About TIM

TIM S.A. (TIM) operates as a telecommunications company. The company offers mobile voice and data services, broadband Internet access, Value-Added Services, and other telecommunications services and products. The company is a subsidiary of TIM Brasil Serviços e Participações S.A. (TIM Brasil). TIM is the brand name under which the company markets its mobile telecommunications services, offering 5G (fifth generation of wireless communications technologies supporting cellular data networks) DSS (Dynamic Spectrum Sharing), 4G (fourth generation of mobile telecommunications network technology succeeding 3G, which comply with the IMT-Advanced standard as defined by the International Telecommunications Union), 3G (third generation of mobile telecommunications network technology that comply with the IMT-2000 standard as defined by the International Telecommunications Union), and GSM ('Global System Mobile' (a standard of digital mobile telecommunications technology)) technologies. The company holds mobile licenses for each of the ten wireless areas of Brazil recognized by Anatel (Brazil's National Telecommunications Agency (Agência Nacional de Telecomunicações)), making the company a mobile operator in Brazil offering complete nationwide coverage. The company is characterized by its pioneering and innovative offerings, among a complete portfolio for individuals, as well as corporate solutions for small, medium and large companies. Besides traditional voice and data services, the company offers a fixed-line ultra-broadband service, TIM UltraFibra, WTTx (Wireless to the x) technology through UltraFibra service, and it has started to offer IoT solutions, with successful examples in agribusiness, while also looking for new opportunities in other industrial segments, such as mining, transport and logistics, healthcare, public safety and industry 4.0. The company also offers a variety of digital content and services in its portfolio of packages, aimed at increasing the day-to-day functionality of its customers' mobile devices. The ability to manage a complete and varied portfolio gives the company the opportunity to offer customized packages to its customers and to provide offers which bundle services, like voice and data, to customers in certain regions. In 2022, the company continued its innovative and pioneering strategy in all consumer market segments (prepaid, control and postpaid). In the postpaid segment, the biggest launch of the year was the new plan with an Apple TV+ subscription included for no additional fee. Settled at the same price point as the company's other postpaid plans and competitively positioned in the market for postpaid offers, the partnership with Apple allows the company to provide a unique offering in the Brazilian market. Furthermore, the company started to establish its position in the 5G market. The company launched an extra '5G Booster Package' to postpaid customers, enabling them to enjoy the best of its 5G capabilities. In addition, the company is the only carrier in the Brazilian market to allow its customers to choose their favorite subscription among HBO, YouTube or Netflix without the need to switch plans. This feature also permits customers to easily change their choice whenever they want. The company still maintains other advantages, such as 'data rollover', 'concierge service' and the new 'TIM in flight', to contribute to a better customer experience. In the control segment, the company increased its focus on the 'TIM Controle Redes Sociais' (TIM Control Social Media) plan, which grants unlimited data to be used on Instagram, Twitter and Facebook packages, and has a higher average ticket. Furthermore, in the prepaid segment, the company continued with its strategy to increase value added benefits for its customers. For example, by including an 'Amazon Prime Mobile Only' subscription with no additional fee to TIM PRE TOP customers, the company maintains its strong position in the prepaid market, being the only carrier in the global market to offer video and music subscriptions without an additional fee (Amazon Prime Mobile Only and Deezer Go - launched in 2021). Through this product strategy, the company's pioneering and innovative spirit (which the company considers characteristics of its DNA) will sustain its relevance in the domestic market and allow its customers to take full advantage of growing network capabilities as it enters the 5G era. The company offers mobile services under a variety of rate plans to meet the needs of different customer classification, including its corporate customers. The rate plans are either postpaid, where the customer is billed monthly for the previous month, or prepaid, where the customer pays in advance for a specified volume of use over a specified period. The company's postpaid plans include monthly subscription charges, which usually include a bundle of minutes, data and digital contents, that are included in the monthly service charge; usage charges, for usage in excess of the specified number of minutes included in the monthly subscription charge; and additional charges, including charges for Value-Added Services and data services. Certain plans include the cost of national roaming and long distance in the price per minute so that all calls within Brazil cost the same amount per minute. Some postpaid plans are designed for high- and moderate- usage subscribers, who are typically willing to pay higher monthly fees in exchange for minutes included in the monthly service charge while other plans are designed to satisfy the more limited needs of low-usage postpaid subscribers. The company also offers customized services to its corporate clients, which may include local call rates between employees wherever located in Brazil. The company offers a single prepaid plan with promotional offerings, which does not include monthly charges. Prepaid customers can purchase a prepaid credits plan that may be used for calls, data and additional services, based on the specific customer's needs. The company has agreements with large national retail store chains, in addition to partnerships with regional retail store chains, to offer recharging online. Customers can recharge straight from their mobile handsets using credit cards. Consumer Plans In 2022, the company continued to improve its positioning towards high value consumers, offering a variety of plans bundling voice, data packages and free access to certain applications, as well digital Value-Added Services (music, e-reading, video streaming). The approach to this segment is driven by the strategy of adding value for the customer base and ensuring users a premium custom experience. Within the consumer business, the company's main plans include: Prepaid Plans TIM Pre TOP: Offerings launched during 2020 were built to provide a full experience with simplicity, by adapting consumption according to balance and recharge; boosting benefits (unlimited network calls, unlimited calls for other carries using code 41, adaptable data packages and SMS). TIM Beta: With an exclusive feel, this plan focused on young and digital customers that can only enter by invitation send by existing members or participating in a journey and accomplishing tasks to conquer their own invite. TIM Beta is only offered as a monthly subscription that includes Deezer Premium and exclusive data packages for YouTube, Netflix, TikTok and Instagram. Postpaid Plans In the higher value postpaid segment, the company has maintained its position in the market as an innovator and disruptor with its new TIM Black Família and TIM Black plans, improving its portfolio by offering large shared data packages with monthly video streaming subscriptions, such as Netflix, HBO GO or YouTube Premium already included in the fee. Control Plans The company's Control plans are a hybrid between its prepaid and postpaid plans, with fixed price billed to the customer on a monthly basis, either via credit card or digital account. Once customers of Control plans have reached the limit of their data plan, the data transmission is no longer available and the user has two options: to repurchase a data package or upgrade to higher tariff plan; or to wait for the next data period to commence, which varies by plan, at which point his data availability and usage limit are renewed in full. Postpaid customers can also purchase a data package to navigate in full speed but the usage is not blocked when he reaches the limit of his data package. Corporate Plans The company joined major companies within the sector to create ConectarAGRO, a customer-focused initiative to expand connectivity to all rural areas of Brazil, increasing productivity and transforming the lives of those who live in these regions. The initiative reached its 2019 goal of 5 million connected hectares and expects to progress further in 2023. In 2021, the company continued to improve its positioning towards the large companies as potential clients, offering a variety of corporate solutions for mobile or fixed services (both voice and data), as well as Value-Added Services and mobile-to-mobile services. The approach for these top clients are driven by customized solutions and a premium customer service focus. In the SMB (small and medium business) segment, the company has positioned its core offering targeting the 'prosumer' market, or those individuals who both consume and produce a product. 'TIM Black Empresas' has become the brand for the SMB portfolio, delivering unlimited voice calls and a variety of data packages, consistent with its strategy of providing 'lots of minutes and lots of Internet, across all operators and anywhere in Brazil'. In addition to mobile connectivity, relevant Value-Added Services have been added to the main 'TIM Black Empresas' offer in order to empower its business customers during their progress towards digital transformation, such as: cloud storage and backup, a website and online store builder, sales/field force automation and productivity apps. Those complimentary services were built based on revenue sharing agreements through strong partnerships with UOL, Fs, Datamob, Prouser and Deezer, that supports the company's intention to become its customers' business partner rather than a pure connectivity provider. In 2022, the company started offering private networks combined with edge computing solutions in the B2B market, in order to address the needs of agricamps, and ports and other verticals to have access to high-throughput, low-latency and high resilience 5G networks, ensuring that companies always have access to the bandwidth and network resources they need, including low latency time. The company intends to implement those networks in 2023. The company maintains a prominent position in the area of Internet of Things (known as IoT), especially in the AGRO segment, where since 2018 the company has started an ambitious effort to fill the connectivity gap throughout rural Brazil in partnership with the agricultural sector. In 2020, in addition to consolidating its leadership in AGRO, the company managed to evolve with projects in other verticals with action and cooperation with the ecosystem. The company's strategy that has connectivity as the central point, its strongest attribute, but with complete solutions together with its partners in order to give more value to its customers and, at the same time, generate more revenue and loyalty. In addition, the company has been developing a new network product and service model by offering private networks using 4G and 5G mobile network technologies for corporate customers, mainly for industrial segments, such as mining, transport and logistics, healthcare, public safety and industry 4.0. The company also established itself in the 5G private network business segment and closed a number of deals in industrial sectors, the most significant of which was the first 5G port operation in Latin America, located in Port of Santos, State of São Paulo. The center point of the company's strategy is connectivity, complemented by fulsome solutions together with its partners to deliver additional value to its customers while generating more revenue and customer loyalty. In the ICT and Mobile market, the company's strategy is to reinforce its portfolio of traditional solutions and its positioning as a significant player in large companies' segment, offering various corporate solutions for mobile or fixed services (voice and data). In addition, the company is working to evolve its value-added solutions, seeking to provide a more fulsome approach to meet the broader needs of its premium customers. Value-Added Services The company is constantly seeking to increase value to its customers through innovative offers and products, and 2022 was no exception. The company offers, directly or through agreements entered into with third parties, Value-Added Services in varied categories, such as education, music, reading, games, videos and social networks. In 2022, the company launched what it considers to be the most innovative offer in the Brazilian pre-paid space, made possible by partnering with Amazon. Pursuant to the company's offer, all pre-paid customers are granted free access to Amazon Prime Video. This has generated a spending increase of 20% for the company's pre-paid base using the service. The company also continues the improvement of its portfolio through additional services provided by new strategic partners. Digital Channels In 2022, the company continued to develop its digital channels, as well as the insurance services it relaunched in 2018 with a new portfolio of services, which allow the company to take a broader approach to this market. The company launched new digital customer service channels, which aims to maximize convenience for its customers. The company continues to use a new tool called DialMyApp that shows a visual interactive voice response (known as IVR) on the customer's cell phone every time the customer calls the contact center from an Android device. This is intended to enable the company's customers to resolve their issues directly on their smartphone without needing to go through the traditional phone service. The company achieved first place in customer engagement on this platform among all Brazilian telcos. The company continues to use customer service through RCS, a Google platform that allows easy interaction with its customers, with user-friendly visual elements, in addition to a more interesting cost composition. Once again, the company was the first telco to launch this service in Brazil. It also started the process of internalizing pre- and post-paid migrations under the leadership of the board dedicated exclusively to digital and remote channels created in 2021. In 2023, the company's fundamental pillars are to increase the share of proprietary channels, with the evolution of the e-commerce internalization process and to redevelop the MEU TIM app, as a strategy to improve customer experience, increase the volume of users and improve their digital journey. Customer Service In order to serve its customer base, almost 63 million customers, the company aligned the insourced/outsourced ratio of its internally managed customer service operations to its outsourced customer service operation to the best practices of Brazilian telecommunications business. The company operates through 18 customer care centers, two of its own and 16 outsourced, comprising around 13,511 customer service representatives and its home based service 'Projeto Nova Era - 100% Remote service', (of which 1,521 customer service representatives aim to offer its customers a differentiated journey). The company's high value customer service, core processes and critical 'Referral Channels' are maintained in its home based model. As of December 31, 2022, the company had more than 12,800 points of sale through premium shops and dealers (exclusive or multi-brand) and consolidated partnerships with large retail chains. This figure includes 158 of its own stores. In addition to these retail stores, the company's customers have access to prepaid phone services through supermarkets, newsstands, and other small retailers, totaling more than 212,000 points of sale throughout Brazil. After its launch in December 2021, the company opened its first five concept stores, using a new format, launching the beginning of a new experience in its customer journey. For 2023, the company plans to open four additional concept stores in this new format. The new format has several spaces where customers are able to try out smartphones and accessories that already have 5G technology, as well as equipment for connecting homes using TIM UltraFibra fixed ultra-broadband. Customers themselves will be able to carry out basic activities, such as consulting with the company's sales representatives, printing, paying invoices, purchasing plans and services, and even discussing with its tech experts tips for operating their devices, apps, and more. For the corporate market, the company has more than 397 third-party business partners and 101 employees focused on serving small and medium-size companies and a direct sales force team of 86 employees focused on large companies. Since 2020, digital channels have been an important aspect of the company's service, through the MEU TIM mobile application and the MEU TIM web portal. Digital channels are also useful for self-service, prepaid customer recharge and service upselling. In addition to being a better customer experience due to the speed of response it provides, digital channels allow the company to reduce costs, such as customer service operations and sales commissions. The company expanded its customer service offerings for its digital customers by adding the following channels for its customers to connect with it: CHAT MEU TIM (Web and App), WhatsApp, SMS, RCS, Telegram, Apple Message for Business and Google Business Message. Lines of Revenue The company's revenues from mobile and fixed services includes monthly subscription charges; network usage charges for local mobile calls; roaming fees; interconnection charges; national and international long distance calls; Value-Added Services; and co-billing. Additionally, the company has revenues from sales of products (mobile handsets and accessories) and other customer platforms revenues. Monthly Subscription Charges The company receives a monthly subscription fee under its postpaid mobile plans, which varies based on the usage limits under the relevant plan. Network Usage Charges The company divides its coverage areas into certain areas defined as 'home registration areas'. Calls within the same home registration area are considered local calls. Each of the company's customers is registered as a user of one of its home registration areas. VC1 (local rate): The VC1 rate is the company's base rate per minute and applies to mobile/fixed or mobile/mobile calls made by a customer located in the customer's home registration area to a person registered in the same home registration area. VU-M: VU-M, also known as an interconnection rate or mobile termination rate, is the fee another telecommunications service provider pays the company for the use of its network by such provider's customers, in this case for local calls. Roaming Fees The company receives revenue pursuant to roaming agreements it has entered into with other mobile telecommunications service providers. Automatic national roaming permits the company's customers to use their mobile telephones on the networks of other mobile service providers while traveling or 'roaming' in the limited areas of Brazil not covered by its network, complementing its mobile coverage. Similarly, the company provides mobile telecommunications service to customers of other mobile service providers when those customers place or receive calls while in its network. Mobile service providers which are party to roaming agreements must provide service to roaming customers on the same basis that such providers provide service to their own clients. All such providers carry out a monthly reconciliation of roaming charges. The company's roaming agreements have a one-year term and automatically renew for additional one-year terms, which are regulated and previously approved by Anatel. Interconnection Charges The company receives interconnection revenues for any calls originating from another service provider's network, mobile or fixed line, which is received by any mobile customer, of the company's or of another provider's, while using its network. The company charges the service provider from whose network the call originates an interconnection fee for every minute the company's network is used in connection with the call. On the other hand, the company must pay the fees for other telecommunications companies, when its users place a call to phones connected to other network operators. Long Distance For mobile customers, the company offers long distance services throughout Brazil. This service allows the company's mobile customers the option of continuing to use its service for long distance calls, which strengthens its respective relationship and loyalty, and enhances the perception of its brand as a comprehensive mobile telecommunications service. Mobile customers of other service providers can also choose to use the company's long distance service. VU-M is the fee another telecommunications service provider pays to the company for the use of its network by such provider's customers, in this case for long distance calls. Co-Billing Services Co-billing occurs when the company bills its customers on behalf of another long distance service provider for services rendered to its customer by that carrier. Beginning July 2003, the company started providing co-billing services to other telecommunication service providers operating in Brazil. The fee to provide such service to the long distance carrier is defined by Anatel and the rate charged to the subscriber follows the rating plan from the long distance carrier. Sales of Product The company offers a diverse portfolio of handset models from several manufacturers for sale through its dealer network, which includes its own stores, exclusive franchises and authorized dealers. The company is focused on offering an array of handsets, including essential and smartphones devices with enhanced functionality for Value-Added Services, while practicing a policy of increasing 5G smartphone penetration. The company's mobile handsets can be used in conjunction with either its prepaid or postpaid service plans. Billing and Collection The company's company-wide, integrated billing and collection systems are provided by a third-party vendors. These systems have four main functions: customer registration, customer information management, accounts receivable management and billing and collection. Partnership with TIP and INATEL In October 2020, the company announced a partnership with Telecom Infra Project (TIP), for developing OpenRAN (Open Radio Access Network) technology by means of the Open Field Program. The initiative will be hosted by INATEL (Instituto Nacional de Telecomunicações) in the city of Santa Rita do Sapucaí, in the state of Minas Gerais, Brazil. The goal is to create an adequate environment (living lab) to test, validate and accelerate products and new functionalities of open and disaggregated technologies solutions for Radio Access Network, by performing network testing, product validation, feature analysis and recommendation based on friendly users' usage and feedback. The program has taken place since 2021. Additionally, at the end of 2022, the Open RAN 5G SA TIP test plan for network access with the vendor was completed and the TIP internal process to obtain the Silver Badge began and is expected to be completed after the review and approval of the deliverables. This Silver Badge demonstrates testing of a product, combination or solution for alignment with TIP-defined requirements, typically in a controlled environment. The specific tests required for a particular badge are established by TIP's project groups and comprise a significant subset of all tests required for deployment. Partnership between TIM and Cogna On July 7, 2021, the company informed its shareholders, the market in general and other stakeholders that, together with Anhanguera Educacional Participações S.A. (AESAPAR), a subsidiary of Cogna Educação S.A. (Cogna), jointly referred to as 'Partners', it completed the negotiations regarding a strategic partnership (Partnership) with the objective of developing offers combined with special benefits aimed at providing distance education through the Ampli platform, reaching over 280,000 users enrolled in undergraduate courses and open courses in 2022. On February 15, 2023, the partners agreed amicably to call off the partnership. The company is negotiating a new partnership with an educational group in Brazil to offer greater value and exclusive benefits to its customer base and expand access to digital education services. Partnership between TIM and FS Group In line with the company's customer platform strategy, following on from a number of other strategic partnerships, in May 2022 the company entered into a new strategic partnership with FS Security to establish a new company dedicated to digital security solutions and entertainment for end consumers while also making it available as a white-label model for other operators. Regional The company provides 4G coverage in 5,370 cities to 99% of the urban population of Brazil, making its 4G network the most extensive in the country. The company continued its infrastructure evolution and expanded its 4.5G coverage to 1,922 cities by the end of December 2022. The company's 3G coverage reaches 4,132 municipalities and 94% of the urban population. Lastly, 2022 was marked by the launch of 5G technology in Brazil, which seeks to meet the demand for higher connection speeds. The company ended 2022 having launched 5G technology in all 27 state capitals of Brazil, with a much higher number of antennas than required by Anatel, allowing it to provide an even better experience for its customers. Network The company's wireless networks use 4G, 3G and 2G technologies and cover 100% of the urban Brazilian population. As a result of its investment in infrastructure, on March 2022 the company announced that it had completed its implementation of standalone 5G network CORE. This was necessary for the company to be able to provide fifth-generation services in accordance with government requirements. Anatel approved a revised schedule for granting access to the 3.5 GHz spectrum band in order to activate the 5G network in the Brazilian capital and Federal District of Brasília after August 2022, commencing the commercial operations of 5G Standalone (5G SA) throughout Brazil. In 2022, the company began the rollout and has 5G coverage in Brasília and all 26 state capitals, with a special focus on the cities of São Paulo, Rio de Janeiro and Curitiba, where 100% of the neighborhoods were covered, and where the company has the highest number of sites compared to its competitors. The company is thus the leader in 4G coverage in Brazil among mobile telecommunications providers, both by number of cities served and percentage of population covered. The company's wireless network has both centralized and distributed functions, and includes mainly transmission equipment, consisting primarily of more than 60 thousand eNodeBs in its 4G network, more than 17 thousand NodeBs for the 3G layer and more than 13 thousand BTSs for 2G network as of December 2022, considering site-sharing, hardware equipment and software installation and upgrades. The network is connected primarily by IP radio links and/or optical fiber transmission systems distributed nationwide. Another priority is developing the company's national network. In December 2022, the company continued to increase the quantity of sites connected by optical fiber, as well as integrating mobile sites acquired with Oi assets, reaching more than 10.500 of sites connected by optical fiber. The results are consistent with Anatel's network quality requirements, and with TIM retaining its solid performance in 2022. Since national coverage and quality of service has improved substantially over the last few years, Anatel has shifted its focus in recent years. Anatel is concentrating its efforts on smaller geographic areas, particularly in those areas where service is still considered poor. By the end of 2022, the company deployed 15 new virtualized Core Network Datacenters (DCC) located in Rio de Janeiro (2), São Paulo (2), Fortaleza (2), Salvador (2), Brasília (2), Belo Horizonte (2), Belem and Curitiba (2), in addition to 19 new virtualized Edge Network Datacenters (DCE) located in Campinas, Porto Alegre, Natal, João Pessoa, Florianópolis, Blumenau, Maringá, Londrina, São Luis, Goiânia, Foz do Iguaçu, Santos, São Jose dos Campos, Uberlândia, Varginha, Feira de Santana, Teresina, Manaus and Ponta Grossa. Most of the company's core network functions are already running in a virtualized fashion by means of these network datacenters. The migration of additional network functions to a virtualized datacenter will be based on a roadmap of virtual network functions, or VNFs, respecting the maturity of each network function. In 2022, the company started to implement its 5G Core, following 3GPP (3rd Generation Partnership Project) standards, providing 5G Standalone services for its customers, with new capabilities like reduced RTT - Round Trip Time and mission critical IoT services. The 5G core has being implemented in a Cloud environment (CNF). Roaming Agreements The company has entered into roaming agreements for automatic roaming services with other mobile operators outside its regions. Automatic roaming allows the company's customers to use their mobile telephones on the networks of other mobile operators while traveling abroad or out of TIM coverage areas in Brazil. Similarly, the company provides mobile services for customers of other mobile operators when those customers place or receive calls while visiting Brazilian cities with TIM coverage. The company provides services for the clients visiting its network on the same infra-structure basis provided to its own clients. All of the mobile operators party to these agreements must carry out a monthly reconciliation of roaming charges with its roaming partners. National Roaming Agreements In 2017, Anatel required the company, Claro S.A. (Claro), Oi and TelefÔnica Brasil S.A. (Vivo) to guarantee the provision of mobile services (voice, SMS (Short Message Services) and data) in all cities with less than 30,000 inhabitants through roaming agreements. International Roaming Agreements The company has international roaming agreements available in 210 different countries with 462 international operators that encompass 591 individual (PMNs) networks. These agreements include at a minimum voice service, and may be enhanced based on the technology available on the visiting network and can include voice, SMS and data (2G, 3G and 4G). The company's international roaming agreements have steadily expanded in recent years. By the end of 2022, the company expanded its 4G data coverage to 35 new networks, meaning the company offers 4G roaming in 105 countries, covering the main travel destinations for Brazilians. The company has also started offering VoLTE and 5G NSA on roaming; by the end of 2022 it had already established five VoLTE (voice over LTE (Long-Term Evolution)) connections in two countries and 26 5G NSA connections in 16 countries. Strategy The company expects its updated strategic plan to allow it to consolidate the TIM brand through 2025, in a consistent approach with its prior plan (2022-2024). The company's new plan is still focused on its main stakeholders and on providing building blocks for its future growth by combining evolution and transformation to reach its aspirations, which combines the company's bold expectations for both value and growth. The key elements of the company's strategy include being recognized as the best mobile operator in Brazil; accelerating its growth by pursuing a new asset light model in broadband; scaling-up its presence in the B2B/IoT tech arena; and expanding the portfolio of its strategic partnerships to accelerate its ability to capture value. Seasonality The company has experienced a trend of generating a significantly higher number of new clients and product sales in the fourth quarter of each year (year ended December 2022). Several factors contribute to this trend, including the increased use of retail distribution in which sales volume increases significantly during the year-end holiday shopping season, the timing of new product and service announcements and introductions, and aggressive marketing and promotions in the fourth quarter of each year. Competition The company competes with landline telephone service providers, of which the incumbent providers in Brazil (Oi, Vivo (TelefÔnica Brasil S.A.) and Embratel Participações S.A. (owned by America Movil), as well as Algar Telecom, a regional incumbent), and some other relevant players (GVT, acquired by Vivo, and Net Serviços de Comunicação S.A., owned by America Movil), offer packages including voice (both fixed line and mobile), broadband and pay-TV services in bundled offers. History TIM S.A. was founded in 2013.