TIM(TIAIY) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2022, group service revenues increased by 3.6% year-on-year, improving from 3.0% in Q3 2022 [32] - Full year 2022 group service revenues were down 1.3% year-on-year, better than the low single-digit decrease guidance set at the beginning of the year [33] - Group EBITDA for Q4 2022 was up 2.7% year-on-year, a significant recovery from a decline of 6.5% in Q3 2022 [33] - Full year 2022 group EBITDA decreased by 6.7% year-on-year, reaching the upper part of the revised guidance [33] Business Line Data and Key Metrics Changes - TIM Consumer total revenues declined by 9% year-on-year, with service revenues down 7% year-on-year [17] - TIM Enterprise total revenues increased by 8% year-on-year, with service revenue up 11%, driven by Cloud, Security, and IoT services [18] - NetCo total revenues declined by 4% year-on-year, with service revenues also down by 4% [19] - TIM Brazil reported a 19% year-on-year increase in total revenues and service revenues, benefiting from market consolidation and the integration of Oi's customers [19] Market Data and Key Metrics Changes - TIM Brazil achieved 5G coverage in all state capitals, with a number of antennas exceeding its peers combined, creating new commercial opportunities [19] - The FTTH rollout by NetCo reached 32% coverage of technical units by the end of 2022, progressing at a pace four times faster than at the beginning of the year [19] Company Strategy and Development Direction - The company aims to manage its four entities independently, focusing on distinct market dynamics and competitive strategies [11] - The strategic plan for 2023-2025 emphasizes efficiency, capturing new growth opportunities, and preparing for market consolidation while maintaining financial discipline [13] - The company is committed to a volume-to-value strategy, selectively repricing its customer base and migrating from copper to fiber [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment, including rising energy prices and inflation, but expressed confidence in the company's operational improvements and future prospects [6][8] - The company expects domestic business to stabilize in 2023, with low single-digit growth in service revenues and mid-single-digit growth in EBITDA [53] Other Important Information - The company achieved better-than-expected results in 2022, with a successful bond placement indicating regaining investor confidence [9] - The company is focused on ESG initiatives, with over 40 projects aimed at achieving sustainability targets [30] Q&A Session Summary Question: Guidance on net free cash flow and KPI trends - Management clarified that the slightly positive cumulative equity free cash flow guidance is conservative and may relate to voluntary redundancies [63] - KPI volatility in Q4 was attributed to seasonal effects and competitive dynamics, with TIM Enterprise performing better than competitors [64][66] Question: CapEx guidance and leverage concerns - Management explained that the guidance reflects gross CapEx, with proceeds from PNRR expected in subsequent years [78] - The company acknowledged the need for extraordinary operations to effectively deleverage and prepare for market consolidation [84] Question: Sector consolidation and strategic role - Management indicated that sector consolidation is anticipated in the mid-term, and the company aims to play an active role in potential projects [88]