TIM’s EBITDA Surges 7.5% — Margin Gains Outpace Revenue Growth

Date of Call: Feb 11, 2026

Financials Results

• Revenue: Service revenue grew 5.2% year-on-year.
• Operating Margin: EBITDA margin expanded to 51% (EBITDA up 7.5% YOY).

Guidance:

• Expect to keep tower lease growth at a maximum with inflation and slower than revenues in 2026.
• Tax reform impact for 2027 is neutral on free cash flow (guidance already incorporates 2025-2027).
• Broadband strategy focuses on improving efficiency and customer experience; no sale of broadband operation on the table.
• Mobile focus on strengthening profitability through customer-first approach.
• B2B ready to capture new opportunities with scalable portfolio.
• Broadband entering 2026 with more efficient operations and aligned portfolio for sustainable expansion.

Business Commentary:

Financial Performance and Margin Expansion:

• TIM S.A. reported service revenue growth of 5.2% year-on-year and an EBITDA margin expansion to 51%, with EBITDA increasing by 7.5%.
• This performance was driven by disciplined cost optimization, operational efficiency initiatives, and strong cash generation.

Mobile and 5G Leadership:

• TIM maintained its position as the leader in 5G coverage in Brazil, expanding to over 1,000 cities, and was the most awarded operator in the Opensignal report.
• The leadership in 5G and network modernization projects, such as the completion of the network modernization in Sao Paulo, contributed to this achievement.

Broadband and Fixed Services Turnaround:

• TIM Ultrafibra revenues grew 6.2% year-on-year in Q4, with broadband services reaching 850,000 customers and an FTTH ARPU of BRL 95.
• The turnaround was due to strategic focus on quality, rationality, and operating efficiency, including nearly complete migration from FTTC to fiber.

B2B Growth and Vertical Expansion:

• B2B total contracted value surpassed BRL 1 billion, with significant contributions from agribusiness, logistics, utilities, and mining sectors.
• This success was driven by tailored solutions and the integration of connectivity, infrastructure, and digital services across various industries.

Strategic Acquisition and Efficiency:

• TIM acquired full control of I-Systems, enhancing operational efficiency and customer experience in broadband services.
• The acquisition aligns with TIM's strategy to improve end-to-end customer service and positions the company for future growth opportunities.

Sentiment Analysis:

Overall Tone: Positive

• Management described results as "more than another solid quarter," "consistent execution of our strategy," and "delivered exactly what we promised." Highlighted "strong margin expansion," "double-digit expansion in operating cash flow," and "return on capital is higher than the consensus cost of capital."

Q&A:

• Question from Bernardo Guttmann (XP Investimentos Corretora de Câmbio, Títulos e Valores Mobiliários S.A., Research Division): How much of the margin efficiency is structural vs. temporary? Also, what is the strategy behind acquiring full control of I-Systems, and does it signal a lower probability of selling the fiber business?
  Response: Margin expansion driven by structural cost optimization program; temporary effects included visitor interconnection cost balance and reduced overtime taxation. Acquisition of I-Systems provides control for better churn management, operational efficiency (accretive to margin), and positions for future value-generating options; sale of broadband operation was never an option.

• Question from Gustavo Farias (UBS Investment Bank, Research Division): What drove the decrease in network and interconnection expenses? Also, how do you view recent mobile portability trends and competition?
  Response: Network/interconnection changes include decreases in visitor interconnection costs and increases from content provider offers and 5G expansion. Churn is stable; increased portability share is due to competitor practices. New cell impact is not material based on internal KPIs; market remains rational.

• Question from Marcelo Santos (JPMorgan Chase & Co, Research Division): Is the gain in overtime pay tax recognition sustainable? Is the broadband ARPU improvement due to market rationality or TIM-specific actions?
  Response: Overtime pay gain affects past and future but concentrated in Q4; future impact will be smaller. ARPU improvement is primarily from TIM's operational actions (e.g., pull distribution model, customer management) not overall market rationality.

• Question from Rogério Araújo (BofA Securities, Research Division): How are tower lease negotiations evolving? What is the expected trajectory for lease expenses? Also, what is the early impact estimate of Brazil's tax reform?
  Response: Lease efficiency efforts ongoing; 2026 lease costs to grow at a maximum with inflation, slower than revenues. Tax reform impact: 2026 no impact; 2027 neutral on free cash flow (guidance covers 2025-2027).

• Question from Daniel Federle (Banco Bradesco BBI S.A., Research Division): Can you provide more color on the price increases in Q1? Any update on CapEx requirements?
  Response: Price increases for back book (postpaid) similar in magnitude to last year, executed in phases; front book (postpaid) adjustment planned for June. CapEx remains on track with guidance; opportunities to anticipate investment are taken, but overall within planned range.

Contradiction Point 1

Nature of Mobile Revenue Deceleration

Contradiction on whether deceleration is due to competition or internal/seasonal factors.

What factors contributed to the reduction in network and interconnection expenses, especially regarding digital content provider cost optimization, and how should this line item be viewed moving forward? How do you assess recent mobile portability trends and competition, and is this linked to new cellular entrants? - Gustavo Farias (UBS)

2025Q4: The competitive environment remains positive and rational. Price adjustments this year went through smoothly... Churn remains stable. - Alberto Griselli(CEO)

How much of the mobile service revenue deceleration is due to competition versus normalization post-strong growth? - Bernardo Guttmann (XP Investimentos)

2025Q3: The deceleration is less about competition and more about seasonal patterns and the company's own strategy. - Alberto Griselli(CEO)

Contradiction Point 2

Strategic Outlook on Fiber Business M&A

Contradiction on the attractiveness of the Brazilian fiber M&A market.

1) How much of the strong margin expansion is structural versus temporary? 2) Does the I-Systems consolidation signal a stronger long-term commitment to the broadband asset, reducing the likelihood of selling the fiber business, and what are the next steps—M&A or organic growth? - Bernardo Guttmann (XP Investimentos)

2025Q4: The Brazilian market remains hyper-fragmented and unattractive for M&A due to pressure on ARPU and churn. - Alberto Griselli(CEO)

Could market speculation about fiber M&A impact your strategy or timeline for the fiber business? - Bernardo Guttmann (XP Investimentos)

2025Q3: TIM's strategy for fiber is unchanged, focusing on a mix of organic and inorganic moves. - Alberto Griselli(CEO)

Contradiction Point 3

Assessment of New Mobile Entrants' Impact

Contradiction on the significance of new entrants like Oi.

How do you view recent mobile portability trends and competition in relation to new cellular entrants? - Gustavo Farias (UBS)

2025Q4: The increase in portability share reflects competitor commercial practices. Regarding new entrants, the market remains rational, and internal KPIs indicate no material impact from new cell subscribers. - Alberto Griselli(CEO)

Was competitive noise from new entrants (e.g., Oi) with promotions notable? - Vitor Tomita (Goldman Sachs Group, Inc.)

2025Q3: Oi has been increasing data allowances (more gigabytes per price) and potentially reducing prices on some offers. TIM is monitoring this but sees no immediate need to respond as the impact is not yet significant. - Alberto Griselli(CEO)

Contradiction Point 4

Inorganic Opportunities and the Fixed Business

Stance on selling the broadband/fixed business shifts from considering options to stating it was never an option.

1) How much of the margin expansion is structural versus temporary? 2) Does the I-Systems consolidation signal a stronger long-term commitment to the broadband asset, reducing the likelihood of selling the fiber business, and what are the next steps—M&A or organic growth? - Bernardo Guttmann (XP Investimentos)

2025Q4: The sale of the broadband operation was never an option; the focus is on enhancing value generation through new opportunities. - Alberto Griselli(CEO)

What is the outlook for lease lines and new tower projects for the remainder of the year, and what is management's current perspective on the fixed business and potential inorganic opportunities? - Marcelo Peev dos Santos (JPMorgan Chase & Co)

2025Q2: On the fixed business, there is no new news on inorganic progress. The company remains focused on organic optimization... For inorganic opportunities, the stance is the same as last quarter—considering a range from divestment to large deals, with focus on balanced opportunities. - Alberto Griselli(CEO)

Contradiction Point 5

Lease Cost Management and Tower Negotiations

Strategy for controlling lease costs shifts from aggressive negotiation/decommissioning to aiming for growth in line with inflation.

How are tower lease negotiations evolving, what factors drove the Q4 incentive increase, what is the expected trajectory, and can renegotiations offset 5G-driven lease costs? - Rogério Araújo (BofA Securities)

2025Q4: The goal is for lease costs to grow no faster than inflation/revenues in 2026, maintaining pressure on costs despite 5G expansion. - Andrea Palma Marques(CFO) & Alberto Griselli(CEO)

What is the outlook for lease lines in the remainder of the year, particularly with new tower projects, and how is management's perspective evolving on the fixed business and potential inorganic opportunities? - Marcelo Peev dos Santos (JPMorgan Chase & Co)

2025Q2: On leases, 2025 is challenging due to inflation and rollouts. The company is actively negotiating with partners to align lease costs with inflation, aiming to increase lease in line with inflation. Alternative options are being studied... - Andrea Palma Viegas Marques(CFO)