TIM S.A. (TIMB) Q3 2026 Earnings Call Transcript

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DATE

Tuesday, Nov. 10, 2026

CALL PARTICIPANTS

• Chief Executive Officer - Alberto Griselli
• Chief Financial Officer - Andrea Palma Marques

TAKEAWAYS

• Service Revenue -- BRL 6.9 billion in the third quarter, representing 5.3% growth year over year.
• Normalized EBITDA -- 6.8% expansion for the first nine months of 2026, with third quarter margins expanding above 52% on an after IFRS 16 basis.
• Operating Cash Flow -- BRL 5 billion for the first nine months of 2026, an 11.6% increase compared to the same period last year.
• Ultra Fibra Revenue -- 12.7% growth year over year, supported by a third consecutive quarter of double-digit customer base growth.
• B2B Revenue -- 19.3% increase over the last 12 months, driven by expansion into verticals like connected vehicles and smart cities.
• Mobile Revenue -- 4% growth year over year, primarily supported by ARPU expansion in the postpaid segment.
• Normalized OpEx -- 3.9% increase in the third quarter, which management reported remained below the rate of revenue growth.
• Operating Cash Flow Margin -- 23.9% for the first nine months of 2026, an improvement of 1.3 percentage points.
• Cash and Equivalents -- BRL 5.2 billion at quarter end, maintaining liquidity despite payments for VA and I-Systems.
• Gross Debt -- 3.7% reduction year over year, reflecting a strategy to maintain controlled leverage.
• AI Billing Agent -- 86% reduction in average handling time for billing and collection journeys compared to human interactions.
• Predictive Maintenance -- 93% failure prevention rate on average at sites identified by the company's predictive AI model.
• Bad Debt Expenses -- 30% increase year over year, reflecting pressure from the B2B segment that management expects to decelerate in future periods.
• Free Cash Flow -- 3% growth year over year, impacted by higher inventory levels for Black Friday and increased income tax payments.
• Prepaid Revenue -- Reported first signs of recovery driven by higher-value recharges and new price points at BRL 30 and BRL 40.
• Postpaid ARPU -- Remained flattish year over year, reflecting competitive dynamics and higher retention discounts.

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RISKS

• Palma Marques warned that "on the bad debt, this quarter, when we compare the debt with the last year, we still have a pressure. We increased 30%," primarily due to impacts from B2B clients.
• Griselli stated, "the market was a bit more edgy and nervous," regarding current competitive dynamics in the postpaid mobile segment.
• Palma Marques noted that the company is monitoring the potential impact of Brazilian tax reform on inflation and cost structures.

SUMMARY

TIM S.A. (NYSE:TIMB) reported growth in service revenue and EBITDA for the third quarter of 2026, driven by expansion in broadband and B2B segments alongside disciplined cost management. Management reported that artificial intelligence is improving operational efficiency, specifically in customer care and network maintenance. The company maintained a cash position of BRL 5.2 billion while reducing gross debt and confirming its full-year guidance for 2026 shareholder remuneration. Strategic priorities for 2027 include accelerating mobile operational KPIs and pursuing selective M&A opportunities in the broadband and B2B sectors.

• Chief Executive Officer Griselli stated, "AI agents already support billing and collection journeys, with our billing agent reducing average handling time by 86% compared to human interactions."
• Management is evaluating satellite partnerships with SpaceX and AST SpaceMobile to provide complementary value propositions in Brazil by the end of 2026.
• The company is optimizing its prepaid portfolio with new price points at BRL 30 and BRL 40 to improve monetization and respond to competitor pricing moves.
• Management indicated that more than half of convergent package sales are occurring at price points significantly higher than those advertised.
• The company is selectively evaluating M&A targets in the broadband sector that offer specific commercial and technical synergies.

INDUSTRY GLOSSARY

• Ultra Fibra: TIM's high-speed fiber-to-the-home (FTTH) broadband service.
• ARPU: Average Revenue Per User, a metric measuring the revenue generated per subscriber.
• Fistel: Fund for Telecommunications Inspection, a Brazilian tax on telecommunications services.
• B2C: Business-to-Consumer, serving individual retail customers.
• B2B: Business-to-Business, serving corporate and enterprise clients.
• WTTx: Wireless-to-the-x, using wireless networks to provide broadband access.
• MSR: Mobile Service Revenue, revenue generated specifically from mobile communications.
• IFRS 16: An international financial reporting standard for lease accounting.
• VA and I-Systems: Specific asset or company acquisitions made by TIM S.A.
• Bet Creators: A specific digital product or feature recently launched by the company.

Full Conference Call Transcript

Operator: Good morning, ladies and gentlemen. Welcome to TIM SA 2026 Third Quarter Results Video Conference Call. We would like to inform you that this event is being recorded. [Operator Instructions] [Presentation]

Operator: Hello, everyone, and welcome to Tim's Third Quarter 2026 Results Presentation. Following today's presentation, Alberto Griselli, CEO; Andrea Viegas, CFO; and the Investor Relations team will be available for the live Q&A session. Before we begin, please note that this presentation may contain forward-looking statements, which are subject to risks and uncertainties. And now I'll hand it over to Alberto.

Alberto Griselli: Hello everyone. Our third quarter results reinforce the consistent trajectory we have followed throughout 2026. During the first nine months of the year, we continued to grow revenue, improve profitability, and convert our operating performance into cash. This reflects the discipline with which we are executing our strategy while maintaining a solid financial position. Service revenue increased by 5.8%, normalized EBITDA grew by 6.8%, and operating cash flow increased by 11.6%. These results keep us on track to deliver our 2026 guidance. Looking specifically at the third quarter, service revenues reached approximately BRL 6.9 billion, an increase of 5.3% compared with the same period last year. In B2C, we continue to evolve our portfolio across mobile and broadband.

We are developing propositions for different customer needs, creating more value for our clients and strengthening our relationship with them over time. Within mobile, revenue grew 4% year over year, supported by ARPU expansion. Postpaid continued a positive trajectory, while prepaid showed the first signs of recovery with higher-value recharges and an improved revenue trend despite a more challenging competitive environment. In broadband, Ultra Fibra revenue increased by 12.7% year over year, while the customer base recorded double-digit growth for the third consecutive quarter. In B2B, revenue grew by 19.3% over the last 12 months, increasing their contribution to our revenue mix. We continue to broaden our portfolio through new partnerships and contracts in established verticals and connected vehicles.

For example, our partnership with BYD strengthens our position in the automotive segment, while in Smart Cities, the SmartView project expands our proposition beyond smart lighting into 5G-enabled public safety. Think Cloud AI by V8 also adds cloud, data, and artificial intelligence capabilities to our offering. Together, these developments reflect the continued evolution of our B2B business beyond traditional connectivity. We are also making practical progress in the use of artificial intelligence in customer care. AI agents already support billing and collection journeys, with our billing agent reducing average handling time by 86% compared to human interactions. We are now expanding their use to offers and sales.

In our network, predictive maintenance has helped prevent, on average, 93% of failures at the sites identified by the model. Turning to our financial performance, revenue continued to grow faster than costs, with OpEx up 3.9% in the quarter. This supported normalized EBITDA expansion of nearly 7%, taking the margin above 52% on an after IFRS 16 basis. The result was even stronger: EBITDA grew close to 8%, while margin expanded by around 1 percentage point to 41.3%. Also benefiting from costs below inflation, our operating performance continued to translate into cash generation. In the first nine months of 2026, operating cash flow reached almost BRL 5 billion, an increase of 11.6% year over year.

The operating cash flow margin reached 23.9%, improving by 1.3 percentage points. Cash generation remains an important part of our performance. It supports our ability to invest in the business while preserving financial flexibility. We ended the quarter with 5.2 billion in cash. Even after the full payment of VA and I-Systems, gross debt declined by 3.7% compared with the previous year and leverage remained at a lower level. This indicator shows that our operating performance continues to translate into a healthy balance sheet, solid liquidity, and controlled leverage. As we move into the final part of the year, our priorities remain consistent. In B2C, we will continue to evolve our value proposition across mobile and broadband.

In B2B, we will continue to expand our portfolio and develop our presence in established verticals. At the same time, we are renewing the Instituto TIM with a focus on technology-enabled education, dignity, and gender equity, contributing to a more inclusive and digital society. Our results reflect a business that continues to evolve, improve profitability, and generate cash. We will continue to execute our strategy with consistency and discipline. Thank you. And now let's move to the live Q&A.

Operator: [Operator Instructions] Our first question comes from Leandro Bastos with Citi.

Leandro Bastos: We have two questions on our side. First one about mobile, specifically postpaid, we saw kind of the ARPU basically flattish on a year-over-year basis. And you guys even mentioned kind of higher retention discounts and still kind of competitive pressures. Just to get a sense of where we are if you continue to see deterioration in the competitive environment into the third quarter and going forward, what's kind of the environment you see for price ups and ARPU evolution, at least the direction? So this would be the first one. The second also still in mobile, but looking at prepaid, which we saw kind of an improvement on the revenue trajectory.

And you guys even mentioned kind of a new offer for BRL 40. So just to understand kind of the kind of traction we are seeing for these new plans and how you're seeing overall competitors reacting to these offerings as well. So those would be our questions.

Alberto Griselli: Leandro it's Alberto speaking. So thank you for your questions. For the first one, when we look at postpaid, I would say that the competitive dynamics remains broadly unchanged versus the second quarter. So there's not any specific new launches besides the typical promotional activities. So in the second quarter, we said that the market was a bit more edgy and nervous. I think it remains as it was. So there has not been a progress in that. And this clearly reflects in the front book prices updates that for control didn't happen so far. And so the situation is largely unchanged.

This clearly impacts the ARPU dynamics to some extent in the sense that we had some pressure in the first, second quarter on churn that now is eased over the third quarter as we reported in our rates that is on our presentation. So we saw some kind of ARPU erosion at the beginning of the year because of this increased churn. And when it comes to what we call contracted revenues that are based on the price point of the postpaid plans that we sell, they are pretty unchanged versus the second quarter. When we move to the prepaid, what is happening is that we are optimizing a bit our portfolio.

As you saw, we launched a new price point that sits together with the existing one. So in some areas of Brazil, we launched an offer whereby the prepaid offer is roughly BRL 30, 30 days for a specific amount of gigabyte. In a number of regions in Brazil, we included a site offer whereby we offer BRL 40, 30 days and a higher allowance of gigabyte. And the response so far has been positive. And you see some results appearing in our third quarter. And what we are looking at in October, November is pretty consistent with what we are seeing in the previous quarter.

In response to that, we saw that one of our competitors announced a prepaid offer of BRL 35. I don't think it's already implemented, but I would say that on prepaid, this is a positive news because we didn't change the BRL 30 offer. We just added BRL 40 on top of the BRL 61 and one of our competitors said that they were moving to BRL 35, which is a positive outcome. On a more negative side, Claro apparently put back what's happen in their offering. So let's see, it's a mixed sign. So there are some positive ones and potentially some less positive one on one of our competitors.

Operator: Our next question comes from Gustavo Miele with Goldman Sachs.

Gustavo Miele: I also have two questions. The first one would be related to capital allocation strategy. So just to hear an update from you guys on how you are thinking priorities in terms of capital allocation for 2027. especially in the context of long-term rates in Brazil going up as per what we saw in the last weeks here in the country. So just to make sure whether dividends or maybe potential M&As gain ground in the priority plan of the company for the upcoming year. This would be my first question. And the second one would be related to bad debt expenses as it happened in the last quarter, we saw some pressure on the year-over-year comparison.

You mentioned some effects coming from B2B client as it happened as well in the last quarter. So just to make sure whether you're also seeing some pressure in the B2C segment as well amid the tough macro environment that we are going on. So those would be my 2 questions.

Alberto Griselli: Gustavo, let me take the first one, and then I will leave Andrea to complement on the first and the second one. So on the first one, I would say that our plan for capital allocation remained pretty much unchanged. So when you look at our shareholder remuneration, our message and performance has been consistent over the last many years. The more we grow our cash flow, that is our priority #1, the more we distribute to our shareholders. So that's something that has been happening for many years, and that's the guidance that we are likely to follow for the years to come.

When it comes to the M&A activities, as you know, we executed this year a couple of operations. The first one was with V8 on B2B and the second one on System on broadband. I think that we're going to be selective and opportunistic on B2B. We are doing well with the strategy that we are putting on the ground. So there might be something appearing next year, but nothing, I would say, it's more of a complement than something transformational. When it comes to the broadband, after the acquisition of System, we are deploying our organic strategy and accelerated broadband. As you saw in our results, it's something that is performing quite well.

And so the organic plan is in place nationwide, and we're going to follow on that. As we discussed in previous quarters, you all know that we are also looking at potential M&A activities in this area. And I agree with you, Gustavo, that the situation for next year is going to be good for us. given our strength in terms of capital. We got BRL 5 billion in cash. So we can execute potential M&A activities in that area that is not decided yet, but the strategy remains unchanged. As soon as we find a target that is at the right price and with the right commercial and technical synergy, we're going to pursue it.

Andrea Palma Marques: Gustavo, complementing the answer of Alberto. Alberto saying about the dividends and M&A. Just to complement that, we have confirmed our guidance for 2026 related to the shareholder remuneration. On the bad debt, this quarter, when we compare the debt with the last year, we still have a pressure. We increased 30%. But when we see in a quarter-over-quarter basis, we see the acceleration. We have the peak of B2B impact in the second quarter. Now we continue with this increase related to the previous years, but we expect this deceleration in bad debt going forward. I don't know if I answer your question about bad debt.

Alberto Griselli: Gustavo, we just add another point on let's say, the wider macroeconomic impact on our consumer operations. So of course, things may change in the coming quarters. So we are monitoring this on a regular basis, on a daily basis, especially on prepaid. So we say when you look at prepaid, prepaid doesn't look impacted by this macro situation so far. As a matter of fact, you will see that our spending is moving up. And so I think that so far, it's a sign of resilience.

And when you look at the, what we call the collection curves for consumer after the price up period that we experienced in the first and the second quarter, I would say they are pretty solid, both on broadband and postpaid. So far, we don't see a deterioration of those curves. Clearly, the back book price that we're going to execute next year are going to put this a bit under pressure, but we know this, and we are building the countermeasures to treat our customers accordingly when we will execute it.

Operator: Our next question comes from Silvio Doria with Safra.

Silvio Doria: Just one question here about brand royalties. The royalties agreement with Telecom Italia expires at the end of this year, if I'm not mistaken. Could the terms change in 2027, especially under cost control? That's my question.

Andrea Palma Marques: No, we have no change related to the royalty agreement. This will continue. We are still under Telecom China brand. So until there, we will continue with our royalty agreement.

Operator: Our next question comes from Luis Chagas with XP.

Luis Chagas: I have two questions here. So the first one, I'd like to go back to the broadband point that Alberto mentioned. Could you comment how the TI UltraComod has performed since launch in terms of net adds and ARPU as well? And the second question is about the change of controller. Could you share how the dialogue with the new controller is evolving and whether you expect any change in Teams Brazil strategic priorities?

Alberto Griselli: Luis, thanks for the question. So when it comes to broadband, I would say that the performance so far are quite positive. You are positive from a number of perspective. We are building it up. So as for now, the offer has been available only in our point of sale, the physical point of sales. And what we see there is a number of things. The first one is that this is driving up our ability to grow broadband by itself. So that's the first positive one. The second one is that besides the positive impact on broadband, we also have a positive impact on mobile. So we sell more mobile as a consequence of that.

The third one that we generally are selling price, and we have a specific data point on our presentation at a price point that is not necessarily the one that we communicate. As a matter of fact, more than half of the conversion bundles of convergent package sold are at a price point that is significantly higher versus what we communicate. The only point that we still have to assess is the churn impact because it generally takes more time. So we measure it on a monthly basis. We've got a couple of months now.

So we see that the results is positive there as well when we compare the curves in M0, M1 of the convergent products versus nonconvergent one, but we need to wait more time. So I would say that from this perspective, the experience has been broadly positive. Now what is going to happen over the next quarters is that we are fine-tuning specific aspects of the value proposition just to make the selling experience, activation and everything smoother for our customers. And we are going to expand the breadth of the commercial channels that are providing this offering. So, so far, it's been limited to the point of sales. We are on a check on this one, worked well.

So now we're going to expand it a bit further on. Let's say, the Black Friday campaign is working in that direction. When it comes to the -- is that okay, Luis, for the first question?

Luis Chagas: Yes.

Alberto Griselli: And so when we move to the second one, this is in the dialogue with Post. I think maybe we discussed this on a one-to-one, but we have a representative of the new shareholder in our Board, the Brazilian Board since March. So we have been working with them now and together clearly with our parent company for a number of months. And including a number of M&A operations already happened with them in our Board and understanding and supporting our strategy. So I think that I didn't notice any change in our priorities and this related to the previous questions primarily in terms of capital allocation.

So expanded dividends as we experienced over the last years and appetite for growth in the areas that we discussed, B2B and broadband to complement our business portfolio in Brazil.

Operator: Our next question comes from Livia Mizobata with JPMorgan.

Unknown Analyst: I have also two questions. The first one on your broadband strategy. I would like to double-click on this one. I understand that you are growing well with expectations and 2027 should be also a year of acceleration following the merger approval. How should we think here about margins and CapEx for next year, having in mind this acceleration? And my next point is on the AI efficiencies that you brought up. I thought it was quite interesting, the initiatives on customer care and also network operations. Are we already seeing some gains in terms of margins? Or is it still too early to tell?

And could you tangibleise for us what level of gains do you foresee for the next years given your studies in-house? And if this could potentially be a driver for the next margin expansion cycle?

Alberto Griselli: When it comes to fixed broadband, as you said, we are already accelerating our expansion, and it's going to continue in the coming years, clearly. We are managing so far to keep our ARPU under control despite the competitiveness of this market. So remembering the broadband market is quite competitive, especially on a regional basis. So far, we've been successful in defending our ARPU. When it comes to the impact in margins and in CapEx, at the growth that we are experiencing, this is not going to impact the sort of messages that we have been delivering over the last years in terms of expanding profitability and a conversion of revenue into free cash flow.

This remains the main priority of the company. And this year, we commented the guidance just for one year. But if you look at the previous year, where you have a longer time frame, you will see that we are providing for an expansion of profitability at all levels and certainly at free cash flow level. So we don't foresee an impact into this within the organic operations. For artificial intelligence, do you want?

Andrea Palma Marques: Yes. Related to the AI, as we see in our presentation, we still have very good results in what we are working now, and we see space to increase more gains in the future. But some of the gains, we will reinvest in our OpEx. We have another things that we want to do. So some of the gains will not achieve the margin, but we will create space for more investors in ion in the customer experience. I don't know if you want to.

Alberto Griselli: I would just complement a few things, Livia, that basically what we see, as Andrea was saying, we have a number of initiatives within the company. And now we are in the process whereby some of them are scaling up. So the two that we put into the presentation on the network side and on customer care side are gaining scale. And basically, when it comes to getting scale, what does it mean that nowadays, if you want to complain on an invoice or you want to query some kind of adjustment in your invoice is 100% AI-driven. And clearly, this is one of the most difficult ones.

So we are gaining a lot of confidence that this wave of artificial intelligence can impact over the coming years, a number of processes within the company, generating not only in the efficiency that then we utilize either to increase our margins or to support the growth in areas where we want to invest. also translate into quite positive outcome from the customer experience. So when you look at the way that the system works, maybe we organize something by the end of the year to make it tangible. You see that the call is more assertive. It's clear for the customers. It's shorter and the customer gets away with a solution at the end of the call.

And so this is positive also for the quality of the service. At the same time, I think that one of the important aspect that's been tweaking and now we are comfortable with it is the sustainability of this initiative. So you've got the savings, but you've got the cost. And so now we got the cost under quite good control. in terms of how we manage it. So we are quite comfortable that we have a net positive outcome of these initiatives at scale.

Unknown Analyst: Perfect. Very clear. Can I just do a follow-up on this margin front since we are elaborating on the topic. Could you discuss also any updates that you might have on Fistel? I've been seeing this process advancing on STF over the past days. So just wanted to know if there is anything new that you could share on this front would be interesting.

Alberto Griselli: Well, on Fistel, there is no relevant news so far. Clearly, there are there a number of paths to reach a solution of this dispute. The first one is the legal one. And basically, this one is the longest one. Then there is the second one that is the ADI. The ADI it's with Alexander more eyes there. It needs to be put into vote has been, but since then, it disappeared. And there is another one that is the congressional path that addressed the TFF. The sector has a positive outcome in the lower chamber. So there are three parts going forward. But I think that we will need to wait a bit more.

Operator: Our next question comes from Gustavo Farias with UBS.

Gustavo Farias: So I'd like to start by talking about free cash flow. So we noted that free cash flow grew 3% year-over-year, which is below the growth we saw in EBITDA. So if you could comment, I believe the drivers were mainly working capital and taxes. So if you could comment if there was any kind of timing effect on that line? And a follow-up of that question related to leverage. So if you could comment on at what leverage level do you feel comfortable in maintaining, especially in the light of potential further M&As in the future? I would also like to touch on a second thing related to sales and marketing expenses.

So we observed some decrease as a percentage of revenues compared to previous quarters. Just would like to see if there was any nonrecurring event and what to expect going forward? If I'm not mistaken, you delivered this decrease in the intensity of this line despite the expenses related to Rock in Rio. So just wanted to know how to think of this line going forward.

Andrea Palma Marques: Let's go to the first one. Related to the free cash flow, we have an increase in working capital in this quarter, basically two points. The first one, we have an increase in the inventories level due to the Black Friday purchase. We have a higher versus the previous year. So we have an increase in the inventory. And also, we have an increase, as you mentioned, in the income tax cash flow, less interest on capital. So this is why you have this difference between the EBITDA and the free cash flow. Moving to the level of our leverage.

If you ask me, I'm in the com what's the leverage I have now -- consider the tax that we have in Brazil, I think we are in a very good position on leverage today. Of course, we have room to improve, but we are very careful where we're going forward considering again the tax. The third point, the commercial cost, as you mentioned, we don't have any inorganic in this quarter. The commercial, yes, we have a little decrease in advertising. This is due to efficiency what we are doing. But consider that the impact of Hoking hill happens in the second quarter because we have previous cost in the previous events.

So the higher impact of the hockey Hill occurs in the second quarter. In this third quarter, it's only efficiency and things that are going on. For the fourth quarter, the next quarter, you can expect the same level. Of course, we have Black Friday and this impacts a little bit more.

Alberto Griselli: Maybe it's worth adding that in the commercial costs, besides the commercial costs, we got the call center cost as well. And so basically, you got a number of things going on there, something is increasing, something is decreasing. So you see the net effect. So when you look at the operation of the call centers that we have just discussed with in the previous question, you have a cost line that is more efficient year-over-year. So it's going down in nominal terms.

Operator: Our next question comes from Maria Clara Infantozzi with Itau.

Maria Infantozzi: I have two questions here. The first one related to your pricing strategy considering 2027, a more inflationary environment could somehow affect the pass-through of inflation to your back book clients next year? And how do you balance pricing with churn given this macro context? And the second question related to profitability, also taking into consideration the macro headwinds. Are you seeing further efficiency gains to absorb the more inflationary environment? If you could comment on that, it would be helpful.

Alberto Griselli: Clara, let me go on quickly over the two and then on I will ask Andrea to complement also. So when it comes to the pricing strategy for 2027, I would say that our back book approach is not going to be impacted. So we're going to execute. And we're going to design -- we're going to always improving our processes to make it in a way that creates less attrition to our customer base. So we put intelligence, more intelligence every year into the process. Clearly, there is all this market rationality scenario that we are looking at. And at the end of the day, we carried out a number of launches in the last quarters.

And now we are 100% focused in make them work and enter 2027 at a more robust pace in terms of net additions versus this year. So if you remember this year, we enter at a slower pace versus our typical speed. This speed has been improving over the last three quarters. It is likely to improve in the coming quarters. So we are working to improve volumes. And when you look at the way we launched a number of new initiatives, they also work on prices. in a smarter way. So you look at prepaid, you look at the bet creators that we just launched. So we are managing the tool to be better positioned in 2027.

When it comes to the profitability, of course, a higher inflation has a direct impact on a number of cost categories. At the same time, we are used to this. It's a number of years that we entered the year with an expectation of lower inflation in our industrial plan and then the inflation went up. So we've got a number of initiatives, processes and attention in how we manage cost. And that's the reason we've been increasing our profitability for the last how many quarters presented for 15. So it's, I would say, business as usual. Clearly, we need to find the new levers. We already have some of them mapped out. Artificial intelligence is clearly one of them.

Andrea Palma Marques: Just to complement Maria Clara, the answer of Alberto. Yes, we always have improved to increase profitability. But we also have to understand what happened with the tax reform because we need to understand what will happen with the inflation of this. But we are working in our plan now and we will create rooms to try to not have impact of the inflation. But again, we have to wait and see what will happen with the tax reform.

Operator: Our next question comes from Fanny Kanomuri with HSBC.

Unknown Analyst: The first one is regarding the building blocks for your service revenue growth. So if you look at 2026, your client generating revenue in mobile has been well below inflation, but that has been offset by adjacent services and fixed broadband. Should we expect this to be the scenario going forward? Or do you expect some reacceleration in the client generation revenues in mobile? The second one that I wanted to ask is on how you are looking at satellites. Some of your competitors have and also partnerships. Are you looking at partnerships with them going forward? And do you see any threat for disruption from them?

Alberto Griselli: Okay. Fanny. So I think that on the building block revenue generation is sort of given the answer in your question. So we are, yes, working on three main building blocks. When it comes to -- I think the two of them are smaller and clearly, we expect to keep on growing broadband and B2B. When it comes to mobile, when I mentioned, we are focusing now to get a more robust entry pace for 2027 is clearly because when you look at our client-generated revenues, mobile revenues, you will see that basically, you have a couple of things that go together, but shifted in time.

So if you look at this year, you see that our pace of volumes, let's put this way, at least for postpaid has been milder at the beginning of the year, and therefore, we are working to enter at a stronger pace in next year because at the end of the day, revenue would follow with a number of quarters of delay. So our objective is to work the volumes and be more dynamic in the way we enter 2027. So that's the reason we are moving up quarter-by-quarter, recovering ground. As for price, this is a bit trickier given the overall competitive environment. But as you see, we are able to maintain a certain rationality.

And basically, we respond to some of our competitors if we do something that we think is a bit too aggressive as in the case of the team fit the discussion that happened last quarter and has been sorted out. So for mobile, our main focus is to improve the KPI, the operational KPI. If we are successful in doing this, and we have been accelerating over the last quarters, there will be a positive impact on revenues with a few quarters of delay. As for broadband and B2B, we are already growing at a fast pace, and our plan is to keep on with this pace in the coming quarters.

When it comes to the satellite, satellite, it's, in my view, a complementary value proposition that is relevant for Brazil. And therefore, yes, we are looking at partnership for Brazil. I think that we got something by the end of the year. The point is that basically, you have two main value proposition in Brazil. One is with SpaceX and the other one is with ASP. Both of them have a specific benefits. I think there was a question in the last quarter from JPMorgan.

And I think when you look at SpaceX, as of now, the trade-off between the cost and the value proposition is not good because at the end of the day, what is being offered as we speak, is the basic tech services and the business model make this service, in my view, the trade-off between these services and what is being asked by the satellite partner is not positive. When you look at the other opportunity in Brazil is ASP that closed some deal with some operators in Brazil. It looks also an interesting value proposition in the future because as of now, there are a limited number of satellites in place.

And I think that is -- the positioning is structurally more complementary to mobile operators. So while SpaceX basically, at the end of the day, has a network of its own end-to-end, AST designed this network to be complementary to us. So basically, they have they got a passive antenna in space and they need to go to our network. So we like this approach as well. Both services will be commercially capable of delivering value at the end of next year. So it's good that we have two options on the ground. We are discussing with both of them. And I think that we will announce something by the end of the year. Clear? Let's assume so.

Unknown Analyst: Yes, it's very clear. Maybe one quick follow-up. I mean you did discuss about the impact of tax reform. Can you just give you some initial takeaways on what you think the impact of tax reform will be on.

Andrea Palma Marques: The tax reform, we are working since the beginning of the year. It is a quite transformation because we have to see review systems, all the contracts with the suppliers, tax credit and so on. But what we are focusing is to maintain our margin and have 0 impact in the free cash flow. So until now, have some regulations still being discussed. So we have to see in the end of the year what will be the effective tax. But we believe that we are prepared to the transition, and we are working with 0 impact in our free cash flow.

Operator: Our next question comes from Rogerio Araujo with Bank of America.

Rogério Araújo: I have just one follow-up on MSR growth. It has slowed to 4%. Claros MSR in Brazil accelerated to 7%. So if you could please share with us what is your view on these differences comparing with the peer? And do you think that pricing positioning is sustainable between players, including them and your pricing strategy? Or would it make sense to adjust prices versus peers to defend market share?

Alberto Griselli: So Roger, the first one, so when it comes to pricing, I think that our pricing are competitive. So I don't see any major differences versus our competitors. So prepaid, it has been stable for many years, and now we are making an attempt to monetize our customer base. As a matter of fact, it's a more for more strategy and it's working. When you look at control, we are on the same ballpark on the ATL offering. And when you look at postpaid, I think that our view is a bit higher than us, and there might be an opportunity to increase it.

We are not just doing right now because we are working to increase our, say, pace of net addition going forward. So I don't think that there is a need to change our pricing strategy because the three of us are pretty much aligned. When it comes to convergence, if you refer to this, it's true that one of our competitors is aggressive regionally. And the other two are more, let's say, let's put this way, are more consistent in terms of a nationwide offering.

Now since we are now upselling a convergent project to our customer base, we don't see a reason at this point in time to be as aggressive as of our competitors because we are managing to grow at a quite interesting price point. That's the data point that we shared with you in the presentation, the fact that more than 50% of our customers subscribe to a higher value versus the one we communicate. So, so far, we don't see the need to be more aggressive.

If you take away the fact that on a promotional basis in some moments of the year, it's part of our business functioning that everyone is launching specific value proposition with, let's put it way, a better price point, but it's temporary. Black Friday is a clear example of this. So that's for your second question. If you look at the first question, I think that what I was saying is that when you look at postpaid, what we are focusing on is the increasing the speed of growth in terms of net addition. We entered this year at a lower pace. And since then, we've been growing with a number of launches.

And our expectation that this trend may continue. And therefore, this will result in a better outlook for MSR growth going forward. When it comes to MSR or service revenue growth, I think we have a difference versus our players that we are concentrated on mobile. So how you treat convergent products is something that you may want to ask to our competitors versus us.

Operator: Without any more questions from analysts, we will now return to Mr. Alberto Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

Alberto Griselli: So thank you all for joining our call today. As the market continues to evolve, we are driving our strategy to accelerate mobile operational KPIs and enter 2027 at a stronger pace. As we said, at the same time, we continue to expand opportunities in broadband and B2B. I would like to thank again our entire team for the commitment and focus to deliver on our strategy, and we are all looking forward to meeting you in the coming days.

Operator: Thus we conclude the third quarter of 2026 conference call of TIM S.A. For further information and details of the company, please access our website, teamam.com.br/ir. You can disconnect from now on. Thank you once again.

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