Good morning, ladies and gentlemen. Welcome to TIM S.A. 2025 Second Quarter Results Video Conference Call. We would like to inform you that this event is being recorded. [Operator Instructions]

Hello, and welcome to our earnings conference for the second quarter of 2025. I'm Vicente Ferreira, Investor Relations Officer of TIM Brazil. This video highlights our recent performance and how we see the market evolving in the first half of the year. After that, we have a live Q&A with our CEO, Alberto Griselli; and our CFO, Andrea Viegas. Please note that management may make forward- looking statements in this presentation may contain them. refer to the disclaimer on the screen and on our Investor Relations website. Now let's review our results.

Hello, everyone. I'm Alberto Griselli, CEO of TIM Brazil. The first half of 2025 has been marked by strong execution and clear strategic vision, driving solid financial and operational results. Service revenues grew by 5.4% year-over-year, supported by mobile services, while EBITDA increased by 6.5%, reflecting improved profitability with a 49.5% margin. Operating cash flow expanded significantly, while we maintain our commitment ramping up distribution to shareholders. We continue to lead in 5G technology, which allow us to offload traffic from 4G. Today, 30% of traffic flows via our 5G network. Additionally, TIM was recognized as the most sustainable Brazilian company, topping the B3 Sustainability Index. Global volatility has increased by end of the semester, but we march forward implementing our strategic initiatives. Network modernization accelerates with new regions, partnerships expand and new revenue opportunities are developed. We are on track to meet our 2025 targets. As I mentioned, our service revenues evolution is driven by mobile. In quarter 2, total service revenue grew 5.1% year-on-year, while mobile sustaining a faster pace at 5.6%. TIM's strategy to combine volume and value initiatives to offer innovation and rational commercial approach is working as the company posted the highest mobile ARPU in the industry at close to BRL 33 per month, expanding at mid-single digits. At the same time, we added more than 450,000 new postpaid customers in the second quarter. Postpaid services have increased in importance with a penetration rate close to 70% of mobile service revenues, confirming the shift towards more stable and higher value customer segments. It's been 14 consecutive quarters of rapid postpaid revenue expansion. In quarter 2, we maintained the double-digit pace closing the first half with 12.2% year-over-year growth. Again, a combination of solid ARPU dynamics, held by control to pure postpaid upselling, and healthy customer…

Hello, everyone. I'm Andrea Viegas, CFO of TIM. I'm pleased to share that we've delivered another quarter of consistent performance, reinforcing our ability to stay on track with our guidance dynamic environment. Once again, we are seeing the benefits of the disciplined cost control. Our efficiency program is running at full speed, helping us keep cost growth below inflation. It's important to note that this multidisciplinary initiative impacts all expense lines and enable us to continue investing in key areas of our business. This strategy has consistently driven improvement across all major operating metrics. We have sustained positive momentum in both EBITDA and EBITDA after lease, showing another quarter of margin expansion. On the lease strong, as I mentioned last quarter, we have several initiatives underway to optimize our industrial costs and lease like tower contract negotiation, evolution of our rail sharing and also new partnerships tower development. Our bottom line continues to expand as a healthy pace, marking at another quarter of strong earnings growth and reinforcing the consistency of our financial delivery. As Alberto mentioned, we've now completed 3 years of 5G operations. Since then, we have been bearing fruit from the efficiency brought by this technology, which has become one of the key levers in our CapEx management strategy. All of this supported our operational cash flow, which once again posted double digit growth. This performance highlights our strong first half results and confirms our commitment to our strategy. Now back to Alberto.

Thank you, Andrea. Before we conclude, I would like to highlight our ESG achievements. We disclosed our annual report with significant strides in our commitments, among other, use of renewable energy, promotion of diversity and inclusion policies, prioritization of accessibility for people with disabilities. These efforts have earned TIM recognition across multiple sustainability indexes and awards, reinforcing our leadership in corporate responsibility. Looking ahead to the second half of 2025, TIM is focused on executing its strategic initiatives to meet its targets. Key areas include: first, developing new partnership with a special focus on financial services. We expect to announce new initiatives in the coming months, filling the space left by C6 Bank expanding our presence within the financial service sector. Second, advancing B2B IoT solution with the expansion of our portfolio and services and reinforces the presence in selected verticals. Third, accelerating implementation of efficiency initiatives under our program, supporting our ability to expand margins. Fourth, securing the implementation of a new approach to leases, renegotiation with reduced prices, tower company switch is a key lever, share infrastructure and reduce exposure and building is now an option. Fifth, improving broadband operation while proactively monitoring market movements. I want to emphasize our consistent trajectory of progress the company's commitment to innovation, operational excellence and sustainable growth as it drives forward into the remainder of the year. Thank you all for your attention. And now let's move to the live Q&A session.

[Operator Instructions] Our first question comes from Marcelo Santos from JPMorgan.

I have 2 questions on my side. The first is -- the first question is the outlook for lease lines in the remainder of the year. So I think the first couple of quarters, the line didn't increase that much. So just wanted to see how we should expect to progress, especially now that you have these new tower projects. So an update would be great. And the second I would like to see if there's an evolution on management thought about the fixed business. So I think in the previous call, you have discussed that you're considering a full spectrum of possibilities for what to do, what team wants to be on this business? I just want to see if something has evolved from the last call to this call.

Marcelo. So let me take the second one, and then I will pass to Andrea for the first one on the tower. So when it comes to the fixed business, in terms of inorganic progress, there is no additional news to be shared at this stage. So we are on the organic side, focus to optimize the businesses. So you see that for us, it's more, the scenario remains competitive. And we are tweaking our operations. So you will see that basically, we are losing less and increasing our customer base. And so we're doing some small adjustments and progress there. In terms of nonorganic opportunities, we are at the same stage like last quarter. So basically, we got from one extreme divestment of the asset, whereby we will lose our strategic optionality on the other extreme some kind of largest deal that are, by definition, more complex. And in the middle, some more balanced opportunities that are the ones where we are focusing. And as soon as we are going to have some update, we're going to share with the market, nothing to date. And will pass tower to Andrea.

Marcelo, related to the towers, as we mentioned before, this year is a very challenging to the lease, especially for inflation and also of our rollouts. We are keeping negotiations with our partners, that our company is a very hard negotiation, very tough, but we are positive that we will achieve our goal in this year that is the increased lease in the path of the inflation rate. We also are studying some alternatives as I mentioned. And as soon, we have news about this, we will show you. But we are constantly keeping the negotiations with our partners.

If I can add on the negotiation a few points, Marcelo, basically, what we've found over the last months is that some of the main players are more willing to negotiate than in the past, whereby other one are less willing to negotiate in the past. What we are literally looking is some win-win situation whereby we got towers that are above market price of what we consider to be a fair market price to a fair market price, and we got some negotiation, let's put this way, counter positive things to be put on the table like extension of the contracts and this sort of time. Then there is some -- in the case of the tower companies, and this is specifically one that is less inclined to negotiate with us. We already communicated that we are going to decommission all towers that are above what we consider to be fair market prices. Of course, it's not something going to happen in the super short term because we need to wait for contract leases to expire. And so there is a pattern there and not to pay fees or fines related to the early termination but we are committed to the commission towers that are not in line with market prices. And we're already doing it.

Our next question comes from Gustavo Farias from UBS.

Congrats on the results. Two from my end. The first one, if you could give a little bit more color on CapEx and leasing efficiency measures and the outlook for CapEx intensity for the second semester and especially in the light of this whole network modernization in Sao Paulo, and the 5G expansion in Mina Gerais. And the second one, if you could comment on the sales and marketing expenses and how to think about this line going forward, and also considering the ongoing commercial efforts in Sao Paulo at the opening of new stores and so on and so forth.

Okay. Let me go with the first round of answers here. When it comes to the CapEx efficiency, as we said, we -- the -- these are related to a modernization of our infrastructure, basically that has been negotiated last year. And basically, the good news is that what we were expecting in terms of improvement in TCO are materializing. We are in the middle -- let's put this way, in the total swap of Sao Paulo capital. So the swap is performing well in terms of network performance. So if you look at the benefits of what we are doing for the customers, you will see that we reached the #1 position in -- we already had in coverage and average speed, meaning 4G and 5G. Now we are best-in-class in both 4G and 5G and, of course, in the average. And so you see that from that perspective, the modernization project is delivering what was expected to deliver in terms of increased coverage capacity, better service to our customers. At the same time, when you look at the efficiency, what we are measuring now is that what we were expecting, it's also materializing. So some of this is more negotiating like the unit pricing, this sort of stuff. Some is related to TCO and that this includes other costs like wind space, like energy consumption. And all these benefits are materializing. So what we designed in our plan and is reflected in our guidance is being delivered in Sao Paulo and therefore, now the expansion in our big capital, same approach to capture the same benefits. And of course, this is then coupled with increased commercial penetration in those regions. As we say, the 206 approach that is made up of -- is built on network robustness and to deliver in the midterm, increased commercial performance, and this comes also with new point of sales and increased communication. So we are putting all the levers. When it comes to the second question, which is related to marketing and sales, in there, you've got a lot of cost categories, each one with different dynamics. So you've got some structural project like -- I will mention a few. So in that category, you have carrying costs and you know that we are implementing a number of initiatives to increase the level of efficiency there, like the artificial intelligence project that are reported in the presentation. Then you have commercial costs. And if you look at what is happening, we are shifting a bit more of our sales to e-commerce, for example, and e-commerce is more efficient for us versus other channels. And at the same time, I don't know if you remember, we internalized the e-commerce migration 1.5 years ago, gross addition more recently, when you internalize, basically, you put CapEx to internalize, but then you don't pay commissions. And also the...

E-billing -- also the e-billing and fixed peak payments that we have a reduction in our costs related to this. But if you look forward second half, we have more campaigns than the first half. So in this first half of the year, we have a very good performance related to the last year. But in the second half, we have more campaigns, Father's Day, Black Friday and Christmas Day. So there is a seasonality first half of the year.

It's okay? Did we answer your questions?

Yes. Super clear.

Our next question comes from Vitor Tomita from Goldman Sachs.

Two questions from my side. The first one is more on the mobile revenue side, the release sites that there was growth on the on customer-generated revenues driven by the customers, but also driven by roaming revenues and some interoperator agreements. Could you give a bit more color on this and whether this was due to any major new agreements since I remember that's the initial booming roaming was more related to a change in our plans to include the more international roaming. And my second question would be a bit of a follow-up on the tower efficiency point that other questions raised. If you could give a bit more color on that initiative of a new RFQ partnership for 1,000 new towers and on how that differs from the way you typically negotiate or think about start construction. You also cited that building towers is more of an option now. So I just wanted to dig a bit more on that.

Okay, Vitor. So let me go with the first one, and will pass to Andrea for the second one. If -- when you look at the revenue generation drivers, basically got user generated in our report, you see different lines. So all of them are improving. And basically, when you look at this set of drivers, you have the user generated revenues and the postpaid we said is driving it. And when you look at the other categories, you will see a number of different things. What is there? You have a combination of a roaming agreement that is related to what we commented on the previous calls. Then you have the B2B IoT progress that is also inside these numbers. And then you have -- when you look at the customer platform level revenues, you will see that you have a different mix of drivers. So if you look overall, you see a flattish number. But remember that you have something that we had last year, like C6 that we don't have this year. And so we have some line of business like mobile advertising, and t data that are growing double digit. This is all related to our core strategy that is mobile and incremental revenues that we are working -- and roaming would be in that category because it's part of the evolution of our main offerings. And then you have new revenue streams like the B2B IoT or mobile advertising and t data that are growing faster and contribute to the overall growth, exactly in line with our strategy to diversify our revenue portfolio.

Vitor, the negotiation that we made with our -- with the tower companies is more related to extend time of the contract and get discounts with this. When we are talking about AFT and another opportunity that we are studying is plus -- for example, as Alberto mentioned, we have some partners that we are not achieving an agreement with them and have very high monthly fee with this tower company. So the alternative will be to build a tower. Another thing is in the contract of B2B sometimes, we are in place that it's only us and the tower company is not interested in building a tower in this agro business or road. So this also is alternative for us. So -- but until now, we already negotiated 30% of our tower contracts, and we believe that we still have room to negotiate a lot more. I don't know if there was...

If I may add, look at this way. It's like we have a cost line that we really want to dominate. And so we are putting in place all the levers and alternatives that we have to drive the cost where we want, as Andrea said. So you have the negotiation, you got the RAN- sharing agreement, you got a make versus buy option. So we are putting all the options in place because we think that we've got more flexibility and more levers to get this cost line where we want to go.

Our next question comes from [ Luis Shagas ] [indiscernible]

From my side, I have to 2. So the first one is regarding OpEx. What are the main drivers behind the increase in network and interconnection costs? Are these pressures likely to persist? Or do you expect normalization in the coming quarter? And the second question is regarding competition. What's your view on the competitive pressure from new entrants in regions like the Northeast. How are you responding to protect market share there?

So Luis, let me go on the first one and then I will pass the OpEx question to Andrea. So if you look at the overall market, it's our view that we are in a rational market with competition focus on quality by our main players and our peers, let's put this way. And you see some positive movements in the last quarter, whereby the -- some of the more for more from book price adjustment has been executed. I believe, and we're starting some potential adjustment in -- according to more strategy front book prices for pure postpaid also. And so overall, the -- am I reading on the competitive dynamics is that it's rational. Of course, there are some regional competitors that tends to be a bit more aggressive and they're playing more on the price levers as we commented on the first quarter, we are looking at it very closely. We are not reacting on prices at this point in time, we're more focusing on our levers in terms of quality of services to make these customers more happy and less sensible to the price movement or the regional competitors. So far, my take is that the threat is limited, but we look at this and we'll respond as things will evolve over time.

Luis, the increase of the network interconnection is related to the increase in the International roaming costs and also in provider costs. International roaming, we increased the customers that actually are using the service. And the provider cost increased because we launched a new portfolio with streams on board and also because more customers are acquiring this kind of plan. For us, it's a positive view, I can't say this because all these have a good margin for us probably if we have an increase in our provider cost because we have more revenue related to this. And in the roaming international, as we mentioned in the past time, we have an adjustment between cost and revenue that in the year, this is also a positive margin. So the increase of this expenses is related to more customers and more revenue.

Okay. Luis, did we answer your question?

Yes.

[Operator Instructions] Our next question comes from Gustavo Farias from UBS.

One additional question. I'd like to take a look on prepaid. We've seen sequential growth in ARPU versus the first quarter. Just wanted to have an outlook for the how you're seeing the segment perspectives ahead and especially in the light of numbers from AMX last week, which also showed some improvements.

Okay, Gustavo, now when you look at prepaid, one or the main driver of our dynamics, I would feel our competitive dynamics also is related to the prepaid to control migration. So this is something that we will keep doing. We have been doing is accretive to our revenue growth and it's one of the drivers of the revenue performance of prepaid. As we commented that we saw in the previous calls, we are also working on opportunities of improvement in the frequency of recharges and we have employees a number of initiatives on the offer side, channel side that will increase capillarity and communication that we're putting in place. And this basically, if you look forward, should allow us to soften the decline of prepaid revenues from one side while sustaining the postpaid revenues with prepaid to control migration. It's a general trend, I would say. I don't comment on others. On our peers' performance, I would say that a lot of what you see is strongly related to the prepaid to control migration strategies of each operator and each one of us has its own.

[Operator Instructions] Without any more questions from analysts, I'm turning the floor to Mr. Alberto Griselli for his final remarks. Please Mr. Alberto, you may proceed.

So thank you all for joining today's video call. I think we wrapped up the first half with strong momentum. And despite external challenges, we are staying true to our strategy and consistently delivering solid results. Looking into the second half, I'm generally excited for what the second half holds for us. We've got a robust plan in place and the confidence to make it happen. I would like also to provide my heartfelt thanks to our entire team for their commitment and drive. And I look forward to catching up with some of you in the upcoming one-to-one meetings. [Foreign Language]

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