TIM Brasil. Company s Presentation. September, 2014

Transcription

1 TIM Brasil Company s Presentation September, 2014

2 AGENDA Macro & Industry Overview...5 Recent Results.. 11 Network Evolution. 19 Regulatory Update. 23 Fixed Business...27 Business Outlook Historical Data & Others. 34 Visit our website and IR app: TIM IR app (English) TIM RI app (Portuguese)

3 KNOWING TIM BETTER GROWTH STRUCTURE Gross Revenues (R$ Bln) EBITDA (R$ Bln) 4,7 5,0 5,2 Customer base EoP (Million) TIM: A Huge Brazilian Company Presence in Brazil since th largest Private Company in Brazil (source: Exame Magazine ). Approximately R$30 billion of Market Capitalization Growth Via Acquisition CORPORATE GOVERNANCE Legal Requirements Brazilian Law 100% Tag Along Equal dividends rights 15,000 km fiber optical backbone Demand for transparency and disclosures One single class of shares Strict disclosure policy Requirement of protection for minority shareholders Nível 1 Nível 2 Unique Telco company listed on the Novo Mercado 5,500 km fiber optical backhauling Highest level of Corporate Governance Statutory Audit Committee: Report to Board of Directors Oversight Financial reporting Analyze anonymous complaints Sales Network Social & Economic 74.2 million customers (27% Share) The 2 nd Player - Market and rev. share More than 383,000 points of sales More than 165 own stores 15 Customer Care Centers (16k attendants) ~13,100 Antennas 3,429 cities covered 95% of urban pop. covered 50,000 km of optical fiber network ~12,480 employees 23,000 indirect jobs R$10.4 billion in taxes payments in 2013 R$3.9 billion invested in 2013 KNOWING TIM 3

4 Macro & Industry Overview

5 GDP Forecast (% YoY Growth) MACRO SCENARIO OUTLOOK Inflation Forecast (IPCA: 12 months) ,60 1,70 1, a 2014e 2015e 2016e 6,4 5,9 6,2 6,0 2013a 2014e 2015e 2016e Market consensus shows a softer growth. Telecom industry has shown resilience, specially in the mobile side, but it is not completely immune. Interest Rate Forecast (% Selic Target p.y. year average) FX Rate Forecast (R$/U$ - year average) Mobile sector will continue to benefit from fixed-mobile substitution, now also strong on data. 8,2 11,0 11,8 10, ,18 Constrains of individuals budget points to an increase of mobile usage (low cost). 2013a 2014e 2015e 2016e 2013a 2014e 2015e 2016e Source: BaCen MACRO & INDUSTRY OVERVIEW 5

6 TIM BRAZILIAN TELCOS X-RAY Fixed / Mobile Fixed BB Fixed / Mobile Fixed BB/TV Vivo Mobile Fixed Fixed BB Pay-TV Group Customers (000 s) n.d Market share 26,9% 1,5% 0,5% n.d. --- Net Adds (000 s) n.d. 305 Net Adds 12M (000 s) n.d Net Revs FY13 (R$ Mln) Mobile Fixed Fixed BB Pay-TV Group Customers (000 s) Market share 28,8% 24,1% 18,8% 3,6% --- Net Adds (000 s) Net Adds 12M (000 s) Net Revs FY13 (R$ Mln) Claro Fixed Mobile Fixec BB/TV Fixed Mobile Oi Mobile Fixed Fixed BB Pay-TV Group Customers (000 s) Market share 24,9% 24,7% 30,3% 53,3% --- Net Adds (000 s) Net Adds 12M (000 s) Net Revs FY13 (R$ Mln) Mobile Fixed Fixed BB Pay-TV Group Customers (000 s) Market share 18,5% 37,2% 28,3% 4,7% --- Net Adds (000 s) Net Adds 12M (000 s) Net Revs FY13 (R$ Mln) , The mobile segment represents 75% of the industry access growth Source: Anatel and Players balance sheet TIM represents 30% of the industry mobile revenue* while has 27% of the market share *Mobile revenue considers only the 4 major players 6

7 Re-visiting Market Structure 1 Purchase Power MARKET STRUCTURE CHANGING TOWARDS DATA USAGE Households with internet connection and breakdown for households without internet connection: Salaries up to R$1.2k 81 mln 53% of pop Mln 2 Salaries up to R$3.1k 106 mln Households Profile With Telephone 57 mln 70% of pop. 91% Possess Internet connection 40% 24.5 mln 53% of active connection base has currently a speed below 2Mbps (40%) Only mobile phone Mobile and fixed phone 32 mln 23 mln 37% 51% Other 32% 11.8 mln 3 4 Fixed phone only Average Cost Fixed: Voice and Broadband Entry level plan Mobile: Voice and Data PTIM s entry level plan 83 mi 2 mln 3% R$41.90 Access Growth (users in mln) R$96.00 Does NOT Possess Internet connection 60% 36.8 mln Total Households Lack of (60%) coverage Too Expensive 24% 8.8 mln 44% 16.2 mln Households which does NOT possess Mobile + 5X Jun/14 Source: PNAD 2012, CETIC.br TIC Domicílios 2013, Company estimates Fixed Market Data Revenues Growth 2016 vs. 2012: > 13 bln Reais on Mobile (+100%) >7 bln Reais on Fixed (+35%) MACRO & INDUSTRY OVERVIEW 7

8 Internet Penetration in South America (Internet users per 100 inhabitants) 66% 60% 59% 56% 46% 44% 41% 37% BRAZILIAN INTERNET USAGE BOOM 83 mln Internet users Brazil is the 5th largest nation in the world of internet users 32% 32% 30% 24% 56.1 #2 in Facebook active users (76mln) only after US Widespread use of Social Media (Social Network Users in Brazil ) #2 in Twitter users (41mln) only after US nd largest market outside US Arg Col Chi Uru Bra Ecu Vem Per Guy Sur Bol Par High Penetration of E-commerce (E-commerce revenues in Bln US$) Strong adoption of Instant Messaging (WhatApp mln users) Amazon lauched operations in Brazil in Dec/ mln worldwide users 28% of mobile users in Brazil use Instant Messaging apps France Russia Argentina UK Spain Germany Mexico Brazil List of selected countries as of Feb/ India 40 Source: SocialBakers, e-marketer, Semiocast, G1.com, Folha de São Paulo MACRO & INDUSTRY OVERVIEW 8

9 Vivo 25,5% Claro TIM Oi Customer Base Evolution (Market Share) 29,5% 29,6% 25,6% Source: ANATEL LEVERAGING ON PURE MOBILE COMPETITIVE ADVANTAGE 28,7% 28,8% 26,9% 27,2% 26,9% 24,6% 25,0% 24,9% 19,1% 18,7% 18,7% 18,5% 2Q11 2Q12 2Q13 x 2Q p.p +1.4 p.p -0.6p.p -0.6 p.p Prepaid Leader 29.2% Market Share 2 nd Overall 74.2 million customers Long Distance Leader 50% Market Share Voice FMS: TIM, with no legacies, can only gain on the trend (R$ billion, Net Revenue per Group 2013) Total Fixed+Data +Pay Tv 11.7 Mobile FMS Focus % 23% Revenue Share 4% 4% 28% 26% Vivo Claro Oi TIM GVT Nextel Entering in Data World Via Mobile (mln users) Mobile Fixed x +83% Source: Companies Releases, TIM estimates; CETIC jun 13; Akamai ; PNAD - IBGE A pure mobile approach is the most suitable strategy to capture both opportunities MACRO & INDUSTRY OVERVIEW 9

10 STRATEGY PAYING OFF Total Access Net Addition (EoP Million) Users Preference for Mobile Fixed Voice 0,8 1,0 Data 2,4 1,8 Broadband Quality (Brazil s Average Speed; Source: Akamai) % HH w/ mobile phones only (Source: PNAD 2012) 12m 2Q13 12m 12m 2Q13 12m 48,0 4Q Mbps % Mobile 9,4 9,7 23,4 ANATEL: >78% of fixed broadband connections are below 4Mbps % 12m 2Q13 12m 12m 2Q13 12m Brazil Ranks 83 th in Average Speed per Country % Source: Anatel Net Revenues (% YoY) Organic EBITDA (% YoY; Not including assets sales; Mobile as TIM) Fixed Incumbents -0,30% -3,51% -8,51% 2Q12 2Q13 Fixed Incumbents 1,38% -9,83% -15,36% 2Q12 2Q13 Mobile 5,19% 3,76% 1,42% VU-M Impact Mobile (only TIM) 5,62% 4,35% 5,39% 2Q12 2Q13 2Q12 2Q13 MACRO & INDUSTRY OVERVIEW 10

11 Recent Results

12 HIGHLIGHTS Financial Operational Gross Data Revenue growth at solid pace: R$1.6 bln in Data as % of revenues 27% 22% 19% +3 p.p. +5 p.p. Data users (in mln) and % of total customer base Data users reached 28 mln lines 39% 28% 32% Q12 2Q13 2Q12 2Q13 Net Revenues: Usage (local + long distance) + VAS 2Q13 +7% YoY Strong cost control: total opex dropped 7% YoY 27% EBITDA Margin 25% 11% 28% 2Q12 2Q13 Net Revenues Business Generated (ex incoming) grew by 7% YoY 9% Total OPEX (Δ% YoY) 2% -3% -7% 2Q13 3Q13 4Q13 1Q14 EBITDA grew 8% YoY with margin gain Mix of postpaid over total base 26k 15.8% 2Q13 Maracanã Stadium Jun/ % Live TIM customer base 100k Postpaid segment grew by 7% and postpaid mix over customer base reached 16.5%, while SAC/ARPU remained below 2 months World Cup Figures (in the Stadiums) Photos sent: 50 mln Outgoing calls: 5 mln Data traffic: 26.7 TB Jul/14 Live TIM crossed 100 thousand customers milestone RECENT RESULTS 12

13 CORE BUSINESS ANALYSIS & PERFORMANCE 1 MTR cut full impact in 2Q Mobile Service Net Revenues Analysis (% YoY) Total -1% +3% Ex-MTR ~170 mln* 6 months (YoY) Ex-MTR +4% 0% -18% -28% Net revenues from MTR Business Generated (Local + LD + VAS) +7% +8% 1Q14 2 Handset sales at a healthy level although reduced growth Total units sold (mln) *MTR Impact Business Received (Incoming MTR + SMS) 2Q13-30% -26% 3 2Q12 2Q13 World Cup impact on commercial activities June 2013 June 2014 EBITDA Performance (mln; %YoY) Reported EBITDA Margin 24.9% +16% +8% Ex-MTR 27.9% 1,427 ~96 mln* No Holidays 1 National holiday 3 Brazil s games (1/2 day holiday) Up to 2 municipal holidays in main cities hosting games *MTR Impact EBITDA 1,232 2Q13 1,331 RECENT RESULTS 13

14 Data Experience is Mobile # Access Growth (users in mln) Jun/14 # Total Market Equipment Sold (units in mln) Smartphone & Tablet Q13 Notebook 13.7 & PC 3.6 2Q13 Brazilian Broadband: Low Average Speed (Mbps) + 5X 2.5 Mobile Fixed Source: Anatel Source: IDC Tracker READY FOR DATA OPPORTUNITY Data Gross Revenues Mix (R$ mln; %YoY) Content & Other Web SMS 1,500 1Q14 Historical Change in Data Mix (%YoY) 1Q14 4Q13 3Q13 2Q13 1Q13 %YoY Capturing Data Opportunity +20% 1,578 %YoY +22% +45% +72% +29% +33% +1% -8% Content & Other Web SMS -1% 33% 30% 36% 45% 72% 19% 25% 29% 33% +13% 20% +7% CAGR 21% CAGR -8% 1% 2% 17% 28% -1% CAGR 42% Q13 1Q14 In May, >45% connections in Brazil were < 2Mbps Sources: Anatel, Akamai - State of Internet BOU: Bytes of Use (Megabytes) Days of Use +40% +30% 2Q13 2Q13 RECENT RESULTS 14

15 Customer Base (mln) CUSTOMER BASE EVOLUTION Vivo TIM Claro # 1 player in prepaid Strong growth in Controle postpaid base Oi Austere disconnection policy 2Q12 2Q13 Source: ANATEL 3G Market Share (%; mln users) 40% 24% 23% 35% 26% 24% 4G Market Share (%; thd users) 118 mln 3.3 mln 41.5 TIM % 21% 20% 39% 30% 20% 1, TIM Prepaid Recharge (R$; % YoY) +8.4% 11% 14% % 10% 334 2Q13 2Q13 2Q13 Source: ANATEL Source: ANATEL Source: Company RECENT RESULTS 15

16 Postpaid Managing customer base GO TO MARKET PROGRESS To Infinity and beyond Prepaid v R$ 7 weekly service package v R$ 0.75 daily offer o o o Reduce churn on postpaid Attract dual SIM card users traffic Renewed focus on corporate customers o Leveraging on pure mobile distinctiveness o Expanding daily tariff scheme to new regions o Simplicity / Transparency Equipping Customer Base % of smartphone sales among players in Source: GFK Group 28% P2 9% P3 23% P1 TIM 41% % of smart + webphone on TIM s base in 35% Source: Company 50% 62% 2Q12 2Q13 % of smartphone over new sales in 39% 57% 71% 2Q12 2Q13 Penetration of smart + webphones drives data usage growth Source: Company RECENT RESULTS 16

17 Thousands Thousands Service Net Revenues (R$ mln; % YoY) 4, % +2.2% ΔYoY +6.9% -29.6% -20.5% FINANCIAL RESULTS ANALYSIS (1/2) 4,155 3,985 MTR 1, Impact ΔYoY +8.0% +15.8% % +4.4% 1,331 EBITDA (R$ mln; % YoY) 1, MTR Impact 3, % EBITDA Margin 27.9% 31.1% Service EBITDA Margin 34.4% Reported Revenue 2Q13 Δ Business Generated Δ Business Incoming Δ Others Reported Revenue Pro forma Revenue in Reported EBITDA 2Q13 Traffic/Data Δ Contribution Margin Δ Opex/ Others Reported EBITDA Pro forma EBITDA in MTR Exposure Net Services Revenues Exposure EBITDA Exposure Interconnection (Δ% YoY) Efficient Cost Control % Bad Debt/Sales (% over gross revenues) ~ 25% ~ 35% -31.3% ~1% ~1% stable 2Q13 2Q13 ~ 12% ~18% Leased Lines Cost (Δ% YoY) 2Q10 2Q11 2Q12 2Q13 2Q10 2Q11 2Q12 2Q13-10% 2Q13 RECENT RESULTS 17

18 Net Income - 6 months (R$ mln; % YoY) FINANCIAL RESULTS ANALYSIS (2/2) Investments R$1,593 mln R$1,657 mln % 738 4G 4G 2G 2G 3G 3G 6M13 6M14 6M13 >94% towards infrastructure 6M14 Net Debt (R$ mln; % YoY) 4,521 Jun/13 2,537 Jun/14 6,356 5,325 1,749 1,749 4,607 3,576 New BNDES Loan 2,648-1,654* -1,786 Cash Flow - 6 months (R$ mln; R$ YoY) ,227 1,984 1,031 Debt Cash Net debt Debt Cash Net debt YoY +41% +110% -48% Net debt/ebitda 12M: 0.19x EBITDA 182 CAPEX Δ WC LT Amazonas OFCF Leasing 6M mln OFCF 6M13 *Considering R$3 mln of LT Amazonas leasing adjustment RECENT RESULTS 18

19 Network Evolution

20 Backhauling Evolution STRATEGY: INFRASTRUCTURE EVOLUTION Fiber to the site / Mobile Broadband Project Key to Data Growth Targeting 38 cities in 2013,+100 cities till Increased Coverage and Access Capacity (# new elements) #NodeB / enodeb (3G + 4G) 82% urban population From 2-8 to +100 Mbps. LTE Ready. Macro coverage fine tuning. POP MW POP MW BSC-RNC Site POP MW POP MW POP MW # BTS (2G) Capex Evolution Towards Data (% of total Capex) 95% urban population Focus on IP infrastructure, caching, peering. Fiber base Infrastructure 2009 INTELIG ACQUISITION 2013 FIBER TO THE AMAZON 2016 MASSIVE LD BACKBONE Small Cell Approach (# new elements) LTE* 3G 2G INTELIG 15,000KM 46,000 KM OF FIBER BY YE13 65,000 KM OF FIBER New Sites Including Small Cell e 2015e 2016e New backbone routes- Increasing resilience. NETWORK EVOLUTION 20

21 TIM s Infrastructure Strategy INFRASTRUCTURE FOCUSED IN DATA Network in Numbers 1 CAPACITY Higher speed 4G roll out Mobile broadband project acceleration Backhauling infrastructure Number of 3G & 4G Sites ~13.1 ~11.3 ~11.0 4Q13 1Q14 Completed actions o New frequency at 900 MHz in SP o Better indoor coverage o Addressing capacity requirement BioSite: New approach to coverage Before After DATA CENTRIC APPROACH 2 3 COVERAGE Homogeneous Access Upgrade In all relevant areas Site densification Small cell / Wi-Fi AVAILABILITY Always available Fine tunning Fiber rings / redundance Resilience Number of Wi-Fi & Small Cell 4Q13 Number of sites with fiber (FTTS) 2Q13 +47% +3.5x 53 Patent pending Initiating in: o Brasília o Curitiba o Rio de Janeiro Cities in mobile BB project +13 cities 66 1Q14 NETWORK EVOLUTION 21

22 Capex Evolution (R$ mln) CAPEX ANALYSIS Capex per Technology (R$ mln) ,871 19% ,983 3,386 CAGR 11% % over sales 18% 17% G 2G 2014e 4G 3G 3G ,836 20% 2G Total Capex R$2,983 ~R$3,800 Fiber to the site expansion to ~100 cities Benchmark: Anatel Plan for (R$ bln) Wi-Fi small cell approach 10.9 To Fiber based +31% +52% +98% From Copper Before FTTS After FTTS Own Fiber (300 Mbps) Metro Ring TIM Claro Vivo Oi Copper (2-8Mbps) Actual from 2012 to Oct/13 Forecasted to Nov/13 until 2014 end Source: 5 th monitoring cycle of mobile telecom improvements plan released by Anatel on Feb/14 NETWORK EVOLUTION 22

23 Regulatory Update

24 New MTR and EILD Analysis REGULATORY UPDATE MTR New Glide Path (R$) Leased Lines - EILD New parameters established Leased line (EILD) reference price reduction, in 2016, from 0.24 ~20% until ~80% Establish regulated reference prices to leased lines speed up to 34 Mbps On preliminary static simulation show relevant OPEX reduction Source: Anatel 4G Auction RFP Auction expected for September License period: years No additional obligation. Network and Spectrum sharing opportunities ANATEL's new costumer care policy - RGC Main measures until July, 2014 Cancelation within 48 hours, without human assistance In case of dropped call, companies must call customer back Minimum of 30 days for prepaid credits to expire Switch off plan starting at the beginning of 2016 Minimum prices and clean-up costs not yet defined TIM has been working to improve transparency and caring Source: ANATEL, Commissioners Meeting on July 17th Source: ANATEL Resolution 632/2014, GEX Meeting on July 17th REGULATORY UPDATE 24

25 708 MHz 713 MHz 718 MHz 723 MHz 728 MHz 733 MHz 738 MHz 743 MHz 748 MHz 763 MHz 768 MHz 773 MHz 778 MHz 783 MHz 788 MHz 793 MHz 798 MHz 803 MHz 708 MHz 718 MHz 728 MHz 738 MHz 748 MHz 763 MHz 773 MHz 783 MHz 793 MHz 803 MHz Auction Public Consultation Band allocation Res. Anatel 625/13 Nov/13 Jan Feb Mar Apr May Jun Jul Aug Sep Conclusion of the Digitalization Plan Interference tests 1 st Round: Cap of MHz Public consultation bid and interference Bid notice Interference Resolution Digitalization Plan 30/Sep Auction Analog TV switch off period 700MHZ AUCTION Auction details Format indicates soft competition: the spectrum will be auctioned in four blocks of 10 MHz + 10 MHz; No additional obligations ( naked auction ), synergies with 2.5GHz auction obligations will be subject to backhaul requirements; Authorization for spectrum sharing in cities with pop. <100k Costs & Payment method Minimum prices: R$1.9bi + R$0.9 (EAD*) per block; 2 nd Round: Cap of MHz (in case of no bidders) License payment in up to six installments (36, 48, 60, 72, 84 and 96 months) preceded by a 10% down payment; Readjustment: IGPDI +1% per month; Reimbursement values will be defined in the BID Regional Blocks: o Block 4 or 13 and 14 Represents 98% of the population, equals to national o Block 5 or 15 and 16 CTBC Region 106 cities or 1 mln users o Block 6 or 17 and 18 SERCOMTEL Region 2 cities or 67k users terms and will be administrated by an independent third party; Channel repositioning, filters, TV converter, and other mitigation techniques will be subject to reimbursement. *Entity for Administration of TV and RTV Channel Relocation and Digitalization Process REGULATORY UPDATE 25

26 2500 MHZ auction results 2500 MHZ rural coverage obligations 4G DETAILS 4G Market Share on 2500Mhz (%; thd users) 3.3 mln TIM Oi Claro Vivo Paid ~R$0.8 bln Paid ~R$1 bln Paid ~R$0.3 bln Paid ~R$0.3 bln V1 band V2 band W band X band Band W Band X Band V1 Band V2 47% 21% 20% 12% Source: ANATEL 39% 30% 20% 10% 2Q13 3Q13 4Q13 1Q14 1, TIM Roadmap Spectrum Characteristics Presidential Decree Nº 5820/06 Rules to the Digital TV migration Ordinance Nº 14/13 Premises to 700 Mhz destination on the SMP 700 Mhz 850 Mhz < 700 Mhz Mhz 2100 Mhz ANATEL s Resolution Creation of a study group to define the future and the atribution of the band Shutting down Period BTS Range (km) Feb/Apr Subrange Atribution CP Nov/13 Res. Nº 625/2013 Atribution of the Subrange Numbers of BTS REGULATORY UPDATE 26

27 Fixed Business

28 TIM SOLUÇÕES CORPORATIVAS: PLAN MOVING FORWARD IN Q2 Turnaround Plan on Fixed Business Plan 4Q13 1Q14 2H14 Phases Financial sanitization Infrastructure reinforcement Market repositioning Showing results Business Priorities o Positive EBITDA o New business unit o New branding o Sales growth Governance / Efficiency Highlights o Cost efficiency o Customer base management organization o IT renewal plan o Multiservice network launch o New offers and product launch o Restructured sales force o Revenue rebound Business development Quality and Process Operational Improvements Paying Off Activation time (days) New sales revenues (R$; YoY) Financial performance Net Revenues (with intercompany) -80% +19x Segment EBITDA-CAPEX Business remodeling driving stable fixed revenues QoQ + 2Q13 2Q13 3Q13 4Q13 1Q14 - Source: Company FIXED BUSINESS 28

29 Gaining more traction Addressable HH (000 HH) Gross Adds (000 users) FIXED BROADBAND: LIVE TIM Customer Base (000 users) 100k 1,220 1,138 1, Q13 3Q13 4Q13 1Q14 Source: Company +113% +34% Q13 0 1Q14 26k Jun/13 Jul/ neighborhoods: 43 neighborhoods in SP 83 neighborhoods in RJ New Offers May/2014 Internet buzz Quality Experience Netflix Broadband Ranking (Average streaming speed representation) o Live TIM Extreme 1Gbps for R$1, % 1 st 31% 51% 18% 2 nd o Live TIM Blue Box release: optional TV approach Market average 8% 21% 72% 4 th 3 rd Jul/2014 New speed: 70Mbps for R$ Positive Neutral Negative 6 th 5 th Source: Gauge 1Q14 Source: Netflix July 2014 FIXED BUSINESS 29

30 Business Outlook

31 KEEPING THE STRATEGIC FOCUS ON THE 2 nd HALF Accelerated Network Evolution for Data Consolidating Recent Offers & Innovative Services 1 Capacity BioSite Mobile DATA CENTRIC APPROACH 2 Coverage Small Cells Fixed 3 Availability 4G 700MHz New Positioning VAS TIM Protect CONTENT Strong Institutional Position Porta Azul (Blue Door) Evolving the Structure for the New Challenges 4G auction participation Streamlining organization Adding new talent Leadership position Stronger segment focus Presence in dialogue with relevant institutions o o o Consumer Corporate Residential BUSINESS OUTLOOK 31

32 OFFER EVOLUTION Smart/Web phone Penetration (% over total base of lines) Voice MOU (minutes) >75% > % 43% e Data Users (% of Data Users in CB; million users) VAS Revenue Growth (% of Mobile Services Gross Revenues; R$ mln) 30% 37% >50% VAS/Revs. 18% 21% >40% % xx% VAS Gross Revs. +22% +xx% e e BUSINESS OUTLOOK 32

33 TIM PART: GUIDANCE R$ million Guidance Total Net Revenues 18,764 19, CAGR: Mid Single Digit Growth e 2015e 2016e R$ million EBITDA 5,012 5, CAGR: Mid Single Digit Growth e 2015e 2016e R$ million 3,765 3,871 CAPEX Infrastructure 3,139 3,487 Total CAPEX : ~R$11 billion* Others/Licenses e 2015e 2016e *Does not consider 4G licenses (700Mhz). BUSINESS OUTLOOK 33

34 Historical Data & Others

35 RECENT TOWERS DEALS HISTORICAL DATA & OTHERS 35

36 QUARTERLY HISTORICAL DATA (R$ THOUSAND) Quarter R$ Thousand Description 1Q13 2Q13 3Q13 4Q13 1Q14 vs. 2Q13 (% YoY) Gross Revenues 7,024,216 7,413,009 7,539,627 7,684,901 7,043,065 7,162, % Gross Revenues Telecommunications Services 6,125,517 6,136,654 6,312,149 6,490,893 6,180,443 6,014, % Telecommunications Services - Mobile 5,831,734 5,852,094 6,054,713 6,254,887 5,958,845 5,793, % Usage and Monthly fee 2,694,316 2,777,176 2,884,968 2,953,344 2,801,736 2,751, % Value added services - VAS 1,245,483 1,291,470 1,362,498 1,454,202 1,499,538 1,577, % Long distance 830, , , , , , % Interconnection 1,005, , , , , , % Others 55,649 59,466 55,153 65,985 67,277 65, % Telecommunications Services - Fixed 293, , , , , , % Gross Revenues Handset sales 898,699 1,276,354 1,227,478 1,194, ,622 1,147, % Net Revenues 4,710,715 4,944,141 5,083,159 5,183,276 4,702,224 4,774, % Adjusted Net Revenues 4,710,715 4,988,050 5,083,159 5,183,276 4,702,224 4,774, % Net Revenues on Services 4,086,662 4,065,311 4,206,773 4,342,314 4,099,640 3,984, % Adjusted Net Revenues on Services 4,086,662 4,109,220 4,206,773 4,342,314 4,099,640 3,984, % Net Revenues on Products 624, , , , , , % Operating Expenses (3,486,942) (3,711,943) (3,831,158) (3,684,504) (3,384,936) (3,443,836) -7.2% Personnel expenses (200,579) (200,623) (211,985) (218,688) (227,767) (229,822) 14.6% Selling & marketing expenses (946,656) (973,227) (1,035,454) (982,561) (980,196) (1,025,703) 5.4% Network & interconnection (1,352,476) (1,321,534) (1,344,279) (1,294,011) (1,194,478) (1,010,578) -23.5% General & administrative (159,075) (152,075) (155,809) (157,766) (149,852) (178,396) 17.3% Cost Of Goods Sold (655,634) (912,158) (906,944) (876,105) (645,844) (828,012) -9.2% Bad Debt (72,631) (67,720) (55,534) (44,167) (76,103) (77,152) 13.9% Other operational revenues (expenses) (99,891) (84,605) (121,152) (111,205) (110,695) (94,173) 11.3% EBITDA 1,223,773 1,232,198 1,252,001 1,498,773 1,317,288 1,330, % EBITDA Margin 26.0% 24.9% 24.6% 28.9% 28.0% 27.9% 295 bps Adjusted EBITDA 1,223,773 1,262,852 1,252,001 1,498,773 1,317,288 1,330, % Adjusted EBITDA Margin 26.0% 25.3% 24.6% 28.9% 28.0% 27.9% 256 bps Depreciation & amortization (679,439) (671,297) (694,075) (723,061) (730,313) (757,072) 12.8% Depreciation (364,335) (373,258) (376,195) (388,709) (401,829) (407,479) 9.2% Amortization (315,103) (298,039) (317,880) (334,352) (328,484) (349,594) 17.3% EBIT 544, , , , , , % EBIT Margin 11.6% 11.3% 11.0% 15.0% 12.5% 12.0% 67 bps Net Financial Results (71,085) (40,881) (90,237) (100,517) (35,834) (72,706) 77.9% Financial expenses (167,024) (152,110) (209,124) (221,442) (177,911) (256,616) 68.7% Net exchange variance (731) 2,034 (4,279) (1,435) (1,403) (560) % Financial income 96, , , , , , % Income before taxes 473, , , , , , % Income tax and social contribution (167,183) (134,462) (152,674) (176,221) (179,008) (135,504) 0.8% Net Income 306, , , , , , % Adjusted Net Income 306, , , , , , % HISTORICAL DATA & OTHERS 36

37 Year R$ Thousand ANNUAL HISTORICAL DATA (R$ THOUSAND) Description (YTD) Gross Revenues 27,755,813 29,661,753 14,205,568 Gross Revenues Telecommunications Services 24,350,086 25,065,214 12,195,042 Telecommunications Services - Mobile 22,879,828 23,993,427 11,752,472 Usage and Monthly fee 11,086,671 11,309,804 5,552,984 Value added services - VAS 4,404,832 5,353,653 3,077,103 Long distance 3,217,921 3,332,965 1,586,398 Interconnection 3,969,138 3,760,751 1,402,920 Others 201, , ,069 Telecommunications Services - Fixed 1,470,259 1,071, ,570 Gross Revenues Handset sales 3,405,726 4,596,539 2,010,526 Net Revenues 18,763,947 19,921,291 9,476,957 Adjusted Net Revenues 18,763,947 19,965,200 9,476,957 Net Revenues on Services 16,419,958 16,701,059 8,084,159 Adjusted Net Revenues on Services 16,419,958 16,744,969 8,084,159 Net Revenues on Products 2,343,989 3,220,232 1,392,798 Operating Expenses (13,751,989) (14,714,546) (6,828,772) Personnel expenses (729,032) (831,876) (457,589) Selling & marketing expenses (3,841,852) (3,937,899) (2,005,899) Network & interconnection (5,353,476) (5,312,301) (2,205,056) General & administrative (551,393) (624,725) (328,248) Cost Of Goods Sold (2,604,978) (3,350,841) (1,473,856) Bad Debt (250,972) (240,051) (153,256) Other operational revenues (expenses) (420,286) (416,853) (204,868) EBITDA 5,011,958 5,206,744 2,648,184 EBITDA Margin 26.7% 26.1% 27.9% Adjusted EBITDA 5,054,088 5,237,399 2,648,184 Adjusted EBITDA Margin 26.9% 26.2% 27.9% Depreciation & amortization (2,688,588) (2,767,871) (1,487,386) Depreciation (1,458,563) (1,502,498) (809,308) Amortization (1,230,025) (1,265,374) (678,078) EBIT 2,323,370 2,438,873 1,160,799 EBIT Margin 12.4% 12.2% 12.2% Net Financial Results (169,890) (302,720) (108,541) Financial expenses (644,754) (749,700) (434,527) Net exchange variance (4,151) (4,410) (1,962) Financial income 479, , ,949 Income before taxes 2,153,480 2,136,153 1,052,258 Income tax and social contribution (704,592) (630,539) (314,512) Net Income 1,448,888 1,505, ,746 Adjusted Net Income 1,500,143 1,525, ,746 HISTORICAL DATA & OTHERS 37

38 HISTORICAL DATA: OPERATIONAL & FINANCIAL RATIOS Year Description Brazilian Wireless Subscriber Base (000`s) 261, , ,707 Estimated Total Penetration 132.8% % 136.1% Municipalities Served (GSM) 3,383 3,404 3,427 Market Share 26.88% 27.09% 26.91% Total Lines (000's) 70,376 73,431 74,203 Pre-paid Lines (000's) 59,658 61,146 61,963 Post-paid Lines (000's) 10,718 12,285 12,239 Gross Additions (000's) 38,408 39,627 18,612 Net Additions (000's) 6,293 3, Churn 47.5% 50.9% 24.2% Total ARPU Total MOU SAC Handsets Sold (000's) 10,227 12,511 5,400 CAPEX (R$ Mn) 3,765 3,871 1,472 Employees 11,650 12,167 12,225 ROA: NOPLAT/Avg. Total Assets. Calculation considers organic Net Income and EBITDA HISTORICAL DATA & OTHERS 38

39 STRUCTURE AND STOCK PERFORMANCE Telecom Italia 100% Telecom Italia International N.V. 100% TIM Brasil Serv. e Part. S.A. Free Float ON: 67% (1,611,969,946) ON: 33% (805,662,701) TIM Participações S.A. 100% 100% TIM Celular S.A. Intelig 60% 50% 40% 30% 20% 10% 00% -10% Stock Performance (base 100)* TIMP3 Ibovespa TSU HISTORICAL DATA & OTHERS 39

40 TELCOS TAX BURDEN & HIGH INVESTMENTS Tax Burden Composition Telecom Industry Tax Payments 1 (R$ Bln) ~5% 1.5% ~39% % Gross Revenues 28% % ~1% Telecom Industry Investments 2 (R$ Bln) Cofins PIS/ PIS/ PASEP ICMS Fistel Fust/ PASEP FUNTEL Total % of Revenues Taxation represents almost 40% of companies gross revenues. 1 Considers TIM, Telefonica, Oi and AMX 2 Considers TIM, Telefonica, Oi, AMX and GVT Source: players Balance Sheet HISTORICAL DATA & OTHERS 40

41 SAFE HARBOR AND IR CONTACTS Safe Harbor Statements Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the Company, or TIM ), that are not historical fact constitute forward looking statements that involve factors that could cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward looking statements. The Company cautions users of this presentation not to place undue reliance on forward looking statements, which may be based on assumptions and anticipated events that do not materialize. Investor Relations Team Avenida das Américas, Bloco 01 6 andar Barra da Tijuca Rio de Janeiro, RJ ri@timbrasil.com.br Rogério Tostes rtostes@timbrasil.com.br Phone: Vicente Ferreira vdferreira@timbrasil.com.br Phone: Leonardo Wanderley lwanderley@timbrasil.com.br Phone: Rodrigo Godoy rcgodoy@timbrasil.com.br Phone: Luiza Chaves luchaves@timbrasil.com.br Phone: Visit our Website SAFE HARBOR & IR CONTACT 41