Q2 2026 TIM SA Earnings Call

July 28, 2026

Speaker #2: You have joined the meeting as an attendee and will be muted throughout the meeting.

Vicente de Moraes Ferreira: You have joined the meeting as an attendee and will be muted throughout the meeting.

Operator 2: Good morning, ladies and gentlemen. Welcome to TIM S.A. 2026 Q2 results video conference call. We would like to inform you that this event is being recorded, and all the 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. remarks are completed, there will be a question-and-answer session for participants. At that time, further instructions will be given.

Operator: Good morning, ladies and gentlemen. Welcome to TIM S.A. 2026 Q2 Results Video Conference Call. We would like to inform you that this event is being recorded, and all the 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. remarks are completed, there will be a question-and-answer session for participants. At that time, further instructions will be given.

Speaker #3: Good morning, ladies and gentlemen. Welcome to the TIM S.A. 2026 second quarter results video conference call. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation.

Speaker #3: There will be a replay of this call on the company's website. After TIM S.A.'s remarks are completed, there will be a question-and-answer session for participants.

Speaker #3: At that time, further distractions will be given.

Speaker #4: Welcome to TIM's second quarter 2026 results presentation. Following today's presentation, Alberto Griselli, CEO, Andrea Viegas, CFO, and the investor relations team will be available for the live Q&A session.

Vicente de Moraes Ferreira: Welcome to TIM's Q2 2026 results presentation. Following today's presentation, Alberto Griselli, CEO, Andrea Viegas, CFO, and the investor relations team will be available for the live Q&A session. Before we begin, please note that this presentation may contain forward-looking statements, which are subject to risks and uncertainties. Now I'll hand it over to Alberto.

Vicente de Moraes Ferreira: Welcome to TIM's Q2 2026 results presentation. Following today's presentation, Alberto Griselli, Chief Executive Officer, Andrea Viegas, Chief Financial Officer, and the investor relations team will be available for the live Q&A session. Before we begin, please note that this presentation may contain forward-looking statements, which are subject to risks and uncertainties. Now I'll hand it over to Alberto.

Speaker #4: Before we begin, please note that this presentation may contain forward-looking statements, which are subject to risks and uncertainties. And now, I'll hand it over to Alberto.

Speaker #5: Hello, everyone. The second quarter was marked by solid execution. We delivered revenue growth, profitability expansion, and cash generation in a balanced way, while continuing to diversify our revenue profile and strengthen our operations.

Alberto Griselli: Hello, everyone. The Q2 was marked by solid execution. We deliver revenue growth, profitability expansion, and cash generation in a balanced way while continuing to diversify our revenue profile and strengthen our operation. As our growth avenues diversify, we increase the resilience of the business and develop a sustainable path for value creation to our shareholder. Let me walk you through the main highlights. Revenue continued to show a consistent dynamic, approaching BRL 7 billion in the quarter, with service revenues maintaining a solid pace. The H1 of the year, service revenue increased around 6%, reflecting broader contribution across the business. This performance was accompanied by further profitability gains. EBITDA grew around 7% in the H1, while EBIT after lease increased close to 8%, supported by operational efficiency, cost discipline, and continued margin expansion.

Speaker #5: As our growth avenues diversify, we increase the resilience of the business and develop a sustainable path for value creation to our shareholders. Let me walk you through the main highlights.

Speaker #5: Revenue continued to show a consistent dynamic approaching $7 billion in the quarter, with service revenues maintaining a solid pace. The first half of the year, service revenue increased around 6%, reflecting broader contribution across the business.

Speaker #5: This performance was accompanied by further profitability gains. EBITDA grew around 7% in the first half, while EBITDA after lease increased close to 8%, supported by operational efficiency, cost discipline, and continued margin expansion.

Alberto Griselli: Net income surpassed BRL 1 billion in the quarter, increasing around 6% year over year. In the H1, net income also grew despite a more challenging comparison base for the lines below EBITDA. Cash generation remained strong. Operating cash flow surpassed BRL 3 billion in the H1, growing at a double-digit base and reinforcing the consistency of our cash generation. Looking to the different areas of the business, we saw solid performance from our key growth platforms, with mobile remaining, of course, as the foundation of our performance, while Ultrafibra and B2B playing an increasingly more important role in our business evolution. In mobile, results were supported by continued postpaid expansion, which now represents close to 70% of mobile service revenues. This reinforces a higher value and more resilient customer base.

Speaker #5: Net income surpassed $1 billion in the quarter, increasing around 6% year over year. In the first half, net income also grew, despite a more challenging comparison base for the lines below EBITDA.

Speaker #5: Cash generation remained strong. Operating cash flow surpassed $3 billion in the first half, growing at a double-digit pace and reinforcing the consistency of our cash generation.

Speaker #5: Looking at the different areas of the business, we saw solid performance from our key growth platform, with mobile remaining, of course, as the foundation of our performance, while ultra-fibre and B2B are playing an increasingly important role in our business evolution.

Speaker #5: In mobile, results were supported by continued postpaid expansion, which now represent close to 70% of mobile service revenues. This reinforces a higher value and more resilient customer base.

Speaker #5: During the first half, we focused on building a more dynamic and segmented portfolio, allowing us to better address customer needs while creating additional monetization opportunities.

Alberto Griselli: During the H1, we focused on building a more dynamic and segmented portfolio, allowing us to better address customer needs while creating additional monetization opportunities. This includes expanding the usage of credit card as a payment method in annual and monthly options materialized in TIM Controle FIP. This launch expands our addressable market through more flexible propositions, strengthening value perception and engagement. Our streaming proposition is also evolving following the launch of TIM Play, a content aggregation platform, creating new opportunities for monetization while increasing customer stickiness. In financial services, the partnership with PicPay represents another step in expanding our digital ecosystem and creating cross-selling opportunities through an integrated customer journey. In broadband, Ultrafibra maintained positive momentum with customer expansion and consistent revenue growth, strengthening its relevance within our portfolio. To propel this further, we just launched TIM Ultracombo, our first truly convergent offer.

Speaker #5: This includes expanding the usage of credit card as a payment method in annual and monthly options, materialized in TIM Control Fit, this launch expands our addressable market through more flexible propositions strengthening value perception and engagement.

Speaker #5: Our streaming proposition is also evolving, following the launch of TIM Play, a content aggregation platform creating new opportunities for monetization while increasing customer stickiness.

Speaker #5: In financial services, the partnership with PicPay represents another step in expanding our digital ecosystem and creating cross-selling opportunities through an integrated customer journey. It broadened ultra-fiber, which maintained positive momentum, with customer expansion and consistent revenue growth strengthening its relevance within our portfolio.

Speaker #5: To propel this further, we just launched TIM Ultra Combo, our first truly convergent offer. It combines fiber, mobile, and content to strengthen our value proposition in selected markets, enabling TIM to target new pockets of growth while supporting LTV-oriented actions.

Alberto Griselli: It combines fiber, mobile, and content to strengthen our value proposition in selected markets, enabling TIM to target new pockets of growth while supporting LTV-oriented actions. In B2B, we continue to build a strategic growth platform. Revenue is expanding and gaining relevance, now representing around 7% of our service revenues. At the same time, we are advancing beyond connectivity with progress in IoT, private networks, and digital solutions. At the same time, artificial intelligence remains an important enabler of our transformation journey and a key lever for efficiency gains. One example is collections, where artificial intelligence supports more proactive and personalized interactions with customers in debt collection and negotiating processes. Early results are encouraging, with more than 2 million customers engaged and a meaningful improvement in recovery rates through the artificial intelligence agents.

Speaker #5: In B2B, we continue to build a strategic growth platform. Revenue is expanding and gaining relevance, now representing around 7% of our service revenues. At the same time, we are advancing beyond connectivity with progress in IoT, private networks, and digital solutions.

Speaker #5: At the same time, artificial intelligence remains an important enabler of our transformation journey and a key lever for efficiency gains. One example is collections, where artificial intelligence supports more proactive and personalized interactions with customers in in-depth collection and negotiating processes.

Speaker #5: Early results are encouraging, with more than 2 million customers engaged and a meaningful improvement in recovery rates through the artificial intelligence agents. Together, this initiative reinforces the evolution of TIM business, supported by disciplined growth, a broader set of revenue drivers, and consistent execution.

Alberto Griselli: Together, these initiatives reinforce the evolution of TIM business, supported by disciplined growth, a broader set of revenue drivers, and consistent execution. We also continue to strengthen the foundation of the company through our culture, recognized by a Great Place to Work, and through solid governance practices. Thank you. Now let's move to the live Q&A session.

Speaker #5: We also continue to strengthen the foundation of the company through our culture, recognized by Great Place to Work, and through solid governance practices. Thank you, and now let's move to the live Q&A session.

Speaker #2: Thank you, Mr. Alberto. To make your question, please press the raise hand button. The first question comes from Luis Chagas from XP.

Operator 2: Thank you, Mr. Alberto. To make your questions, please press the raise hand button. The first question comes from Luis Chagas from XP.

Operator: Thank you, Mr. Alberto. To make your questions, please press the raise hand button. The first question comes from Luis Chagas from XP.

Speaker #3: Hi, Alberto, Andrea, Vicente, and Luisa, good morning, and thank you for the opportunity to ask questions. I have two questions from my side. So the first one is about IC systems and FTTH.

Luis Chagas: Hi, Alberto, Andrea, Vicente, and Luisa. Good morning, and thank you for the opportunity of making questions. I have two questions from my side. The first one is about I-Systems and FTTH. How does the I-Systems acquisition change your FTTH build economics and homes passed ambition, and what incremental CapEx commitment should we expected? The second question is about the mobile base, which contracted in this quarter while the market share fell. Is this a deliberate value over volume decision, or has the competitive response, including the intermediate price offers now in the market, started to cost you growth rates? Thank you.

Luís Chagas: Hi, Alberto, Andrea, Vicente, and Luisa. Good morning, and thank you for the opportunity of making questions. I have two questions from my side. The first one is about I-Systems and FTTH. How does the I-Systems acquisition change your FTTH build economics and homes passed ambition, and what incremental CapEx commitment should we expected? The second question is about the mobile base, which contracted in this quarter while the market share fell. Is this a deliberate value over volume decision, or has the competitive response, including the intermediate price offers now in the market, started to cost you growth rates? Thank you.

Speaker #3: How's the IC systems acquisition change your FTTH build economics and homespats ambition? And what incremental capex commitment should we expect it? The second question is about the mobile base.

Speaker #3: Which contracted in this quarter while the market share fell? Is this a deliberate value over volume decision, or has the competitive response, including the intermediate price offers now in the market, started to cost you rosettes?

Speaker #3: Thank you.

Alberto Griselli: Hi, Luis. Good morning. Let me go quickly through the two questions. When it comes to I-Systems, I-Systems for us, it's some kind of accelerator of our broadband strategy because now we control the network, the experience of the client, and to a better extent, the financial profile of broadband. Therefore, once we acquired and we own back our network, this is one of the growth vectors of our company going forward on our own network, besides the agreement that we have with V.tal.

Speaker #5: Hi, Luis, good morning. So let me go quickly through the two questions. When it comes to the IC system—for us, the IC system is some kind of accelerator of our broadband strategy, because now we control the network, the client experience, and, to a better extent, the financial profile of broadband.

Speaker #5: And therefore, once we have acquired and we own back our network, this is one of the growth vectors of our company going forward, on our own network, besides the agreement that we have with V.tal.

Speaker #5: When it comes to the additional capex, basically we already discussed in previous quarters that we saw some kind of upside risks on our capex profile, meaning that we are optimizing our capex base through a number of different mechanisms, and therefore they shouldn't be any material impact of IC system capex in our capex profile.

Alberto Griselli: When it comes to the additional CapEx. Basically, we already discussed in previous quarters that we saw some kind of upside risks on our CapEx profile, meaning that we are optimizing our CapEx base through a number of different mechanisms, therefore there shouldn't be any material impact of I-Systems CapEx in our CapEx profile, so we are able to absorb it, basically. When it comes to the revenue growth and the mobile revenue growth, it is important to say that we look at the revenue growth in a portfolio way. We've got two business lines growing double-digit, and we have mobile growing at middle single-digit at around 4.7%.

Speaker #5: So we are able to absorb it basically. When it comes to the revenue growth and the mobile revenue growth, it is important to say that we look at the revenue growth in a portfolio way.

Speaker #5: So, we got two business lines growing double digits, and we have mobile growing at mid-single digits, at around 4.7%. This slowdown was somewhat expected because, if you look at our revenue evolution quarter by quarter, once we do the price up, then it tends to slow down.

Alberto Griselli: This slowdown was somewhat expected because if you look at our revenue evolution quarter-by-quarter, once we do the price up, it tends to slow down, and that was also accompanied by a slower or softer customer base dynamics in the H1. The net additions as a result of a mixture of growth and churn has been softer in this H1 versus last year and the H2 last year. That's the reason why we put together on the ground a number of evolution of our value proposition, the new offerings that we've been launched, to give more dynamicism to the customer base dynamics.

Speaker #5: And that was also accompanied by a slower or softer customer base dynamics in the first half. So, the net additions result, as a mixture of gross and churn, has been softer in this first half versus last year and the second half of last year.

Speaker #5: And that's the reason why we put together, on the ground, a number of evolutions of our value propositions—so the new offerings that we've been launching to give more dynamism to the customer base dynamics.

Speaker #5: When you look at the customer base dynamics, also remember that we executed a price increase in the first quarter, and therefore churn is a bit of a pressure in the first quarter and second quarter, and so this has also impacted our net addition dynamics.

Alberto Griselli: When you look at the customer base dynamics, also remember that we executed a price up in the Q1, therefore churn is a big pressure in the Q1 and Q2, this also impacted our net addition dynamics. Was it clear, Luis?

Speaker #5: Was it clear, Luis?

Speaker #3: Yes, very clear. Thank you, Alberto.

Luis Chagas: Yes, very clear. Thank you, Alberto.

Luís Chagas: Yes, very clear. Thank you, Alberto.

Speaker #2: Thank you for your question. The next question comes from Mr. Jose Araujo from Bank of America.

Operator 2: Thank you for your question. The next question comes from Mr. Jose Araujo from Bank of America.

Operator: Thank you for your question. The next question comes from Mr. Jose Araujo from Bank of America.

Speaker #5: Hi, Alberto, Andrea, Vicente, and Luisa. Thanks a lot for the opportunity. I have a couple here. The first one, on revenue growth—excluding M&A, revenue grew just slightly below inflation, mainly as the core client-generated business is growing at 3.1% year over year.

Jose Araujo: Hi, Alberto, Andrea, Vicente, and Luisa. Thanks a lot for the opportunity. I have a couple here. The first one on revenue growth. Excluding M&A, revenue grew just slightly below inflation, mainly as the core client-generated business is growing at 3.1% year-over-year. My question is there any plan to address growth in the core mobile line and re-accelerate its pace? If you could please share with us your thoughts on that. The second question, a follow-up from the first one, could you please walk through the competitive environment if there is any unusual discount from other players? If TIM is planning to increase control plans front booking prices this year? Thank you so much.

Rogério Araújo: Hi, Alberto, Andrea, Vicente, and Luisa. Thanks a lot for the opportunity. I have a couple here. The first one on revenue growth. Excluding M&A, revenue grew just slightly below inflation, mainly as the core client-generated business is growing at 3.1% year-over-year. My question is there any plan to address growth in the core mobile line and re-accelerate its pace? If you could please share with us your thoughts on that. The second question, a follow-up from the first one, could you please walk through the competitive environment if there is any unusual discount from other players? If TIM is planning to increase control plans front booking prices this year? Thank you so much.

Speaker #5: My question is, is there any plan to address growth in the core mobile line and re-accelerate its pace? If you could, please share with us your thoughts on that.

Speaker #5: And also, the second question—a follow-up from the first one. Could you please walk through the competitive environment? Is there any unusual discounting from other players?

Speaker #5: And also, is TIM planning to increase control plans' prompt booking prices this year? Thank you so much. Regarding revenue growth slowdown, building upon the previous answers to Luis.

Alberto Griselli: Let's go to the revenue growth slow down, building up on the previous answers to Luis. The main driver behind the slowdown is the dilution effect of the price ups plus the customer base dynamics. Do we have plan to give more dynamicism to the mobile revenue growth? Yes. As a matter of fact, we restructured a number of our offerings just this quarter or at the end of the previous quarter. There is a wide portfolio review, and the objective is to give a push or a boost to the customer base dynamics in a number of different ways. If you look, we have four main areas of interest. The first one is the Ultra Combo, which is the convergent offering that we just launched.

Speaker #5: So, the main driver behind the slowdown is the dilution effect of the price ups, plus the customer base dynamics. And do we have a plan to give more dynamism to the mobile revenue growth?

Speaker #5: Yes, as a matter of fact, we restructured a number of our offerings just this quarter or at the end of the previous quarter. So, there is a wide portfolio review, and the objective is to give a push or a boost to the customer base dynamics.

Speaker #5: In a number of different ways. So, if you look, we have four main areas of interest. The first one is the Ultra Combo, which is the convergent project offering that we just launched.

Speaker #5: This would help primarily the broadband, but this also has a positive effect on the churn of our customer base. Then we launched the team play portfolio that is an evolution of the way we go to market with the streaming products it's a paid product, and therefore this will support monetize our own customer base.

Alberto Griselli: This would help primarily the broadband, but it also has a positive effect on the churn of our customer base. We launched the TIM Play portfolio. This is an evolution of the way we go to market with the streaming products. It's a paid product, and therefore this will support monetize our own customer base. It's an ARPU driver. Of course, this also support the optimization of the cost related to the acquisition of this content. We have the third one, which is TIM Fit, which is a new control plan that is payable via credit card. This is a double objective. The first one is to feed our prepaid-to-control migration with a lower credit risk, and the other one is to fill a gap that we have in our portfolio related to the, let's say, digital or BTL offering that our competitors already had.

Speaker #5: So, it's an output driver. And, of course, this also supports the optimization of the costs related to the acquisition of this content. Then, we have the third one, which is team fit.

Speaker #5: Which is a new control plans that is payable via credit card. This is a double objectives. The first one is to feed our prepaid to control migration, with a lower credit risk.

Speaker #5: And the other one is to fill a gap that we have in our portfolio related to the, let's say, digital or BTL offering that our competitors already had.

Speaker #5: And the last one is a new go-to-market, which is the one related to the partnership with BigPay. Basically, it's a go-to-market whereby we will have another lake or another platform to grow our customer base.

Alberto Griselli: The last one is a new go-to-market, which is the one related to the partnership with PicPay. Basically, it's a go-to-market whereby we will have another lake or another platform to grow our customer base. These different value propositions have complementary business objectives, both in terms of ARPU growth, migration, internal migrations on our customer base, and more attractiveness on the market itself. When you go to your second question, which is related to the competitive dynamics. I think that it's important to step back for a while and just recap what is being going on in these last quarters. Let me go directly to the end. The end is that there is more predominancy of what we call a BTL offering or pricing.

Speaker #5: So if these different value proposition have complementary business objectives, both in terms of output growth, migration, internal migration, so on our customer base, and more attractiveness on the market itself.

Speaker #5: When you go to your second question, which is related to the competitive dynamics, so I think that it's important to step back for a while and just recap what is being going on in this last quarters.

Speaker #5: So we had one of—let me go directly to the end. So, the end is that there is more predominance of what we call BTL offering or pricing.

Speaker #5: So, you know that in the market, we have what we name, what we call ATL—above the line offering. That is our general postpaid, pure postpaid, and prepaid pricing.

Alberto Griselli: You know that in the market we have what we name, what we call ATL above the line offering. This is our general postpaid, pure postpaid and prepaid pricing, the front book offering that you see in shops, in the e-commerce. Then you have a number of offering that we label like below-the-line offering, that are generally used to migrate the customer from prepaid to control. One of our competitors at the end of last year made one of these offers available through an MVNO agreement. Something that is, let's say, more contained, became a bit more widespread. If you look at the way the market responded, we saw the other competitor that launch this BTL offering they'd already had in a more widespread fashion. That's the reason why we also had to adopt our portfolio.

Speaker #5: The from book offering that you see in shops in the e-commerce and then you have a number of offering that we label like below the line offering.

Speaker #5: These are generally used to migrate customers from prepaid to control. One of our competitors, at the end of last year, made one of these offers available through an MVNO agreement.

Speaker #5: And so something that is, let's say, more contained became a bit more widespread. And if you look at the way the market responded, then we saw the other competitor, they launched this BTL offering that already had in a more widespread fashion.

Speaker #5: And that's the reason why we also had to adapt our portfolio, and so we launched the Team Fit proposition that basically complements this one, as well as the partnership with BigPay.

Alberto Griselli: We launched the TIM Fit proposition that basically complement this one as well the partnership with PicPay. Now, it is also important to say that when you go to the market rationality, let's put it this way, you always have up and downs. In the past already, we had moments where one of our competitors increased price and then afterwards decreased price. It's a sort of cycle. There is a good moment, then there is a moment that is not so good. Nowadays, the market is more competitive or it looks more promotional because these BTL offerings are more available and visible. That doesn't mean that then after this period, we go back to a better period. When it comes to the front book adjustment of our control price, we certainly want to do it.

Speaker #5: Now, it is also important to say that when you go to the market rationality, let's put it this way, you always have up and downs.

Speaker #5: And in the past, we already had moments where one of our competitors increased prices and then afterwards decreased prices. And so it's a sort of cycle.

Speaker #5: And so, there is a good moment and there is a moment that is not as good. Nowadays, the market is more competitive because it is more promotional, or it looks more promotional, because these BTL offerings are more available and visible.

Speaker #5: And that doesn't mean that after this period we go back to a better period. When it comes to the front book adjustment of our control price, we'll certainly want to do it.

Speaker #5: But in order for us to do it, we have two competitors with a higher postpaid market share. So, let's see what they do, and then we will move accordingly.

Alberto Griselli: In order for us to do it, we have two competitors with a higher postpaid market share. Let's see what they do, then we will move accordingly.

Speaker #2: Okay. That takes a lot for the clarification. Very helpful.

Jose Araujo: Okay. Thanks a lot for the clarification. Very helpful.

Rogério Araújo: Okay. Thanks a lot for the clarification. Very helpful.

Speaker #3: Thank you. And the next questions comes from Mr. Marcello Santos from JP Morgan.

Operator 2: Thank you. The next question comes from Mr. Marcelo Santos from JPMorgan.

Operator: Thank you. The next question comes from Mr. Marcelo Santos from JPMorgan.

Speaker #4: Hi, good morning. Thanks for taking my questions. The first question, I wanted to double-click on these new plans that you launched on the hybrid.

Marcelo Santos: Hi. Good morning. Thanks for taking my questions. The first question I wanted to double-click on these new plans that you launched on the hybrid. What is the risk of cannibalization of the higher-end control plans? How do you control for that? The second question is an update on M&A. How are you seeing the prospects? What is the current view of TIM in going to broadband? If you could expand a bit on that would be great. Thank you very much.

Speaker #4: What is the risk of cannibalization of the higher-end control plans? I mean, how do you control for that? And the second question is an update on M&A.

Speaker #4: How are you seeing the prospects? What is the current view of the team in going to broadband? If you could expand a bit on that, that would be great.

Speaker #4: Thank you very much.

Alberto Griselli: Sure. I understood correctly your second question. Let me go to the first one. The risk of cannibalization, it of course exists. Generally, we mitigate this risk of cannibalization with a number of strategy, including the remuneration of our commercial networks. When you look, for example, to a TIM Fit, TIM Fit is a product that is available primarily for people that do not pass the credit score for a control plans. They won't be able to get along to buy a control plan because they don't have the credit profile. Therefore, they pay by credit card, the credit profile passes, and the customer is converted. If you design the process and the remuneration in the right way, you mitigate the risk of cannibalization. That's the first question. Marcelo, can you repeat your second one in terms of the prospect of broadband?

Speaker #5: Well, if I understood your second question correctly, let me first address the first one. So, the risk of cannibalization, of course, exists. And generally, we mitigate this risk of cannibalization with a number of strategies, including the remuneration of our commercial networks.

Speaker #5: And so when you look, for example, to a team fit, team fit is a product that is available primarily for people that do not pass the credit score for a control plans.

Speaker #5: So, they won't be able to get along to buy a control plan because they don't have the credit profile. Therefore, they pay by credit card.

Speaker #5: The credit profile passes and the customer is converted. So if you design the process and the remuneration in the right way, you mitigate the risk of cannibalization.

Speaker #5: That's the first question. And Marcello, can you repeat your second one regarding the prospects for broadband?

Marcelo Santos: M&A. I was asking about merger and acquisitions, like what's your appetite for M&A? How are you receiving this as a strategy to growing broadband? I just wanted a refresher on your M&A plans and fixed strategy. Thank you.

Speaker #4: M&A, I was asking about merging and acquisitions. Like what's your appetite for M&A? How are you seeing this as a strategy to grow in broadband?

Speaker #4: Just wanted a refresher. On your M&A plans and fixed strategy. Thank you.

Alberto Griselli: Okay. Right. When it comes to the fixed strategy, we already bought I-Systems back, that was the first driver of faster growth in broadband that is related to the fact that we control the network, we can manage profitability and commercial push in a more controlled way besides the customer experience. That's one of the reason why we launched this TIM Ultracombo plan. We launched a couple of weeks ago. The results are quite positive so far, so we're happy with what we are seeing. This is before we even go to the wider communication. We didn't launch any commercial advertising campaign yet. When it comes to the M&A, I think that the answer is similar to the answer of the previous quarters. Basically, we profile, we analyze almost all targets. We know its pros and cons.

Speaker #5: Okay, right. So, when it comes to the fixed strategy, we already bought iSystem back, and that was the first driver of faster growth in broadband.

Speaker #5: That is related to the fact that we control the network. We can manage profitability and commercial push in a more controlled way. Besides the customer experience, and that's one of the reasons why we launched this team ultra combo plan.

Speaker #5: We launched a couple of weeks ago. The results are quite positive so far, so we're happy with what we are seeing. And this is before we even go to the wider communication.

Speaker #5: So, we didn't launch any commercial advertising campaign yet. When it comes to the M&A, you know, I think that the answer is similar to the answer of the previous quarters.

Speaker #5: So basically, we profile and we analyze almost all targets. We know its pros and cons. We know the way that they contribute commercially or industrially to our strategy.

Alberto Griselli: We know the way that they contribute commercially or industrially to our strategy. We also think that given the overall environment, the pricing aspect is also as important. The outlook ahead in terms of inflation and interest rate can create good conditions for us going forward. We don't have any rush at this point in time, because we just launched an upgrade on our strategy after the acquisition with I-Systems. We think that we got significant and material opportunities in front of us related to what we are doing, and therefore that on this one, as when on the B2B, we can grow revenues at a faster pace while clearly we work on putting more dynamism on the mobile side.

Speaker #5: We also think that given the overall environment, the pricing aspect is also important. The outlook ahead in terms of inflation and interest rate can create a good can create good conditions for us going forward.

Speaker #5: So we don't have any rush at this point in time. Because we just launched an upgrade on our strategy after the acquisition with a system.

Speaker #5: We think that we have significant and material opportunities in front of us related to what we are doing. Therefore, on this one, as well as on the B2B side, we believe we can grow revenues at a faster pace, while clearly we work on putting more dynamism on the mobile side.

Speaker #4: Perfect. Thank you very much.

Marcelo Santos: Perfect. Thank you very much.

Speaker #3: Thank you. And the next question comes from Mr. Gustavo Farias from UBS.

Operator 2: Thank you. The next question comes from Mr. Gustavo Farias from UBS.

Operator: Thank you. The next question comes from Mr. Gustavo Farias from UBS.

Gustavo Farias: Hi, everyone. Thanks for taking my questions. Two questions. First one on the margin dynamics. We've seen a deceleration in client-generated revenue, but margins continue to expand. If you could provide color on the margins of the part of revenue that is not client-generated, and if it is what currently allows the consolidated margin to hold up, or this expansion is explained by other drivers. My second question is on capital allocation. How do you balance the distribution to shareholders, considering the investments required to scale fiber and convergence, and especially following the increase in net debt after the I-Systems transaction? Thank you.

Speaker #2: Hi everyone. Thanks for taking my questions. Two questions. So, first one, on the margin dynamics: we've seen a deceleration in client-generated revenue.

Speaker #2: But margins continue to expand so if you could provide color on the margins of the part of revenue that is not client generated. And if it is what currently allows the consolidated margin to hold up, or this expansion is explained by other drivers.

Speaker #2: And my second question is on capital allocation. So, how do you balance the distribution to shareholders, considering the investments required to scale fiber and convergence?

Speaker #2: And especially following the increase in net debt after the iSystems transaction. Thank you.

Alberto Griselli: Okay, let me go on the margin dynamics. I think that you have a different business line with different margins. Broadband is a high margin, B2B is a lower margin, mobile is a higher margin. We have quite a wide set of initiatives to increase the productivity of our operations. That is the opportunity that lies ahead and the opportunity that is underpinning our margin expansion going forward. If you look at the cost performance, you will see that there are some costs that are increasing. Like the debt is increasing a bit, while we are comfortable that we can manage this. There are a number of costs that are going down. You will see HR and G&A increasing a bit because we are consolidating V8.Tech and I-Systems.

Speaker #5: Well, okay. Let me go on to margin dynamics. So I think that with margins, you have different business lines with different margins. So, broadband has a high margin, B2B has a lower margin, and mobile has a higher margin.

Speaker #5: We have quite a wide set of initiatives to increase the productivity of our operations. That is the opportunity that lies ahead, and the opportunity that is underpinning our margin expansion going forward.

Speaker #5: If you look at the cost if you the cost performance you will see that there are some costs that are increasing. Like but that is increasing a bit while we are comfortable that it's we can manage this.

Speaker #5: There are a number of costs that are going down. You will see HR and G&A increasing a bit because we are consolidating V8 and iSystem.

Speaker #5: But at the end of the day, we have a wide set of initiatives to keep on increasing marginality going forward. And that is underpinning the expansion that we are seeing and that we keep seeing.

Alberto Griselli: At the end of the day, we have a wide set of initiatives to keep on increasing marginality going forward. That is underpinning the expansion that we are seeing and we will keep seeing. When it comes to the capital allocation, I will hand over the word to Andrea. The acquisition of I-Systems, as I was saying, basically I-Systems has a positive impact on OpEx and potentially a negative impact on CapEx. When it comes to the CapEx, we share with you guys that we have been optimizing our CapEx profile in terms of we acquire, especially network systems, the swap and all these sort of things. Therefore, we're able to absorb this within our CapEx profile, maintaining the plan that we have in place for mobile.

Speaker #5: When it comes to the capital allocation and then what we'll hand over the word to Andrea the acquisition of a system as I was saying we basically the iSystem is a positive impact on OPEX and potentially a negative impacts on CAPEX.

Speaker #5: But when it comes to the CAPEX, we shared with you guys that we have been optimizing our CAPEX profile, in terms of the acquired, especially network systems at the swap and all these sorts of things.

Speaker #5: And therefore, we are able to absorb this within our CAPEX profile, maintaining the plan that we have in place for mobile.

Andrea Viegas: Hi, Gustavo. Related to the capital allocation. The way we think about capital allocation didn't change with the acquisition of I-Systems. As Alberto mentioned, we have some opportunity with I-Systems. They have an important asset that we have room to monetize, increase the cap. We are not considering increase our CapEx, the CapEx we already declare in our guidance because of I-Systems. What we will do is monetize the assets. Our capital allocation will continue with the same goal to invest in attractively returns and maximize the shareholders' remuneration. We consider that we have enough cash for this, even with the increase of debt of I-Systems that we will work on. We are just announced an increase of capital of I-Systems exactly to deal with this debt. We have enough cash for support our dividends and the CapEx of the I-Systems.

Speaker #6: Hi Gustavo. Related to the capital location, the way we think about capital location didn't change with the acquisition of iSystems as Alberto mentioned. We have some other opportunity with iSystem they have an asset an important asset that we have room to monetize, increase take up.

Speaker #6: So we are not considering increase our CAPEX, the CAPEX we are already declared in our guidance because of iSystems. What we use what we will do is monetize the assets.

Speaker #6: So our capital location will continue with the same goal to invest in attractive returns and maximize the shareholders remuneration. And we have we consider that we have enough cash for this even with the increase of debt of iSystem that we will we will work on we are just announced an increase of capital of iSystem exactly to deal with this debt.

Speaker #6: But we have enough cash for support our dividends and the CAPEX of the iSystem.

Speaker #2: Very clear. Thank you very much.

Gustavo Farias: Very clear. Thank you very much.

Speaker #3: Thank you for your question. The next question comes from Mr. Gustavo Mieli from Goldman Sachs.

Operator 2: Thank you for your question. The next question comes from Mr. Gustavo Mielli from Goldman Sachs.

Operator: Thank you for your question. The next question comes from Mr. Gustavo Mielli from Goldman Sachs.

Speaker #7: Good morning, Alberto. Andrea Vicente Luisa. Thanks for the opportunity. I also have two questions. The first one is related to bad debt expenses. We once again saw a small volatility in this line.

Gustavo Miele: Good morning, Alberto, Andrea, Vicente, Luisa. Thanks for the opportunity. I also have two questions. The first one is related to bad debt expenses. We once again saw a small volatility in this line. You mentioned the release that this has some relation with a non-recurring effect of a specific client in the B2B market. Just want to make sure Whether if we were to adjust for this non-recurring event, if you would still see some pressure on bad debt expenses, and if that's the case, if this reflects maybe a tougher macro environment for your client base? This would be my first question. The second one, also related to macro, if you believe that maybe some volatility in the macro environment could lead to some revision in your plans on growing on this B2B market, which may be a bit more sensitive to those dynamics.

Speaker #7: You mentioned the release—that this has some relation with a non-recurring effect from a specific client in the B2B market. I just want to make sure: if we were to adjust for this non-recurring event, would you still see some pressure on bad debt expenses?

Speaker #7: And if that's the case, if it does reflect maybe a tougher macro environment for your client base, this would be my first question. And the second one is also related to macro.

Speaker #7: If you believe that maybe some volatility in the macro environment could lead to some revision in your plans on growing in the B2B market, which may be a bit more sensitive to those dynamics.

Speaker #7: So just want to test this hypothesis with you guys. Thank you very much.

Gustavo Miele: Just want to test this hypothesis with you guys. Thank you very much.

Speaker #5: Sorry. Let me go with the second one, and then I will leave the bad debt to Andrea. So, when it comes to B2B, we are not seeing, so far, a slowdown in our activity.

Alberto Griselli: Sorry, let me go with the second one, and then I will leave the bad debt to Andrea. When it comes to B2B, we are not seeing, so far, a slowdown in our activity. I would say, Gustavo, that one of the reasons also that you see, we disclose in this report that our B2B revenues is 6.6% of our overall revenue. Basically, we are a small player and attacker in this space through, let's say, a very specific business model that is related to the IoT solution and services and with V8.Tech, the digital and artificial intelligence solution. We didn't see or we are not experiencing a slowdown in the verticals where we operate. As a matter of fact, we have the best Q2 in the IoT solutions in our history. When you look at V8.Tech prospects and pipeline, it's quite rich.

Speaker #5: I would say, Gustavo, that one of the reasons is also that you see we disclosed in this report that our B2B revenues is 6.6% of our overall revenue.

Speaker #5: So basically, we are a small player and an attacker in this space, through, let's say, a very specific business model that is related to IoT solutions and services, and with V8, the digital and artificial intelligence solution.

Speaker #5: So we didn't see, or we are not experiencing, a slowdown in the verticals where we operate. As a matter of fact, we had the best second quarter in IoT solutions in our history.

Speaker #5: And when you look at V8 prospects and pipeline, it's quite rich. So we are not seeing a deceleration yet. Now, of course, there are a number of things that are happening in Brazil and outside of Brazil.

Alberto Griselli: We're not seeing a deceleration yet. Now, of course, there is a number of things that are happening in Brazil and outside of Brazil. The impact of the macro environment is sort of volatile, but we are not seeing a slowdown in the B2B line. For the bad debt, Andrea.

Speaker #5: So, the impact of the macro environment is somewhat volatile. But we don't—we don't see, and we are not seeing, a slowdown in the B2B line.

Speaker #5: For the bad debt, Andrea.

Andrea Viegas: Hi, Gustavo. As I mentioned in the Q1, we have this situation with our B2B customer partnership that also impacts the Q2. This is a one-off situation. Of course, we have expansion in our customer base, in our postpaid customer base that came with a slight increase in the bad debt. We consider that we are achieving a plateau. We have this increase from the past two quarters, the Q1 and the Q2. We consider that we have achieved a plateau and we expect a gradual stabilization in bad debt moving forward. We are working hard in mitigate this impact besides the one-off, of course, working with our credit score models and customer segmentation. We are doing collection initiatives now with AI that we expect to improve this line in the coming future.

Speaker #6: Hi Gustavo. As I mentioned in the first quarter, we have this situation with our B2B customer, a partnership that also impacts the second quarter.

Speaker #6: And this is one of situation. Of course, we have expansion in our customer base in our postpaid customer base that came with a slight increase in the bad debt.

Speaker #6: But we consider that we are achieving a plateau so we have this increase from the past two quarters, the first and the second quarter.

Speaker #6: But we consider that we have achieved a plateau, and we expect a gradual stabilization in bad debt moving forward. We are working hard to mitigate these impacts.

Speaker #6: Besides the one-off, of course, we are working with our credit score models and customer segmentation. We are also implementing collection initiatives now, and with that, we expect to improve this line in the coming future.

Gustavo Miele: That's very clear. Thanks, Andrea. Thanks, Alberto.

Speaker #7: That's very clear. Thanks, Andrea. Thanks, Alberto.

Speaker #3: Thank you for your question. The next question comes from Mrs. Maria Clara from Itaú BBA.

Operator 2: Thank you for your question. The next question comes from Maria Clara from Itaú BBA.

Operator: Thank you for your question. The next question comes from Maria Clara from Itaú BBA.

Maria Clara Infantozzi: Hi, everyone. Thanks for this opportunity. My first question comes on the B2B. After the two first months of the incorporation of V8.Tech, can you please provide us how you feel about the asset? What is your B2B strategy going forward? What should be the low-hanging fruits in terms of revenue growth ahead? The second question comes on top of profitability. Andrea, you just mentioned about AI. Could this be a lever in terms of operating efficiencies, especially when it comes to call center expenses already in the short term? Thank you.

Speaker #8: Hi everyone, thanks for this opportunity. So, my first question is about the B2B segment. After the first two months since the incorporation of V8, can you please tell us how you feel about the asset?

Speaker #8: What is your B2B strategy going forward? What should be the low-hanging fruits in terms of revenue growth ahead? And the second question comes on top of profitability.

Speaker #8: Andrea just mentioned AI. So, could this be a lever in terms of operating efficiencies, especially when it comes to call center expenses, even in the short term?

Speaker #8: Thank you.

Speaker #5: So, Maria Clara, let me go with the B2B. So, the incorporation—we are already working very closely with the V8 guys. And the low-hanging fruits are basically the cross and upselling of our strategic verticals with the V8 product portfolio.

Alberto Griselli: Maria Clara, let me go with the B2B. We are already working very closely with the V8 guys. The low-hanging fruits are basically the cross and upselling of our strategic verticals with V8 product portfolio. If you look at our strategy, basically on B2B, especially in IoT, is where V8 provides value. We selected some verticals. These verticals are the agri business, the logistic business, the utility business, and the mining business. We have important core customers that we've been serving for a while now and successfully. The idea is to identify the opportunities of cross-upselling our sort of coverage-as-a-service portfolio with the V8 digital and AI services. A number of discussions are already in place. The cycles for selling these more complex projects, we know they are not short because they're business critical, they got business impact.

Speaker #5: So if you look at our strategy, basically, on B2B—especially in IoT—is where V8 provides value. We selected some verticals. These verticals are the agribusiness, the logistics business, the utilities business, and the mining business.

Speaker #5: And so we have important core customers that we've been serving for a while now and successfully. So the idea is to identify the opportunities of cross upselling our sort of coverages and service portfolio with the V8 digital and AI services.

Speaker #5: A number of discussions are already in place. The cycles for selling these more complex projects—we know that they are not short, because they are business critical.

Speaker #5: They got business impact. But the low hanging fruits basically it's upselling our strategic customers with a wider set of portfolio. When it comes to profitability, I will leave it to Andrea to address this.

Alberto Griselli: The low-hanging fruits, basically it's upselling our strategic customers with a wider set of portfolio. When it comes to profitability, I will leave to Andrea to address this.

Andrea Viegas: Hi, Maria Clara. Related to AI, we are continuing work with AI. We mentioned several times we work in several fronts, network, of course, customer care. Now I just mentioned the collection, and we have in legal areas also, we are introducing AI. We consider that it's not a structure change, we have several fronts where we work and increase the productivity. We believe this is a combination. These AI fronts, but also maintain our operational discipline, our focus in efficiency. This combination will continue to increase our productivity, but not just AI program. I don't know if you want to complete.

Speaker #6: Hi Maria Clara. Related to AI, we are continuing work with AI. We have mentioned several times that we work with it on several fronts—network, of course, customer care. Now, I just mentioned collections, and we have in the legal area also; we are introducing AI.

Speaker #6: We consider that it's not a structured change. But we have several fronts where we work and increase the productivity. But we believe this is a combination.

Speaker #6: AI this AI is front but also maintain our operation discipline our focus in efficiency. So this combination will continue to increase our productivity. But not just AI program.

Speaker #6: I don't know if you want to complete.

Alberto Griselli: Well, I will put some additional color, Maria Clara. If you look at the last page of our presentation today, you will see on the right a number of use case categories that we are working on. Some of them are already in the implementation and material impact. I would say that network is one of them, and IT is another one of them. What does it mean? That the impact is already there, it's material, and by the way, it's not completed. We implemented the first wave, where basically we achieved some kind of a reduction in increasing productivity and increasing the quality of output. There are others where, basically, we still need to get to the material impact, but we are getting there. When it comes to the call center, for example, that you mentioned, a number of activities are already fully digitalized.

Speaker #5: I will put some additional color. Maria Clara on if you look at the last page of our presentation today, you will see on the right a number of use case categories that we are working on.

Speaker #5: And some of them are already in implementation and having a material impact. And I would say that network is one of them, and IT is another one of them.

Speaker #5: What does it mean? That the impact is already there. It's material. And by the way, it's not completed. So, we implemented the first wave, where basically we achieved some kind of reduction and increased productivity and increased the quality of output.

Speaker #5: And there are others where basically we still need to get to the material impact. But we are getting there. When it comes to the call center, for example, that you mentioned, a number of activities are already fully digitalized.

Speaker #5: And so now we are working on the complex one. One of the complex ones is, for example, the guests to the human operators, and they are related to the questions or complaints or explanations related to the bills.

Alberto Griselli: Now we are working on the complex one. One of the complex one is, for example, that gets to the human operators, and they are related to the questions or complaints or explication related to the bills. Since there is a trade-off between the revenue that you trade off versus the customer satisfaction, this is a difficult one that is still managed and handled by the human attendees. Now we are working on the complex part, and the idea is clearly is get to the point whereby, the system can handle this 100%, almost 100% via artificial intelligence. We are doing good progress. The first wave has been done on the easiest part, now we're getting to the complex one. It takes some time.

Speaker #5: Since there is a trade-off between the revenue that you trade off versus customer satisfaction, this is a difficult one that is still managed and handled by human attendees.

Speaker #5: And so now we are working on the complex part. And the idea is clearly is get to the point whereby the system can handle this 100 percent almost 100 percent via artificial intelligence.

Speaker #5: We are going, we are making good progress. So, the first wave has been done on the easiest part. Now, we are getting to the complex one.

Speaker #5: It takes some time. But we have quite a wide set of portfolio initiatives that will support us to increase productivity for a number of years ahead.

Alberto Griselli: We have quite a wide set of portfolio of initiatives that will support us to increase productivity for a number of years ahead.

Andrea Viegas: Very clear. Thank you.

Maria Clara Infantozzi: Very clear. Thank you.

Speaker #8: Very clear. Thank you.

Speaker #3: Thank you. Our next question comes from Fanny Kanomuri from HSBC.

Operator 2: Thank you. Our next question comes from Phani Kanumuri from HSBC.

Operator: Thank you. Our next question comes from Phani Kanumuri from HSBC.

Phani Kanumuri: Hi. Thank you for taking my questions. The first one is on TIM Ultracombo. What percentage of your mobile subscriber base is covered by TIM Ultracombo? Do you have plans to expand it? If you have plans, how do you plan to expand the coverage? Is it by your M&A strategy, or do you have intentions of partnering with other fixed broadband operators to offer a converged product? Thank you.

Speaker #7: Hi. Thank you for taking my questions. The first one is on TIM Ultra Combo. What percentage of your mobile subscriber base is covered by TIM Ultra Combo?

Speaker #7: And do you have plans to expand it? And if you have plans, like how do you plan to expand the coverage? Is it by your M&A strategy or do you have intentions of partnering with other fixed broadband operators to offer converged product?

Speaker #7: Thank you.

Alberto Griselli: Phani, let me try to rephrase it just to make sure that I understood it correctly. Did you ask what our plan in terms of an expansion of TIM Ultracombo?

Speaker #5: Fanny, let me try to rephrase it just to make sure that I understood it correctly. Did you ask what our plan is in terms of an expansion of TIM Ultra Combo?

Speaker #7: Yes. So, basically, your fiber base is pretty low compared to other operators—some other big operators. So, what percentage of your mobile subscriber base is currently covered by TIM Ultra Combo?

Phani Kanumuri: Yes.

Alberto Griselli: Uh-

Phani Kanumuri: Basically, your fiber base is pretty low compared to other operators, some other big operators. What percentage of your mobile subscriber base is currently covered by TIM Ultracombo?

Alberto Griselli: Okay. Right.

Speaker #5: Okay. Right. So Fanny.

Phani Kanumuri: And then-

Speaker #7: And then, do you have plans to expand it? And then, do you have plans to expand it? By either going for a different M&A in fixed, or doing a product collaboration with other fixed broadband operators?

Alberto Griselli: Yes, got it. Yeah

Phani Kanumuri: Do you have plans to expand it? Do you have plans to expand it, by either going for a different M&A fixed or doing a product collaboration with other fixed broadband operators?

Speaker #5: Okay, so Fanny, let me go to the first one and then to the plan to expand it. So, on the first one, the product itself is already available nationwide.

Alberto Griselli: Okay. Phani, let me go to the first one, to the plan to expand it. On the first one, the product itself is already available nationwide. We basically operate via a former system that is our network and our partner, V.tal, in the main capitals of Brazil. The Ultra Combo has been launched across the board. It is already available on the entire footprint. Clearly, the business model is a bit different. This reflects or may reflect in some way in the commercial value proposition, which is the price tag that we are putting in one region versus the others. Remembering that the competition in broadband is regional, so we can adapt our offering regionally. The product is available nationwide and the only things that may change is the commercial terms in one region versus the other region.

Speaker #5: And so we basically operate via former assistant that is our network. And our partner Vital in the main capitals of Brazil. And the Ultra Combo has been launched across the board.

Speaker #5: So it's already available across the entire footprint. And clearly, the business model is a bit different. This reflects—or may reflect in some way—the commercial value proposition, which is the price tag that we are putting in one region versus the others.

Speaker #5: Remembering that the competition in broadband is regional. So we can adapt it our offering regionally. But basically the product is available nationwide and the only things that may change is the commercial terms in one region versus the other region.

Speaker #5: And therefore, the footprint is already our footprint. The idea is to leverage our own customer base and our brand to accelerate broadband tech-up.

Alberto Griselli: Therefore, the footprint is already our footprint. The idea is to leverage our own customer base and our brand to accelerate broadband take-up. This is basically what we are going to see in the coming quarters, and with a positive fallback also on a longer term on churn on mobile services. This will appear over time. This is the organic. Let's put it this way, at this point, this is the organic plan. Then there is other organic plan where we can add to our portfolio additional technologies. We are looking into that also. That would be organic also. Then there is another plan that is related to potential M&A, whereby basically we buy somebody and with their fiber and complement our footprint also through an acquisition.

Speaker #5: This is basically what we are going to see in the coming quarters. And with a positive fallback also on a longer term, on churn on mobile services.

Speaker #5: But this will appear over time. Then, you have—and this is the organic, let's put it this way. At this point, is this the organic plan?

Speaker #5: And then there is the other organic plan, where we can add to our portfolio additional technologies. So we are looking into that also. And then there is—and that would be organic also.

Speaker #5: And then there is another plan that is related to potential M&A whereby basically we buy somebody and with their fiber and complement our footprint also through an acquisition.

Alberto Griselli: This plan, it's a plan that whereby I commented before, we profile all the players, we know pros and cons, we know what they add to our strategy and where clearly, and we're just waiting for the right condition to materialize, and we think that better condition can materialize going forward.

Speaker #5: This plan, it's a plan that whereby I commented before we profile all the players. We know pros and cons. We know what they add to our strategy and where clearly.

Speaker #5: And we are just waiting for the right conditions to materialize. And with better conditions, that can materialize going forward.

Phani Kanumuri: Great. Thank you. Maybe one quick follow-up. In the comments, you said that price increases have led to some increased churn in Q1 and Q2. As you look through Q2 into different months, are you seeing better churn trends in June compared to April?

Speaker #7: Great, thank you. Maybe one quick follow-up. In the comments, you said that price increases have led to some increased churn in Q1 and Q2.

Speaker #7: So as you look through Q2 into different months, are you seeing better churn trends in June compared to April?

Speaker #5: So if I understood correctly, Fanny, you're asking if I commented that we saw some kind of churn increasing in Q1 and Q2.

Alberto Griselli: If I understood correctly, finally, you're asking if I commented that we saw some kind of churn increase in Q1 and Q2. The answer is yes. This is normal in generally when we do price up, that would be back-book price up. The content was a bit more challenging because there was a bit more of ATL offering around. That's all. We didn't move like last year with front-book prices in Q1 and Q2. Having said that, when you look at our churn level, it goes up and then goes down. If you ask if June is better than April in terms of churn level, the answer is yes. June is better than April.

Speaker #5: The answer is yes. This is normal, in general, when we do price up. That would be back book price up. What we are seeing is that the context was a bit more challenging because there was a bit more of ATL offering around.

Speaker #5: So, we didn't move like last year with book prices in the first and second quarters. Having said that, when you look at our churn level, it goes up and then goes down.

Speaker #5: If you're asked if June is better than April in terms of churn level, the answer is yes—June is better than April.

Speaker #7: Okay. Yeah. Thank you. Thanks.

Phani Kanumuri: Okay. Yeah. Thank you. Thanks.

Speaker #3: Thank you. And our next question comes from Mr. Danielle Federli from Bradesco BBI.

Operator 2: Thank you. Our next question comes from Mr. Daniel Federle from Bradesco BBI.

Operator: Thank you. Our next question comes from Mr. Daniel Federle from Bradesco BBI.

Speaker #7: Good morning, everyone. Thank you very much for taking my questions. The first one is related to the platform revenue, which more than doubled in the second quarter.

Daniel Federle: Good morning, everyone. Thank you very much for taking my questions. The first one related to the platform revenue that more than doubled in Q2. I would like to hear if you expect any kind of volatility in this line, or we should see this as a trend going forward, very high growth going forward. Second question related to international roaming expenses that seem to be very volatile, making much more difficult to read if the margin was good or not, if there is any mismatch between roaming revenue and cost. Any color here would be welcome. Thank you.

Speaker #7: I would like to hear if you expect any kind of volatility in this line or we should see these as a trend going forward.

Speaker #7: Very high growth going forward. Second question related to international roaming expenses. That seemed to be very volatile. Making much more difficult to read if IBDA margin was good or not.

Speaker #7: If there's any mismatch between roaming revenue and cost. So any caller here would be welcome. Thank you. Okay. Let me address the first one.

Alberto Griselli: Hey, let me address the first one, then I will leave the second one with Andrea. We have, in our revenue profile, different types of revenues. We got the mobile core revenues, we've got the platform revenues within, we got the advertising revenues, we got the B2B revenues. Some of them are slightly more volatile versus the others. Therefore, these are part of our strategy now. They've been part of our strategy many years. Therefore, once we close one deal with mobile advertisement, can be big or can be small, but overall, if you look in the year-end results, the numbers have been growing year after year. When you look at the platform strategy, we got some partnerships that work better, some that don't work, they not scale up. They present some volatility.

Speaker #7: Then we ask I will leave the second one with Andrea. So we have in our revenue profile different types of revenue. So we got the mobile revenues.

Speaker #7: Then we have the platform revenues within. Then we have the advertising revenues. Then we have the B2B revenues. And some of them are slightly more volatile versus the others.

Speaker #7: And therefore, these are part of our strategy now and have been part of our strategy for many, many years. And therefore, once we close one deal with mobile advertising, it can be big or it can be small.

Speaker #7: But overall, if you look at the year-end results, the numbers have been growing year after year. When you look at the platform strategy, we got some partnerships that were better.

Speaker #7: Some of that work does not scale up, and so there's some volatility in the process. But generally, the trends—since these are parts of our strategy—if you look not on a quarterly basis, but on an annual basis, these are accretive.

Alberto Griselli: Generally, the trends, since these are parts of our strategy, that if you look not on a quarterly basis, but on an annual basis, these are accretive. The larger the scale, the less the volatility. If you, for example, take B2B also, or the IoT within the B2B is a smaller one, but it's growing over time. Every now and then we close a big deal like the ones that have been closing in the last quarter, like CNH and CPFL, you see clearly a spike. If you take this year versus last year, it's growing.

Speaker #7: The larger the scale, the less the volatility. So, if—for example—take B2B also, or the IoT within B2B. It's a smaller one, but it's growing over time.

Speaker #7: So every now and then we close a big deal like the ones that being closing in the last quarter, like CNH and CPFL, you see clearly a spike.

Speaker #7: But if you take this year versus last year, it's growing. So, some of the revenues, even because of their size, are more volatile.

Alberto Griselli: Some of the revenues, even because of their size, they are more volatile, but the general trends, it's positive, and it's part of our revenue portfolio growth, whereby until some years ago, we just had mobile, and now we got mobile, we got broadband, we got B2B, we got platform strategy, and all contribute to a better resilience of our top line.

Speaker #7: But the general trend is positive, and it's part of our revenue portfolio growth, whereby until some years ago we just had mobile, and now we've got mobile.

Speaker #7: We got broadband. We got B2B. We got platform strategy. And all contribute to better resilience of our revenue, of our top line.

Andrea Viegas: Hi, Daniel. Related to the roaming cost, we have these agreements with the big carriers. We close amount for a year. They send us the data, and we send for them the data. This is the difference between the revenue and the cost. The revenue and the cost does not combine of each quarter. When you see the full year, you see a combination between revenue and cost. Each quarter, they are not aligned. The Q1, we had the peak of our cost of the interconnection roaming was one of the impacts that we had in our OpEx in the Q2. As we mentioned in the previous quarters, we was expecting a decrease, and we're expecting this for the rest of the year. The revenue will occur during the year.

Speaker #8: Hi, Danielle. Related to the roaming cost, we have these agreements with the big carriers. And we close amount for a year. So they send us the data and we send for them the data.

Speaker #8: So this is the difference between the revenue and the cost. So the revenue and the cost are not combined for each quarter. When you see the full year, you see a combination between revenue and cost.

Speaker #8: But each quarter they are not aligned. So the first quarter we have a higher the peak of our cost of the roaming international roaming.

Speaker #8: One of the impacts that we had was in our opex. In the second quarter, as we mentioned in the previous quarter, we were expecting a decrease, and we expect this for the rest of the year.

Speaker #8: But the revenue will occur during the year. So only when you see the full year, you can see the combination between the revenue and the cost.

Andrea Viegas: Only when we see the full year, you can see the combination between the revenue and the cost. I don't know if that addressed your question.

Speaker #8: I don't know if I addressed your question.

Speaker #7: Yes. Yes. Just one follow-up. So the roaming cost, the bottom happens in the second quarter. Is that correct?

Daniel Federle: Yes. Just one follow-up. The roaming costs, the bottom happens in the Q2. Is that correct?

Andrea Viegas: The revenue occurred during the quarters.

Speaker #8: The revenue occurred during the quarters. We have that. But the cost in this year, the major part occurred in the first quarter. So in the next quarters, we won't see a peak like we saw in the first quarter.

Daniel Federle: The cost?

Andrea Viegas: The cost, in this year, the major part occurring in Q1. In the next quarters, we'll see not a peak like we saw in Q1. If you remember, if you see our results in Q1, we had a very high interconnection roaming, and this quarter is normalized.

Speaker #8: If you remember, if you see our results in the first quarter, we had a very high interconnection roaming. And this quarter, it is normalized.

Alberto Griselli: To make it simple, Daniel, generally, the cost tends to be higher in H1, and the revenue tends to be higher in H2.

Speaker #7: To make it simple, Danielle, generally the cost tends to be higher in the first half and the revenue tends to be higher in the second half.

Andrea Viegas: Yeah.

Daniel Federle: Okay. Thank you very much.

Speaker #7: Okay. Thank you very much. This every year. It's every year it's the same.

Alberto Griselli: It is every year. Every year is the same.

Andrea Viegas: Yeah. Every year is the same.

Speaker #8: Every year it's the same.

Speaker #7: Okay. Thank you.

Daniel Federle: Okay. Thank you.

Operator 2: Thank you for your question. If you have another question, please press the Raise Hand button. Ladies and gentlemen, without any more questions, I am returning to Mr. Alberto Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

Operator: Thank you for your question. If you have another question, please press the Raise Hand button. Ladies and gentlemen, without any more questions, I am returning to Mr. Alberto Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

Speaker #3: Thank you for your question. If you have another question, please press the raise hand button. Ladies and gentlemen, with no more questions, I am returning to Mr. Alberto Griselli for his final remarks.

Speaker #3: Please, Mr. Alberto, you may proceed.

Alberto Griselli: Thank you all for joining today's video call. The market continues to evolve, and we have been driving our strategy to capture the opportunities in broadband, B2B, and obviously mobile. Our team is working relentlessly, so I want to thank them for the effort and results, and I look forward to meeting you in the coming days. Ciao.

Speaker #7: Thank you all for joining today's video call. The market continues to evolve, and we have been driving our strategy to capture the opportunities in broadband, B2B, and, obviously, mobile.

Speaker #7: Our team is working relentlessly, so I want to thank them for their effort and results. I look forward to meeting you in the coming days.

Speaker #7: Ciao.

Operator 2: This we conclude the Q2 of 2026 conference call of TIM S.A. For further information and details of the company, please access our website, tim.com.br/ri. You can disconnect from now on. Thank you, and once again

Operator: This we conclude the Q2 of 2026 conference call of TIM S.A. For further information and details of the company, please access our website, tim.com.br/ri. You can disconnect from now on. Thank you, and once again

Speaker #8: As we conclude the second quarter 2026 conference call of TIM S.A., for further information and details about the company, please access our website.

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