TIMS3

TIM S.A., traded on B3 under the ticker TIMS3, is a telecommunications company that operates throughout Brazil, with a predominant focus on mobile services and fixed broadband. Its origins are linked to the breakup of the state-owned Telebrás in 1998, when it was initially incorporated as Tele Celular Sul Participações S.A. The company was the result of the reorganization of the Brazilian telecommunications system, which divided the country into operating regions and created new holding companies to provide mobile and fixed services under a private regime. In 2004, the company adopted the name TIM Participações S.A., consolidating the “TIM” brand as the core identity of its operations, and over the years it integrated various regional subsidiaries that inherited assets and customers from the former Telebrás System, especially in the mobile telephony areas.

TIM’s control structure in Brazil is linked to the Telecom Italia Group. The company is controlled by TIM Brasil Serviços e Participações S.A., which in turn is a wholly owned subsidiary of Telecom Italia Finance S.A., directly connected to Telecom Italia S.p.A., a European telecommunications company operating in Europe, the Mediterranean Basin and South America. From 2002 onward, TIM Brasil began to bring together the group’s operating companies in the country, centralizing strategic decisions and investments in network and services. Telecom Italia’s presence in Brazil dates back to 1998 and was reinforced by its participation in spectrum auctions promoted by ANATEL, including Bands D and E, which allowed the group to build a nationwide operation under a single brand and gradually expand mobile telephony coverage.

TIM’s business model is centered on providing mobile and fixed telecommunications services, including voice, data, broadband Internet access, value-added services and digital solutions. The company operates with a single consolidated business segment, TIM S.A., which concentrates most of its revenue through telecommunications services, complemented by a smaller share from the sale of handsets and other technology products. The company offers prepaid, “controle” (hybrid) and postpaid plans for individuals, as well as corporate solutions for small, medium and large companies. In fixed broadband, it operates with ultra-broadband fiber service, marketed as TIM UltraFibra, aimed at high-speed residential and corporate access, reinforcing its convergence strategy between mobile and fixed services in certain regions.

TIM’s revenue streams are based on different tariff components and connectivity-related services. In mobile and fixed operations, the company generates revenue from monthly subscription fees, network usage charges for local calls, national and international roaming services, interconnection charges between networks, long-distance calls and value-added services, as well as co-billing with other operators. The company has also been developing revenues linked to the Internet of Things (IoT), which include installation fees for solutions, monthly subscriptions per connected device and services on specific platforms, with applications in smart public lighting, precision agriculture, herd management and use cases supported by 4G and 5G networks. Product revenues include sales of mobile phones, 5G-compatible smartphones and other electronic devices, sold in its own stores, franchises and authorized resellers.

TIM has nationwide operations and was one of the first mobile operators to achieve a presence in all Brazilian states, positioning it as a provider of broadly available services in the telecommunications market. Its customer base is highly diversified, with no dependence on any individually significant customers, and in fiscal year 2024 there was no customer accounting for more than 10% of total net revenue. The company seeks to strengthen its presence among higher-value consumers, with plans that combine voice and data packages, access to apps and digital services for entertainment, music, reading, games and video streaming. The portfolio also includes partnerships with providers of content, education, health, retail and energy, which are integrated into voice and data offerings designed to increase network usage and strengthen user loyalty.

In terms of infrastructure and quality of service, TIM invests in 4G and 5G mobile networks and in fixed ultra-broadband solutions, prioritizing the expansion of coverage and data traffic capacity. The company monitors performance indicators at the municipal level, in line with the regulatory shift that led ANATEL to adopt a more granular approach focused on the experience in specific cities. A significant share of the company’s data traffic already runs over fourth- and fifth-generation networks, reflecting users’ migration to data-intensive services and digital applications. The company also maintains structured management systems for information technology suppliers, with processes for consolidation, contract review and the pursuit of synergies with the international controlling group, aiming to optimize costs and ensure quality and availability standards in its infrastructure.

TIM’s activities are strongly influenced by telecommunications sector regulation in Brazil, conducted by the National Telecommunications Agency (ANATEL). The company operates under the private authorization regime in services such as Personal Mobile Service (SMP), Switched Fixed Telephone Service (STFC, when applicable under a private regime) and Multimedia Communication Service (SCM). The company is subject to a broad set of resolutions and regulatory acts dealing with the use of radiofrequency spectrum, spectrum concentration limits, competition and infrastructure sharing rules, quality of service, numbering, regulatory oversight and consumer rights. TIM is also considered to hold significant market power in certain markets, such as mobile network call termination, national roaming, high-capacity data transport and data interconnection, which entails additional obligations to provide reference offers and sharing under regulated conditions.

In the recent regulatory environment, TIM has been following structural changes related to the revision of the General Telecommunications Law, which allows the adaptation of fixed telephony concessions to authorizations, as well as the flexibility and successive renewal of radiofrequency usage authorizations and the possibility of spectrum trading between operators, subject to ANATEL’s approval. The regulatory simplification promoted by the agency, with the review and consolidation of resolutions, directly affects how services are provided, the definition of quality targets, oversight procedures and competition-related obligations. In this context, TIM adjusts its operations, interconnection contracts, roaming agreements and offering structures to remain in compliance with current regulations, while seeking to sustain its competitive positioning in the Brazilian telecommunications market, in which its TIMS3 shares reflect the consolidated performance of its activities in the country.