TIM S.A.

Good morning, ladies and gentlemen, and welcome to TeamSA 2023 Second Quarter Results Conference Call. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. There will be a replay for this call on the company's website. After TeamSA remarks are completed, there will be a question and answer session for participants. At that time, further instructions will be given. We highlight that statements that may be made regarding the prospects, projections, and goals of Team SA constitutes the beliefs and assumptions of the company's board of executive officers. Future considerations are not performance warranties. They involve risks, uncertainties, and assumptions as they refer to events that may or may not occur. Investors should understand that internal and external factors to Team SA may affect their performance, and lead to different results than those planned. Should any participant need assistance during this call, please press star zero to reach the operator. Now, I'll turn the conference over to the CEO, Mr. Alberto Griselli, CEO of Team SA, and to Ms. Andrea Viegas, Chief Financial Officer, to present the main messages for the second quarter of 2023. Please, Mr. Alberto Griselli. You may proceed.

Good morning, everyone, and thanks for attending our conference call. Outstanding achievements and rock-solid results mark the second quarter driven by the sharp execution of our plan. Our top line rose more than 9% year over year. with EBITDA growing above 17%. This combination led to a margin expansion of more than 300 basis points. Our operating free cash flow grew more than 65% versus the second quarter of 2022, and the net income more than doubled. Strong operational trends were achieved jointly with the aforementioned financial highlights. ARPU, churn, and network quality presented their best performances in years. On the ESG front, it is worth highlighting that TIM was certified, once again, as a great place to work, achieving a favorability of more than 90% with solid improvements versus last year. In this context, we were also recognized as one of the best companies for inclusive work experience. Under the scope of the environmental pillar, we are executing two initiatives that impact energy consumption. The first is related to transforming our sources to renewable energy proprietary plants. Under this project, we closed the quarter with 87 plants. The second initiative addresses energy consumption by developing smart public lighting solutions that drastically reduce the usage of electricity by municipalities. The integration of ESG aspects into our business dynamics and how we can promote social impact while developing and selling solutions to our clients is a relevant part of our strategy. In Team Agro, for example, we are taking connectivity to the countryside of Brazil. covering 90,000 rural properties, more than 220 public schools, and 65 basic health units. While in the education vertical of our customer platform strategy, we provided courses to 450,000 people to improve their education or develop their careers. Going over the details of our business performance, I want to highlight our revenue dynamics. Total service revenues grew 9.5% year-on-year in the second quarter, with a relevant contribution from mobile services that expanded by 9.7%. This performance was driven by inflation recovery and improved customer base dynamics and a scenario of rational competition. ARPU was also positively impacted, reaching an all-time high level of 29.2 reais per month, growing 13% versus last year. When looking at the mobile segments individually, we saw post-paid revenues growing significantly, up by more than 10% year over year, with an ARPU excluding machine-to-machine lines of almost 52 reais. As anticipated, we return to positive net addition in this quarter after the cleanup and adjustment of former oil customer base. Post-pay churn scored the lowest mark in 12 quarters. In prepaid, revenue expanded at a sound pace of close to 12% versus second quarter 22, leading to an ARPU above 14 reais. Following this remarkable mobile performance, we now have the highest mobile ARPU in Brazil, in prepaid, postpaid and also blended. Migration and app sales movements grew 28% versus Q2 2022 and are playing an essential role in consolidating our ARPU leadership. To better understand what is behind these results, we need to recover concepts from our 2022 investor day. We are developing our value proposition according to three pillars, best offer, best service, and best network. And in all three of them, we are delivering what we promised yesterday. As probably most of you saw last week, we extended our exclusive partnership with Apple and launched Apple One bundle in our high-end team-like plans. We are the third operator in the world to launch such an initiative and the first and only operator in Latin America. This is a clear evidence of how we play the game of innovation as a core differentiator to deliver the best offer to Brazilian customers. Our journey towards customer experience excellence is long, but we are doing it step by step to achieve the best service. Results from the Reclamia Key Portal, Procom Agency, and Anatel point to a significant improvement in all experience metrics. In June, we won the Resolution Award from the Sao Paulo Consumer Protection Agency. We are the only Brazilian company to ever achieve such a recognition. What seemed impossible a couple of years ago is now a reality. TIM is providing the best quality on Brazil's largest mobile network. And we have the evidence to show. OpenSignal awarded us as the number one operator in consistent quality index, a metric that combines a set of critical indicators to measure network quality across a variety of commonly used and demanding applications. On top of that, we are also leading in 5G with 40% more sites than the second place. Our value proposition evolution is clear, but the average client must also perceive that. And perception change is a marathon where consistency is more important than sprints. The good news is that the first signs of change are emerging. As I mentioned earlier, in the second quarter, we have the best churn level in years and need a quarter of inflation recovery in certain offers. Also, debt is historically low, representing 1.8% of our net revenues, and our overall NPS improved by 4 points versus the first quarter. With this, I wrap up the explanation on mobile performance, and we can now move next to fixed services. In fixed, the growth driver remained in ultra-fibra with a solid performance. Fixed broadband revenues went back to double-digit expansion. Broadband ARPU grew year over year for the 18th consecutive quarter, reaching almost 95 reais. Our broadband continues to be driven by the successful migration from FTTC to FTTH and accelerated net addition following the geographical expansion to Paraná and Santa Catarina states. We closed the quarter with a client base beyond 760,000 connections, adding 38,000 clients in those new regions. We are still fine-tuning the model, but the results are encouraging. Additionally, we are following a similar approach to the one that we use in mobile, staying away from price competition and focusing our differentiators on offer innovation and quality of service. With this in mind, we expanded our portfolio with a new 2GB speed plan. Until now, we have been successful, but the overall broadband market is still very price-oriented. I will now pass the floor to Andrea to review the financial results.

Thank you, Alberto. Good morning, everyone. As Alberto just explained, this second quarter was very strong across all lines of our results. Our performance continued to be driven by the positive effects of the M&A integration as well as the organic growth. Our OPEX continued to decelerate and is now growing below inflation. In addition, during the quarter, our TSA agreement with OEI ended, which is helping us reduce costs and eliminate some pressure. The combination of strong revenues and solid OPEX dynamic resulted in a double-digit growth of our EBITDA in the quarter. We grew more than 17% in a year-over-year basis and suppressed 2.9 billion reais. Our EBITDA margin expanded by 340 basis points in the quarter, and we recorded the highest margin on the record at 50%. It is important to mention that the second quarter was the first one without the negative effects that were impacting the trends of our costs. The TSA cost was eliminated in April, and now we have an apple-to-apple comparison related to the Fiberless Mile Rental. In terms of our decommissioning program, we are now seeing the benefits following our M&A. We were able to optimize our process during the quarter and have already adjusted the dynamics with our suppliers. As a result, we are now ready to accelerate the site dismantling. By the end of the quarter, we had eliminated over two-thirds of the planted sites for the year. Of course, there is a delay between the fiscal decommissioning and seeing its financial impact. However, we had already seen some initial positive effects in the second quarter. We paid 57 million reais in decommissioning fines. But the pace of increase in our lease costs has slowed down on a year-on-year comparison and started to decline on a sequential basis. As a result, our EBITDA after lease increased 21% year over year. During the disclose of our guidance at the beginning of the year, we explained that we expect the effects from the decommission to pick up in the second half of the year as more sites are eliminated. We are happy with the progress we already made in this project so far. The strong operation and financial performance added to our bottom line totally 640 million reais, which is almost double the amount of what we registered in the second quarter of last year. It's important to remind you that the transitory impacts we addressed in recent quarters are starting to decrease, including this impact on both DNA and financial expenses. We are also seeing less on the impact of the monetary adjustment related to the 5G license, and a reduction in the tax burden as we resumed the distribution of interest on capital. Free cash flow for the second quarter was also strong. Our EBITDA after lease minus capex was up 67%, totally 1.2 billion reais. Our cash position also rose by 46% year over year, ending the quarter at 3.3 billion reais. The second quarter allowed us to strengthen our financial position and improve our leverage level. The net debt to EBITDA ratio decreased to 1.4 times, and total net debt, including leases, amounted to R$15.3 billion. These sustainable trends leave us comfortable in a scenario of high interest rates. Now, I hand the call back to Alberto.