Q1 2025 TIM SA Earnings Call

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Good morning, ladies and gentlemen. Welcome to China State 2025 first quarter results video conference call.

We'd like to inform you that this event has been recorded, and all participants will be in listen only mode during the company's presentation.

There will be a replay for this call on a company's website. After China State remarks are completed, there will be a Q&A section for participants. At that time, further instructions will be given.

Hello, I'm Vicente Ferreira, Head of Invest Relations.

Welcome to TeamSA's earnings conference for the first quarter of 2025. This video highlights our recent performance and how we see the market evolving in 2025. Afterward we will have a live Q&A with our CEO Alberto Griselli and our CFO Andrea Viegas. Please note that management may make forward-looking statements and this presentation may contain them. Refer to the disclaimer on the screen and on our investor relations website.

Now, let's review our results.

Hello everyone, I'm Alberto Griselli, CEO of Tim Brazil. Despite a volatile external environment in the first quarter, we have seen a solid start to the year. We successfully implemented our strategy and delivered consistent numbers. Our mobile revenues increased by 6.2% year over the year, driven by strong push-ups.

Vicente de Moraes Ferreira: Good morning, ladies and gentlemen. Welcome to TIM S.A. 2025 Q1 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 for this call on the company's website. After TIM S.A.'s remarks are completed, there will be a Q&A section for participants. At that time, further instructions will be given. Hello, I'm Vicente Ferreira, Head of Investor Relations. Welcome to TIM S.A.'s Earnings Conference for Q1 2025. This video highlights our recent performance and how we see the market evolving in 2025. Afterwards, we will have a live Q&A with our CEO, Alberto Griselli, and our CFO, Andrea Viegas. Please note that management may make forward-looking statements, and this presentation may contain them.

on Ear. As mentioned before, the post-paid segment drove the revenues dynamics with close to 14% yearly growth. The 6.2% growth in mobile revenues results from robust human post-paid based growth, almost 7% year on ear, and sound artbook performance in post-paid and blended. The increase in mobile artbook indicates effective customer monetization strategies, which

Vicente de Moraes Ferreira: Refer to the disclaimer on the screen and on our investor relations website. Now, let's review our results.

Alberto Mario Griselli: Hello, everyone. I'm Alberto Griselli, CEO of TIM S.A. Despite a volatile external environment in Q1, we have seen a solid start to the year. We successfully implemented our strategy and delivered consistent numbers. Our mobile revenues increased by 6.2% year over year, driven by strong postpaid growth. Our EBITDA grew by 6.7% yearly, with margin expansion reflecting our efficient operational execution. We also saw a double-digit expansion in operational cash flow, reaching BRL 1 billion. In Q1, we announced BRL 690 million as interest on capital. Our strategic initiatives are paying off. Following the launch of a fully updated version of the new Meu TIM, we saw significant growth in users. We are boosting our presence in São Paulo with a 360 degrees approach to customer experience, modernizing the network, and revamping our go-to-market strategy in the region.

Translate our natural leadership into customer experience and perception change. We are modernizing over 3,000 sites which will significantly improve network capacity. In this network swap so far we have seen a 40% increase in coverage and capacity, while energy consumption is falling 15%. This infrastructure revolution will expand further our network quality leadership. Attested by open signal network consultancy, we already have.

Alberto Mario Griselli: The Q1 was also marked by notable development in the new business initiatives. With the launch of a new partnership and a special focus on the B2B utilities vertical. Service revenue started the year at a solid pace, growing 5.6% year on year. As mentioned before, the postpaid segment drove the revenue dynamics with close to 14% yearly growth. The 6.2% growth in mobile revenues results from robust human postpaid base growth, almost 7% year on year, and sound ARPU performance in postpaid and blended. The increase in mobile ARPU indicates effective customer monetization strategies, which emphasizes TIM's successful upselling efforts. Now, 50% of our base is composed by postpaid lines, with revenues representing almost 70%. While we celebrate our postpaid performance, we continue to work on recovering the prepaid.

The best quality in the state and where awarded the best experience to Ricardo. Now we will have absolute leadership in all neighborhoods of São Paulo City. We are adjusting our go-to-market in the region to have bridge these are evident to perception. We just launched a flagship store on Oscar Friedrich Street, an area famous for its sophistication and luxury spots. It is the Brazilian version of real rights. This marks a significant

or a reflective force to boost brain perception and customer engagement. Some power is the country's richest state, so it's natural to be the focus of our rotation, but we will apply similar taxes in other regions of the country. We are commencing a new stage of our 3B strategy. Changing years to new revenue streams, our B2B IoT strategy is performing well, with since substantial growth in contracted revenues, particularly in agribusiness.

Alberto Mario Griselli: Our 3-step plan is designed for the medium term. Resilience and consistency are keys for the plan to bear fruits. São Paulo is the focus of a special project that aims to apply a 360 approach to translate our network leadership into customer experience and perception change. We are modernizing over 3,000 sites, which will significantly improve network capacity. In this network swap, so far, we have seen a 40% increase in coverage and capacity while energy consumption is falling 15%. This infrastructure evolution will expand further our network quality leadership. Attested by Opensignal, network consultancy, we already had the best quality in the state and were awarded the best experience during Carnival. Now, we will have absolute leadership in all neighborhoods of São Paulo City. We are adjusting our go-to-market in the region to help bridge this evidence to perception.

Sologistics and Utilities. Specifically, in the last vertical, we are ramping up our presence. We are expanding the services we sell on our own and with partners, showcasing TIM's commitment to provide integrated solutions that enhance operational efficiency for clients in various sectors. In addition to our very known solution for public smart lighting, we are now operating in water management, gut distribution telemetry and energy.

of the distribution metric. We are committed to further developing the B2B opportunity, expanding our dressable market and opening new evidence of growth. Our digital ecosystem continues to expand with significant growth in customer registrations and transaction volumes. Now we are launching new initiatives in the energy sector, partnering to create value in both B2B and B2C market by exploring different energy distribution methods.

Alberto Mario Griselli: We just launched a flagship store on Oscar Freire Street, an area famous for its sophistication and luxury spots. It is the Brazilian version of Rodeo Drive. This marks a significant milestone for us, showcasing to customers a different positioning where quality and value are prime. Adding to this boost in presence in São Paulo, we had the first edition of TIM Music event in the city. The results were fantastic. Tickets were distributed out in minutes. We achieved massive engagement levels on social media, and it was a PR success. The concert was all over the media. The successful TIM Music event and the new iconic store reflect efforts to boost brand perception and customer engagement. São Paulo is the country's richest state, so it's natural to be the focus of our attention. We will apply similar tactics in other regions of the country.

We are set to initiate a pilot project in collaboration with Electrobras. In this project, TIM will act as a channel for Electrobras, selling its energy to corporate clients. With open, we have just initiated a pilot project within the distributed generation model and the revenue share agreement. This initiative allows our B2C clients to participate in solar

Alberto Mario Griselli: We are commencing a new stage of our 3B strategy. Changing gears to new revenue streams, our B2B IoT strategy is performing well. We have seen substantial growth in contracted revenues, particularly in agribusiness, logistics, and utilities. Specifically, in the last vertical, we are ramping up our presence. We are expanding the services we sell on our own and with partners, showcasing TIM's commitment to provide integrated solutions that enhance operational efficiency for clients in various sectors. In addition to our well-known solution for public smart lighting, we are now present in water management, gas distribution telemetry, and energy distribution metering. We are committed to further developing the B2B opportunity, expanding our addressable market, and opening new avenues of growth. Our digital ecosystem continued to expand with significant growth in customer registrations and transaction volumes.

Valdez Value Curation This quarter, I want to highlight our efficiency program, which will help us deal with the impacts of inflation, both this year and in the coming years. The problem we have been implementing since last year aims to improve productivity and customer experience, while insurance-marriage is patient. The focus on technology and organizational levers reflects a commitment to innovation

Alberto Mario Griselli: We are launching new initiatives in the energy sector, partnering to create value in both B2B and B2C markets by exploring different energy distribution methods. We are set to initiate a pilot project in collaboration with Eletrobras. In this project, TIM will act as a channel for Eletrobras, selling its energy to corporate clients. With Open, we have just initiated a pilot project within the distributed generation model under a revenue share agreement. This initiative allows our B2C clients to participate in solar-powered plant cooperatives, enabling them to reduce their energy expenses. Our proactive approach to diversifying offerings and enhancing customer value through innovative solutions confirms our intention to take TIM value proposition to the next level. Let's move on to the financial details with our CFO, Andrea.

Marques, Vicente Ferreira, Alberto Griselli Marques, Vicente Ferreira, Alberto Griselli

Andrea Palma Viegas Marques: Hello, everyone. I'm Andrea Viegas, CFO of TIM. I'm pleased to share that we ended Q1 with solid figures, reinforcing our progress in cash generation growth and shareholder value creation. This quarter, I want to highlight our efficiency program, which will help us deal with the impacts of inflation both this year and in the coming years. The program we have been implementing since last year aims to improve productivity and customer experience while ensuring margin expansion. The focus on technology and organization levers reflects a commitment to innovation and operational excellence. Our OPEX running below inflation reflects an effective cost management strategy, key to staying competitive and reinvesting in activities that can more directly impact client perception. This approach supports TIM consistent EBITDA growth and margin expansion. Our EBITDA grew by 6.7% year-over-year, adding 80 basis points to our margin, which surpassed 48%.

Our Robles balance sheet with strong liquidity and manageable depth levels. Again, all these numbers reflect things capacity to turn revenues into cash and demonstrate our strong financial

Andrea Palma Viegas Marques: EBIT after lease also presents a solid increase with margin improvements. Lease payments were stable compared to last quarter but grew high single digits year-over-year. We have specific initiatives to control leases, we'll focus on this in the coming quarters. Our net income grew more than 50% year-over-year, marking the eighth consecutive quarter of double-digit expansion and reaching the highest net income level for a Q1 in TIM's history. To finalize our review of the financial results, it's worth highlighting our operational cash flow performance, another double-digit increase of almost 20%, with our cash flow margin reaching almost 16%. Despite seasonal effects, working capital improved significantly in the quarter. We also maintain a robust balance sheet with strong liquidity and manageable debt levels. Again, all these numbers reflect TIM's capacity to turn revenues into cash and demonstrate our strong financial health.

Sonero. Today, we are the only organism Brazil with these tales. This is a clear demonstration of our commitment to sustainability. In conclusion, we have started 2025 with solid momentum paving the way to meet our annual guidance, our strong cash flow evolution and commitment to operational excellence, position as well for the challenges ahead. Thank you for your attention. Now, let's move to the live Q&A.

Andrea Palma Viegas Marques: Now, back to Alberto.

Alberto Mario Griselli: As we conclude, I want to summarize TIM strategic focus areas for the quarter ahead. First, our commitment to competitive rationality in the market is evident. We want to intelligently enhance our mobile value proposition. We are applying that to the prepaid recovery plan and expect progress in the coming months. Second, the emphasis on expanding the B2B IoT portfolio and growing our partnerships under the digital ecosystem reflects a proactive approach to innovation. Adding these new revenues opportunities will help us deliver sustainable growth. Third, the focus on operational efficiency translates into a more conservative view of TIM Ultrafibra evolution in a challenging broadband market. Fourth, this efficiency mindset permeates all the areas of the company. As Andrea mentioned, we have a program in place that covers Opex. For this one, we present the levers we have today.

[inaudible]

Before we start the Q&A section, I will hand the floor to Mr. Alberto. Please Mr. Alberto, he may proceed.

Thank you, good morning everybody, before we start our Q&A, just a quick remark.

This morning we were confirmed as the most sustainable company in Brazil.

We ranked first among all companies in the Corporate Sustainability Index of the Brazilian Stock Exchange.

This result reinforces our leading role in ESG among Brazilian publicly traded companies and is worth remembering that we have been in the selected group of companies for 17 consecutive years, the longest break for a telco.

Now we can proceed with the Q&A, please, operator.

Alberto Mario Griselli: Working capital, in this case, we are finalizing a set of actions to help our performance throughout the year, and leases. As you know, since the days of the commissioning of Oi towers, this is an area where we need to transform the sector. We need to change the relationship we have with the tower company. Before we conclude, I'd like to highlight that we have been listed on the CDP A List for the second year in a row. Today, we are the only operator in Brazil with these titles. This is a clear demonstration of our commitment to sustainability. We have started 2025 with solid momentum, paving the way to meet our annual guidance. Our strong cash flow evolution and commitment to operational excellence position us well for the challenges ahead. Thank you for your attention. Now, let's move to the live Q&A session.

Speaker Change: Thank you. We are now going to start the Q&A session for investors and analysts. If you wish you ask the question, please use the raise-hand button. Wait, while we'll move for questions.

Speaker Change: Our first question comes from Bernardo Guttmann from XP. Please, Mr. Bernardo, your microphone's open.

Bernardo Gutmann: Hi, good morning, everyone. Thanks for taking my question. Actually, I have two here. The first one is related to mobile growth. The post-paid segment remains quite resilient, but the prepaid continues to perform below expectation. Thank you very much.

Bernardo Gutmann: Could you elaborate on the adjustment made and the levers for improvement in the prepaid segment?

Bernardo Gutmann: And my second question concerns costs in the current inflationary environment. What are the inefficiency levers for improving margins through all the year? Thank you.

Bernardo Gutmann: Thank you Bernardo. So I will take the first one and pass to the second one to Andrea for the cost one. So on the revenue growth, we are seeing in this quarter a similar set of dynamics like the last quarter.

Operator 2: Before we start the Q&A session, I will hand the floor to Mr. Alberto Griselli. Please, Mr. Alberto Griselli, you may proceed.

Alberto Mario Griselli: Thank you. Good morning, everybody. Before we start our Q&A, just a quick remark. This morning, we were confirmed as the most sustainable company in Brazil. We ranked first among all companies in the Corporate Sustainability Index of the Brazilian Stock Exchange. This result reinforces our leading role in ESG among Brazilian publicly traded companies. It's worth remembering that we have been in the selected group of companies for 17 consecutive years, the longest streak for a telco. Now we can proceed with the Q&A. Please, operator.

Pospeed is the main driver of Groza.

Bernardo Gutmann: Promario, it's sustained by price adjustment and pre-to-control migration and control-to-post-paying migration that was pretty strong in this first quarter whereby pre-paid is suffering.

Bernardo Gutmann: Just remember, Bernardo, Felipe is suffering in general, so the market for recharges is decreasing as all operators are migrating Felipe customer to control and there is some constraint on the demand side. [inaudible]

Operator 2: Thank you. We are now going to start the Q&A session for investors and analysts. If you wish to ask a question, please use the Raise Hand button. Wait while I pull for questions. Our first question comes from Bernardo Guttmann from XP. Please, Mr. Bernardo, your microphone is open.

Bernardo Gutmann: The communication that we are trying to make it a bit more consistent in time in order for the value proposition to came across.

Bernardo Guttmann: Hi. Good morning, everyone. Thanks for taking my question. Actually, I have two here. The first one is related to mobile growth. The postpaid segment remains quite resilient, but the prepaid continues to perform below expectation. Could you elaborate on the adjustment made and the levers for improvement in the prepaid segment? My second question concerns costs in the current inflationary environment. What are the main efficiency levers for improving margins throughout the year? Thank you.

Bernardo Gutmann: The objective of these are twofold. From one side increase the loyalty of our customers to us, as you know the chain rate in Brazil is still high, and the second one is to get a larger share of the share market to us.

Bernardo Gutmann: We have in our plan a negative growth for pre-paid throughout the years and what we are working on is to slow down the decrease over time.

Alberto Mario Griselli: Well, thank you, Bernardo. I will take the first one and pass the second one to Andrea for the cost one. On the revenue growth, I saw we are seeing in this quarter a similar set of dynamics like the last quarter. Postpaid is the main driver of growth, primarily sustained by price adjustment and pre to control migration, and control to postpaid migration. That was pretty strong in this Q1. Prepaid is suffering. Just remember, Bernardo, prepaid is suffering in general, so the market for recharges is decreasing as all operators are migrating prepaid customer to control, and there is some constraint on the demand side. We put in place a plan on our side that is made up of a combination of the three levers that we discussed in the previous quarter.

So, Andrea, maybe the one on couch. Yes, hi, Bernardo. Relic to the course on the margin. We are...

Andrea Viegas: As you know, always working very closely to reduction in the cost and in our efficient program. We have several initiatives, DI, digitalization, make-up, bye.

Andrea Viegas: and also a very cost-control approach in several initiatives inside the company. But considering inflation, our biggest concern this year is related to the lease.

because leaves have a direct impact on the soil.

Andrea Viegas: from inflation. And we are working several initiatives related to these for the music case, these impacts.

Alberto Mario Griselli: The offer itself that received a boost in this Q1, the communication that we are trying to make it a bit more consistent in time in order for the value proposition to come across to our customer, and some tactical actions on the channels. The objective of these are twofold. From one side, increase the loyalty of our customers to us. As you know, the churn rates in Brazil are still high. The second one is to get a larger share of the share market to us. We have, in our plan, a negative growth for prepaid throughout the years. What we are working on is to slow down the decrease over time. Andrea, maybe the one on cost.

Renegotiations with our...

Andrea Viegas: With the towers, another program that we are putting in practice, and we are very focused and in mitigate this specific line that is our biggest concern related to inflation.

Eric Luder, Andrea, and Alberto, thank you very much. Thank you very much.

and Ruben Hernandez.

Marcelo Santos: Our next question comes from Marcelo Santos from JP Morgan. Please, Mr. Marcelo, your microphone's open.

Marcelo Santos: Hi, good morning, Alberto. I'm Andrea. I appreciate your visit. Thank you for taking my questions.

Marcelo Santos: I have my, I'll focus my questions on on the growth on their mobile service revenue growth. You already talk about free paid, but I want to turn the attention a bit to post paid. It was very strong, but understanding it was impacted by a a a differences onality in the price increases. So I wonder if you could help us a bit understand like.

Andrea Palma Viegas Marques: Yes. Hi, Bernardo. Related to the cost and the margin, we are, as you know, always working very closely to reduction in cost and in our efficiency program. We have several initiatives, AI, digitalization, make or buy, and also a very cost control approach in several initiatives inside the company. Considering the inflation, our biggest concern this year is related to lease. Lease have a direct impact from inflation. We are working several initiatives related to lease for mitigate these impacts. A renegotiation with the towers, another programs that we are put in practice. We are very focused in mitigate this specific line that is our biggest concern related to inflation.

Marcelo Santos: How much did bringing the price increase from April May to mark, help the growth of both

Marcelo Santos: in the sports quarter. And if you could give more details, like when during March was this increase applied, how much of the base was affected? I don't know, anything you could get there, what was the average increase? [inaudible]

Marcelo Santos: Just for us to understand how much of this increase could be propagated going forward. Thank you very much.

Marcelo Santos: Three main drivers at the end of the day, so we are talking about the price adjustment and at this point in time we are talking about

Marcelo Santos: We are talking about pre-paid control migration and we are talking about control to post-paid migration. So, when you look at the decombination of three...

Marcelo Santos: These three factors, they all impact what we are looking at in terms of the results of this quarter. They came up pretty strong.

Bernardo Guttmann: Very clear, Andrea and Alberto. Thank you very much.

Marcelo Santos: and the three elements are in place. So, our post-paid customer base is going healthy. This is the first note. We have a pretty strong inter-post-paid migration. It's a double-digit growth. And then we've got a different nationality, yes, in terms of price adjustment, that as we mentioned in many, one-to-one meetings occurred in between the first quarter and the second quarter.

Vicente de Moraes Ferreira: To Fernando.

Operator 2: Our next question comes from Marcelo Santos from JPMorgan. Please, Mr. Marcelo, your microphone's open.

Marcelo Santos: Hi. Good morning, Alberto, Andrea, Vicente, Luisa. Thank you for taking my questions. I'll focus my questions on the growth on the mobile service revenue growth. You already talk about prepaid, but I want to turn the attention a bit to postpaid. It was very strong, but I understand it was impacted by a different seasonality in the price increases. I wonder if you could help us a bit understand, how much did bringing the price increase from April, May to March help the growth of postpaid in this Q1? If you could give more details, like when during March was this increase applied? How much of the base was affected? I don't know, anything you could give there. What was the average increase? Just for us to understand how much of this increase could be propagated going forward. Thank you very much.

Marcelo Santos: with some anticipation of some cycles in the first quarter. So, overall, all this effect they sum up to the Trump performance in the year. When you look at the drivers going for order, we intend to have for mobile service revenue, the post paid as our main growth engines in the coming quarters.

Marcelo Santos: to see in the coming years. So, when you look at the overall composition, we're going to have, or we are working on sustaining a solid growth on post-paid, whereby we're working to have a slower decrease on prepaid going forward.

Alberto Mario Griselli: Okay, Marcelo. When you look at the revenue growth for postpaid, it's made up of three main drivers at the end of the day. We're talking about the price adjustment. At this point in time, we are talking about back book price adjustment. We are talking about prepaid to control migration, and we are talking about control to postpaid migration. When you look at the combination of these three factors, they all impact what we are looking at in terms of the results of this quarter. They came up pretty strong. The three elements are in play. Our postpaid customer base is growing healthy. This is the first note. We have a pretty strong intra-postpaid migration. It's a double-digit growth.

Speaker Change: Perfect. Just clarification, was this full post-based base in control affected by the price increases?

Speaker Change: on a subset of the post-paid customer base we tend to.

Speaker Change: We keep some of the customers out, depending on the level of propensity in internal or complaints, and we generally also have a few different moments in time when we do this adjustment. So, there is a main one that occurred in between the first and the second quarter, but there are further adjustment down the line of minor intensity. Thank you.

Alberto Mario Griselli: We got a different seasonality, yes, in terms of price adjustment, that as we mentioned in many one-to-one meetings, occurred in between Q1 and Q2 with some anticipation of some cycles in Q1. Overall, all these effects, they sum up to the strong performance in the year. When you look at the drivers going forward, we intend to have, for mobile service revenue, the postpaid as our main growth engines in the coming quarters. As it generally happens, you will see that growth tend to slow down on the subsequent quarters. This will be a typical trend that we are likely to see in the coming years.

Perfect. Thank you very much.

Our next question comes from Vitor Tomita from Goldman Sachs.

plus Mr. Tomita and my phone's open.

Speaker Change: Hello, good morning, all two questions from our side. The first one is a bit of a follow-up on Marcelo's question.

I imagine that's the...

Speaker Change: that this price up is still had a smaller effect in March, so thinking specifically about had this more effect in the quarter, even that it was only...

Implemented in March, so...

Speaker Change: We had some interesting ARPO improvement in the squarters, so do you believe there is room for the ARPO in both space to improve further in the next quarter and maybe be a bit more of a boost to revenues?

Alberto Mario Griselli: When you look at the overall composition, we are working on sustaining a solid growth on postpaid, whereby we are working to have a slower decrease on prepaid going forward.

and the second question on the same note.

Speaker Change: How are you thinking about for your guidance for revenues at this point, given the good result in the squatter? Do you see loans for apartments or regions or do you believe it's more of a

Marcelo Santos: Perfect. Just a clarification. Was the full postpaid base and control affected by the price increases?

Speaker Change: You are still thinking more about the guidance target as it is now given that as you mentioned you expect some deceleration in that growth in the next few quarters. Thank you very much.

Alberto Mario Griselli: No. We generally don't impact, and this is as in every year, we do the price adjustment on a subset of the postpaid customer base. We tend to keep some of the customers out, depending on the level of propensity in churn or complaints. We generally also have a few different moments in time when we do this adjustment. There is a main one that occurred in between Q1 and Q2, but there are further adjustment down the line of minor intensity.

Speaker Change: So, Vitor, let me take the second first, because it's easier to respond. We are committed to deliver our guidance. We just communicated a couple of months ago.

Speaker Change: So that's our commitment is so we're talking about roughly a 5% revenue increase over time when it comes to our pool.

Speaker Change: You need to remember that the ARPA has been growing in our ARPA has been growing over time, post-paid and compound.

Speaker Change: and you've got a number of different drivers for this arport to grow. And so we need to see how this play out in the coming quarters.

Marcelo Santos: Perfect. Thank you very much.

Speaker Change: because you have something that is clearly a creative, like a back book price adjustment or a front book price adjustment, whereby there is something that is more delusive like a prepay to control migration.

Operator 2: Our next question comes from Vitor Tomita from Goldman Sachs. Please, Mr. Tomita, your microphone's open.

Vitor Tomita: Hello. Good morning, all. Two questions from our side. The first one is a bit of a follow-up on Marcelo's question. I imagine that this price up still had a smaller effect in March. Thinking specifically about a small effect in the quarter, even if it was only implemented in March. We had some interesting ARPU improvement in this quarter. Do you believe there is room for the ARPU in postpaid to improve further or in the next quarter and maybe be a bit more of a boost to revenues? The second question, on the same note, how are you thinking about full-year guidance for revenues at this point, given the good result in this quarter?

Speaker Change: So, generally speaking, it's one of key metrics. We are number one in terms of arpo.

Speaker Change: We still have to implement some book price adjustment in the coming months, so we've got some forces pushing forward, but we also have some forces diluting the numbers, which is really to prepare to control migration. Let's go to the next generation.

So that's for the first question.

Thank you very much.

Speaker Change: Our next question comes from Gustavo Farias, from UBS. Please, Mr. Farias, your microphone's open.

Vitor Tomita: Do you see rooms for upwards revisions, or do you believe you are still thinking more about the guidance target as it is now, given that, as you mentioned, you expect some deceleration in that growth in the next 2 quarters? Thank you very much.

Speaker Change: Hi everyone. Good morning. Thank you for taking my questions to my end as well. So the first one if you could comment a little bit more on leads and payments.

Speaker Change: I realized from last conference call that most of contracts are already tied to IPCA.

Alberto Mario Griselli: Vitor, let me take the second first because it's easier to respond. We are committed to deliver our guidance. We just communicated a couple of months ago. That's our commitment is. We're talking about roughly a 5% revenue increase over time. When it comes to ARPU, you need to remember that Our ARPU has been growing over time, post-paid and compound. You've got a number of different drivers for this ARPU to grow. We need to see how this play out in the coming quarters because you have something that is clearly accretive, like a back book price adjustment or a front book price adjustment, whereby there is something that is more dilutive like a prepaid-to-control migration. Generally speaking, it's one of our key metric. We are number one in terms of ARPU.

Speaker Change: I would like to know if there is more room to negotiation even considering this or any other levers that you are able to tackle, to control his repayments, going forward.

Speaker Change: And the second one related to working capital. We've seen a pretty strong performance from working capital, a contribution to cash generation. I'd like to know what we can expect.

Speaker Change: at Sustainable Level of Working Capital and any other levers you are able to use to optimize it going forward. Thank you.

Speaker Change: Hi Gustavo, related to the first one, the leaves of payment. The leaves in this quarter wasn't almost at the same level of the...

Alberto Mario Griselli: We still have to implement some from book price adjustment in the coming months. We've got some forces pushing forward, but we also have some forces diluting the numbers, which is related to prepaid to control migration. That's for the first question.

Les Quatre.

Speaker Change: But you are right to have EPCA and AGPM that impact this conflict. But the most part is starting in the end of the March and April and May. So in the second quarter, you will see the start of an impact on inflation in our leads. So in the second quarter, you will see the start of an impact on inflation in our leads.

Vitor Tomita: Clear. Thank you very much.

What do we expect and what we already declared that leads?

Operator 2: Our next question comes from Gustavo Farias from UBS. Please, Mr. Farias, your microphone is open.

Speaker Change: We are working to keep the increase of the total is in the year lower than our revenue. This is where we are working very hard to achievement.

Gustavo Farias: Hi, everyone. Good morning. Thank you for taking my questions, two on my end as well. The first one, if you could comment a little bit more on leasing payments. I realized from last conference call that most of contracts are already tied to IPCA, and I would like to know if there is more room to negotiation, even considering this or any other levers that you are able to tackle to control leasing payments going forward. The second one related to working capital. We've seen a pretty strong performance from working capital, a contribution to cash generation. I would like to know what we can expect a sustainable level of working capital and any other levers you are able to use to optimize it going forward. Thank you.

Speaker Change: continues to our decommission, our decommission where we see which towers that we have to.

Speaker Change: are coming to the end of the contract and try to negotiate these two, or renew the contract or move it to another lower cost power.

Speaker Change: Let me just add something on the list. On the list, so you have this set of levers, which are these levers, so as Andrea will see we got the negotiation. Negotiation is something that is on the table once we need to deploy new towers and as Andrea was saying there are some towers that are getting to the end of the period and we have the opportunity to renegotiate them to a value that is in line with market values.

Andrea Palma Viegas Marques: Hi, Gustavo. Related to the first one, the lease payments. The lease in this Q was almost at the same level of the last Q. You are right, we have IPCA and IGP-M that impact these contracts. The most part started in the end of March, April, and May. In Q2, you see the start of an impact on inflation in our lease. What we expect and what we already declared that lease, we are working to keep the increase of the total lease in the year lower than our revenue. This is what we are working very hard to achievement. Besides the negotiation that you mentioned and I mentioned before, we also have another leverage that continues to our decommission, where we see which towers that we have are coming to the end of the contract and try to negotiate these, too.

Speaker Change: It's the effect some up in years because there is some infrastructure required, but we are committed to use all the levers in place to meet the guidance that we share at the beginning of the year.

Thank you.

And relate to the working capital. So, um...

Speaker Change: We are working very hard with this working after with several initiatives also that we have.

Andrea Palma Viegas Marques: Renew the contract or move it to another lower cost tower.

But remember we have a personality. Let's see it.

Speaker Change: In the first half of the year, the first half of the year, we have a negative working capital, in the second half we have a positive working capital.

Alberto Mario Griselli: Let me just add something on the leases.

Andrea Palma Viegas Marques: Sure.

Alberto Mario Griselli: Sorry, Andrea. Gustavo, on the leases, so you have a set of levers. Which are these levers? As Andrea was saying, we got the negotiation. Negotiation is something that is on the table once we need to deploy new towers. As Andrea was saying, there are some towers that are getting to the end of the period, and we have the opportunity to renegotiate them to a value that is in line with market values. On the other hand, you have another set of levers that are the decommissioning of towers that have been a focus of our company throughout 2024. We decommissioned thousands of towers, so we get good to do it. We can move towers, and then we got partnership with other operators whereby we share the infrastructure, like the shared agreement with Vivo, for example.

but we will prove a lot.

Speaker Change: As you can see, the first quarter of this year relates to the first quarter of last year, and we still have some...

Speaker Change: Some initiatives should put in place and we can discuss it as we do this new opportunity we will discuss to you.

Very clear. Thank you very much.

Speaker Change: Our next question comes from Felipe Cheng from Santander, please Mr. Cheng, your microphone's open.

Good morning everyone, and thank you for taking my questions.

Speaker Change: My first question is maybe zoom in a little bit on the pricing dynamics, particularly here for front book.

Alberto Mario Griselli: We have a large set of levers in our place that we are going to deploy in order to keep these line costs in check. It's something that is not super short term, something that the effect sum up in years because there is some infrastructure required. We are committed to use all the levers in place to meet the guidance that we shared at the beginning of the year.

Speaker Change: Our understanding is that your main competitors have already increased front-book prices, so I was just wondering if Tim has any schedule here to eventually also implement price increases to the front-book offers.

Speaker Change: and secondly if I may also zoom in a little bit on TIM LIVE.

Speaker Change: I just wanted to understand a little bit the dynamics of this quarter, right? What were the main drivers or reasons here to see a decline in revenue growth?

Speaker Change: and eventually if you are studying any potential M&A's, be it via selling your Tim Live operation or potentially buying other assets here to fortify here this business. So that's it, thank you.

Andrea Palma Viegas Marques: Thank you. Related to the working capital. We are working very hard with this working capital, with several initiatives also that we have. Remember, we have a seasonality. In H1 of the year, we have negative working capital. In H2, we have positive working capital. We are still in this trend, we improved a lot. As you can see, Q1 this year related to Q1 of last year. We will still have some initiatives to put in place, and we can disclose it. Once we do this new opportunity, we will disclose to you.

Speaker Change: So, Felipe, going to the first question, we are fully committed to market rationality and so we are actually working on our

Speaker Change: So that's something that we are going to do. For the second question, the main drivers are basically the following. Before going to our performance, I would like to stress again that the market remains highly competitive.

Speaker Change: and therefore this pressure, both the arpo and we have quite a good arpo and churn level.

Gustavo Farias: Very clear. Thank you very much.

Speaker Change: When it comes to our performance, the second point of attention is that, when we report our numbers, we need to remember that we have copper and fiber in the same numbers.

Operator 2: Our next question comes from Philippe Chang from Santander. Please, Mr. Chang, your microphone is open.

differently from other market players.

Philippe Chang: Good morning, everyone, and thank you for taking my questions. My first question is maybe zooming in a little bit on the pricing dynamics, particularly here for front book. Our understanding is that your main competitors have already increased front book prices. I was just wondering if TIM has any schedule here to eventually also implement price increases to the front book offers. Secondly, if I may also zoom in a little bit on TIM Live. I just wanted to understand a little bit the dynamics this quarter, right? What were the main drivers or reasons here to see a decline in revenue growth, right? Eventually, if you are studying any potential M&As, be it via selling your TIM Live operation or potentially buying, right, other assets here to fortify this business. That's it. Thank you.

Speaker Change: and Copper is at the technology that is fading out, so we are losing customers there.

Speaker Change: and the result that you see on this court is basically the effect of a customer base that has been decreasing over the last nine months until January this year, and some pressure on the arpo that has been going down a bit.

Speaker Change: On the positive side, you have, on February and March, a customer baby is growing, I can confirm that in April is also growing, but we are not pushing hard on this, because as we mentioned in many occasions, it's ultra team ultra, our broadband service is diluting on our numbers, and for we are sort of...

Speaker Change: Moving sideline on this line of business, where we are assessing all the options on the table, on your inorganic front.

Alberto Mario Griselli: Felipe, going to the first question, we are fully committed to market rationality. We are actually working on our front book price upgrades. They will come in the coming months. That's something that we are going to do. For the second question, the main drivers are basically the following. Before going to our performance, I would like to stress again that the market remains highly competitive. Therefore, this pressure, both the ARPU, and we have quite a good ARPU, and churn level. When it comes to our performance, the second point of attention is that when we report our numbers, we need to remember that we have copper and fiber in the same numbers, differently from other market players. Copper is a technology that is fading out, so we are losing customers there.

Very clear. Thank you.

Speaker Change: Our next question comes from Phani Kanumuri from HSBC, plus Mr. Phani Yamak-Fonsovan.

Mr. Ken and Marie, your microphone's open.

Speaker Change: Sims, there's a problem with your old Mr. Kanumuri, OFQ, to rejoin to the conference and join the

Speaker Change: So, our next question comes from Lucca Brendim from Bank of America.

For more information visit www.FEMA.gov

Pulas Mr. Bringing, Yamag Phun Sobhan.

Speaker Change: Hi, good morning, everyone. I have two questions on my end. I wanted to mainly double click on the OPEX Dynamics for the company. First,

Alberto Mario Griselli: The result that you see on Q1 is basically the effect of a customer base that has been decreasing over the last 9 months until January 2024. There's some pressure on the ARPU that has been going down a bit. On the positive side, you have, on February and March 2024, a customer base that is growing. I can confirm that in April 2024 it's also growing. We are not pushing hard on this because as we mentioned in many occasions, it's Ultra, TIM Ultra, our broadband service is diluting on our numbers. Therefore, we are sort of moving sideline on this line of business, while we are assessing all the options on the table on the inorganic front.

Speaker Change: We saw a reduction in terms of the sales and marketing expenses. It was down 2% year over year. You mentioned it was...

Speaker Change: The reduction in fiscal fiscal, but the sales and marketing is down.

even more than the reduction in human.

Speaker Change: and a human user base. So I wanted to understand a little bit more on those dynamics. It's that's something that should continue. If it's something that should go mostly in line.

Speaker Change: with the user-based expansion or any other dynamics here. And the second one regarding network and interconnection.

Speaker Change: It is going up considerably year-over-year. This is something that was happening in previous quarters already, but how can we think about this going forward? When will this stabilize? And how can we think about it for the next years? Thank you.

Philippe Chang: Very clear. Thank you.

Operator 2: Our next question comes from Phani Kanumuri from HSBC. Please, Mr. Phani, your microphone is open. Mr. Phani Kanumuri, your microphone's open. Seems there is a problem with your audio, Mr. Phani Kanumuri. I will ask you to rejoin to the conference and join the queue again. Our next question comes from Luca Branzin from Bank of America. Please, Mr. Branzin, your microphone is open.

Speaker Change: We put, as a benefit, we put in robin international in several plans in post-paid and the cost increased really reflects in that the this customer is going.

Luca Branzin: Hi. Good morning, everyone. I have 2 questions on my end. I wanted to mainly double-click on the CapEx dynamics for the company. First, we saw a reduction in terms of the sales and marketing expenses. It was down 2% year over year. You mentioned it was the reduction in wholesale fees, but the sales and marketing is down even more than the reduction in human user base. I wanted to understand a little bit more on those dynamics if that's something that should continue, if it's something that should go mostly in line with the user base expansion or any other dynamics here. The second one regarding network and interconnection. It is going up considerably year over year. This is something that was happening in previous quarters already. How can we think about this going forward?

Luca Branzin: When will this stabilize, and how can we think about it for the next years? Thank you.

Speaker Change: Once again, if you wish you ask a question. Please press the recent Burton.

Andrea Palma Viegas Marques: Hi, Luca. Related to the second one, the interconnection and the roaming expenses increased in this Q1 relates to the content providers because we launched a program in November. We simulated the use of stream, it have impact in this quarter. Also the international roaming relaunch. We put roaming international in several plans in postpaid, and the cost increase really reflects these customers going abroad. We have this showing impact in relation to the roaming and the content provider in this Q1. Related to the sales and market, this was a seasonality. The wholesale decreased a little bit related to the net adds, but was a little bit. Also we have some only seasonality things. We expect the sales expenses increase this year.

Speaker Change: While we pull for questions.

Speaker Change: Our next question comes from Mr. <unk> Murray from HSBC. Please Mr. Karen Murray your microphone is open.

Speaker Change: Mr. Fannie seems used to with problems with your microphone.

Speaker Change: Mr Funding can you hear me.

Speaker Change: So I'll ask you to check your your audio device and tried joining again Mr. Fanning.

Speaker Change: Our next question comes from Matt <unk> from Barclays. Please Mr. Hu large your microphone is open.

Andrea Palma Viegas Marques: As we mentioned, we put efficiency in some parts of the cost for generates a space for increase, something that we know that is important to us to increase, like advertising. When you see the full years, you see increase. In this Q1 was just a punctual decrease. I don't know if I addressed your question.

Speaker Change: Please Mr <unk>.

Speaker Change: <unk> activate your microphone and ask your question.

Luca Branzin: No, very clear. Thank you for the answers.

Operator 2: Once again, if you wish to ask a question, please press the Raise Hand button. Wait while pulled for questions. Our next question comes from Mr. Phani Kanumuri from HSBC. Please, Mr. Kanumuri, your microphone is open. Mr. Phani, seems you're still with problems with your microphone. Mr. Phani, can you hear me? I'll ask you to check your audio device and try joining again, Mr. Phani. Our next question comes from Mathieu Robilliard from Barclays. Please, Mr. Robilliard, your microphone is open. Please, Mr. Mathieu, just activate your microphone and ask your question. Just as a reminder, if you wish to ask a question, please use the Raise Hand button. Wait while pulled for questions. Our next question comes from Mr. Phani Kanumuri from HSBC. Please, Mr. Phani, if you want to try again, please. Oh, you sent your question through written form.

Speaker Change: Just as a reminder, if you issue ask a question please use the region button.

Speaker Change: Wait while we pull for questions.

Speaker Change: Our next question comes from Mr. Feeney Kinder Morgan from HSBC.

Speaker Change: Plus Mr. Feeney, if you once you try again please.

Speaker Change: You said you send your question through recent form Euro Joe is at work and yet so I'll read that.

Speaker Change: <unk>.

Speaker Change: Our next question comes from Fannie <unk> Murray and it is how do you see to competitor churn involve from new and regional operators like reason that thank you.

Speaker Change: So the.

Speaker Change: The finally the.

Speaker Change: Clearly the the smaller players are gaining some traction in the regions.

Speaker Change: I would say that so far the impact is.

Speaker Change: Been limited on us.

Speaker Change: And.

Speaker Change: He didn't change.

Speaker Change: Our competitive dynamics in terms of a response he didn't trigger specific response to them. So we see that they are gaining market share, but they're not changing the competitive environment as are all we are continuously monitoring.

Speaker Change: If they are making an impact on our customer base.

Speaker Change: There is some but it's not material to react at this point in time.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Since there are no further questions.

Roberto: Who would like to close the Q&A session and ill pass the word to Mr. Alberto <unk> for his final remarks. Please Mr. Roberto you May proceed. Thank you.

Speaker Change: So guys, we set off the <unk>.

Speaker Change: Robust pizza.

Speaker Change: By the external environment that we are successfully implementing our strategy and delivering consistent numbers.

Operator 2: Your audio isn't working yet, so I'll read that. Our next question comes from Phani Kanumuri, and it is: how do you see the competition involved from new and regional operators like Reasonet? Thank you.

Speaker Change: Although we expect a challenging year, we have a solid game plan in our hands that we intend to implement with confidence.

Speaker Change: I would like to thank you for participating in our vehicle today special thanks to our team for its commitment and focus and I look forward to meeting some of you as are all of us in the coming one to one sessions. Thank you Angel.

Alberto Mario Griselli: Phani, clearly, the smaller players are gaining some traction in the regions. I would say that so far, the impact has been limited on us, and it didn't change our competitive dynamics in terms of our response. It didn't trigger a specific response to them. We say that they are gaining market share, but they're not changing the competitive environment as a whole. We are continuously monitoring if they are making an impact on our customer base. There is some, but it's not material to react at this point in time.

Speaker Change: This does conclude the first quarter of 2025 conference call of Chinas say for further information and details of the company. Please access our website at <unk> Dot Com Dot BR Slash IR you can disconnect from now on.

Speaker Change: And thank you once again and have a wonderful day.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: Okay.

Speaker Change: [music].

Operator 2: Thank you. Since there are no further questions, we would like to close the Q&A session, and I will pass the word to Mr. Alberto Mario Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

Alberto Mario Griselli: Thank you. Guys, we set off at a robust pace. Despite the external environment, we are successfully implementing our strategy and delivering consistent numbers. Although we expect a challenging year, we have a solid game plan in our hands that we intend to implement with confidence. I would like to thank you for participating in our video call today. Special thanks to our team for its commitment and focus, and I look forward to meeting some of yous or all of yous in the coming one-to-one sessions. Thank you, and ciao.

Operator 2: This does conclude the Q1 2025 conference call of TIM S.A. For further information and details of the company, please access our website at tim.com.br/ir. You can disconnect from now on. Thank you once again, and have a wonderful day.

Operator 1: Goodbye