• Service Revenue Growth: 6.4% for the year, 5.1% in Q4.
• Mobile Services Revenue Growth: 6.6% compared to 2023.
• Postpaid Revenue Growth: Close to 9% year over year.
• EBITDA Growth: 8% year over year, with margin expansion to 49.6%.
• Operating Free Cash Flow Growth: Close to 23% year over year.
• Net Income: Grew double digits, reaching more than BRL3 billion.
• Shareholder Remuneration: Totaling BRL3.5 billion with a yield of 10%.
• CapEx Over Revenues: 17.9%.
• 5G Coverage: More than 600 cities, 20% more than the second player.
• ARPU Growth: 6% versus 2023, above BRL31.
• B2B IoT Contracted Revenues: More than BRL700 million, with BRL270 million added in 2024.

• Warning! GuruFocus has detected 5 Warning Signs with TIMB.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Service revenue grew by 6.4% in 2024, reaching the top of the guidance range.
• Mobile services revenue increased by 6.6% compared to 2023, with postpaid rising close to 9% year over year.
• EBITDA increased by 8% in 2024, with a margin expansion, demonstrating operational efficiency.
• Operating free cash flow grew by nearly 23% year over year, with a margin exceeding 20%.
• TIM SA expanded its 5G coverage to over 600 cities, 20% more than the second-largest competitor.

Negative Points

• Prepaid segment continues to face challenges, with a tougher comparative base affecting performance.
• The fixed segment remains under pressure, contributing less than 4% of revenues and being dilutive on free cash flow.
• Concerns about the ability to maintain growth amidst a competitive market with mature peers and new entrants.
• CapEx remains stable despite higher exchange rates, raising questions about sustainability.
• Receivables have been increasing faster than revenue over the last three quarters, indicating potential cash flow management issues.

Q & A Highlights

Q: What are the main macroeconomic assumptions embedded in your guidance, particularly regarding inflation? A: Our guidance was prepared when inflation was more stable. We've updated our assumptions to align with current trends, acknowledging inflation volatility. We are accustomed to managing this volatility, given our long-standing operations in Brazil. The main difference in our guidance preparation was inflation, which we've adjusted to reflect current numbers.

Q: Can you discuss the outlook for prepaid and any initiatives to improve trends? A: Our prepaid performance is influenced by customer migration to control plans, which is part of our strategy. This migration results in larger revenue in postpaid, where we can better monetize. The recharge market is generally decreasing, impacting prepaid. We are revamping our prepaid business with new offers and communication campaigns to enhance performance.

Q: Your CapEx guidance remains stable despite higher exchange rates. What are the main efficiency levers, and is this level sustainable? A: Our CapEx efficiency is driven by network cost optimization and assertive investment allocation. We've negotiated competitive tenders with providers, reducing total cost of ownership. Our AAA approach aligns CapEx with commercial advantages. We have minimal exposure to exchange rate fluctuations due to contract bands.

Q: Regarding the C6 partnership, will the monetization affect dividends, even if it's noncash? A: The monetization will positively impact our cash flow, contributing to expanding shareholder remuneration through dividends and interest on equity. Although we don't distribute 100% of cash, this additional cash flow supports our guidance for increased shareholder returns.

Q: What are the drivers for further margin expansion, given high profitability and inflationary pressures? A: Margin expansion will continue through productivity improvements, digitalization, and contract renegotiations. We focus on a zero-based approach and see opportunities in digital initiatives. Our guidance accounts for current inflation dynamics, ensuring continued margin growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.