

Speaker Change: And maybe some commercial expenses increased related to our investment in hockey helium some mark advertising, that's why I'm age.

Andrea Viegas: Maybe some commercial expenses will increase related to our investment in Rock in Rio and some market advertising that we are making.

Speaker Change: Crystal clear thank you.

Gabriel Vaz de Lima: Crystal clear. Thank you.

Speaker Change: Our next question comes from Felipe <unk> from Santander. Please Mr. Cheng you May proceed.

Vicente Ferreira: Our next question comes from Felipe Cheng from Santander. Please, Mr. Cheng, you may proceed.

Speaker Change: Okay.

Felipe: Good morning, everyone, Oh back to a day at the St. Jude Luisa. Thank you so much for taking my questions. My first question is related to working capital dynamics. This quarter we saw.

Felipe Cheng: Good morning, everyone. Alberto, Andrea, Vicente, Luiza, thank you so much for taking my questions. My first question is related to working capital dynamics. This quarter, we saw a deterioration on both the quarter-over-quarter and year-over-year comparison. Just wanted to understand a little bit what we should expect in the coming quarters. Understand there is a negative seasonal impact in this Q1, if you could provide a little bit more details here regarding working capital. My second question is related to price increases in control and postpaid. If you could remind us the schedule and eventually what magnitude of price increases you expect throughout the year. Thank you so much.

Felipe: A deterioration on both a quarter over quarter and year over year comparison. So just wanted to understand a little bit what we should expect in coming quarters understand there is a negative seasonal impact in this first quarter.

Speaker Change: But if you could provide a little bit more details here regarding working capital and my second question is related to price increases and country with postpaid if you could remind us the schedule and eventually.

Speaker Change: <unk> of price increases you expect throughout the year. Thank you so much.

Speaker Change: Hi, Felipe are related to their working capital and we are always now alexey, whereas the first semester of the year, we have a negative impact in the second and third party chip. This is a clear magnitude of some.

Andrea Viegas: Hi, Felipe. Related to the working capital, we always have the seasonality where H1 of the year we have a negative impact, H2 is a positive. This is occurring mainly to some agreement with our major suppliers that we have. This particular quarter, we have another impact. For example, we have higher inventory due to the mix of the handsets, especially with the 5G, that's more expensive, also have some impact in the accounts receivable. One relates to what Alberto already mentioned about the international roaming. We have a different behavior in this account receivable, also because we have a higher revenue from handsets, this also have a different dynamic in the accounts receivable. It's important to highlight that this dynamic in Q1 of working capital was expected.

Felipe: Agreements with our major suppliers that we have this particular quieter.

Speaker Change: We have another impact for example, we.

Speaker Change: We have hired him to answer it.

Speaker Change: Do each of the next after the handsets, especially with the <unk> that's more expansive and also have some impact in the accounts receivable once I leave to the what's out there is a mention about them Rami.

Speaker Change: National Army would have a different behavior in this account receivable and also because we have a higher vendors are highest.

Speaker Change: Revenue from <unk>.

Speaker Change: From handsets and this also have that differentially in that dynamic here in their country symbol.

Speaker Change: But it's important to highlight that this.

Speaker Change: This dynamic in the first quarter of working capital was effect.

Andrea Viegas: We are on track what we are expected, and we will improve as we're moving forward this year. I don't know if I addressed your question related to the price up?

Speaker Change: On track of what to wear a.

Speaker Change: Expect it in the living.

Speaker Change: Importantly, as Anthony moving forwards.

Speaker Change: Yeah.

Speaker Change: Absolutely more moving parts this year.

Speaker Change: I don't know if I address your question relates to the price up.

Speaker Change: I'm, sorry, but what are they saying.

Alberto Griselli: Sorry, can you, Felipe, yeah.

Speaker Change: Yeah, So FX partner Bryce Satcom.

Andrea Viegas: What's expected for the price up?

Speaker Change: For example, if we do these for postpaid and.

Alberto Griselli: The price up, Felipe, we do this for postpaid and for control, both on what we call the front book and back book in this quarter. It is basically the annual adjustment that we do. We did it last year, Q2. We are doing this year. It applied to a portion of our customer base, and I can say that this year is going to be, given the inflation dynamics, milder versus last year. It is happening this quarter.

Speaker Change: We do these for speed and for control.

Speaker Change: Both on a what we call the front book and back book in this quarter and so it's basically a.

Speaker Change: The.

Speaker Change: The annual adjustment there with what we did last year second quarter were doing this year.

Speaker Change: Applied to a portion of our customer base and I can say that this year is going to be.

Speaker Change: Given the.

Speaker Change: Inflation dynamics.

Speaker Change: Versus last year, and our and so it is happening this quarter.

Speaker Change: Perfect very clear thank you so much.

Felipe Cheng: Perfect. Very clear. Thank you so much.

Speaker Change: Once again, if you wish to ask a question. Please press resend button or use the Q&A button.

Vicente Ferreira: Once again, if you wish to ask a question, please press the Raise Hand button or use the Q&A button. Wait while we pull for questions. Ladies and gentlemen, since there are no further questions, I'll return the floor back to Mr. Alberto Griselli for his final remarks. Please, Mr. Griselli, you may proceed.

Speaker Change: Wait whoa pool for questions.

Speaker Change: Ladies and gentlemen, since there are no further questions.

Speaker Change: I'll return the floor back to Mr. Roberto Brasilia for his final remarks. Please Mr. Crivelli you May proceed.

Roberto Brasilia: Thank you. So thank you to everybody for attending our call today.

Alberto Griselli: Thank you. Thank you to everybody for attending our call today. I think we had a good discussion in terms of where we started this year in good shape with the Q1 in line with our plan. I want to thank the entire team for keeping delivering such good results across the board, and a special thanks to the commitment and the work of the people involved in supporting Rio Grande do Sul and the disruption over there and keeping our service up and running as much as possible. Guys, thank you, everybody, and we'll meet in the one-to-one calls following today's call. Thank you.

Roberto Brasilia: I think we had a good discussion themselves. We started this year in good shape with the first quarter in line with our plan.

Roberto Brasilia: I want to thank the entire team.

Roberto Brasilia: For keeping delivering such good results across the board and a special thanks to the commitment that and the work of the people involved in supporting real around the solar and the.

Roberto Brasilia: Disruption over there and keeping our service are up they're running as much as possible. So guys. So thank you everybody and that we're meeting the ones who are on call Seth following today's call.

Speaker Change: Thank you. Thank you.

Andrea Viegas: Thank you.

Speaker Change: Okay.

Speaker Change: This does concludes the first quarter of 'twenty 'twenty four conference call off Tina Fey.

Vicente Ferreira: This does conclude the Q1 2024 conference call of TIM S.A. For further information and details of the company, please access our website at ri.tim.com.br. Thank you once again, and you can now disconnect your line. Thank you.

Roberto Brasilia: For further information and details of the company. Please access our website at <unk> Dot Com Dot BR slash IR. Thank.

Speaker Change: Thank you once again and you can now disconnect your line.

Speaker Change: <unk>.

Speaker Change: Yeah.

Speaker Change: [music].