TIM(TIMB)2025-03-31 21:56Financial Position and Risks - As of December 31, 2024, 0.4% of the company's current indebtedness is denominated in foreign currency (U.S.$), with 34% linked to inflation (IPCA) and 65% linked to CDI[192]. - The company is exposed to foreign exchange risk due to substantial dollar-denominated expenditures for imported components, equipment, and handsets[192]. - Any increase in the interbank deposit certificate (CDI) rate may adversely impact the company's financial expenses and results of operations[192]. - The company has a significant foreign currency-denominated debt obligation, which could impact liquidity if payments are not made[215]. - The company faces uncertainties regarding the impact of U.S. monetary policy adjustments on international financial markets, contributing to increased volatility in the Brazilian market[198]. - The recent economic instability in Brazil has contributed to a decline in market confidence, although the end of the health crisis and some important reforms may improve the economic environment in 2024[193]. - The Central Bank of Brazil raised interest rates in response to increasing inflation expectations, despite a decrease in the unemployment rate and an increase in economic activity[193]. - Developments in other countries may adversely affect the Brazilian economy and the market price of Brazilian issuers' securities, including the company[197]. - The ongoing geopolitical tensions, including the war between Russia and Ukraine, have led to market disruptions that could negatively impact the company's operations[199]. Strategic Partnerships and Acquisitions - The acquisition of Oi Group's mobile business was completed for a total price of R$6.68 billion, which has been paid in full[231]. - The company has been involved in arbitration regarding post-closing price adjustments related to the acquisition of Oi Group's mobile assets, which has now been resolved[230]. - The partnership with C6 Bank allowed the company to acquire an indirect equity interest of approximately 6.06% by the end of 2024[234]. - The company entered into a sharing agreement with Vivo to enhance network cost efficiency and synergies since 2020[239]. - The partnership with Stellantis aims to provide connectivity solutions in vehicles, with over 200,000 Jeep and Fiat vehicles already integrated[241]. - The company secured a controlling equity interest in FiberCo, now known as I-Systems, with IHS Fiber holding 51% of the share capital[246]. - The company completed the merger of Cozani, optimizing operating costs and improving service quality through asset integration[298]. - The company is focusing on converting capital expenditures into operational expenditures through partnerships with I-Systems and Vtal[390]. Network and Technology Development - As of December 31, 2024, the company achieved 100% 5G SA neighborhood coverage in nine major cities, including Brasília and São Paulo, and expanded its 4G network to cover all 5,570 Brazilian cities[266]. - The company has deployed its 5G SA network core in over 200 cities by the end of 2023, enhancing its mobile telephony market presence[266]. - By the end of 2024, the company expanded its 5G coverage to 607 cities, recognized for achieving the first 5G Consistent Quality award by Open Signal[269]. - The 5G auction in November 2021 resulted in the acquisition of 11 lots for a total value of R$1.05 billion, enabling the company to meet growth demands in mobile telephony[264]. - The company contributed approximately R$84.7 million to the 5G Investment Fund to support the development of 5G technology solutions[293]. - The company launched TIM Ads, reaching over 33 million active users and adopted by more than 280 companies across 31 industries[260]. - The company has developed a Proof of Concept using 5G connectivity in Stellantis' factory to explore new applications and technologies[240]. - TIM began offering private networks with Multi-Access Edge Computing (MEC) capabilities, with commercial deployments starting in 2023 in the agri-food and port logistics sectors[336]. - In 2023, TIM launched the first standalone 5G pilot for the automotive industry in Brazil, utilizing AI and cloud computing[335]. - The Open Innovation Program has established 5G Living Labs across Brazil, focusing on sectors such as telemedicine and smart agriculture, to foster the development and commercialization of innovative products[331]. Market Performance and Customer Growth - The Brazilian mobile subscriber base increased by 2.8% year-on-year, reaching 263.4 million by December 31, 2024, with postpaid users growing by 8.3% to 161.2 million[302][303]. - The prepaid customer segment declined to 38.8% of the total subscriber base, down from 41.9% in 2023, reflecting a shift towards postpaid plans[303]. - The company achieved service revenue growth above inflation, with EBITDA expansion and improved operating cash flow margins in 2024[281]. - Revenues from strategic partnerships and mobile advertising reached R$219 million in 2024, up from R$162 million in 2023[391]. - Average Revenue Per User (ARPU) increased by 3.2% compared to 2023[389]. - TIM UltraFibra ended 2024 with 790,000 connections, reflecting a 4.7% year-over-year increase in FTTH base[390]. - The total homes passed (HPs) with fiber grew by 42% year-over-year, operating in 212 cities[389]. - The company aims to increase mobile Internet penetration and data traffic, addressing the demand for affordable broadband in Brazil, particularly in underserved areas[382]. - The company is enhancing customer loyalty by offering exclusive products and value-added services, leveraging partnerships with established OTT players[383]. - The company is focused on providing affordable Internet access, particularly through entry-level 5G smartphone models, to stimulate data usage and digital inclusion[385]. Corporate Governance and Social Responsibility - The company’s controlling shareholder, Telecom Italia, has significant influence over its business decisions, which may conflict with the interests of other shareholders[202]. - Cash dividends and other distributions are payable only in Brazilian reais, exposing the company to exchange rate fluctuations that affect U.S. dollar amounts received by ADS holders[206]. - The company has improved its vendor management system, resulting in better accountability and cost savings through enhanced contractual conditions[326]. - The company evaluated 298 suppliers in 2024 for socio-environmental compliance, with those failing the assessment not authorized to continue in the contracting process[365]. - TIM's GHG emissions inventory is prepared annually in accordance with the GHG Protocol, with a CDP Climate Change Score improvement from B to A in 2023[357]. - TIM has been recognized as one of the 20 most innovative companies in Brazil in 2024, highlighting its commitment to open innovation and best practices[341]. - The company maintained its leadership in the FTSE Diversity & Inclusion Index for the fourth consecutive year in 2024, emphasizing its commitment to diversity[356]. - The company aims to achieve carbon neutrality by 2030 and net-zero carbon by 2040, with a commitment to 100% renewable energy consumption and a 110% increase in energy efficiency in data traffic by 2025[363]. - The company participated in the largest hackathon in Latin America, focusing on sustainable development goals, showcasing its commitment to innovation and community engagement[335]. Future Outlook and Strategic Planning - The updated strategic plan for 2024-2026 focuses on consolidating the TIM brand and achieving growth through revenue growth, cash cost efficiency, and disciplined capital allocation[370]. - The capital expenditures for the strategic plan 2025-2027 will focus on developing disruptive business models and utilizing new technologies like 5G and Massive-MIMO[273]. - The company projected sustainable growth in service revenues and EBITDA expansion with margin improvement for the 2025-2027 period[286]. - The company is expanding its IoT connectivity and solutions, targeting high-growth opportunities in sectors such as agribusiness, logistics, utilities, and industry[373]. - The company is optimizing its broadband market strategy by transitioning to an asset-light model and enhancing customer experience through digital channels[374]. - The digital transformation initiatives have shown effectiveness, with a focus on enhancing customer experience through digital service portals[322].