TIM(TIMB) - 2025 Q2 - Quarterly Report

General Filing Information Form 6-K Filing Details TIM S.A. filed a Form 6-K report with the SEC on July 30, 2025, indicating it files annual reports under Form 20-F and is not submitting the Form 6-K in paper - TIM S.A. filed a Form 6-K report on July 30, 2025[1] - The company files annual reports under Form 20-F[2] - The company is not submitting the Form 6-K in paper[3][4] Quarterly Information Overview This section introduces the Quarterly Information for TIM S.A. as of June 30, 2025, and provides a table of contents for the report, outlining the various financial statements, performance commentary, and detailed notes - The document presents TIM S.A.'s Quarterly Information as of June 30, 2025[5][6] - The report includes balance sheets, statements of income, comprehensive income, changes in shareholders' equity, cash flows, added value, performance comments, and detailed notes[7] Financial Statements Balance Sheets TIM S.A.'s balance sheet as of June 30, 2025, shows total assets of R$56.95 billion, with increased liabilities and decreased shareholders' equity Balance Sheet Summary (Thousands of Reais) | Item | June 2025 | December 2024 | | :-------------------------- | :---------- | :-------------- | | Total Assets | 56,954,895 | 56,327,311 | | Current Assets | 13,455,115 | 12,662,929 | | Non-Current Assets | 43,499,780 | 43,664,382 | | Total Liabilities | 31,829,409 | 29,922,675 | | Current Liabilities | 14,857,968 | 12,827,248 | | Non-Current Liabilities | 16,971,441 | 17,095,427 | | Shareholders' Equity | 25,125,486 | 26,404,636 | - Current liabilities exceeded total current assets by R$1,402,853 thousand as of June 30, 2025[119] Statements of Income TIM S.A. reported a R$1.77 billion net profit for 1H25, a 36.3% YoY increase, driven by 4.8% net revenue growth and improved operating profit Statements of Income Summary (Thousands of Reais) | Item | June 2025 | June 2024 | Change (YoY) | | :------------------------------------ | :---------- | :---------- | :----------- | | Net revenue | 12,993,574 | 12,398,069 | +4.8% | | Gross income | 6,822,451 | 6,529,963 | +4.5% | | Operating profit | 2,840,653 | 2,487,145 | +14.2% | | Profit before income tax and social contribution | 1,867,470 | 1,512,201 | +23.5% | | Net profit for the period | 1,773,008 | 1,300,643 | +36.3% | | Basic earnings per share (R$) | 0.73 | 0.54 | +35.2% | | Diluted earnings per share (R$) | 0.73 | 0.54 | +35.2% | - Financial revenues significantly increased to R$771,727 thousand in June 2025 from R$409,391 thousand in June 2024, while financial expenses also rose to R$1,659,666 thousand from R$1,415,230 thousand[16] Statements of Comprehensive Income TIM S.A.'s total comprehensive income for 1H25 was R$1.77 billion, matching net profit, indicating no other comprehensive income components Statements of Comprehensive Income (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------ | :---------- | :---------- | | Net profit for the period | 1,773,008 | 1,300,643 | | Other components of comprehensive income | - | - | | Total comprehensive income for the period | 1,773,008 | 1,300,643 | Statements of Changes in Shareholders' Equity TIM S.A.'s shareholders' equity decreased to R$25.13 billion by June 30, 2025, mainly due to R$3.04 billion in shareholder distributions, partially offset by net profit Changes in Shareholders' Equity (Thousands of Reais) | Item | January 01, 2025 | June 30, 2025 | | :------------------------------------------------ | :--------------- | :-------------- | | Balances on January 01, 2025 | 26,404,636 | - | | Net profit for the period | - | 1,773,008 | | Long-term incentive plan | - | 11,751 | | Purchase of treasury shares, net of disposals | - | (47,906) | | Lapsed fractional shares | - | 23,997 | | Interest on Shareholders' Equity | - | (990,000) | | Additional dividends/interest on shareholders' equity distributed | - | (2,050,000) | | Distribution of reserve for expansion | - | - | | Balances at June 30, 2025 | - | 25,125,486 | - Shareholders' equity decreased by R$1,279,150 thousand from December 31, 2024, to June 30, 2025[20] Statements of Cash Flows TIM S.A. generated R$5.47 billion in operating cash flow for 1H25, but investment and financing activities led to a R$264 million net cash decrease Statements of Cash Flows Summary (Thousands of Reais) | Activity Type | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Net cash generated by operating activities | 5,466,634 | 4,332,194 | | Net cash used in investment activities | (2,133,212) | (1,508,240) | | Net cash used in financing activities | (3,597,548) | (3,790,734) | | Increase (decrease) in cash and cash equivalents | (264,126) | (966,780) | | Cash and cash equivalents at end of period | 2,994,617 | 2,111,151 | - Operating activities saw a significant increase in cash generation, primarily from profit before income tax and social contribution and depreciation/amortization adjustments[24] - Investment activities included substantial investments in marketable securities and additions to property, plant, and equipment and intangible assets[25] - Financing activities were dominated by payments of lease liabilities, interest, and dividends/interest on shareholders' equity[25] Statements of Added Value TIM S.A.'s total added value payable increased to R$7.77 billion for 1H25, distributed mainly to third-party capital, taxes, and shareholders Statements of Added Value Summary (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Gross operating revenue | 19,392,739 | 17,817,307 | | Net added value produced | 6,960,225 | 6,538,236 | | Total added value payable | 7,767,460 | 7,063,983 | | Distribution to: | | | | Personnel and charges | 610,077 | 601,896 | | Taxes, fees and contributions | 2,880,236 | 2,968,993 | | Third-party capital remuneration | 2,496,392 | 2,187,305 | | Shareholders' Equity Remuneration | 1,773,008 | 1,300,643 | Performance Comment Financial Highlights TIM S.A. achieved strong financial performance in 2Q25 and 6M25, driven by mobile service revenue growth and cost management, leading to increased net revenue, EBITDA, and net income Operational Revenue TIM S.A.'s total net revenue grew 4.7% YoY in 2Q25 and 4.8% in 6M25, fueled by 5.6% mobile service revenue growth, despite declines in fixed service and product revenue Net Revenues (R$ million) | Description | 2Q25 | 2Q24 | % YoY | 6M25 | 6M24 | % YoY | | :------------------ | :--- | :--- | :---- | :--- | :--- | :---- | | Net Revenues | 6,600 | 6,303 | 4.7% | 12,994 | 12,398 | 4.8% | | Services Revenues | 6,417 | 6,103 | 5.1% | 12,657 | 12,013 | 5.4% | | Mobile Service | 6,089 | 5,766 | 5.6% | 12,010 | 11,343 | 5.9% | | Fixed Service | 328 | 337 | -2.8% | 646 | 670 | -3.5% | - Mobile ARPU reached a record R$32.7, increasing 4.8% YoY, driven by postpaid evolution and annual price adjustments[40][45] - Postpaid Revenue expanded 10.7% YoY in 2Q25, with Postpaid ARPU at R$44.3 (+1.0% YoY), while Prepaid Revenue fell 10.6% YoY, with Prepaid ARPU at R$14.3 (-4.0% YoY)[45][46] - TIM Ultrafibra, the broadband service, declined by 3.6% YoY, with an ARPU of R$95.6 (-3.0% YoY), due to a competitive and fragmented market[47] Operational Costs and Expenses Normalized Operating Costs and Expenses grew 3.1% YoY in 2Q25 to R$3.25 billion, driven by network and interconnection, offset by lower selling and marketing, with bad debt rising Normalized Operating Expenses (R$ million) | Description | 2Q25 | 2Q24 | % YoY | 6M25 | 6M24 | % YoY | | :-------------------------------- | :--- | :--- | :---- | :--- | :--- | :---- | | Normalized* Operating Expenses | (3,249) | (3,150) | 3.1% | (6,558) | (6,355) | 3.2% | | Personnel | (378) | (366) | 3.3% | (736) | (730) | 0.8% | | Selling & Marketing | (952) | (1,002) | -5.0% | (1,914) | (1,982) | -3.4% | | Network & Interconnection | (1,247) | (1,079) | 15.6% | (2,569) | (2,214) | 16.0% | | General & Administrative | (207) | (208) | -0.6% | (418) | (429) | -2.4% | | Cost Of Goods Sold (COGS) | (256) | (268) | -4.5% | (514) | (570) | -9.9% | | Bad Debt | (191) | (172) | 11.0% | (373) | (338) | 10.5% | - Selling & Marketing expenses decreased due to digitalization efforts, including a +5.9 p.p. YoY growth in digital sales penetration and +14 p.p. YoY in PIX adoption[52] - Bad Debt's ratio over gross revenue remained stable at 1.9%, despite the increase in absolute value[57] From EBITDA to Net Income TIM S.A. achieved R$3.35 billion Normalized EBITDA in 2Q25, up 6.3% YoY with a 50.8% margin, and Normalized Net Income grew 25.0% YoY to R$976 million EBITDA and Net Income (R$ million) | Description | 2Q25 | 2Q24 | % YoY | 6M25 | 6M24 | % YoY | | :------------------------ | :--- | :--- | :---- | :--- | :--- | :---- | | Normalized* EBITDA | 3,351 | 3,153 | 6.3% | 6,435 | 6,043 | 6.5% | | Normalized* EBITDA Margin | 50.8% | 50.0% | 0.8p.p. | 49.5% | 48.7% | 0.8p.p. | | Normalized* Net Income | 976 | 781 | 25.0% | 1,786 | 1,301 | 37.3% | | Normalized EPS (R$) | 0.40 | 0.32 | 25.0% | - | - | - | - Net Financial Result was negative R$375 million in 2Q25, an improvement of 16.7% YoY, mainly due to the R$73 million financial appreciation of the 5G Fund[71] - Income Tax and Social Contribution totaled -R$199 million in 2Q25 (effective rate of -16.9%), explained by increased taxable income and higher Interest on Equity in 6M25[73] Investments and Cash Flow TIM S.A. maintained disciplined investment with Capex decreasing 4.6% YoY in 2Q25, while Operating Free Cash Flow significantly increased by 19.0% YoY in 2Q25 Capex TIM S.A.'s Capex totaled R$882 million in 2Q25, a 4.6% YoY decrease, primarily focused on 5G network expansion Capex (R$ million) | Description | 2Q25 | 2Q24 | % YoY | 6M25 | 6M24 | % YoY | | :---------------- | :--- | :--- | :---- | :--- | :--- | :---- | | Network | 622 | 636 | -2.2% | 1,650 | 1,620 | 1.9% | | IT & Others | 260 | 289 | -10.0% | 571 | 659 | -13.4% | | Capex | 882 | 925 | -4.6% | 2,221 | 2,279 | -2.6% | | Capex/Net Revenue | 13.4% | 14.7% | -1.3p.p. | 17.1% | 18.4% | -1.3p.p. | - Investments focused on expanding the 5G network across Brazil, enhancing infrastructure in São Paulo and Minas Gerais[75] Cash Flow Normalized EBITDA minus Capex increased 10.8% YoY in 2Q25 to R$2.47 billion, with Operating Free Cash Flow rising 19.0% YoY to R$1.13 billion Cash Flow (R$ million) | Description | 2Q25 | 2Q24 | % YoY | 6M25 | 6M24 | % YoY | | :-------------------------- | :--- | :--- | :---- | :--- | :--- | :---- | | Reported EBITDA | 3,350 | 3,153 | 6.3% | 6,415 | 6,043 | 6.2% | | Capex | (882) | (925) | -4.6% | (2,221) | (2,279) | -2.6% | | Reported EBITDA - Capex | 2,468 | 2,228 | 10.8% | 4,194 | 3,764 | 11.4% | | Operating Free Cash Flow | 1,128 | 948 | 19.0% | 1,422 | 513 | 177.2% | - The increase in OpFCF reflects improved operational cash generation and a less negative change in working capital, mainly due to a reduction in accounts payable[80] Cash Position TIM S.A.'s Cash and Marketable Securities reached R$5.47 billion at June 2025, a 65.3% YoY increase, driven by strong operating cash generation - Cash and Marketable Securities totaled R$5,474 million at the end of June 2025, a 65.3% YoY increase[84] - The total amount recorded for the suspended TFF (Operating Supervision Fee) was R$3.8 billion as of June 30, 2025, comprising R$2.9 billion in principal and R$903 million in accrued interest[84] Debt TIM S.A.'s Total Debt (post-hedge) reached R$16.76 billion at June 2025, an increase of R$591 million, primarily due to higher lease liabilities, resulting in a -0.18x net cash position Debt Profile (R$ million) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Total Financial Debt | 2,906 | 3,036 | | License (5G) | 989 | 990 | | Total Debt Before Lease | 3,896 | 4,026 | | Total Lease | 13,075 | 12,555 | | Total Debt | 16,971 | 16,581 | | Cash and Cash Equivalents + Market Sec | (5,474) | (5,693) | | Net Debt | (2,781) | (2,813) | | Net Debt AL / Normalized EBITDA AL* | -0.18x | -0.19x | - Total Debt (post-hedge), including net derivatives, reached R$16,757 million at the end of June 2025, an increase of R$591 million compared to 2Q24[88] - The growth in total debt was primarily driven by a higher lease liability position, partially offset by a reduction in financial debt[88] Operational Indicators TIM S.A.'s mobile customer base grew 0.3% YoY to 62.19 million in 2Q25, driven by 8.8% postpaid customer growth, with Mobile ARPU rising 4.8% YoY Operational Indicators (Thousands, R$) | Description | 2Q25 | 2Q24 | % YoY | 6M25 | 6M24 | % YoY | | :-------------------------- | :----- | :----- | :---- | :----- | :----- | :---- | | Mobile Customer Base (000) | 62,194 | 61,986 | 0.3% | 62,194 | 61,986 | 0.3% | | Prepaid | 30,679 | 33,014 | -7.1% | 30,679 | 33,014 | -7.1% | | Postpaid | 31,515 | 28,972 | 8.8% | 31,515 | 28,972 | 8.8% | | Mobile ARPU (R$) | 32.7 | 31.2 | 4.8% | 32.3 | 30.8 | 4.9% | | Prepaid ARPU (R$) | 14.3 | 14.9 | -4.0% | 14.1 | 14.8 | -4.7% | | Postpaid ARPU (R$) | 44.3 | 43.9 | 1.0% | 44.0 | 43.0 | 2.4% | | TIM Ultrafibra Customer Base (000) | 799 | 798 | 0.2% | 799 | 798 | 0.2% | | TIM Ultrafibra ARPU (R$) | 95.6 | 98.6 | -3.0% | 94.4 | 97.2 | -2.9% | - Mobile Net Adds decreased by 72.6% YoY in 2Q25 to 155 thousand, and by 81.6% YoY in 6M25 to 135 thousand[94] - Monthly churn remained stable at 2.9% in 2Q25[94] Environmental, Social and Governance (ESG) Highlights TIM S.A. demonstrated strong ESG commitment in 2Q25, achieving CDP Leader status, operating 134 renewable energy plants, and launching social programs - TIM was recognized by CDP as a Leader (score A) in Supplier Engagement Assessment and is part of the 'A List' for global leaders in climate change management[98] - The company has 134 distributed generation plants in operation, supplying over 17 thousand sites with renewable energy, and 100% of its electricity consumption comes from renewable sources[98] - TIM launched a training program for people with disabilities (starting with autistic individuals) and made a free online Artificial Intelligence course available to all TIM customers[101] - For the fourth consecutive year, TIM was included in the Great Place To Work (GPTW) ranking and, for the second consecutive year, in the GPTW Diversidade Mulher ranking, with women representing over 52% of the workforce and holding 37.4% of leadership positions in 2024[101] Disclaimer This section clarifies that financial information is presented in accordance with IFRS and Brazilian Reais, and includes a forward-looking statement disclaimer - Financial and operating information is presented in accordance with IFRS and in Brazilian Reais (R$)[103] - The document contains forward-looking statements that reflect management's beliefs and expectations, but future operating results may differ due to known and unknown risks and uncertainties[104] - The company is not obligated to update forward-looking statements in light of new information or future developments[104] Notes to the Quarterly Information 1. Operations TIM S.A. is a subsidiary of TIM Brasil, with Telecom Italia Group holding 66.59% of its share capital, operating across Brazil with various telecommunication licenses - TIM S.A. is a subsidiary of TIM Brasil Serviços e Participações S.A., with Telecom Italia Group holding 66.59% of its share capital[108] - The company holds authorizations for Landline Switched Telephone Service (STFC), Personal Mobile Service (SMP), and Multimedia Communication Service (SCM) across Brazil[109] - TIM S.A. holds a 49% equity interest in I-Systems and its shares are traded on B3 and NYSE[110][111] 2. Basis of preparation and presentation of quarterly information Quarterly information is prepared under Brazilian accounting practices and IFRS, focusing on historical cost and fair value for derivatives, with the company operating as a single segment a. General criteria for preparation and disclosure Quarterly information is prepared using historical cost, with derivatives at fair value, and management confirms no going concern uncertainties - Quarterly information is prepared considering historical cost, with derivative financial instruments measured at fair value[117] - Current liabilities exceeded current assets by R$1,402,853 thousand on June 30, 2025, but management confirms no going concern uncertainties due to R$5.6 billion positive cash generated by operations[119] - The Statement of Value Added is presented as supplementary information, as it is not required by IFRS[120] b. Functional and presentation currency The functional and presentation currency is the Brazilian Real (R$), with foreign currency transactions and monetary items translated at relevant exchange rates - The functional and presentation currency is the Real (R$)[122] - Foreign currency transactions are recognized at the exchange rate on the transaction date, and monetary items are translated at the balance sheet date's exchange rate[123] c. Segment information The Company's Executive Board and Board of Directors consider the entire group's operating activities as a single business segment, with all strategic and financial decisions consolidated - The Executive Board and Board of Directors consider the company to represent only one business segment[125][128] - All decisions regarding strategic, financial planning, purchases, investments, and resource allocation are made on a consolidated basis to maximize results from SMP, STFC, and SCM licenses[128] d. Business combination and goodwill Business combinations use the acquisition method, measuring identifiable assets and liabilities at fair value, with goodwill recognized as the excess of consideration over net assets, tested annually for impairment - Business combinations are accounted for under the acquisition method, measuring cost by the fair value of consideration transferred[129] - Identifiable assets acquired and liabilities assumed are initially measured at their fair value on the acquisition date[130] - Goodwill is initially measured as the excess of consideration transferred over net assets acquired and is carried at cost less accumulated impairment losses, allocated to cash-generating units for impairment testing[133][134] f. Approval of quarterly information The quarterly information was approved by the Company's Board of Directors on July 30, 2025 - The quarterly information was approved by the Company's Board of Directors on July 30, 2025[139] g. New standards, amendments and interpretations of standards TIM S.A. assessed new standards like IAS21 and CPC18(R3) with no material impact, is assessing IFRS18 and IFRS9 amendments, and IFRS19 is not applicable - IAS21 (Lack of Exchangeability) and CPC18(R3) (Investment in associated company) amendments, effective January 1, 2025, were assessed and identified no material impact[140][143][144][147] - IFRS18 (Presentation and disclosure of financial statements), effective January 1, 2027, introduces new income statement categories and disclosure requirements, and the company is currently assessing its impacts[151][152][154][155] - IFRS19 (Subsidiaries without Public Liability) is not applicable to TIM S.A. as its equity instruments are publicly traded[156][158] - Amendments to IFRS9 (Disclosure of quantitative information for contractual terms), effective January 1, 2026, require disclosure of possible changes in contractual cash flows, which the company is assessing[162][163][164] 3. Estimates and areas where judgment is significant in the application of the Company's accounting policies The Company's accounting policies involve significant estimates and judgments, particularly for legal and tax provisions, fair value of financial instruments, and IFRS 16 lease terms - Significant accounting estimates and judgments are made for provisions for legal and tax administrative proceedings, fair value of derivatives and other financial instruments, and unbilled revenues[168][169][170][172][173] - Judgments for leases under IFRS 16 include estimating lease terms and using assumptions to calculate the incremental borrowing rate for lease liabilities[174][175] 4. Cash and cash equivalents TIM S.A.'s cash and cash equivalents totaled R$2.99 billion as of June 30, 2025, primarily held in highly liquid, interest-earning CDBs Cash and Cash Equivalents (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Cash and banks | 25,539 | 81,177 | | Free availability interest earning bank deposits: CDB | 2,969,078 | 3,177,566 | | Total Cash and Cash Equivalents | 2,994,617 | 3,258,743 | - CDBs are highly liquid, nominative securities with adjustment linked to the percentage of the Interbank Deposit Certificate (CDI)[178] - The average remuneration of CDB investments in the first semester of 2025 was 100.34% p.a. of the CDI[182] 5. Marketable securities TIM S.A.'s marketable securities, measured at fair value, totaled R$2.50 billion as of June 30, 2025, primarily in government bonds and financial papers Marketable Securities (Thousands of Reais) | Item | June 2025 | December 2024 | | :-------------------------- | :---------- | :-------------- | | FUNCINE | 21,401 | 15,241 | | Fundo Soberano | 5,089 | 2,404 | | FIC: Government bonds | 1,688,888 | 1,716,706 | | FIC: CDB | 18,176 | 18,897 | | FIC: Financial bills | 328,622 | 394,343 | | FIC: Other | 438,365 | 302,091 | | Total Marketable Securities | 2,500,541 | 2,449,682 | | Current portion | (2,479,140) | (2,434,441) | | Non-current portion | 21,401 | 15,241 | - The average remuneration of FICs in the first semester of 2025 was 102.90% p.a. of the CDI[186] - FUNCINE investments, aimed at tax deductibility, had an average remuneration of 0.16% p.a. in 1H25[184] 6. Trade accounts receivable TIM S.A.'s trade accounts receivable increased to R$5.45 billion as of June 30, 2025, including R$468 million from C6 Bank, with a higher provision for expected credit losses Trade Accounts Receivable (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Trade accounts receivable | 5,447,986 | 4,815,750 | | Gross accounts receivable | 6,132,811 | 5,486,319 | | Provision for expected credit losses | (684,825) | (670,569) | | Current portion | (5,335,336) | (4,677,935) | | Non-current portion | 112,650 | 137,815 | - R$468,000 thousand is to be received from the C6 Bank agreement, with approximately 10% already received by June 30, 2025[198] Aging of Accounts Receivable (Thousands of Reais) | Category | June 2025 | December 2024 | | :---------------- | :---------- | :-------------- | | Total | 6,132,811 | 5,486,319 | | Falling due | 4,393,276 | 3,917,182 | | Overdue (≤30 days) | 482,281 | 372,836 | | Overdue (>120 days) | 773,961 | 818,039 | 7. Inventories TIM S.A.'s total inventory increased to R$358 million as of June 30, 2025, primarily due to higher cell phone and tablet stock Inventories (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Total inventory | 358,229 | 293,529 | | Inventories (Gross) | 377,938 | 310,054 | | Cell phones and tablets | 281,195 | 187,866 | | Accessories and prepaid cards | 73,340 | 98,868 | | TIM chips | 23,403 | 23,320 | | Losses on adjustment to realizable value | (19,709) | (16,525) | - Inventories are presented at the average acquisition cost, with losses recognized to adjust to net realizable value when lower[202] 8. Income tax and social contribution TIM S.A.'s income tax and social contribution balances reflect both recoverable and payable amounts, as well as a R$1.28 billion deferred tax asset, with 1H25 expense significantly lower due to tax benefits 8.a Income tax and social contribution payable (Recoverable) TIM S.A.'s recoverable income tax and social contribution totaled R$275.5 million as of June 30, 2025, with R$70 million in credits utilized in 2025 Income Tax and Social Contribution Payable (Recoverable) (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Income tax and social contribution payable | 275,502 | 326,256 | | Income tax | 185,717 | 200,802 | | Social contribution | 89,785 | 125,454 | | Current portion | (44,734) | (111,376) | | Non-current portion | 230,768 | 214,880 | - TIM recorded R$535 million (principal) in 2021 related to a favorable STF decision on non-levy of IRPJ/CSLL on monetary restatement of undue payments, with R$70 million in credits offset in 2025[206][207] 8.b Income tax and social contribution payable (Current) Current income tax and social contribution payable increased to R$99 million as of June 30, 2025, as the company opted for quarterly tax payments in 2025 Current Income Tax and Social Contribution Payable (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Income tax and social contribution payable | 98,993 | 46,610 | | Income tax | 34,062 | - | | Social contribution | 64,931 | 46,610 | | Current portion | (92,482) | (46,610) | | Non-current portion | 6,511 | - | - The company chose to make quarterly payments of income tax and social contribution in 2025[211] 8.c Deferred income tax and social contribution TIM S.A. recognized a net deferred income tax asset of R$1.28 billion as of June 30, 2025, driven by temporary differences from legal provisions, credit losses, and suspended taxes Deferred Income Tax and Social Contribution (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Tax loss carryforwards and negative basis of social contribution | - | 12,132 | | Temporary differences: | | | | Provision for legal and administrative proceedings | 510,597 | 536,550 | | Provision for expected credit losses | 264,006 | 257,645 | | Taxes with enforceability suspended | 1,379,477 | 1,230,521 | | Derivative financial instruments | (91,656) | (274,140) | | Capitalized interest - 4G and 5G | (229,071) | (246,621) | | Adjustments to standard IFRS16 | 767,386 | 730,015 | | Accelerated depreciation | (1,013,910) | (990,374) | | Fair value adjustment I–Systems | (249,477) | (249,477) | | Impairment loss | 228,656 | 269,172 | | Other assets | 266,828 | 287,234 | | Other liabilities | (90,312) | (92,779) | | Total Temporary Differences | 1,276,104 | 1,081,633 | | Deferred active tax portion | 3,416,950 | 3,323,269 | | Portion of deferred tax liability | (2,140,846) | (2,241,636) | - The company constitutes deferred income tax credits and social contribution on all temporary differences based on profitability history and future taxable results[226] - The prevailing tax rates are 25% for income tax and 9% for social contribution, with no statute of limitation for carried forward losses (offset up to 30% of taxable profit)[216] 8.d Expense with current and deferred income tax and social contribution The total expense for income tax and social contribution for 1H25 was -R$94.46 million, a significant reduction from 1H24, primarily due to higher tax benefits from Interest on Shareholders' Equity Income Tax and Social Contribution Expense (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Current income tax and social contribution taxes | (288,933) | (120,503) | | Deferred income tax and social contribution | 194,471 | (91,055) | | Total Expense | (94,462) | (211,558) | | Effective rate | 5.06% | 13.99% | - The reconciliation shows a significant tax benefit from Interest on Shareholders' Equity allocated (R$336,600 thousand in 1H25) and tax incentives (R$209,582 thousand)[227] 9. Taxes, fees and contributions to be recovered TIM S.A.'s taxes, fees, and contributions to be recovered totaled R$1.83 billion as of June 30, 2025, primarily related to ICMS and PIS/COFINS credits Taxes, Fees and Contributions to be Recovered (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Taxes, fees and contributions to be recovered | 1,830,823 | 1,853,456 | | ICMS | 1,219,058 | 1,235,119 | | PIS/COFINS | 306,397 | 330,019 | | IRRF (Withholding income tax) on interest earning bank deposits | 93,159 | 93,008 | | Recoverable ISS | 109,314 | 109,314 | | Other | 102,895 | 85,996 | | Current portion | (903,508) | (946,103) | | Non-current portion | 927,315 | 907,353 | - Recoverable ICMS credits primarily arise from property, plant, and equipment acquisitions for telecommunication services and amounts paid under the tax substitution regime for goods acquired for resale[231] - PIS/COFINS balance is mostly composed of credits from the non-cumulative taxation regime[233] 10. Prepaid expenses TIM S.A.'s prepaid expenses significantly increased to R$865.4 million as of June 30, 2025, mainly due to Fistel fees, unreleased advertisements, and contractual expenses Prepaid Expenses (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Prepaid expenses | 865,407 | 562,141 | | Fistel | 171,272 | - | | Advertisements not released | 118,570 | 20,331 | | Rentals and reinsurance | 73,881 | 83,603 | | Incremental costs for obtaining customer contracts | 198,332 | 188,269 | | Prepaid contractual expenses | 279,976 | 251,181 | | Other | 23,376 | 18,757 | | Current portion | (568,550) | (280,851) | | Non-current portion | 296,857 | 281,290 | - Incremental costs for obtaining customer contracts are deferred and amortized over 1 to 2 years, in line with the contract term or economic benefit[237] - Prepaid contractual expenses represent costs of installing a neutral network deferred over the contract term[238] 11. Judicial deposits TIM S.A.'s judicial deposits increased to R$692.58 million as of June 30, 2025, covering civil, labor, tax, and regulatory proceedings Judicial Deposits (Thousands of Reais) | Category | June 2025 | December 2024 | | :---------------- | :---------- | :-------------- | | Total Judicial deposits | 692,575 | 677,530 | | Civil | 302,769 | 290,580 | | Labor | 58,156 | 54,954 | | Tax | 236,153 | 239,093 | | Regulatory | 117 | 116 | | Online attachment | 95,380 | 92,787 | - Civil deposits include R$90,987 thousand related to vacating transmission sub-bands for 4G technology implementation[245] - Tax deposits include R$73,243 thousand related to the unconstitutionality and illegality of FUST collection[250] 12. Other financial assets TIM S.A.'s other financial assets decreased to R$508.3 million as of June 30, 2025, primarily due to the C6 Bank bonus warrant write-off, despite increased 5G Fund investment Other Financial Assets (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Other financial assets | 508,298 | 550,669 | | C6 Bank bonus warrant | - | 162,958 | | 5G Fund | 332,981 | 212,394 | | Subscription warrant (EXA) | 175,317 | 175,317 | | Non-current portion | 508,298 | 550,669 | - The C6 Bank bonus warrant was fully written off in March 2025 following the termination of the partnership and disposal of TIM's interest[253][600] - Investment in the 5G Fund increased to R$332,981 thousand, with a R$85 million contribution in January 2025, to boost 5G solution development[254][255] - TIM acquired the right to subscribe for 27% of EXA's shares for R$174 million, recorded as a financial asset at fair value of R$175,317 thousand[257] 13. Other assets TIM S.A.'s other assets increased to R$300.6 million as of June 30, 2025, mainly due to increases in advances to employees and suppliers, and recoverable INSS Other Assets (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Other assets | 300,626 | 238,218 | | Advances to employees | 37,374 | 3,819 | | Advances to suppliers | 66,139 | 48,008 | | Amounts receivable from TIM Brasil | 23,218 | 23,260 | | Amounts receivable from incentivized projects | 27,666 | 27,391 | | Recoverable INSS | 95,391 | 80,610 | | Other | 50,838 | 55,130 | | Current portion | (270,401) | (208,313) | | Non-current portion | 30,225 | 29,905 | 14. Investment TIM S.A.'s investment in I-Systems decreased to R$1.32 billion as of June 30, 2025, reflecting its proportional interest in I-Systems' net loss Investment in I-Systems (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Investment value | 1,315,916 | 1,368,286 | | Company's proportional interest in I-Systems | 49% | 49% | | I-Systems' Net loss for the period/year | (106,879) | (167,145) | | Company's interest in the associated company's income (loss) | (52,370) | (82,526) | - TIM S.A. disposed of 51% of its equity interest in I-Systems (formerly Fiber Co) in November 2021, resulting in a loss of control and recording the remaining 49% investment at fair value[263] 15. Property, plant and equipment TIM S.A.'s net property, plant, and equipment increased to R$23.25 billion as of June 30, 2025, primarily due to additions in right-of-use leases and construction Property, Plant and Equipment, Net (Thousands of Reais) | Item | December 2024 | Additions | Write-offs | Transfers | June 2025 | | :------------------------------------ | :-------------- | :-------- | :--------- | :-------- | :---------- | | Total cost of property, plant and equipment, gross | 75,732,043 | 3,064,563 | (163,887) | - | 78,632,719 | | Total accumulated depreciation | (52,916,715) | (2,562,716) | 92,887 | - | (55,386,544) | | Total property, plant and equipment, net | 22,815,328 | 501,847 | (71,000) | - | 23,246,175 | - Right-of-use in leases increased to R$9,525,590 thousand in June 2025 from R$8,948,060 thousand in December 2024, with additions of R$1,479,747 thousand[274][280] - Construction in progress increased to R$564,894 thousand in June 2025, with R$1,584,319 thousand in additions[274] - The company assessed useful life estimates for property, plant, and equipment and found no significant changes or alterations to justify changes to the useful lives currently in use[284] 16. Intangible assets TIM S.A.'s net intangible assets decreased to R$14.63 billion as of June 30, 2025, including significant goodwill and radio frequency authorizations, with no impairment found Intangible Assets, Net (Thousands of Reais) | Item | December 2024 | Additions/Amortization | Write-offs | Transfers | June 2025 | | :------------------------------------ | :-------------- | :--------------------- | :--------- | :-------- | :---------- | | Total cost of intangible assets, gross | 47,460,121 | 747,213 | (48) | - | 48,207,286 | | Total accumulated amortization | (32,605,161) | (969,357) | 1 | - | (33,574,517) | | Total intangible assets, net | 14,854,960 | (222,144) | (47) | - | 14,632,769 | - Goodwill registered totaled R$3,112,169 thousand, including R$2,636,426 thousand from the acquisition of Cozani[302] - The total effect on intangible assets referring to 5G radio frequencies and related obligations is R$4,053 million as of June 30, 2025[332] - The company performs annual impairment tests for goodwill, comparing book value with fair value, and has not identified any indications of impairment[316][321] 17. Other amounts recoverable TIM S.A.'s other amounts recoverable, primarily Fistel credits, totaled R$33.16 million as of June 30, 2025, expected to reduce future TFF contributions - Other amounts recoverable totaled R$33,155 thousand as of June 30, 2025, down from R$38,033 thousand in December 2024[336] - These credits arise from decreases in the customer base and are expected to offset future TFF (operating supervision fee) contributions[335] 18. Leases TIM S.A.'s lease liabilities increased to R$13.32 billion as of June 30, 2025, primarily due to network infrastructure and real estate leases Lease Liabilities (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Total Lease Liabilities | 13,317,154 | 12,575,846 | | LT Amazonas | 332,472 | 324,152 | | Sale of towers (leaseback) | 1,669,829 | 1,606,644 | | Other leases (IFRS16/CPC06(R2)) | 11,194,424 | 10,520,599 | | Current portion | (1,597,359) | (1,629,698) | | Non-current portion | 11,719,795 | 10,946,148 | Lease Assets (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | LT Amazonas | 176,735 | 174,014 | | Sublease "resale stores" – IFRS16 | 65,282 | 66,373 | | Total Lease Assets | 242,017 | 240,387 | - Interest paid on lease liabilities for 1H25 was R$641,351 thousand, and R$31 million was paid for fines related to site decommissioning[352] - The company has sale and leaseback agreements for telecommunications towers with ATC, with R$1,088,390 thousand booked as deferred revenue[359] 19. Suppliers TIM S.A.'s accounts payable to suppliers decreased to R$4.52 billion as of June 30, 2025, with most obligations in domestic currency, and R$170 million in drawee risk operations Suppliers (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Suppliers | 4,522,549 | 4,986,912 | | Domestic currency | 3,590,578 | 4,233,754 | | Suppliers of materials and services | 3,509,130 | 4,157,887 | | Interconnection | 50,796 | 44,759 | | Roaming | 6,547 | 4,667 | | Co-billing | 24,105 | 26,441 | | Foreign currency | 931,971 | 753,158 | | Suppliers of materials and services | 278,456 | 267,723 | | Roaming | 653,515 | 485,435 | | Current portion | 4,522,549 | 4,986,912 | - The company has R$170 million related to drawee risk operations, where financial institutions advance receivables to suppliers without recourse[372] 20. Authorizations payable TIM S.A.'s authorizations payable totaled R$1.49 billion as of June 30, 2025, including commitments for renewals, ANATEL liability, and 5G radio frequency costs Authorizations Payable (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Renewal of authorizations | 289,241 | 279,548 | | Updated ANATEL liability | 215,558 | 209,538 | | Authorizations payable (5G) | 989,361 | 990,696 | | Total Authorizations Payable | 1,494,160 | 1,479,782 | | Current portion | (309,960) | (299,354) | | Non-current portion | 1,184,200 | 1,180,428 | - The 5G license costs (R$884 million initially) are subject to Selic rate interest and are paid annually over 20 years[377] - The company has various radio frequency authorizations with expiration dates ranging from 2027 to 2041[380] 21. Loans and financing TIM S.A.'s loans and financing decreased to R$2.91 billion as of June 30, 2025, including debentures and bank loans, with all financial covenants complied and risks managed by swap contracts Loans and Financing (Thousands of Reais) | Description | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | KFW Finnvera | 14,481 | 32,820 | | Debentures | 2,022,952 | 1,956,307 | | BNDES | 357,381 | 385,592 | | BNB | 492,326 | 585,129 | | BNDES (TJLP) | 19,116 | 75,653 | | Total Loans and Financing | 2,906,256 | 3,035,501 | | Current | (950,797) | (348,353) | | Non-current | 1,955,459 | 2,687,148 | - The company complied with all financial and non-financial covenants for its BNDES financing and debentures[387] - The fair value of debentures, BNDES, and BNB loans is considered the present value of swap contracts that protect against exchange rate and interest rate changes[393] 22. Taxes, fees and contributions payable TIM S.A.'s taxes, fees, and contributions payable increased to R$4.29 billion as of June 30, 2025, primarily driven by ANATEL's taxes and fees, including R$3.82 billion for suspended TFF Taxes, Fees and Contributions Payable (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Taxes, fees and contributions payable | 4,289,377 | 3,926,854 | | Value-added tax on sales and services - ICMS | 293,443 | 279,776 | | ANATEL's taxes and fees | 3,841,130 | 3,389,167 | | Imposto sobre Serviço [Service tax] - ISS | 65,537 | 72,274 | | PIS / COFINS | 50,806 | 51,294 | | Other | 38,461 | 134,343 | | Current portion | (4,251,834) | (3,888,568) | | Non-current portion | 37,543 | 38,286 | - The total value of the obligation relating to TFF (Operating Inspection Fee) is R$3,815 million as of June 30, 2025, with payments suspended by injunction since 2020[397] 23. Deferred revenues TIM S.A.'s deferred revenues decreased slightly to R$822.67 million as of June 30, 2025, including prepaid services, anticipated revenues, and contract liabilities Deferred Revenues (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Deferred revenues | 822,673 | 839,867 | | Prepaid services | 185,032 | 172,824 | | Anticipated revenues | 33,995 | 35,510 | | Deferred revenues on sale of towers | 545,492 | 572,540 | | Contract liabilities | 58,154 | 58,993 | | Current portion | (293,675) | (280,422) | | Non-current portion | 528,998 | 559,445 | Contractual Assets (Liabilities) Realization Schedule (Thousands of Reais) | Year | Contractual assets (liabilities) | | :--- | :------------------------------- | | 2025 | (16,256) | | 2026 | (20,068) | | 2027 | (1,893) | - Contract liabilities include amounts related to activation and availability fees of customer contracts[403] 24. Provision for legal and administrative proceedings TIM S.A.'s provision for legal and administrative proceedings decreased to R$1.48 billion as of June 30, 2025, mainly due to a R$169 million reversal in civil proceedings, with R$25.54 billion in possible losses unprovisioned Provision for Legal and Administrative Proceedings (Thousands of Reais) | Category | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Total Provision | 1,478,933 | 1,564,293 | | Civil | 400,271 | 561,199 | | Labor | 206,735 | 209,098 | | Tax | 835,965 | 759,584 | | Regulatory | 35,962 | 34,412 | - A R$169 million accounting provision for a Public Civil Action related to the Infinity plan was reversed in April 2025 following a favorable STF decision[417] - The company has R$25,544,879 thousand in judicial and administrative proceedings with losses assessed as possible, for which no provision has been constituted[440] - The Conduct Adjustment Term (TAC) with ANATEL, which included commitments for quality and infrastructure improvements, ended in June 2024, with a service deadline extension for 19 municipalities in Rio Grande do Sul until September 30, 2024[475] 25. Shareholders' equity TIM S.A.'s shareholders' equity includes share capital, capital reserves, and profit reserves, with R$990 million in Interest on Shareholders' Equity and R$2.05 billion in additional dividends approved - Share capital is R$13,477,891 thousand, represented by 2,420,804,398 common shares with no par value[20][480] Capital Reserves (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Special Reserve of goodwill | 353,604 | 353,604 | | Long-term incentive plan | 31,167 | 19,416 | | Other capital reserves | 23,997 | - | | Total Capital Reserves | 408,768 | 373,020 | - The company must distribute a mandatory dividend equivalent to 25% of Adjusted Net Profit annually, as per its bylaws[493] - In 1H25, R$990,000 thousand in Interest on Shareholders' Equity was distributed, and R$2,050,000 thousand in additional dividends for FY2024 were approved[500][504] - The total dividends paid per share on June 30, 2025, was R$0.67 (R$0.53 in 1H24)[505] 26. Long-term incentive plan TIM S.A. operates long-term incentive plans for senior directors and key positions, granting performance or restricted shares/cash, with expenses totaling R$11.75 million in 1H25 - Long-term incentive plans (2021-2023 and 2024-2026) grant shares (performance and/or restricted) or equivalent cash to senior directors and key positions[512][513][514] - Expenses related to these plans totaled R$11,751 thousand in 1H25 (R$14,113 thousand in 1H24)[518] - The Board of Directors approved a new share buyback program on February 12, 2025, for up to 67,210,173 common shares, with approximately five million shares earmarked for the Long-Term Incentive Plan[522] 27. Net revenue TIM S.A.'s net operating revenue for 1H25 was R$12.99 billion, an increase from 1H24, primarily driven by mobile service revenue Net Operating Revenue (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Net operating revenue | 12,993,574 | 12,398,069 | | Gross operating revenue | 19,392,739 | 17,817,307 | | Service revenue | 18,700,446 | 17,016,147 | | Mobile | 17,683,909 | 16,028,472 | | Landline | 1,016,537 | 987,675 | | Sale of goods | 692,293 | 801,160 | | Deductions from gross revenue | (6,399,165) | (5,419,238) | - Revenues from services are recognized as services are used, net of sales taxes and discounts, including unbilled revenues estimated based on consumption data[523][524] - The agreement with C6 Bank was approved in March 2025, confirming the termination of the partnership and related disputes[527] - Incremental costs for obtaining contracts (e.g., sales commissions) are deferred as prepaid expenses and amortized over the contract term[536] 28. Operating costs and expenses TIM S.A.'s total operating costs and expenses for 1H25 amounted to R$10.02 billion, an increase from 1H24, driven by interconnection, depreciation, and personnel costs Operating Costs and Expenses (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Total Operating Costs and Expenses | (10,016,715) | (9,718,886) | | Personnel | (736,451) | (730,429) | | Outsourced services | (1,752,220) | (1,796,604) | | Interconnection and connection means | (1,886,247) | (1,551,156) | | Depreciation and amortization | (3,521,902) | (3,510,272) | | Taxes, fees and contributions | (533,611) | (552,489) | | Rentals and reinsurance | (384,401) | (362,498) | | Cost of goods sold | (464,282) | (515,308) | | Advertising | (330,094) | (322,468) | | Losses on doubtful accounts | (373,450) | (338,102) | | Other | (34,057) | (39,560) | - The company contributes R$16,724 thousand to public or private pension insurance plans for employees, with no additional obligations[540] 29. Other net revenues (expense), net TIM S.A.'s other net revenues (expenses), net, for 1H25 resulted in a net expense of R$83.84 million, an improvement from 1H24, driven by higher revenues and lower legal provisions Other Net Revenues (Expenses), Net (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Revenues | 106,624 | 85,632 | | Fines on telecommunication services | 57,867 | 48,860 | | Revenue on disposal of assets | 4,149 | 1,652 | | Other revenues | 44,608 | 35,120 | | Expenses | (190,460) | (232,083) | | FUST/FUNTTEL | (80,164) | (80,411) | | Taxes, fees and contributions | (12,457) | (12,534) | | Provision for legal and administrative proceedings, net of reversal | (81,219) | (122,533) | | Expenses on disposal of assets | (5,725) | (2,555) | | Other expenses | (10,895) | (14,050) | | Other revenues (expenses), net | (83,836) | (146,451) | - Other revenues mainly represent deferred revenue from sold towers (R$27,048 thousand)[544] - FUST/FUNTTEL expenses represent contributions on telecommunications revenues due to ANATEL[545] 30. Financial revenues TIM S.A.'s financial revenues significantly increased to R$771.73 million for 1H25, primarily driven by higher interest on bank deposits and inflation adjustments Financial Revenues (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Financial revenues | 771,727 | 409,391 | | Interest on interest earning bank deposits | 341,815 | 185,795 | | Interest received from customers | 19,011 | 20,701 | | Swap interest | 148,758 | 131,090 | | Interest on lease | 14,258 | 14,072 | | Inflation adjustment | 169,477 | 37,302 | | Other derivatives | - | 19,587 | | Other revenue | 78,408 | 844 | - A substantial part of financial revenues is related to monetary restatement on tax credits and judicial deposits[546] - Swap interest represents gains from swap instruments used to hedge against interest rate changes on debts[547] 31. Financial expenses TIM S.A.'s financial expenses increased to R$1.66 billion for 1H25, primarily driven by higher interest on lease liabilities, taxes, and other derivatives Financial Expenses (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Financial expenses | (1,659,666) | (1,415,230) | | Interest on loans and financing | (148,326) | (135,767) | | Interest on taxes and rates | (192,955) | (130,283) | | Swap interest | (154,243) | (211,145) | | Interest on lease liabilities, net of cancellations | (774,400) | (710,029) | | Inflation adjustment | (117,994) | (95,730) | | Discounts granted | (23,427) | (20,752) | | Other derivatives | (165,780) | - | | Other expenses | (82,541) | (111,524) | - A substantial part of financial expenses is related to inflation adjustment of judicial and administrative proceedings (R$116,755 thousand in 1H25)[551] - Other derivatives expenses (R$165,780 thousand) resulted from contractual adjustments with C6 Bank following the termination of the partnership[551] 32. Foreign exchange variations, net TIM S.A. reported a net foreign exchange variation expense of R$85.24 million for 1H25, a reversal from 1H24 net revenue, primarily due to higher expenses on accounts receivable Net Foreign Exchange Variations (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Revenues | 87,878 | 161,944 | | Loans and financing | 7,370 | - | | Suppliers | 48,182 | 5,913 | | Swap | 3,601 | 99,838 | | Accounts receivable | 25,466 | 42,283 | | Financial assets | 3,259 | 13,910 | | Expenses | (173,122) | (131,049) | | Loans and financing | (3,596) | (50,528) | | Suppliers | (42,028) | (30,009) | | Swap | (7,370) | (49,310) | | Accounts receivable | (79,184) | (319) | | Financial assets | (40,944) | (883) | | Net foreign exchange variations | (85,244) | 30,895 | - The net foreign exchange variation primarily refers to foreign exchange variation on loans and financing in foreign currency[552] - Derivative financial instruments are used to mitigate risks of foreign exchange variations related to foreign currency debts[553] 33. Earnings per share TIM S.A.'s basic and diluted earnings per share for 1H25 were R$0.73, a significant increase from 1H24, reflecting higher net profit Earnings Per Share (R$ per share) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Income attributable to the Company's shareholders | 1,773,008 | 1,300,643 | | Weighted average number of shares issued (thousands) | 2,420,128 | 2,420,240 | | Basic earnings per share | 0.73 | 0.54 | | Diluted earnings per share | 0.73 | 0.54 | - The Board of Directors approved a reverse stock split and subsequent stock split (100:1 followed by 1:100) on February 24, 2025, which will not affect share capital or the total number of shares[563][564] - An auction for fractional shares resulting from the stock split was held on July 14, 2025, totaling R$455,691 thousand[644][645] 34. Balances and transactions with related parties TIM S.A. maintains various balances and transactions with related parties, with total assets of R$80.05 million and liabilities of R$1.55 billion as of June 30, 2025 Balances with Related Parties (Thousands of Reais) | Item | June 2025 | December 2024 | | :------------------------------------ | :---------- | :-------------- | | Total Assets | 80,053 | 117,273 | | Total Liabilities | 1,548,667 | 724,806 | | TIM Brasil (Shareholders' Equity/Dividends) | 1,358,122 | 367,943 | Transactions with Related Parties (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Revenues | 20,570 | 4,121 | | Costs / Expenses | 609,000 | 596,884 | | Gruppo Havas (Advertising) | 274,836 | 289,997 | - Sales and purchases with related parties are conducted at market-equivalent prices, with outstanding balances settled in cash and no associated guarantees[576] - In May 2025, Vivendi Group and Gruppo Havas ceased to be related parties[569] 35. Management remuneration Total remuneration for TIM S.A.'s key management personnel for 1H25 was R$20.66 million, an increase from 1H24, including short-term and share-based remuneration Management Remuneration (Thousands of Reais) | Item | June 2025 | June 2024 | | :------------------------------------ | :---------- | :---------- | | Short-term benefits | 13,569 | 13,311 | | Share-based remuneration | 7,089 | 4,930 | | Total Remuneration | 20,658 | 18,241 | 36. Financial instruments and risk management TIM S.A. manages financial risks using derivative instruments like swaps and options, with R$434.16 million in assets and R$220.27 million in liabilities, and all foreign currency debt 100% hedged - The company uses derivative financial instruments (swaps and options) to reduce foreign exchange and interest rate risks, without speculative purposes[583] - All foreign currency loans and financings are 100% protected by swap contracts, both in terms and value[586][613][614] Derivative Financial Instruments (Thousands of Reais) | Item | June 2025 Assets | June 2025 Liabilities | December 2024 Assets | December 2024 Liabilities | | :------------------------------------ | :--------------- | :-------------------- | :------------------- | :------------------------ | | Operations with derivatives | 434,155 | 220,270 | 379,888 | 224,275 | | Other derivatives | - | - | 522,822 | - | | Total Derivatives | 434,155 | 220,270 | 902,710 | 224,275 | - The C6 Bank share subscription options (R$522,822 thousand in Dec 2024) were fully written off in March 2025 following the termination of the partnership[598][600] - Sensitivity analysis confirms that derivative financial instruments effectively hedge against market variations, with effects on swaps being offset by inverse movements in the corresponding financial debt[618][624][625] 37. Pension plan and other post-employment benefits TIM S.A. sponsors defined benefit and contribution private pension plans for former employees, managed by various foundations, with a total provision of R$3.46 million Pension Plan and Other Post-Employment Benefits (Thousands of Reais) | Item | June 2025 | Decemb