A. History
and Development of the Company
Basic Information
TIM S.A., formerly known as Intelig Telecomunicações
Ltda., a publicly-held company (sociedade anônima) organized under the laws of the Federative Republic of Brazil, incorporated
in the Federative Republic of Brazil for an indefinite period on March 9, 1998.
Our headquarters are located at João Cabral
de Melo Neto Avenue, 850 – South Tower – 12th floor, 22775-055, Rio de Janeiro, Brazil and our telephone number
is +55 21 4109 4167.
Our agent for service of process in the United
States is Puglisi & Associates located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.
The SEC maintains an Internet site that contains
reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at http://sec.gov.
Our website address is http://www.tim.com.br. Information contained on, or that can be accessed through, our website does not constitute
a part of this annual report.
Historical Background
Privatization and summary
In July 1998, as part of the privatization of
Telebrás, the Brazilian state-owned telecommunications monopoly, the Brazilian Federal Government sold substantially all of its
shares issued by the 12 holding companies into which Telebrás had initially been broken up, including its shares of Tele Sudeste
Celular Participações S.A. (“TSU”), and Tele Nordeste Celular Participações S.A. (“TND”).
Following a series of acquisitions, corporate reorganizations and corporate name changes, TSU and TND merged to form TIM Participações
S.A. (“TIM Participações”) in 2004.
We continued to expand and restructure our operations
through a series of corporate reorganizations, mergers, acquisitions and name changes as described below, and a majority of our share
capital is currently held, directly and indirectly, by Telecom Italia (which began operating in Brazil in 1998 as Telecom Italia Mobile)
through its wholly owned subsidiary, TIM Brasil, formed in 2002 as the holding company of Telecom Italia’s operating companies in
Brazil. In turn, the largest shareholder of Telecom Italia are Poste Italiane S.p.A. (successor of Cassa Depositi e Prestiti) and BlackRock,
which are able to exercise significant influence over Telecom Italia. In 2019, Telecom Italia delisted all of its U.S. listed securities
and deregistered from the SEC, having filed Form 15F on July 9, 2019. On February 17, 2023, TIM Brasil obtained registration by the CVM
as a publicly-held company in category B. See “—C. Organizational Structure” for a description of our current corporate
structure.
Acquisition of Intelig
In 2009, we acquired 100% of Intelig’s
share capital from Holdco Participações Ltda. As a result, Intelig became our wholly owned subsidiary. The acquisition of
Intelig (prior to being renamed TIM S.A. in September 2017, as a result of the Reorganization) brought material advantages through significant
synergies with its network, such as its metropolitan fiber optic network and its large backbone that allowed us to accelerate the development
of our 3G network and generate significant operational cost savings.
Merger of TIM Celular
In 2011, TIM Celular (which was subsequently
merged into us as a result of the Reorganization) entered into an agreement with Companhia Brasiliana de Energia and AES Elpa (the AES
Group in Brazil) for the purchase of all of AES Elpa’s equity interests in Eletropaulo Telecomunicações and 98.3%
of the interest of AES RJ, (“AES Atimus Acquisition”). In connection with the acquisition, Eletropaulo Telecomunicações
changed its corporate name to TIM Fiber SP Ltda. (“TIM Fiber SP”), and AES RJ changed its corporate name to TIM Fiber RJ
S.A. (“TIM Fiber RJ”). Both entities were collectively referred to as TIM Fiber. In accordance with the corporate reorganization
of TIM Fiber, TIM Fiber RJ and TIM Fiber SP were merged into TIM Celular in 2012, which was the former entity that used to own and operate
the fiber optic network in metropolitan São Paulo and Rio de Janeiro (and which, as discussed below, itself was merged into the
Company in October 2018 as a result of the Reorganization). The purpose of this reorganization was to simplify our organizational structure
and improve the administrative, operational and financial efficiency of the companies controlled by us.
TIM’s Corporate Reorganization
On July 25, 2017, the Board of Directors of TIM
Participações approved a corporate reorganization of its then subsidiaries, TIM Celular and the Company (formerly known
as Intelig). On September 6, 2017, as the first phase of such corporate reorganization, Intelig altered its articles of association to
change the company from a limited liability company to an unlisted limited liability corporation, and to change its corporate name to
TIM S.A.
As discussed in more detail below (see “—C.
Organizational Structure”), in October 2018, the second phase of this corporate reorganization resulted in the merger of TIM Celular
into the Company. This merger was part of the Reorganization and achieved its objective of capturing operating and financial synergies,
through the implementation of a more efficient operating structure, as well as accounting and internal control systems.
Merger and succession of NYSE and B3 listing
On July 29, 2020, the shareholders of TIM Participações
(our former parent holding company) and our shareholders approved, by a majority of votes, the merger of TIM Participações
into us, pursuant to the terms of the Protocolo e Justificação de Incorporação. On July 29, 2020,
the boards of directors of each of the companies approved the execution of a Merger Agreement (protocolo de incorporação).
The merger of TIM Participações into us, previously a wholly owned subsidiary of TIM Participações, became
effective on September 28, 2020 (the “Merger”). Consequently, TIM Participações, our former parent holding company,
was merged into us as a result of the Merger. The common shares of TIM Participações had been listed on the Novo Mercado
segment of the B3 S.A. – Brasil, Bolsa, Balcão (the “B3”) (the São Paulo stock exchange) since 2011. On
September 28, 2020, because of the Merger, TIM Participações ceased to exist as a separate entity, and we, TIM S.A., continued
as the surviving corporation in the Merger, succeeding to all rights and obligations of TIM Participações pursuant to Brazilian
corporate law and we became the successor registrant under Rule 12g-3(a) under the Exchange Act. On September 28, 2020, the B3 approved
the listing of the merged company and the admission to trading of its shares on the Novo Mercado. In order to be listed on the
Novo Mercado, we are required to comply with heightened corporate governance and disclosure requirements, and we are not permitted
to issue preferred shares, participation bonuses or any type of shares that have restricted voting rights. On September 28, 2020, we filed
a form 6-K pursuant to Rule 12g-3(a) promulgated under the Exchange Act to report this succession in accordance with Rule 12g-3(f) promulgated
under the Exchange Act. Pursuant to Rule 12g-3(a) under the Exchange Act, our common shares and our ADSs, as common shares and ADSs of
the successor issuer, were deemed registered under Section 12(b) of the Exchange Act. TIM Participações’s common shares
and ADSs continued to be traded until October 13, 2020, when our common shares and ADSs started to trade on the B3 and the NYSE, respectively.
See “Item 9. The Offer and Listing—A. Offer and Listing Details.”
Joint acquisition of Oi Group’s mobile
business
On March 10, 2020, we disclosed to the market
that we, jointly with Telefônica Brasil S.A. (“Vivo”), expressed to Oi Group’s financial advisor, Bank of America
Merrill Lynch (“BofA”), our interest in a potential joint acquisition of all or a part of Oi Group’s UPI mobile business.
On July 18, 2020, we, together with Vivo and Claro S.A. (“Claro”), submitted a binding offer to Oi Group for the acquisition
of all of the mobile assets of the Oi Group, or the UPI Mobile Business. The offer was revised on July 27, 2020, and September 7, 2020
and the latter offer was accepted by Oi Group on December 14, 2020. On December 14, 2020, we, along with Claro and Vivo, were declared
the winners of the competitive process of the sale of assets of the mobile telephony operation (Personal Mobile Service) of the Oi Group.
In February 2022, the transaction received regulatory approval from CADE and ANATEL. Closing of the transaction occurred on April 20,
2022.
As a result of closing the transaction, we became
the owner of 100% of the share capital of SPE Cozani, a company that holds part of the assets, rights and obligations business unit of
Oi Móvel. The price for 100% of the shares of SPE Cozani, after all the adjustments provided for in the Share Purchase Agreement
(“SPA”), was R$6.98 billion. Pursuant to the SPA, of the Adjusted Closing Price: (i) R$634.33 million was withheld by us,
mostly for the purposes of covering any additional price adjustments that may need to be made and which may be identified in the 120
days following the closing; (ii) R$2.06 billion was transferred directly to BNDES–- National Bank for Economic and Social Development,
per a contractual provision; and (iii) the balance of R$4.29 billion was paid directly to the Seller.
With the acquisition completed, our business
has taken a significant step forward at a national level, allowing us to compete even more effectively with our main competitors with
regard to infrastructure and broad geographic representation of our customer base.
Following the closing of the acquisition, on
October 3, 2022, we, Claro and Vivo commenced an arbitration procedure before the Market’s Chamber of Arbitration (“CAM/B3”)
against Oi Group in order to dispute the post-closing price adjustment of the transaction. On October, 3, 2023, the dispute was resolved
due to us, Vivo and Claro entering into an agreement with Oi Group.
On October 4, 2023, the Company announced that
CAM/B3 approved an agreement in relation to the post-closing adjustment entered into between the Company, Telefônica Brasil S.A.,
Claro S.A. and Oi S.A. – In Judicial Recovery, resolving the controversy and the arbitration procedure related to the post-closing
price adjustment. The final price for the UPI Mobile Assets portion attributed to the Company, considering the post-closing adjustment
negotiated in the agreement, was R$6.68 billion, which has been paid in full.
As a result of the resolution, all pending issues
and disputes between the Company and Oi in relation to the acquisition of UPI Mobile Assets were ended.
Partnership with C6 Bank in Brazil
From 2020 to early 2025, we maintained a strategic
partnership with Banco C6 S.A. (“C6 Bank”), focused on customer-related initiatives. As part of this partnership, we obtained
rights to acquire a minority indirect equity interest in C6 Bank, which were partially exercised in 2022, with additional vested rights
outstanding thereafter. In 2024, disputes arose between us and C6 Bank in connection with the partnership, which became subject to arbitration
proceedings. In 2025, we and C6 Bank entered into a comprehensive settlement agreement that provided for the termination of the partnership,
the resolution of all outstanding disputes and the dismissal of the ongoing arbitration proceedings.
The agreement sets forth the terms relating to
the termination of the partnership with C6 Bank, in addition to the transfer of all outstanding C6 Bank shares and warrants held by us
back to C6 Bank in the total amount of R$520 million before taxes. On March 14, 2025, the Cayman Islands Monetary Authority (“CIMA”)
approved the transfer of C6 Bank shares to us.
Following this approval, on March 20, 2025, we
and C6 Bank completed the transaction and all outstanding shares and subscription warrants issued by Carbon Holding Finance S.A. (an entity
that indirectly holds a stake at C6 Bank) held by us were transferred to an entity of the C6 Group, as stipulated in the agreement. Consequently,
the partnership between the companies was formally terminated, along with all related disputes, leading to the closure of the four arbitration
proceedings.
TIM and Vivo sharing agreement
Since 2020, following the competent authorities’
(CADE and ANATEL) approval, the sharing agreement established between us and Vivo aims to increase the network cost efficiency and synergies
that can help us continue to provide innovative and standardized offerings and services, as well as synergies and efficiencies in the
allocation of investments and operating costs, through the following initiatives:
· Single Grid: sharing of 3G / 4G networks in cities with less than 30 thousand inhabitants, using the MOCN (Multiple-Operator Core Network) architecture, to maintain the infrastructure of only one of the operators in these cities, allowing completely redundant sites to be turned off. As of May 2021, each party increased its 3G and 4G coverage in more than 300 cities with a total of 422 shared sites on each side. From 2021 to 2025, we added further cities within the single network agreement providing 3G and 4G presence. In more than 320 cities, one of the operators disconnected the 3G and 4G networks (resulting in 75% of the agreement perimeter having been deployed);
· 2G Switch-off: nationwide sharing of the 2G network using GWCN technology, enabling both operators to switch off part (approximately 50%) of their network with the same technology, consequently saving on energy and maintenance costs. After the sharing period, operators will be able to completely shut down their remaining 2G networks. During 2021, the GWCN was implemented, while quality KPIs were monitored. As a result of the sharing agreement, we shared its 2G network in 785 cities as of December 31, 2025, including important cities such as Rio de Janeiro, Curitiba, Fortaleza, Brasilia, Belem and Recife. As of the same period, Vivo shared its 2G network in 1,063 cities, including cities such as Belo Horizonte, Salvador, Manaus, Porto Alegre and Campinas. As of December 31, 2025, approximately 80% of the agreement perimeter had been deployed.
In
2025, the expansion of the original agreement was approved by CADE, with safeguards to preserve competition and monitoring mechanisms
established in coordination with ANATEL, which approval is pending.
TIM and Stellantis connected cars partnership
Since 2020, we and Stellantis, established
a partnership to offer connectivity solutions embedded in vehicles of the Fiat, Jeep and RAM brands in Brazil. As part of the global strategy
of developing ecosystems for connected services and to enhance the digital experience of customers, Stellantis launches in the country
since the first half of 2021 rely on eSIM, with the LTE coverage quality and our IoT network. As a result, all the Stellantis vehicle
since then have access to native Wi-Fi onboard eSIM and the cars’ active and real-time communication with the user, the Stellantis
and the dealer network. In addition to such features, this technology focusses on safety, allowing remote identification of possible vehicle
failures with the possibility of more agile and accurate diagnoses.
In 2021, a Proof of Concept (“PoC”)
was launched in the Stellantis factory in Goiana/PE using 5G connectivity to investigate the benefits of this technology and enabling
the use of new applications on a large scale, from the use case of AI to the automated processing of images. The PoC evolved in 2022 to
a new phase which will enable an Edge 5G SA Private Core and an Edge Cloud environment, achieving greater computing capacity, greater
scalability, and allowing the application to perform in an environment with higher throughput and low latency.
During 2023, Stellantis announced an expanded
partnership with us for the Rampage pickup, the first RAM project conceived and developed in Brazil. Already integrated into more than
200,000 Jeep and Fiat vehicles, our presence extends to American manufacturer models, providing 4G internet for the RAM Connect platform.
This technology grants consumers access to a diverse range of in-vehicle services and entertainment.
Also in 2023, we joined the Conecta 2030
Project, which is a collaborative effort with partners, such as Stellantis and IPFacens (Research Institute of the Facens University Center).
Pursuant to this project, IPFacens received a R$3 million grant from the Brazilian government, dedicated to enhancing pedestrian and cyclist
safety through cutting-edge technology and 5G connectivity. This project remained ongoing through 2024.
In 2024, we strengthened our partnership
with Stellantis by securing a new agreement for the implementation of the connected car solution at Peugeot, with implementation set to
begin in 2025. Additionally, we expanded connectivity services by extending corporate Wi-Fi capabilities to the RAM and Jeep brands. By
the end of 2024, we achieved a milestone of over 330,000 connected cars in Brazil.
In 2025, our partnership with Stellantis
continued to strengthen, supporting the expansion of connected vehicle services and industrial innovation. During the year, Stellantis
expanded its installed base to more than 400,000 connected vehicles in Brazil, all supported by our connectivity infrastructure, enabling
the continued growth and scalability of digital services offered to drivers.
I-Systems (formerly FiberCo) Formation and Sale of Equity
Interest
On December 10, 2020, our Board of Directors
approved the formation of FiberCo, in preparation for a possible future segregation of assets and provision of fiber infrastructure services.
This process was one of the intermediate steps in the transformation of our broadband services, and it aimed to create an open fiber infrastructure
vehicle to allow us to attract a strategic partner as a shareholder of FiberCo. We expected FiberCo to operate in the wholesale market
and to provide fiber connectivity services for the last mile and a transport network, for all market operators, having us as an anchor
customer. We expected FiberCo to allow us to achieve our expected growth in the Brazilian fiber market in the coming years, taking advantage
of the open network and using a focused operating model. This transaction aimed to accelerate the growth of our residential broadband
business and unlock additional value from our existing infrastructure. Accordingly, on March 3, 2021, we entered into an exclusivity
agreement with IHS Brasil Participações Ltda. (“IHS”), a large and diversified provider of telecommunications
infrastructure, to negotiate the terms and conditions for the acquisition of an equity interest in FiberCo by IHS. The operation was approved
by CADE on June 16 2021, and by ANATEL on November 11, 2021.
On November 16, 2021, after regulatory authorizations
from ANATEL and CADE, IHS Fiber Brasil – Cessão de Infraestruturas Ltda. (“IHS Fiber”), acquired from us a controlling
equity interest in FiberCo. In the aftermath, IHS Fiber changed the name of FiberCo to I-Systems. Following this transaction, IHS Fiber
held 51% of I-Systems’s share capital, with the remaining 49% held by us.
In November 2021, we entered
into an agreement with I-Systems for the provision of technical and administrative services (TAS) by us to I-Systems for an initial term
of 18 months. As this original term proved insufficient for I-Systems to complete the required integration of activities, we entered into
an addendum in 2023 extending the term of the agreement through the end of 2023. As a result of this extension, which covered an additional
seven-month period, the aggregate amount payable in connection with the TAS totaled R$78.7 million. On April 30, 2024, we entered into
an agreement with I-Systems to terminate the provision of TAS, pursuant to which I-Systems paid all amounts due for services rendered.
Since 2021, I-Systems
has also provided us with certain fiber infrastructure services, enabling us to deliver residential broadband services and other offerings
to our customers.
On February 11, 2026,
we entered into a share purchase agreement with IHS Fiber to acquire their 51% ownership interest in I-Systems for a total consideration
of R$950 million, payable on the closing date of the transaction. The completion of this transaction is contingent upon the fulfillment
of certain customary precedent conditions, as well as any necessary corporate approvals, as applicable. In March 2026, Anatel and CADE
approved the transaction.
Partnership between TIM and Cartão de
Todos (Health)
In August 2023, we started the commercial operation
of the partnership with Grupo Cartão de TODOS. The operation began in some states of Brazil and expanded throughout 2023, reaching
5 Brazilian states at the end of 2023. Four types of packages were offered to our customers in a family and individual format, offering
telemedicine services, discounts on medical appointments with specialists, discounts on exams and medications.
In May 2024, the subscription journey was redesigned
to focus on the partnership landing page rather than the mobile application. At the same time, we streamlined the product portfolio to
prioritize the Cartão de TODOS offering, reflecting its stronger value proposition. As part of this evolution, we provided customers
with exclusive benefits, including three months of subscription fees at no cost and a full waiver of the activation fee, resulting in
average savings of approximately R$124 per customer.
By 2025, we took another step forward in enhancing
the partnership. We expanded the service model—which was previously digital-only—to include in-person support at Cartão
de TODOS physical units through their franchise network. This change brings more autonomy, proximity, and convenience to our customers.
Partnership between TIM and FS Group
In line with our customer platform strategy,
following a number of other strategic partnerships, in May 2022, we entered into a new strategic partnership with FS Security to establish
a new company, EXA Serviços de Tecnologia, dedicated to digital security solutions and entertainment for end consumers while also
making it available as a white-label model for other operators. This partnership was approved by CADE, without restrictions, on July 29,
2022.
The partnership allows us to launch digital products
on e-books (digital e-books, audiobooks and minibooks) and education services to our customers directly in their plans through the Aya
Ensinah application. These products and services provide access to digital summaries of materials related to a wide variety of secondary
and fundamental education subjects, in addition to security services such as cloud storage, VPN, antivirus, among others.
By the end of 2024, FS Security and us concluded
the renegotiation of certain terms of the partnership and, as a result, we acquired rights to subscribe a 27% stake in EXA Serviços
de Tecnologia, which can be exercised within 24 months. The exercise price is R$1 for all shares. We may exercise it at any time and at
its sole discretion, within 24 months.
In 2025, we expanded our digital offerings by launching
Aya Equilibrah, which provides content focused on physical, mental and social well-being, and Aya Idiomas, which offers language-learning
content, including grammar and pronunciation studies, educational materials and practice via WhatsApp. In addition, we began offering
device insurance products exclusively to control and postpaid customers purchasing devices at our retail stores, including coverage options
for (i) total protection, (ii) breakage and damage, and (iii) theft and robbery.
TIM Ads: Mobile Advertising
Since 2020, we have been investing in our digital
advertising platform, TIM Ads, as part of our data monetization and technological innovation strategy. This initiative connects brands
and consumers through data-driven and technology-based solutions, ensuring full compliance with Brazil’s General Data Protection
Law (LGPD).
In 2025, TIM Ads reached over 34 million active
users who consented to receiving advertising communications and leveraged more than 1,000 attributes for segmentation through the TIM
Insights intelligence solution. The platform offers a full-funnel approach, covering lead generation, traffic increase, and targeted campaigns
across both internal and external channels. In 2025, enlarging our audience touchpoints, we launched RCS on iOS in partnership with Google.
Additionally, TIM Ads ensures advertiser with its brand safety and avoiding fraudulent interactions and promoting genuine engagement.
As of December 31, 2025, TIM Ads had already
been adopted by more than 550 companies across 40 industries, establishing itself as a competitive advantage for us and our commercial
partners.
TIM Data: Data Monetization and API Solutions
Since 2020, we have been strengthening our data
monetization strategy through the TIM Data platform, offering innovative API-based solutions to meet the demands of an increasing digital
market. With over 60 million customers across Brazil and a database of more than 1,000 data attributes, TIM Data enables the creation
of personalized, real-time solutions for a wide range of industries, including banking, e-commerce, insurance and service applications.
TIM Data’s solutions include tools for
identity verification (KYC), customized credit analysis, location validation, customer authentication and fraud prevention using SIM card
and device information, as well as the mobile number’s history at the operator. Through the Open Gateway initiative, aligned with
GSMA's global standards, TIM Data promotes the standardization and integration of fully secure APIs that comply with Brazil’s General
Data Protection Law (LGPD). This approach strengthens the digital ecosystem by enabling secure interactions, streamlined user journeys,
and hyper-personalized offers, driving customer engagement and loyalty.
5G Auction in 2021
In November 2021, the 5G auction was held. In
the auction, we acquired 11 lots, with a total value offered of R$1.05 billion, in three frequency bands: 3.5 GHz, 2.3 GHz and 26 GHz.
The acquired bands have a set of obligations that must be met with financial contributions or the construction of mobile and fixed network
infrastructure. As a result, we have rights to the spectrum capacity that we consider necessary to follow our growth journey in the mobile
telephony market nationwide, as well as preparing ourselves for customers’ demands and the ability to explore new use applications
and develop innovative solutions that require high-speed connectivity and capacity.
The main commitments associated with each band
are as follows:
· 2.3 GHz: 4G coverage in approximately 1,000 localities (in the South and Southeast Regions of Brazil, not including the state of São Paulo);
· 3.5 GHz: 5G coverage in all municipalities with a population equal to or greater than 30,000 inhabitants until 2029, plus fiber backhaul obligations in 138 municipalities plus additional contributions to a new entity (EAF) to carry out the following projects: clean-up 3.5 GHz, deployment of fiber in Amazonia and building a private network for exclusive Brazilian Federal Government use; and
· 26 GHz: contributions to a new entity (EACE) to carry out connectivity schools projects.
Important Events
4G and 5G Expansion
In March 2022, we achieved a significant milestone
in the Brazilian telecommunications industry by completing the core of our 5G SA network. Following this achievement, we expanded in 2022
our 5G SA coverage to include all 26 capitals and the Federal District (Brasília), aligning with ANATEL 5G Auction schedule.
By the end of 2023, we successfully deployed
our 5G SA network core in more than 200 cities. Notably, in nine cities — Brasília, Rio de Janeiro, Recife, São Paulo,
Curitiba, Salvador, Fortaleza, Belo Horizonte, and Goiânia — we had achieved 100% neighborhood coverage with 5G SA by the
end of 2023. Furthermore, in 2023, we became the first and only telecommunications operator covering all municipalities in Brazil with
our 4G network.
As of December 31, 2025, our 4G network covered
all 5,570 Brazilian cities. Besides access layer, we have increased optical backhaul (FTTS – Fiber To The Site) through new implantations
or strategic partnership with neutral operators (such as V-Tal), adding more than 2.400 sites connected to the fiber at the end of 2025.
In 2024, we have expanded 5G coverage, reaching
607 cities throughout Brazil, allowing traffic growth through a faster and more efficient network. As a result, TIM was recognized by
the OpenSignal with first 5G Consistent Quality award.
In 2025, we continued accelerating our nationwide
5G expansion and reached more than 1,000 cities in Brazil, ensuring coverage in all state capitals and in every municipality with more
than 500,000 inhabitants. This milestone reflects our commitment to delivering high-performance mobile connectivity to the country’s
most populated and economically relevant urban centers, while advancing the modernization of our network infrastructure.
Strategic Planning
TIM’s Strategic Plan establishes the Company’s strategic direction for the coming years, linking its long-term vision to day-to-day decision-making with a focus on sustainable growth, operational efficiency, customer experience, and value creation.
Although structured as a three-year plan, it is reviewed annually to ensure continued alignment with evolving market trends, technological developments, customer behavior, and competitive dynamics. In addition, the plan is subject to continuous monitoring throughout the year to track the execution of strategic initiatives and their outcomes.
In recent years, TIM has advanced in several structuring initiatives that have strengthened its competitive position and support the current strategic plan. The most notable of these was the consistent evolution of its Network, which consolidated TIM as a quality benchmark in Brazil, with broader coverage, presence in more cities, and accelerated expansion of 5G, ensuring a superior experience for millions of customers.
Another decisive development was the acceleration of B2B services and the creation of new growth avenues—such as IoT, digital solutions, and advanced connectivity—which position TIM as a company increasingly driven by technology, data, and solutions that extend beyond traditional connectivity.
In February 2026, the Company announced its 2026–2028 Strategic Plan, built on six pillars that balance growth, profitability, efficiency, technological transformation, and sustainability. These pillars guide strategic choices and serve as reference points for decisions and priorities across the organization:
1. Mobile: Customer-first approach as a driver of profitability;
2. Broadband: Sustainable growth with optionality for the future
3. B2B:Accelerating along a new growth trajectory
4. Cross-organizational AI Transformation
5. Efficiency as a key engine of value creation
6. ESG:Foundation of the strategy and embedded throughout the Company
In summary, the Plan
envisions real service-revenue growth above inflation, supported by the continued sustainability of the mobile segment, renewed growth
in broadband, and the strengthening of B2B solutions, with particular emphasis on higher-value offerings. EBITDA and margin expansion
are expected to be driven by cost discipline, digitalization, and efficiency gains generated through Artificial Intelligence.
Additionally, efficient
capital allocation—focused on network quality and technological evolution—is expected to contribute to the growth of Operating
Cash Flow. As a result, the Company intends to continue accelerating its shareholder-remuneration strategy.
Reverse Split and Subsequent Split
On February 24, 2025, our
Board of Directors approved a reverse split and subsequent split of our common shares, at a ratio of 100:1 followed by 1:100, without
affecting our capital stock, number of shares or ADRs. The operation aims to increase share liquidity, reduce administrative expenses,
and enhance shareholder management. Shareholders had a 30-day period to adjust their positions, after which fractional shares have been
sold at auction, with proceeds distributed proportionally. The reverse split and subsequent split was approved in the shareholders meeting
held on March 27, 2025.
The adjustment period commenced
on June 2, 2025 and ended on July 7, 2025. Following the end of the adjustment period, an auction of 22,059,698 fractional shares was
conducted on July 14, 2025, resulting in aggregate proceeds of R$455.7 million, which were distributed proportionally to the holders of
such fractional shares.
Share Buyback Program
On February 12, 2025, our Board of Directors
approved a share buyback program for up to 67,210,173 of our common shares, representing approximately 2.78% of our outstanding common
shares, to be held in treasury and subsequently cancelled, without a reduction of our capital stock. We believe that this share buyback
program may enhance shareholder value through the efficient use of available cash resources and improved capital allocation.
In addition, a portion of the shares repurchased
under the share buyback program may be allocated to support equity-based compensation under our Long-Term Incentive Plan (“LTI”).
The shares allocated to the LTI represent less than 8% of the total number of shares authorized to be repurchased (approximately five
million shares). Our management retains discretion to determine the timing and execution of share repurchases within the term of the program
and may conduct one or more transactions.
As of December 31, 2025, approximately 74.79%
of the share buyback program had been executed, with 33.5 million common shares repurchased, for an aggregate consideration of approximately
R$747.88 million. Of the 33.5 million common shares repurchased in the program, 28,678,509 were cancelled.
Capital Contribution - 5G Investment Fund
As previously disclosed, we established a venture
capital fund in partnership with Upload Ventures Growth, LP (“Upload”), with the objective of supporting early-stage companies
with growth potential in Latin America. The vehicle targets startups and scaleups with validated business models and clear expansion plans,
which may also benefit from access to our industrial and technological infrastructure to accelerate scalability. In 2025, the Fund had
delivered R$ 78 million in gains for the Company, with performance supported by all three current portfolio companies. The fund’s
investees include Topsort, a retail-media technology platform; Simetrik, a financial reconciliation infrastructure provider; and Tractian,
an industrial predictive-maintenance solutions company.
The Fund has an independent management where Upload
is the General Partner responsible for the fundraising, selection and ongoing monitoring of portfolio companies
Recent Developments
Strategic Agreement with American Tower
do Brasil
On March 2, 2026, Company has
signed a new strategic agreement with American Tower do Brasil (“ATC”), redefining the terms of their infrastructure partnership.
The agreement consolidates all existing contracts into a single framework covering approximately 9,000 towers—about 30% of our infrastructure
park—with a unified term extending through 2034.
The initiative represents a relevant step in
the long-term relationship between ATC and us, reinforcing our continuous commitment to operational efficiency, simplification of governance
and sustainable evolution of the network. The agreement is part of our lease efficiency plan and supports the achievement of the objectives
and goals that make up our strategic plan.
Acquisition of V8.Tech
On November 26, 2025, we entered
into share purchase agreement for the acquisition of 100% of the share capital of V8 Consulting S.A. (“V8.Tech”) for an initial
purchase price of R$140 million. This amount may be increased by additional earn-out payments of up to R$140 million, contingent upon
the achievement of certain conditions over a period of six years. V8.Tech is a technology company specializing in digital solutions integration,
cloud services and managed services, with a strong emphasis on digital transformation, cloud computing, and artificial intelligence.
On January 30, 2026, following
the satisfaction of all conditions precedent, including the receipt of approval from CADE, the transaction was completed.
Acquisition of I-Systems
On
February 11, 2026, we entered into a share purchase agreement with IHS Fiber to acquire their 51% ownership interest in I-Systems for
a total consideration of R$950 million, payable on the closing date of the transaction. The completion of this transaction is contingent
upon the fulfillment of certain customary conditions precedent, as well as, any necessary corporate approvals, as applicable.
In March 2026, Anatel and CADE approved the transaction. After the completion of this transaction,
we will hold 100% of the share capital of I-Systems.
B. Business
Overview
Market Characteristics
The telecommunications sector in Brazil is marked
by a high degree of competition and by the effective regulation of the National Telecommunications Agency, or ANATEL, which has a stated
purpose of “promoting the development of telecommunications in Brazil, in order to provide it with a modern and efficient telecommunications
infrastructure, capable of offering society appropriate and diversified services at fair prices nationwide.”
After 2023, with the subsiding of the COVID-19
pandemic, the telecommunications sector presented a relief in performance. The sector maintained a growth trajectory in terms of data
consumption, and as such, operators were required to adapt their networks and face the challenge of delivering an increasingly robust
infrastructure in an environment which requires greater rationality of investments, including on projects such as the densification of
sites, frequency refarming, and the aggregation of carriers on two or three frequencies. Furthermore, we continue to advance in sharing
initiatives focused on 4G and transport network, despite accelerating the rollout of our 5G coverage to optimize traffic offload. This
network evolution has allowed for a better usage experience, both in terms of performance – with higher download and upload speeds
and lower latency – as well as in indoor coverage and greater penetration.
Throughout its history, the Brazilian telecommunications
sector has always been impacted by fierce competition, evidenced by the presence of aggressive marketing offers, including the add-on
content offered to customers and strong price competition. However, in recent years, we have observed this competition begin to focus
more on quality and service.
Once the acquisition of Oi Móvel’s
mobile assets was concluded in 2023, the Brazilian telecommunications market came to be operated by three major companies, enabling in
our view a healthier and more favorable competition to the benefit of Brazilian consumers.
Also in 2023, we completed the merger of Cozani,
the special purpose company acquired from Oi S.A., simplifying our corporate structure, and resulting in an optimization of operating
costs and the efficient allocation of investments due to the integration of merged assets, improving the coverage and quality of services
provided to our customers.
Since the introduction of 5G technology in Brazil
in 2022, we have consistently broadened our 5G footprint, following the strategy focused on antenna densification to ensure end-to-end
coverage. By the end of 2025, we surpassed the mark of 1,000 cities covered with high-speed connection, achieving 100% 5G coverage in
substantially all populated neighborhoods of the 26 state capitals in Brazil and the Federal District (Brasilia).
Mobile Market Developments
The following table shows the data of Brazilian
mobile market during the periods presented.
As of December 31,
2025 2024 2023
Brazilian wireless subscriber base (million)(1) 270.4 263.4 256.4
Prepaid lines (million) 94.5 102.2 107.5
Postpaid lines (million) 175.9 161.2 148.9
Estimated total penetration (%)(2) 126.7 123.9 126.1
(1) Source: ANATEL.
(2) Based on information published by ANATEL.
The Brazilian mobile market reported an increase
in subscriber base of 2.7% year-on-year (“YoY”), maintaining the growth trend seen in the last year. In 2025, the number
of postpaid users reached 175.9 million. Since 2021, the prepaid customer base has no longer been the market's largest portion and has
continued to decline relative to postpaid customers. As of December 31, 2025, prepaid customers accounted for 35.0% of the total subscriber
base, down from 38.8% on December 31, 2024. The reduction in the overall number of prepaid users is mainly due to the acceleration in
users consolidating multiple SIM cards into a single SIM, high penetration of mobile service and the rapid substitution of voice with
data usage, resulting in a decrease in the so-called “community effect,” where consumers value a telecommunications system
more as more users adopt it. The postpaid, however, experienced an increase of 9.1% during 2025, reaching 65.0% of the total subscriber
base as of December 31, 2025, as compared to 61.2% as of December 31, 2024, driven by operators’ efforts to monetize their customer
base, offering more data, content and digital services, and the migration of customers from prepaid to control plans, and from entrance
plans to postpaid plans.
Mobile Competitors
TIM is the brand name under which we market our
mobile telecommunications services, offering 5G NSA/SA, NB-IoT, 4G, 3G and GSM technologies. Currently, we hold mobile licenses for each
of the ten wireless areas of Brazil recognized by ANATEL, making us a mobile operator in Brazil offering complete nationwide 4G coverage.
In two of our ten areas, we are the Telebrás legacy provider. See “—A. History and Development of the Company—Historical
Background.” In addition to us, as of December 31, 2025 there were two other major participants in the Brazilian mobile market that
offer nationwide coverage in all ANATEL wireless areas: Vivo and Claro, given that Oi was acquired by Claro, Vivo and us in April 2022.
See “—A. History and Development of the Company—Historical Background.” Currently, we are ahead of our competitors
in rolling out new technologies: our 4G network covers 100% of Brazil’s municipalities, including via VoLTE. We are ahead of other
operators in terms of number of municipalities covered with 5G technology, covering more than 1,000 Brazilian cities with our fifth-generation
network (as of December 31, 2025), bringing 5G to almost 70% of Brazil's urban population and consolidating our position in faster and
lower-latency 5G technology.
The Brazilian mobile telecommunications industry
is highly competitive. In addition to competition from the traditional operators with significant market power and from already established
regional players, new entrants can cause an impact both in terms of loss of market share and reduction in the sector's revenue set, by
changing the pricing market rationality and new value propositions. Any adverse effects on our results and market share from competitive
pressures will depend on a variety of factors that cannot be precisely assessed and are beyond our control. Among such factors are our
competitors’ size, experience, business strategies and capabilities, the prevailing market conditions, and the applicable regulations.
Other Competition
We also compete with landline telephone service
providers, of which the incumbent providers in Brazil (Oi, Vivo and Embratel Participações S.A. (owned by America Movil),
as well as Algar Telecom, a regional incumbent), and some other relevant players (GVT, acquired by Vivo, and Net Serviços de Comunicação
S.A., owned by America Movil), offer packages including voice (both fixed line and mobile), broadband and pay-TV services in bundled offers.
Landline providers are, however, required to offer their services to unaffiliated mobile providers on the same basis they are offered
to affiliate mobile providers. Our acquisition of Intelig (now known as TIM S.A.) and AES Atimus (later TIM Fiber, which was merged into
TIM Celular in 2012, and TIM Celular was merged into the Company in 2018) broadened our participation in the fixed telecommunication sector.
In November 2018, ANATEL issued Resolution No.
703/2018, which established new maximum limits on the amount of spectrum bandwidth that a single telecommunications service provider of
collective interest, together with its affiliates, subsidiaries or controlling entities, may hold on a primary basis when operating within
the same municipality. This regulatory framework is intended to promote competition and ensure the efficient use of spectrum. The consolidated
text of Resolution No. 703/2018 was updated by ANATEL in February 2025, without changes to the applicable spectrum caps.
In August 2025, ANATEL initiated Tomada de Subsídios
No. 5/2025, as part of its 2025–2026 Regulatory Agenda, to reassess the spectrum caps established under Resolution No. 703/2018
in light of market developments following the 5G auction and recent structural changes in the mobile telecommunications sector. This review
process may result in future amendments to the spectrum cap framework, which could affect our spectrum strategy and regulatory obligations.
In the fixed broadband market, consolidation
movements were particularly concentrated in the early years of this decade (2020–2024), driven primarily by transactions between
larger operators and smaller regional internet service providers, as well as spin-off transactions aimed at separating integrated operations
into customer-focused companies and network-infrastructure-focused companies. In 2025, however, this scenario shifted, with the volume
of M&A activity declining and revealing lower underlying organic growth in the sector. This shift has highlighted a more selective
and competitive market environment. Looking ahead, potential developments may include a resumption of strategic corporate actions and
M&A activity, including transactions in which large national operators could acquire local internet service providers. Such transactions,
which have been identified as a potential avenue for further market consolidation, may accelerate the transition to fiber-based networks
(FTTH) and generate operational and infrastructure efficiencies for consolidated players.
Our Business
We are a telecommunications company that offers
mobile voice and data services, broadband Internet access, value-added services, and other telecommunications services and products. For
a breakdown of our total revenue by category of activity, see “Item 5. Operating and Financial Review and Prospects—Results
of Operations for the Year Ended December 31, 2025, compared to the Year Ended December 31, 2024.”
We believe that we are well recognized in the
market for our strong brand, “TIM”, and for having a reputation as an innovative and disruptive company capable of setting
new consumption standards for the market. Our proactive approach allows us to be in a leading position in the transformation of the telecommunications
business model. The change in consumer profiles and the emergence of new technologies foster a rupture in the telecommunications industry
based on the consumption of digital data, content and services.
We are characterized by our pioneering and innovative
offerings, among a complete portfolio for individuals as well as corporate solutions for small, medium and large companies. Besides traditional
voice and data services, we offer a fixed-line ultra-broadband service, TIM UltraFibra (formerly TIM Live), and we are preparing to offer
IoT solutions beyond connectivity, building a complete new source of revenue for the future, with use cases in smart lighting, precision
agriculture and constructing 5G based solutions in autonomous operations and video surveillance & analytics, while also looking for
new opportunities in other verticals such as logistics and industry 4.0.
We also offer a variety of digital content and
services in our portfolio of packages, aimed at increasing the day-to-day functionality of our customers’ mobile devices. The ability
to manage a complete and varied portfolio gives us the opportunity to offer customized packages to our customers and to provide offers
which bundle services, like voice and data, to customers in certain regions.
To expand our capabilities in delivering comprehensive
digital transformation solutions and to support our long-term strategy focused on the B2B market, we concluded the acquisition of 100%
of the share capital of V8.Tech in January 2026. The integration of V8.Tech’s digital and cloud services into our portfolio is expected
to enhance our ability to offer end-to-end technology solutions, supported by specialized teams with technical expertise in digital and
cloud-based services.
In 2025, we continued to advance our innovation
strategy across all consumer profiles (prepaid, control and postpaid), with a focus on delivering differentiated products and services.
During the year, we expanded the functionality of our customizable bundle offering to the control customer, allowing customers to select,
at no additional cost, among certain third-party streaming services, with flexibility to change their selection over time. In the second
half of 2025, we also expanded our commercial offering of connected devices by entering into new arrangements with device manufacturers,
including becoming the first telecommunications operator in Brazil to integrate the PlayStation 5 into its commercial offerings. These
initiatives form part of our broader strategy to differentiate our commercial propositions and strengthen our value proposition to customers.
Our strategy for partnerships is focused in delivering
increased loyalty and generating incremental value for ourselves. Accordingly, our partnership portfolio is based on content & security
(YouTube Premium, Disney+, Apple One, Deezer, HBO Max, Prime Video and EXA), education (Descomplica), health (Cartão de Todos),
retail (Zé Delivery), and Energy (Eletrobras and Thoppen).
In July 2019, we and Vivo also entered into a
memorandum of understanding (the “Vivo MoU”) to engage in negotiations regarding (i) sharing of a single-grid 2G network;
(ii) establishment of new infrastructure sharing agreements for the 4G network in 700Mhz, directed to cities with fewer than 30,000 inhabitants,
which in the future may be expanded to larger cities; (iii) other network sharing opportunities in other frequencies and technologies;
and (iv) other opportunities in efficiency and cost reduction in operations and network maintenance. We believe that implementing the
concepts set forth in the Vivo MoU will result in synergies and efficiencies that could help support us in continuing to provide innovative
and standard-setting offerings and services, as well as synergies and efficiencies in the allocation of investments and operating costs.
In 2025, the expansion of the original agreement was approved by CADE, with safeguards to preserve competition and monitoring mechanisms
established in coordination with ANATEL, which approval is pending. The updated arrangement allows for radio access network (“RAN”)
sharing in up to 2,049 municipalities for 2G services and in up to 265 municipalities for unified 3G/4G networks under a single-grid model,
with implementation expected within a 30-month period. These measures are intended to enhance network efficiency and coverage while ensuring
compliance with applicable competition and regulatory requirements.
We believe that our robust network infrastructure,
our innovative approach, our brand recognition, and our widespread sales network, position us well to capitalize on opportunities in the
telecommunications industry in Brazil and meet the constantly changing demands of the mobile telecommunications market. We believe that
our main strengths include:
High quality services
Over the past several years, improvements in
national coverage and service quality have led ANATEL to adjust its regulatory approach. While regulatory oversight was previously focused
on service quality at a broader, state-level scale, ANATEL has increasingly adopted a more granular framework, emphasizing smaller geographic
areas. In response, we have enhanced our internal monitoring of quality and performance indicators at the municipal level to support more
rigorous oversight of customer experience. Following the public consultation process, we continue to monitor municipalities classified
by ANATEL as “critical” and recently, after the first quality labels published under Resolution No. 717/2019, we begun a new
discussion with ANATEL to suspend the labels pending a review of the metrics, considering some identified inconsistencies in our results
in comparison with other performance indicators, such as Opensignal. See “—Quality Management Regulation.” Also, an
action plan is currently under discussion to accelerate performance improvements and further strengthen the company’s results, following
on our Strategic Plan.
Notably, we have maintained strong results in
3G/4G data-related indicators, driven by the rapid expansion of our 4G network. According to ANATEL, we are the leading telecommunications
provider in terms of the number of cities covered.
Our LTE technology also demonstrated strong performance
and the inclusion of the NR network in data usage, wide coverage and availability. These results are important due to the strong demand
by our customers for this technology. At the end of 2025, approximately 97.6% of our data traffic was carried out over the 4G and 5G network,
with an increase of 1.1% compared to the previous year.
We believe that the above statistics reflect
our commitment to quality infrastructure and our focus on customer experience. However, we recognize that there are some statistics and/or
quality measures that use different methodologies, and which may present different results from those that are mentioned above.
The results of our digital transformation initiatives
continue to expand. The strategy we have adopted for several years to seek digital evolution and constant network development, aiming
to ensure innovative solutions, quality and availability of services, offering superior customer experience and strengthening our position
in the market has shown itself very effective. We believe that the digital transformation of our services must take place on several fronts,
from the sale and activation of the line to post-sale and the so-called “self-caring”, meaning the digital service portals
that allow customers to manage profiles and subscriptions, billing, collection, and payment.
Even in a challenging year, our digital channels’
positive results and the excellence of services offered to our customers confirm that we had made the right business decisions, demonstrated
our capacity to adapt to adverse situations and reinforce our purpose of “evolving together, with courage, transforming technology
into freedom.”
We believe our ultra-broadband service is also
viewed generally as a reference of quality in the sector, driven by our commitment to ensuring a positive customer experience. The service
quality of our TIM UltraFibra offer has produced positive results, being repeatedly recognized via awards (e.g. best fixed broadband in
the country for the third time, as bestowed in the sixth edition of the Canaltech 2023 Awards)
We also seek a strong position in the high-value
customer market as a content HUB by offering a variety of plans for individual and family usage, bundling voice and data packages, streaming
and other content subscriptions, as well digital value-added services (i.e. music, e-reading, video streaming and games), in order to
provide customer custom experience.
We believe we are also better able to provide
high quality services due to our strong relationship with our suppliers. We operate a system for information technology vendor management
to improve the commitment of our suppliers. As a result of this approach, we benefit from enhancements like (i) better accountability
of end-to-end vendors on our business processes; (ii) better contractual conditions and savings due to the increase of volumes per vendor;
(iii) vendor consolidation and specialization in specific platforms/processes, creating the opportunity for long-term investments in such
areas; (iv) active contribution to transformation and simplification; and (v) raising the best practices of Request for Quotation instead
of Direct negotiating in order to gain more savings, also increasing the so called Global Deal among us and Telecom Italia with the scope
to capture more synergies and quality of the furniture’s by global vendors.
These processes were organized and improved through
detailed rules such as the Projects Review Board and Investments, and the Function Points Productivity Contractual Auditing. This allowed
us to achieve an excellent level of information technology governance, exemplified by better business contribution of each investment
due to shared objectives and goals. As a result, we improved our efficacy and efficiency.
Finally, we also continue to seek new internal
data sources to better understand our users’ perspective and needs, including collecting and analyzing information from applications
and investing in the modernization of traditional quality assessment tools.
Our commitment to service excellence is reflected
in our notable achievements. We are proud to be the first telco company in Brazil to earn and uphold the Procon-SP Efficiency Seal for
30 consecutive months. Additionally, we have consistently maintained the RA1000 seal from Reclame Aqui, which is Brazil's largest, most
influential online platform for consumer complaints, reputation analysis, and brand research, achieving a resolution rate of 91.2%. These
accomplishments underscore our ongoing dedication to customer satisfaction
Open Innovation Program
Our Open Innovation Program was established in
2016 as a structured corporate initiative designed to support our strategic priorities through collaboration with startups, technology
partners, academic institutions and innovation hubs. Since its inception, the program has focused on identifying, testing and evaluating
innovative solutions that may contribute to network evolution, digital services, B2B solutions, operational efficiency and improvements
in customer experience.
Over time, we have developed long-term relationships
with established innovation ecosystems, including hubs, universities, incubators and accelerators. Through these initiatives, we have
engaged with more than 500 startups and entered into approximately 50 commercial agreements across different business areas, subject to
our internal governance and approval processes. We also maintain an ongoing collaboration with Cubo Itaú, one of the leading innovation
hubs in Latin America, where we have established a sustained presence and structured interaction with startups and innovation partners.
The Open Innovation Program operates through
structured mechanisms, including solution scouting, customized Innovation Days, innovation challenges, pilot projects and proofs of concept.
These initiatives enable us to assess emerging technologies and business models in controlled environments,
supporting informed decision-making regarding potential adoption while mitigating operational, technological and compliance risks.
As part of these initiatives, we have promoted
Innovation Days focused on specific corporate areas, resulting in interactions with a broad range of startups. Through internal challenge
programs, we have completed multiple startup engagements in areas such as non-commercial anti-fraud solutions, sales support and network
development. Certain initiatives have resulted in the development and testing of digital solutions integrated with our technology platforms,
including application programming interfaces (APIs), and aligned with our business strategy.
All initiatives under the Open Innovation Program
are subject to internal governance processes, including predefined selection criteria, technical and business evaluations, and compliance
with applicable corporate, legal and regulatory policies. Participation in the program, as well as the execution of pilot projects, hackathons
or proofs of concept, does not imply any automatic commercial engagement, financial investment or long-term contractual commitment.
The Open Innovation Program also supports the
monitoring of technological and market trends through structured internal processes, contributing insights that may inform strategic planning
and innovation priorities. Through solution scouting and experimentation initiatives, the program enables us to evaluate new applications
and technologies, including those integrated with our digital platforms and APIs.
The relevance and maturity of our open innovation
initiatives have been recognized by independent institutions. In recent years, we have received recognitions such as the “Selo Dourado”
from Cubo Itaú, nominations and rankings from 100 Open Startups, the Valor Inovação award and inclusion among the
20 most innovative companies in Brazil by MIT Technology Review Brazil, reflecting a structured and disciplined approach to open innovation.
The Open Innovation Program complements the activities
carried out by TIM Lab. While TIM Lab focuses on technical validation, research and development and performance assessment of technologies
in controlled test environments, the Open Innovation Program emphasizes external collaboration and business-oriented innovation, supporting
the evaluation of solutions with potential strategic and operational impact.
A strong brand
We believe that our brand, TIM, since the commencement
of our operations, has been recognized for leading important developments in the Brazilian telecommunications market and, consistent with
our brand identity, we continue to position ourselves at forefront of society’s digital transformation. Our brand tagline “Imagine
the possibilities”, invites our customers to view the future in a positive light and demonstrates our commitment to being alongside
them as they face new challenges, opening a world of opportunities. To reinforce the positioning of our brand as a brand that values our
customers and brings advantages beyond just gigabytes of data, in 2024 we launched an innovative partnership with one of the world's largest
beer manufacturers, Ambev, through a summer campaign with the slogan 'Get a Top-up', offering exclusive discounts for customers, transforming
prepaid credits into discounts on Zé Delivey (a drink delivery app). In a similar way, beginning in the second half of 2024, we
innovated by sending cashback via money to users' checking accounts, through transfers via PIX (financial direct transfer), for top-ups
made through its app. Since 2015, we have been the leader in 4G coverage throughout Brazil, even connecting Brazil’s countryside
to help facilitate technological innovation in the agribusiness sector - we have approximately 20 million hectares with 4G coverage. Furthermore,
we pioneered the activation of 5G networks in Brazil, with our first tests carried out in 2019, and we demonstrated our preparedness for
the next generation of mobile networks by launching 5G in all Brazilian state capitals in 2023. Since then, we have stayed ahead of the
competition in number of cities covered by 5G (more than 1,000 cities), reinforcing the network strength with the use of “Leader
in 5G” claim in the brand communication. We continued to foster our values and beliefs in diversity in inclusion, in 2024, for the
second consecutive year, we received recognition from the Instituto +Diversidade and the Human Rights Campaign, the BR Equity Seal - such
actions have a profound impact on corporate culture and are part of our strategic plan. Lastly, we kept strengthening our brand association
with music through sponsorship of several music events, including the largest festival in Latin America, Rock in Rio, and also, the sponsorship
of Festival de Verão Salvador (traditional music festival in Bahia), TIM Music Rio (free concerts on the beaches of Rio de Janeiro)
and TIM Music Noites Cariocas (the most iconic event in Rio), adding TV broadcast sponsorship to communicate that “With TIM 5G,
music doesn’t stop.”
In January 2026, we became an official sponsor
of Big Brother Brasil (BBB), one of the largest entertainment platforms and television audiences in Brazil. This sponsorship represents
a strategic initiative to enhance our national media presence and expand engagement with different consumer profiles, particularly younger
and digitally engaged audiences.
The sponsorship aligns with our brand positioning
and provides a platform to showcase our connectivity services, mobile plans and digital solutions. It also reflects our broader strategy
of investing in high-visibility initiatives aimed at strengthening brand recognition and supporting differentiation in a highly competitive
market.
Advanced Technology and Innovation Center
TIM Lab is a multifunctional testbed environment
dedicated to the evaluation of innovative technologies, products and services. Its activities focus on assessing functional efficiency,
performance requirements and the development of new technical models and solutions in a controlled environment. TIM Lab brings together
engineers, researchers and technical specialists to conduct structured and effective evaluations and operates as a reference center for
research and development activities within the Brazilian telecommunications sector.
TIM Lab plays a strategic role in supporting
service assessment and innovation initiatives across our operations. Its projects contribute to the continuous evolution of our network
and address relevant business and market needs, including the evaluation of next-generation network technologies, future internet applications,
initiatives with positive social and environmental impact and activities related to open innovation, all subject to internal governance,
technical validation and evaluation processes. Throughout 2025, TIM Lab continued to operate as an active environment for technology evaluation
and validation, supporting ongoing network evolution and innovation initiatives aligned with our strategic priorities.
As of December 31, 2025, we had participated
for more than five years in the Telecom Infra Project (“TIP”), an initiative founded by Meta and other industry participants
aimed at developing new approaches for building and deploying telecommunications network infrastructure. TIM Lab operates as the first
TIP Community Lab in Latin America. In addition, since 2017, TIM Lab has participated as one of the GSMA Mobile IoT Open Labs, a collaborative
environment in which companies developing solutions based on cellular low-power wide-area networks work alongside industry experts to
test and validate their projects.
Within the TIM Lab environment, several technologies
relevant to network evolution and our business strategy have been assessed and validated, including:
· mobile technologies, such as NB-IoT, 5G New Radio (5G NR) and related standards;
· radio access network (RAN) sharing techniques;
· Open-RAN solutions;
· transport network solutions, such as Defense Wavelength Division Multiplexing (DWDM), disaggregated transport architectures;
· broadband/fixed network expansion test scenarios and Multi InfraCo’s scenarios (together with VTAL), with a focus on the interoperability tests of TIM CPEs in the InfraCo’s network, in addition to the various support and testing fronts with I-Systems;
· network optimization and automation solutions;
· power saving features and energy efficiency solutions;
· IP multimedia networks (VoLTE, video over LTE, WiFi calling services, completely laid out functional blocks, and enabled by an IP multimedia subsystem platform);
· network functions virtualization (NFV);
· Multi-Access Edge Computing MEC; and
· 5G network slicing.
During 2023, and remaining fully operational
throughout 2024 and 2025, TIM Lab migrated to a new location with a fully renovated test environment, with the objective of expanding
its technical capacity and supporting our innovation activities. The new facilities were designed to enhance technical capabilities, improve
operational efficiency through the use of TIM-owned infrastructure and provide dedicated spaces for the presentation and evaluation of
projects with potential business partners and clients. The new location, situated in São Cristóvão, in the state
of Rio de Janeiro, has an area of approximately 850 square meters and offers improved connectivity, increased capacity to support innovative
projects, integration with cloud environments and dedicated areas for testing 5G technologies and related applications.
As part of our digital transformation strategy,
we launched the integrated learning program “Onda Digital” (Digital Wave) in 2023, which was further consolidated during 2024
and 2025. The program is designed to strengthen digital mindset capabilities and technical skills across the organization, supporting
the adoption of new technologies and working models. As of December 31, 2025, the following educational initiatives were particularly
relevant:
· TIM Digital & Cultural Mindset Program: a customized assessment and development framework designed to evaluate and enhance the digital maturity of professionals and leaders based on six soft skills: creative thinking, curiosity (learning agility), collaboration (relationship management), sense of responsibility, digital problem solving and focus on customer experience. These competencies were benchmarked against global standards. Tailored learning journeys were implemented for each of the six skills, with approximately 35% of our professionals enrolled as of December 31, 2025.
· TIM Data Academy: a structured training initiative focused on strengthening value generation through advanced analytics, increasing the effectiveness of use cases and supporting the development of business opportunities, thereby reinforcing our data-driven culture. As of December 31, 2025, 974 professionals participated in this academy.
· TIM Artificial Intelligence Academy: a structured learning journey focused on artificial intelligence, developed in a customized manner and offering multi-format content to specific professional groups, in addition to a foundational AI literacy program that reached approximately 60% of our employees, representing around 5,700 professionals as of December 31, 2025.
· TIM Agile Academy: an educational program providing training in agile methodologies to 460 employees, contributing to organizational agility and supporting the effective application of agile practices in our projects.
Strong commitment with ESG pillars and the only
Brazilian telecommunications company listed on the Novo Mercado for over 10 years
Since 2011, we have been part of the Novo Mercado
segment of the B3 stock exchange, meaning that we are subject to B3’s highest standard of corporate governance requirements, which
includes compliance with heightened requirements not only related to corporate governance, but also to the disclosure of information to
the market. We believe that the listing on the Novo Mercado provides greater liquidity and value for our shares and allows us greater
access to international markets, promotes the strengthening of our corporate image and increases confidence in us, in addition to reaffirming
the long-term commitment of Telecom Italia and its subsidiaries (the “Telecom Italia Group”), in Brazil. We believe listing
on the Novo Mercado also aligns the interests among our controlling and minority shareholders with respect to voting rights, tag along
rights and dividend policy.
In addition, we belong to a select group of
companies comprising the portfolio of the Corporate Governance Index and the B3 Tag Along Stock Index, comprised of companies that have
been committed to adopt better co-sale protection to minority shareholders, have actively traded in 30% of the trading sessions and do
not constitute a penny stock. We are for the eighteenth consecutive year part of the portfolio of the Corporate Sustainability Index
of the B3, an index comprised of companies that have a strong commitment to sustainability and social responsibility. In 2025, we also
remained one of the constituents of the S&P B3 Brazil ESG and S&P Global LargeMidCap ESG Indices. In January 2025, we were selected
to remain in the portfolio of the Carbon Efficient Index, or ICO2, of the B3, with the commitment to measure, disclose and monitor our
greenhouse gases, or GHG, emissions, and we were selected to remain in B3’s Great Place to Work Index, or IGPTW, since we remained
a GPTW certified company in 2025, recognizing us an employer that creates an outstanding employee experience. The constant pursuit of
best environmental, social and governance practices also ensures our presence in several international indexes and ratings, such as FTSE4GOOD
Emerging Markets, FTSE4GOOD Latin America, MSCI AWCI ESG Leaders, MSCI Emerging Markets ESG Leaders, FTSE D&I Index, among others.
We are, since 2023, the first and only telecom
operator listed on B3’s IDIVERSA portfolio, which recognizes Brazilian companies committed to racial and gender diversity. In 2021,
we became the first Brazilian operator to integrate the FTSE Diversity & Inclusion Index (formerly Refinitiv D&I Index), occupying
since the first position globally in the telecom sector. The index measures the performance of more than 15,500 companies based on diversity,
inclusion, and career development initiatives. In 2025, we maintained for the fifth year in a row our leadership in the telecom sector
and among all Brazilian companies in the FTSE Diversity & Inclusion Index
As a signatory to the Global Compact since 2008
and UN Women since 2021, we promote projects related to the Sustainable Development Goals (“SDG”) and recognize the rights
to data privacy, safe internet, access to information and freedom of expression as essential and unnegotiable as part of our efforts to
respect Human Rights.
As part of our commitment
to society in addressing climate change, we conduct periodic mapping of the sources of emissions in our activities. We are able to do
so by preparing annually a GHG inventory in accordance with the guidelines of the GHG Protocol (which sets the global standard for how
to measure, manage, and report greenhouse gas emissions) and also by working with us in Italy to establish goals aligned with the Science
Based Targets Initiative (SBTi), since the companies controlled or related to the TIM Group in Italy (“TIM Group”) joined
the initiative in July 2021 with the challenge of keeping global warming limited to 1.5°C, as established in the Paris Agreement.
The SBTi aims to promote the best reduction and offsetting of GHG emissions in line with climate science. Since 2010, we have reported
our greenhouse gases (GHG) emissions by means of the Carbon Disclosure Project (“CDP”) – the largest database of primary
corporate climate change information in the world – and publishes its GHG emissions inventory in accordance with the Brazil GHG
Protocol Program. Since 2021, the CDP questionnaire has been integrated by B3 as a crucial part of the methodology for the selection of
the constituents of the Corporate Sustainability Index. In 2023, our CDP Climate Change Score improved from B to A, and we were selected
to integrate the CDP A-list for three years in a row (2023, 2024 and 2025).
Since May 2022, we have publicly declared our
support for the recommendations by the Task Force on Climate related Financial Disclosures (TCFD), demonstrating our commitment to better
information as a basis for understanding climate risks in our transition to a low carbon economy. We have also aligned our approach to
climate risks and opportunities with the TCFD recommendations and published these in an issue brief, updated yearly.
We also identify opportunities to improve our
levels of excellence in our Environmental Management System (EMS), covering all our operations, based on our Environmental Policy. This
includes commitments such as protecting the environment, customer service to the legal requirements and norms of the organization and
the continuous improvement of performance in processes and controls, having obtained the ISO14001 environmental certification for Network
Management and Operation in the states of Rio de Janeiro, São Paulo and Espírito Santo.
Since 2008, we have published our Sustainability
Report presenting the main financial and non-financial results, in accordance with the Global Reporting Initiative (“GRI”)
Standards methodology. Since 2021, we refer to this publication as the ESG Report and reinforce our commitment to transparency and accountability
to our stakeholders, organizing the report into three pillars: Environmental, Social and Governance. Since 2021, the ESG Report also reports
the SASB - Sustainability Accounting Standards Board - indicators.
Our main policies - such as the Corporate Social
Responsibility, Human Rights, Diversity & Inclusion, Environmental, Climate Change, Supplier Relations, Risk Management, Anti-corruption
and Safety & Occupational Health Policies - are publicly available to the consultation of our stakeholders.
Founded in 2013, Instituto TIM has a mission
to democratize access to science, technology and innovation, in order to promote human development in Brazil. More than 700,000 people
from all Brazilian states and the Federal District have been benefited by the education and inclusion projects of Instituto TIM, some
of which were internationally awarded (i.e., Governarte Awards – BID 2015).
Our ESG plan is annually updated together with
our strategic plan. Among the established goals for the 2025-27 period, one of our environmental goals is to become a carbon-neutral company
by 2030, and net-zero carbon by 2040. In addition, we have undertaken to maintain a policy of using renewable sources for 100% of our
energy consumption and to increase by 110% the energy efficiency in data traffic (against the base year of 2019) by 2025. From a social
perspective, the main commitments are for our workforce to be comprised of more than 25% of black people and more than 36% of women in
leadership positions until 2025, to reach 32 million connected hectares, and to keep our level of employee engagement of at least 82%
until 2025. Some of these goals have been included in our MBO and LTI compensation programs, such as the percentage of employee engagement,
renewable energy, women in leadership positions, ecoefficiency, recycling of solid waste, black people in leadership positions and reuse
or recycling of solid waste. We obtained the ISO 37001 (anti-bribery management systems) and, in 2022, also obtained the ISO 27001 (information
security management). Both certifications are key components of our Corporate Governance pillar, which aims to uphold best practices and
standards in transparency and anti-corruption, cybersecurity and data protection, and our positioning in ESG indexes and ratings.
In 2025, we made significant progress in its
take back program for post-consumer electronic waste, with an increase of 880.7% compared to 2024 in terms of the amount of electronic
waste captured, with a recycling rate of 98.02%, thus reinserting the relevant products into the transformation chain for other products
and contributing to a reduction in the extraction of new raw materials, thereby stimulating the circular economy. There are more than
440 collection points, distributed nationally in our stores and buildings.
Additionally, to guarantee a supply chain that
adheres to its mission, we carry out the qualification of companies that participate in the bidding process for services considered critical
from a socio-environmental point of view, based on the assessment of direct or indirect risks associated with social, environmental, health
and safety aspects. In 2025, 354 suppliers were evaluated, and those who failed were not authorized to continue with the contracting process
with us.
We were also recognized with the 2024 ANATEL
Accessibility Award for offering inclusive environments and services for people with disabilities. We strengthened our stance against
racism by joining and participating in the Procon SP Racial initiative, carried out in partnership with Zumbi dos Palmares University,
promoting the "10 Principles for Combating Racism."
To reduce inequalities, we established partnerships
with apps such as SOMOS+ and Mulheres Positivas, offering training and employment opportunities for transgender individuals, women, and
professionals aged 45 and older. Additionally, collaborations with organizations like Gerando Falcões, Gerando Valkírias,
and As Maras supported the training of sales professionals in technology, circular economy practices, and digital inclusion. These efforts
included the provision of 5G Kits to the Marte community in São Paulo, along with opportunities for participants to join TIM at
the end of the programs.
Highly qualified and experienced
executives and controlling shareholder support.
We have a team of highly qualified executives,
widely recognized in the industry and possessing extensive experience in telecommunications markets in Europe and emerging countries.
Our executive compensation policy seeks to align the interests of our executives with those of our shareholders, through variable compensation
plans and share-based incentives that reward good performance and the accomplishment of certain goals.
Our controlling shareholder’s support in
our operations is further demonstrated through the sharing of know-how and best practices and development of new solutions for networking,
marketing and finance, which are rapidly rolled out under a “plug & play” strategy, under which network innovations may
be developed by our parent company first in other regions and then implemented with us.
Strong financial position
With consistent financial results in recent years,
and solid Adjusted EBITDA, according to our internal analysis, we believe that we have a strong cash flow generation, a solid financial
position and a low Net Debt to Adjusted EBITDA ratio. In this scenario, we understand that we are in a strong position to take a significant
role in potential future consolidations in the market and/or to have a competitive position in important frequency auctions in the years
to come.
Our Strategy
Our Strategic Plan
Our 2026–2028 strategic plan continues the strategic direction
of our prior plan and aims to further strengthen the TIM brand. It focuses on long-term growth and value creation, supported by revenue
expansion, cost-efficiency measures, robust free cash flow generation, disciplined capital allocation, and reinvestment in high-growth
opportunities.
After a long and intensive journey of development and transformation,
we are shaping the next generation of TIM with a well-defined strategy that also adapts to market dynamics. For this reason, our revised
plan is structured around six strategic fronts:
(a) putting the mobile customer first to drive profitability,
ensuring competitiveness across segments through superior network quality, enhanced customer experience supported by AI, and value-driven
portfolio innovation;
(b) pursuing sustainable broadband growth with optionality for
the future, by strengthening operational performance and preserving the flexibility to accelerate as market conditions evolve;
(c) accelerating our business-to-business (B2B) trajectory,
expanding our portfolio of IoT solutions and technology offerings while advancing Network-as-a-Service capabilities and new
data-monetization initiatives;
(d) embedding artificial intelligence at a transformative level,
positioning TIM as an AI-First organization through interorganizational AI adoption and redesign of processes, customer interactions,
and operating models;
(e) reinforcing efficiency as a core engine of value creation,
combining strict capital allocation discipline with the development of new growth avenues; and
(f) placing ESG at the foundation of our strategy, integrating
environmental, social, and governance priorities across the Company to strengthen long-term resilience and sustainable value generation.
Building on the evolution of our mobile strategy, we
continue to focus on ensure competitiveness across all mobile segments through our “3Bs” approach—Best Network,
Best Service and Best Offer—while evolving our base-management model to drive higher customer lifetime value and
sustainable profitability. This in cludes targeted initiatives in hyper-personalization, portfolio evolution, cross-sell and
upsell, as well as improved retention and churn-control mechanisms supported by AI-enabled predictive analytics. In addition, we expect to accelerate the monetization of
our customer base beyond core telecommunications by expanding an ecosystem of partnerships in areas such as streaming, gaming, fintech,
health services, insurance and other adjacent verticals.
We also intend to strengthen our commercial performance
through differentiated content offerings, selective expansion of physical channels, reinforcement of our digital and remote-sales
capabilities and continued investment in brand perception. Combined, these initiatives support our ambition to enhance the distinctiveness
of our mobile value proposition, protect and grow our customer base, and unlock new avenues of profitable growth.
To pursue sustainable and profitable growth in the broadband market, we are evolving
our strategy to strengthen our operational fundamentals while preserving flexibility for future opportunities. Under our updated
plan, we are focused on driving organic growth and improving churn performance, supported by operational enhancements, selective expansion
into pockets of opportunity and the use of complementary technologies such as fixed wireless access (FWA) and satellite connectivity to
extend our reach. As part of this evolution, we continue to expand our footprint, advancing end-to-end improvements in customer
experience. In addition, we maintain optionality for inorganic moves, supported by recent steps such as the proposed acquisition of I-System
and the ongoing evaluation of future consolidation pathways in a fragmented broadband market.These initiatives are designed to support more resilient growth,
improve service quality and position the Company to capture additional value as market dynamics evolve.
To shape a new trajectory of growth
in the B2B market, we are evolving from a connectivity centric approach toward a broader technology driven model that enables digitalization,
intelligence and data based value creation across multiple industries. Leveraging our nationwide reliable connectivity, we are expanding
IoT solutions, real time data capabilities, intelligent and secure automation, edge processing and industry specific AI models to support
modernization across sectors. All this while we pave the way for the future, developing the next wave of capabilities to make operations
increasingly intelligent and generate value with data and AI. This includes the evolution of industry specific AI models, real time decisioning
architectures, autonomous and AI enabled processes, and advanced data driven automation designed to unlock new productivity frontiers.
The acquisition of V8.Tech accelerates this trajectory by strengthening our expertise in cloud native digital engineering, computer vision,
intelligent automation, and AI driven business applications, supporting the long term shift toward a more intelligent, data centric enterprise
landscape.
We are accelerating the adoption of artificial intelligence across the Company, positioning AI as a transformative capability and a strategic
imperative embedded in our operating model. Building on our initial focus on efficiency and agility, we are expanding the scope, scale
and sophistication of AI use cases to support end-to-end value creation across networks, customer operations and support functions.
Under our updated plan, AI becomes a foundational element of how we operate—guiding priorities, decision-making processes and
execution throughout the organization as we advance toward an AI-First model.
We are strengthening our core business to generate cash flow to sustain new avenues of growth and increase shareholder remuneration. We
believe that this unique combination of elements, with ESG agenda embedded in our business strategy, will result in the best value proposition
for the investor community. In an effort to generate high value for shareholders and also finance our best value proposition to clients,
we have focused on efficiency leadership. We have one of the highest EBITDA margin in the sector in LATAM and we will keep working on
improving our operating free cash flow. Our Opex-efficiency agenda includes the digitalization and expansion of AI adoption across
the Company, organizational simplification, make-or-buy initiatives and continued cost-discipline measures. In parallel, we
are advancing lease optimization through the renegotiation of tower contracts, the expansion of RAN-sharing initiatives and targeted
efforts to optimize tower-space utilization. On the Capex front, we are scaling the implementation of AI within the network domain,
accelerating the transition to next-generation infrastructure, including selective 5G offload, and reinforcing overall network-efficiency
measures. Additionally, we are improving working-capital management by renegotiating payment terms, strengthening accounts-payable
processes and enhancing inventory controls.
Strategic Alignment and Cultural Evolution
To align our business strategy with the interests
of our employees and to culturally ensure our leadership focus, in 2023 we carried out a cultural diagnosis study, based on an internationally
recognized methodology. The objective of this study was mapping existing values in our current culture and our desired culture values,
identifying opportunities for its evolution and providing appropriate behaviors and a favorable environment to achieve the expected results.
This study generated a communication plan to
our team focusing on ensuring simplification and understanding the strategy's priorities, bringing awareness and commitment through the
launch of the internal campaign named “Identity 101” which was based on 3 pillars: “Customer First”, “Zero
Barrier” and “You, Protagonist.”
As part of our cultural evolution, leaders were
once again brought to commit to a set of cultural values that would guide our behavior and decision-making process, on a day-by-day basis,
contributing to the achievement of business results. The values are: “Surprise the Customer”, “Be Protagonist”,
“Overcome Barriers”, “Build Trust”, “Promote Inclusion” and “Think Big.”
Cultural values were connected to our performance
evaluation process, corporate climate survey and also to other people management initiatives.
Protecting the value of our prepaid customer
base and aiming at the growing of postpaid, shifting focus from absolute market share to revenue share, and strengthening our existing
customer base.
After two years of unusual circumstances –
including in 2022, the market presenting a series of disconnections of inactive prepaid lines acquired by leading carriers from Oi Móvel’s
mobile business – since 2023, the Brazilian mobile telecommunications market returned to the trend of general reduction in the number
of prepaid customers seen until 2020. Such performance is reasonable, as many users have sought better value for money, migrating to control
plans (postpaid) due to the increasing need for internet access. We maintained our strategy to be chosen as the single SIM provider for
the prepaid consumer market by providing offers that are attractive and valuable to customers while maintaining our reputation for quality
and innovation. For the prepaid consumer market, our key priority is to offer simplification to improve customer experience with continued
evolution of digital channels, while for the postpaid consumer market, our plan is to grow based on a “Mobile Challenger”
approach pushing migration from prepaid, leveraging the benefits of 4G coverage leadership and establishing a customer long-term relationship
driven by loyalty initiatives. We are continuously improving the digital channel and sales models experience. In the business-to-business
market, we intend to leverage consumer offers and channels to gain market share in the small and medium businesses, or SMB. We are also
pursuing the development of targeted markets such as the IoT, and the machine-to-machine market, or M2M, beyond simple connectivity, and
evaluating business opportunities for the application, using the 5G network. Moreover, we are improving our sales channel strategy to
increase not only efficiency but also sales productivity. Our growth strategy is mainly focused on addressing the potential for mobile
Internet in the Brazilian market, particularly increasing mobile Internet penetration and data traffic. We believe mobile operators are
in a strong position to address the demand for broadband in Brazil, with the ability to provide flexible price plans affordable to most
of the Brazilian population. The lack of fixed infrastructure is still an issue for accessibility to fixed broadband, especially in suburban
areas, making mobile coverage more suitable for such customers without broadband access. In addition to providing affordability and
coverage advantages, mobile operators appeal to the new cultural demand for Internet connectivity at all times and in all places.
In addition, our strategy also involves positioning
ourselves as a partner of our existing customer base, by increasing their loyalty by offering exclusive products to existing customers,
focusing on value-added services in our offers, and by differentiation in our products and services. Value-added services represent an
important part of our strategy, as it is already a relevant market and has high growth rates with the potential to increase revenue streams.
Such services are generally launched through a partnership with an established OTT player. We believe the foregoing strategies will allow
us to strengthen customer loyalty without requiring us to incur higher costs, as increased traffic within our own network does not significantly
increase our operational costs. We are also investing in new channels, to bring new customers to us and to enhance each customer’s
experience. We are constantly seeking new customers through new marketing efforts and promotional initiatives. Another important growth
factor is expected to come from our digital strategy evolution, with an increased role in the growing M2M and IoT ecosystem, exploring
new revenues opportunities including being more than just a connectivity provider, offering a platform (analytics, big data, mobile advertising,
etc.) and a content offer aggregation to support mobile and fixed service revenue growth. Capitalizing fixed-mobile substitution in voice
and traditional services.
We seek to capitalize on the existing opportunity
of fixed-mobile substitution in voice and data traffic and encourage the use of mobile devices, rather than landlines, for long distance
communication and Internet. We believe that the main advantage of our product offerings is that our customers can use our growing mobile
network.
Providing affordable Internet access
Mobile network technology has created a business
opportunity for CSPs to offer more affordable connectivity services to individuals, which brings benefits for both customers and the mobile
operator. We are offering our prepaid and postpaid customers competitive data usage plans through wireless handsets or other data devices
(e.g., tablets, wearables, etc.). We believe that our telecommunications activities generate positive impact beyond our business. Access
to mobile telephony and broadband internet services allows not only communication, but also creates countless opportunities for people
and companies, functioning as a powerful tool for innovation. This transformation also enables digital inclusion through the provision
of connectivity to regions without access to these resources, such as isolated communities, rural locations and low-income areas. Our
focus on increased data usage among our customers is also influenced by our ability to effectively manage our handset and accessories
sales, with a focus on entry level 5G smartphone models, providing quality Internet access. This approach allows us to offer our services
at a highly competitive price, offer convenient payment methods, meet market demand and allow for opportunities for innovation. The result
of this strategy can be seen in the increase in our number of data users and in smartphone penetration, especially in 5G. Leading mobile
Internet growth in our sector is a key pillar of our strategy, since we see this as the most important market in terms of growth and size
in the foreseeable future. Our marketing efforts have also been designed to stimulate Internet usage and leverage our 4G and 5G networks
by providing for suitable and affordable postpaid and prepaid Internet plans.
Construction of a unique infrastructure network
in the Brazilian market and improving our network
We
are committed to developing a robust network infrastructure capable of serving our customer base and anticipating new trends and technologies
in the industry. The development of this infrastructure requires both organic (planning and infrastructure development projects for the
existing network) and inorganic (acquisitions) investments. As part of our strategy to focus our investments on infrastructure, TIM Participações
acquired Intelig (now known as TIM S.A.) in December 2009, in order to establish our own fiber optic network and develop automation projects.
TIM Participações also acquired the company formerly known as AES Atimus (later TIM Fiber, which was merged into TIM Celular
in 2012, and TIM Celular was merged into us in 2018) in 2011 to strengthen and expand our fiber optic network and in 2022, we acquired
Oi Móvel’s mobile assets (together with Vivo and Claro) to improve our market position, capturing better economies of scale,
synergies and optimizing investments, and also our operational efficiency,
aiming to offer better UX for our customers.
We provide 4G technology in 100% of Brazilian
cities since the end of 2023, which positions our brand as the market leader in terms of 4G coverage.
In 2024, TIM launched a project to expand 4G
coverage across Brazilian highways and began developing partnerships with highways concessionaires. In 2025, the company surpassed 10,000
kilometers of covered highways in Brazil. During 2025, TIM enhanced its network capacity in São Paulo, Brazil’s largest
state, by 40% through the most significant mobile network modernization in its history—one of the most comprehensive initiatives
ever undertaken in the Brazilian telecommunications sector. This strategic investment strengthens TIM’s competitive positioning
and quality service, directly benefiting approximately 10 million customers and supporting long-term growth. We have secured a premier
position in mobile network quality by leveraging our superior spectrum capacity and advanced 5G coverage. We have been repeatedly nominated
by OpenSignal, as the telecommunications company with the best Brazilian Network Consistency Quality Index. In January 2026, we achieved
this award for the fourth consecutive time — leading by more than four percentage points over the second-placed operator. This
recognition also reflects our top performance in both the overall Video Experience and Live Video Experience awards. In addition, we
harness advanced 5G to reshape our market positioning and perception, delivering high-end customer experience to our clients with a 5G
rollout strategy that put ourselves ahead of other operators in terms of number of municipalities covered with 5G technology, covering
more than 1,000 Brazilian cities with our fifth-generation network, bringing 5G to over 70% of Brazil's population by the end of 2025,
consolidating our position in faster and lower-latency 5G technology.
Since 2020, we have been developing an innovative
customer platform strategy that aims to monetize our customer base. Strategic partnerships, together with Mobile Advertising, yielded
revenues of approximately R$162 million in 2023, R$219 million in 2024 and R$129 million in 2025.
To reinforce our long-term strategy focused
on the B2B market, in January 2026, we concluded the acquisition of 100% of the share capital of V8 Consulting S.A. (“V8.Tech, a
technology company specialized in digital solutions integration, cloud services and managed services. The integration of V8.Tech’s
cloud and digital service capabilities into our portfolio is expected to enhance our capacity to deliver end-to-end technology
solutions, supported by highly specialized teams recognized for their industry expertise and technical know-how. This combination
reinforces our intention to broaden our value proposition in higher-growth enterprise segments and to support corporate clients through
advanced digitalization initiatives.
Significant AI adoption across core domains—including
network operations and customer care—to reduce total cost of ownership, in collaboration with leading partners such as Google and
Microsoft
We are accelerating the implementation of AI
across our areas that are focused on efficiency and agility, taking this as strategic subject. We expect these efforts to deliver significant
results, not only in operational performance but also in enhancing customer experiences. Our approach is comprehensive, impacting areas
such as customer care, sales, marketing campaigns, self-service, and self-healing capabilities, through all digital channels available
in a coordinated and data/context unique integrated approach.
Sales and Marketing Strategy
Our recent sales and marketing strategy has been
characterized by:
· focus on strengthening our positioning with high-value customers by offering integrated service propositions that go beyond traditional voice and data plans, including access to selected digital applications, such as video-streaming services, and more competitive pricing for flagship devices. Our approach to this business line is driven by a strategy focused on increasing customer value and expanding access to premium devices at attractive price points. In this context, in 2025, we inaugurated our concept store, Flagship Oscar Freire, designed to reinforce our brand positioning among high-value customers. The store offers an interactive retail environment that showcases our portfolio of services and products and is intended to enhance customer engagement and brand experience, particularly among opinion leaders and high-value consumers;
· strengthening our strategy in respect of the migration of customers away from the prepaid, by focusing on recurrent offers instead of daily offers and therefore boosting consumption;
· a continuous evolution of our postpaid plans, within which we are pursuing a number of strategies, including: (i) a review of our offers in order to stimulate the sales of postpaid plans, with discounts in services and handsets, according to the commitment of the customers; (ii) add value, including value-added services as part of our plans, without extra charges; (iii) creating new markets for postpaid plans, according to our customers’ usage profile; (iv) creating new opportunities for transitioning the higher spending prepaid and TIM Controle customers to postpaid; (v) creating customizable plans for streaming subscription by the postpaid customers; and (vi) launching 5G dedicated offers to monetize our investment in 5G, providing additional data allowances and exclusive contents to our high end customers;
· an effort to maintain our position as an innovator by relaunching TIM Black Família, as the first mobile plan in Brazil with flexible bundle for streaming subscription where the customer can choose between premium streaming services in their plan. The portfolio also includes the following on all family plans: large data packages to share with up to six lines, data rollover, international roaming (including data package for use in the American continent, seven days of unlimited WhatsApp and 30 minutes of voice) and a new app experience with many new functionalities, such as Internet control and self-care provisioning, which allows the owner of the contract to share Internet with the other lines through the app. In addition, the TIM Black portfolio has benefits like data rollover and international roaming (data package for use in the American continent);
· exclusive and distinctive partnerships with major digital brands to boost loyalty and monetization. We have launched exclusive deals with Netflix, HBO, YouTube, Disney, Apple and Amazon throughout the last few years. In 2025, we maintained a partnership with Apple to bundle its Apple One services offers with distinctive deal on iPhones. This strategy has proven to be highly successful given the rapid increase in our high-value, postpaid customer base;
· a monetization process in respect of our postpaid customer base, leveraging ARPU, via a “more for more” strategy and end-to-end product offerings which result in higher revenue generation;
· enhance customer retention and value in the postpaid by launching TIM Mais Program, an exclusive, high premium loyalty initiative provides daily rewards, such as cinema tickets, food and mobility vouchers, and sweepstakes, along with access to premier experiences, including Rock in Rio, Lady Gaga and Formula 1; and
· strengthening and expanding our fixed internet service. TIM UltraFibra offers high quality ultra-broadband, with high-speed data connection. To navigate our way through new markets, we, through partnership with I-Systems and others, have accelerated our footprint expansion, FTTH network coverage and continued to grow, prioritizing the consolidation of already active clusters. We ended 2025 with growth of 54% year-over-year of total homes passed (HPs) with fiber, operating in 302 cities, and with an ARPU increasing by 1.9% when compared to 2024. TIM UltraFibra ended 2025 with 850 thousand connections, increasing the FTTH base by 60 thousand accesses (a increase of 7.6% year-over-year), maintaining its growth trajectory, with the FTTH base as the main lever. Higher value plans, with speed 400 Mbps or above, continue to gain more relevance, reaching 90% of the total base on December 31, 2025. We intend to continue expanding TIM UltraFibra services through the Neutral Network model, in partnership with I-Systems and Vtal (current contracts).
In the corporate business, we continue to work
to increase our B2B market share, through the improvement of the Traditional mobile & ICT portfolio, added to the launch of new solutions.
The expansion of B2B market will drive a wave
of productivity in key industries in Brazil. By capitalizing on the expansion of IoT connectivity as a foundation, we aim to leverage
a variety of solutions and services. Establishing strategic partnerships with leaders in four essential verticals - agriculture, logistics,
utilities, and industry - our goal is to lead and catalyze the digital transformation in the Brazilian industry. Our commitment lies in
promoting innovation and efficiency in vital sectors for the country’s economic progress.
In 2025, our strategy expanded beyond these four
verticals with the addition of the Internet of Vehicles (IoV) business. This new vertical strengthens our role in supporting the digital
transformation of both established automotive manufacturers in Brazil and new market entrants, enabling the evolution of connected mobility
and next-generation vehicle platforms.
This expansion adds a critical strategic layer
to our B2B ambitions, enhancing our role as a comprehensive technology partner for companies of all sizes. It also strengthens our ability
to capture value in high-growth segments within Brazil’s evolving digital ecosystem, reinforcing our commitment to driving innovation,
efficiency, and modernization across the country’s productive sectors.
Mobile Service Rates and Plans
ANATEL regulations require mobile telecommunications
providers to offer service to all individuals regardless of income level. We recommend service plans that are suitable to each potential
customer’s needs and credit history, such as our prepaid service plans described below. If a customer fails to make timely payment,
services can be interrupted. See “—Billing and Collection.”
We offer mobile services under a variety of rate
plans to meet the needs of different customer classification, including our corporate customers. The rate plans are either postpaid, where
the customer is billed monthly for the previous month, or prepaid, where the customer pays in advance for a specified volume of use over
a specified period.
Our postpaid plans include the following charges:
· monthly subscription charges, which usually include voice, data and digital contents, that are included in the monthly service charge;
· usage charges, for usage in excess of the specified number of minutes included in the monthly subscription charge; and
· additional charges, including charges for value-added services and data services.
Some postpaid plans are designed for high- and
moderate- usage subscribers, who are typically willing to pay higher monthly fees in exchange for more benefits like partnerships, roaming
and discounts on device prices. We also offer customized services to our corporate clients, which may include local call rates between
employees wherever located in Brazil.
We offer a single prepaid plan with promotional
offerings, which does not include monthly charges. Prepaid customers can purchase a prepaid credits plan that may be used for calls, data
and additional services, based on the specific customer’s needs. We have agreements with large national retail store chains, in
addition to partnerships with regional retail store chains, to offer recharging online. Customers can also recharge straight from their
mobile handsets using credit cards on our app Meu TIM and their bank app
Consumer Plans
In 2025, we
continued to improve our positioning towards high value consumers, offering a variety of plans bundling voice, data packages, roaming
to Latin America, Europe and World (in accordance with the signed plan) and free access to certain applications, as well as digital value-added
services (i.e. music, e-reading and video streaming). The approach to this business is driven by the strategy of adding value for the
customer base and ensuring users a premium custom experience.
Within the consumer business, our main plans
include:
Prepaid Plans
· TIM Pré XIP: Offerings launched during 2024 were built to provide a full experience with simplicity, by adapting consumption according to balance and recharge; boosting benefits (unlimited network calls, unlimited calls for other carries using code 41, adaptable data packages and SMS). We expanded the offer benefits by including WhatsApp in any recharge value and a progressive cashback through PIX, while at the same time creating incentive to digitalization through Meu TIM app.
· TIM Beta: With an exclusive feel, this plan focused on young and digital customers that can only enter by invitation send by existing members or participating in a journey and accomplishing tasks to conquer their own invite. Currently, TIM Beta is only offered as a monthly subscription that includes Deezer Premium and exclusive data packages for YouTube, Netflix, TikTok and Instagram.
Postpaid Plans
In the higher value postpaid, we have maintained
our position in the market as an innovator and disruptor with our new TIM Black Família and TIM Black plans improving our portfolio
by offering large, shared data packages with monthly video streaming subscriptions.
TIM Black Família
plans start at R$209.99 for an entry level plan with unlimited off-network calls, 80 Gb shared data package (for one main line and one
dependent), and 10Gb data for OTT applications such as Facebook, Instagram and others. The main offer is set at R$304.99 (for one main
line and three dependents) with unlimited off-network calls, 120 Gb shared data package, Netflix, HBO GO, YouTube Premium, Disney + or
Paramount monthly fee included, and 10Gb data for OTT applications such as Facebook, Instagram, data rollover, international roaming and
others.
TIM Black plans start at
R$119.99 for an entry level plan with unlimited off-network calls, 40Gb data package (for one main line), and 10Gb data for OTT applications,
such as Facebook, Instagram and others. The main offer is set at R$149.99 (for one main line) with unlimited off-network calls, 60 Gb
data package, data rollover and international roaming (data package for use in the American continent) and other benefits like 10Gb data
for OTT applications and value-added services such as music, e-books and magazines.
Control Plans
Our Control plans (“TIM
Controle”) are a hybrid between our prepaid and postpaid plans, with fixed price billed to the customer monthly, either via credit
card or digital account. Once customers of TIM Controle have reached the limit of their data plan, the data transmission is no longer
available and the user has two options: (i) to repurchase a data package or upgrade to higher tariff plan; or (ii) to wait for the next
data period to commence, which varies by plan, at which point his data availability and usage limit are renewed in full. Postpaid customers
can also purchase a data package to navigate in full speed, but the usage is not blocked when they reach the limit of the data package.
TIM Controle plans start
at R$57.99 with unlimited calls and 15 Gb Internet. The main offer in the TIM Controle portfolio (which has a commercial focus) is set
at R$69.99 with unlimited calls, 20 Gb Internet and 5G for OTT applications.
Our control plans offer
premium partnership benefits with the major entertainment brands in streaming: Amazon, Paramount, Netflix, Disney, etc. It was a pioneering
move, and we were the first carrier to offer such benefits for the control customers.
Corporate Plans
The strategy in mobile & ICT market is to
strengthen our core business by evolving the traditional fixed and mobile portfolio both voice and data, while capturing new opportunities
with new solutions segments, reinforcing our position as a significant player among large companies. We continue to evolve our value-added
solutions to meet the broader needs of our premium customers.
Since 2018, our focus in the IoT sector, particularly
in the agribusiness industry, involved bridging the connectivity gap in rural Brazil. In 2020, we solidified our leadership in agribusiness
industry and expanded projects across various verticals, emphasizing connectivity as our core strength. Our strategy includes providing
complete solutions through partnerships, enhancing value, driving revenue, and fostering loyalty. We are developing a new network model
offering private 4G and 5G networks for industrial segments like mining, transport, healthcare, public safety, and industry 4.0. As a founding member of ConectarAGRO, we collaborate
with key players in agriculture, extending connectivity to all rural areas and transforming lives.
In 2022, our IoT presence expanded beyond agribusiness,
entering logistics, public safety, and mining. We ventured into the 5G private network and edge computing solutions with notable deals,
including the first 5G port operation in Latin America at the port of Santos, São Paulo. Our strategy revolves around connectivity,
comprehensive solutions, and partnerships, delivering added value, revenue, and customer loyalty.
In 2023, alongside implementing these networks,
we intensified efforts to expand connectivity in the logistics sector, covering major highways in southeast and central Brazil. In a pioneering
initiative, we forged partnerships with major private highways concessionaires (e.g., CCR and ECORODOVIAS). Going beyond the connectivity,
we developed street lighting projects in some of Brazil’s major cities such as Curitiba and Porto Alegre.
In 2024, we introduced TIM IoT Solutions, which
marks a significant step in reinforcing our expertise to drive the digital transformation of Brazilian industries. Positioned as a key
enabler of new business opportunities through the IoT, we are focused on key sectors such as agribusiness, utilities, logistics, and industry
4.0.
Translating into numbers, these initiatives represent
more than 5,600 km of highways covered. Over 220,000 functioning streetlights, with more than 340,000 sold in several municipalities.
Reinforcing our leadership in agribusiness, we surpassed the mark of 19.7 million hectares covered with 4G.
In 2025, we strengthened our position as a leading
force in the digital transformation of rural areas, highways, and Brazilian cities, expanding connectivity to previously underserved regions
and enabling significant gains in productivity, efficiency, and social impact. In agribusiness, NB-IoT coverage grew more than 25%,
while 4G coverage for rural IoT reached 26.2 million hectares, advancing over 32% and reinforcing our role in automation and operational
intelligence across the sector. In logistics, we expanded coverage to 10,259 kilometers of highways — an 83% increase — enabling
advanced tracking, telemetry, and safety solutions. From a socioenvironmental perspective, we connected 2.6 million people in rural areas,
expanded service to more than 53,000 farms, and recorded a 38.7% increase in smart public lighting, totaling 472,000 installed points,
demonstrating how our IoT infrastructure accelerates development in historically underserved regions.
In an unprecedented initiative, we signed the
Rural Connectivity Program with the Government of Paraná, designed to accelerate network deployment in remote areas through an
innovative financing model that converts ICMS tax credits into direct infrastructure investment. We were the first operator to join the
program, allocating R$22 million to deploy 116 antennas across 83 municipalities, expanding coverage to approximately 40,000 people directly
and more than 2 million indirectly. This model reduces investment barriers, accelerates socioeconomic benefits, and reinforces our leadership
position in rural connectivity.
Value-Added Services
We constantly seek to increase value to our customers
through innovative offers and products. We offer, directly or through agreements with third parties, value-added services in varied categories,
such as education, music, reading, games, videos and social networks.
Since 2022, the company has enhanced its
value proposition through a series of innovative bundled offerings enabled by strategic partnerships. It began by introducing free Amazon
Prime Video access to prepaid customers, driving a significant increase in spending among users of the service. Building on this foundation,
the company expanded its portfolio by incorporating Apple One into its premium family plans and later enriched its offerings by enabling
customers to select benefits from leading global streaming platforms through a flexible, choice-based bundle structure.
In 2025, we prioritized revenue growth through
the expansion of standalone entertainment services. Throughout the year, we strengthened our portfolio and accelerated commercial initiatives
focused on meeting the increasing demand for flexible, high-value digital content. As a result, revenue from standalone entertainment
streaming services grew by 81% year over year, reaffirming our ability to capture emerging market opportunities and enhance our digital
services ecosystem.
Digital Channels
Since 2022, we have continued to expand our digital
channels and insurance services, which were relaunched in 2018 with a broader portfolio, enabling a more comprehensive approach to this
market. During this period, we introduced new digital customer service channels designed to enhance convenience and reduce reliance on
traditional call-center interactions. We continued to deploy DialMyApp, a tool that displays a visual interactive voice response (“IVR”)
interface on customers’ smartphones when they contact our call center from Android devices, allowing issues to be resolved directly
on the device without navigating conventional voice menus. We achieved the highest level of customer engagement on this platform among
Brazilian telecommunications operators.
We also expanded the use of Rich Communication
Services (“RCS”), a platform developed by Google that enables customer interactions through visual and interactive messaging
formats with a more efficient cost structure. We were the first telecommunications operator in Brazil to launch customer service through
RCS. In parallel, we initiated the internalization of pre-paid and post-paid migration processes under the oversight of a board dedicated
exclusively to digital and remote channels, which was established in 2021.
In 2023, our primary objectives included increasing
the share of proprietary channels, advancing the internalization of e-commerce operations and redesigning the MEU TIM application to enhance
customer experience, expand the user base and improve the digital journey. In 2024, we implemented the second phase of this transformation,
introducing new features related to activation, portability and eSIM processes and fully eliminating dependence on external vendors. During
the same year, we completed the redevelopment of the MEU TIM application and concluded the initial phase of bringing e-commerce systems
and operations in-house. This transition contributed to record digital sales performance and a significant increase in unassisted sales
channels.
Our ongoing focus has been on optimizing the
customer journey by improving conversion rates, equalizing digital services across channels, delivering a more integrated omnichannel
experience and reducing the operating costs associated with human-assisted services. We have also advanced initiatives to consolidate
text-based service channels through a unified chat platform and to centralize communication tools, such as WhatsApp and chatbots, into
a single application. In addition, we have enhanced personalization on our website to facilitate customer interaction and route leads
more effectively across channels.
In 2024, we began prioritizing digital sales
initiatives such as abandoned-cart recovery and receptive sales, aimed at re-engaging customers who demonstrated interest in our products
but did not complete a purchase. In 2025, we further consolidated the expansion of digital channels within the B2C Mobile Sales market,
which is responsible for e-commerce and remote sales strategies, increasing the use of artificial intelligence and improving customer
relationship management across areas such as retention and billing. During 2025, our e-commerce platform delivered new features focused
on customer acquisition through number portability and new subscriptions, including the use of SIM and eSIM activation portals for post-paid
plan sales, resulting in approximately 15,000 additional post-paid plans sold per month.
Customer Service
In order to serve our customer base of almost
62 million customers, we aligned the insourced/outsourced service operations with the best practices of the Brazilian telecommunications
business.
We operate through 23 inbound call centers, of
which five sites are specialized partners in customer service, focusing on high-value customer service, core processes and critical “referral
channels.”
As of December 31, 2025, we had approximately
12,000 points of sale premium stores and resellers (exclusive or multi-brand), in addition to established partnerships with major retail
chains. This number includes 166 company-owned stores. Beyond these physical stores, our customers have access to prepaid services through
supermarkets, newsstands, and other small retailers, totaling more than 160,000 points across Brazil.
Since 2021, TIM has been enhancing its store
models with the goal of offering even more services to our customers combining experience and innovation through spaces where it is possible
to try out smartphones, accessories, and connected-home devices, along with the TIM UltraFibra experience. Since then, we opened
stores in the "concept" and "future" segments, ensuring our plan to modernize our network reach. As a highlight
of a new segmentation, we launched a new store model TIM’s flagship store on Oscar Freire in São Paulo was designed to be
an innovative space that transforms each visit into a unique experience, bringing together technology, music, and creativity in a modern
and interactive environment. With this new segmentation approach, the channel begins to generate greater value, strengthening customer
relationships and increasing profitability among higher-potential clients.
In 2025, we reached the milestone of 166 company-owned
stores and 699 commercial partner stores. In 2025 for the corporate market, we s closed the year with 252 business partners serving small
and medium-size companies
In 2025, TIM reaffirmed
its commitment to ESG by implementing initiatives that promote inclusion, diversity, and accessibility in its consumer service channels.
To broaden income-generating
opportunities for independent entrepreneurs, in 2025 TIM officially announced the relaunch of the TIM+ Vendas app, a digital platform
that enables the resale of SIM cards and top-ups in a simple, secure, and fully digital way. With a modern and intuitive interface, users
can place online orders, make payments via Pix or bank slip, and receive products directly at home. This initiative reinforces TIM’s
strategy of democratizing access to telecommunications while promoting financial inclusion and economic growth.
We conducted the maintenance of the project "Caminho
Delas", safe spaces in stores for women at risk, providing access to the geolocation service via application Positive Women and guaranteed
during the year 2025 the 1st place in the ASA indicator of Accessibility in Stores of ANATELSince 2020, digital channels have been a core
component of our service strategy through the MEU TIM mobile application and the MEU TIM web portal. These channels support self-service
functionalities, prepaid recharges and the upselling of additional services. In addition to enhancing customer experience through faster
response and resolution capabilities, digital channels have enabled cost reductions in areas such as customer service operations and sales
commissions.
In 2025, we advanced this strategy with the launch
of a new MEU TIM customer service portal, which fully integrated the mobile application and web environments into a single, unified platform.
This integration was designed to deliver a consistent and seamless customer experience across channels and resulted in improvements in
usability, journey continuity and issue resolution, while also positively impacting key business indicators, including digital engagement,
self-service adoption, operational efficiency and revenue generation through digital channels.
During 2024 and 2025, we also significantly enhanced
our text-based customer service channels by modernizing platforms and expanding interaction capabilities. These initiatives included the
enhancement and scaling of CHAT MEU TIM, available through both web and mobile environments, as well as the expansion of service interactions
through WhatsApp, allowing customers to engage with us through the channels best suited to their preferences and needs.
These developments extended beyond the introduction
of additional channels and focused on improved orchestration, usability and end-to-end resolution capabilities. As a result, text-based
interactions became more effective and resolutive, contributing to higher customer satisfaction while supporting key operational objectives,
including higher digital resolution rates, reduced reliance on assisted service channels and increased operational efficiency.
Since 2021, we have been working to keep our
“customer experience” foundational pillar as a focus (see “—Our Strategy”), creating initiatives that seek
to put the customer as the center of decision-making. The approach used to promote this cultural transformation was guided by the relationship
between customers and employees.
We have evaluated and taken action to improve
the experience and professional development of our employees, with educational projects to promote engagement and insight, focused not
only on technical, functional or soft skills competences, but also on the new capabilities required to reach industrial and business
goals. These efforts strengthened the bonds between an employee’s business functions and the products and services they deliver
to the customer. The impact was noticeable in our organizational climate survey, a study performed by consulting company mercer, considering
several companies in Brazil and the global telecom market, in which our employees’ performance with respect to “quality and
customer focus” remained consistent and stable at 88% in 2025. The business area supporting these initiatives was divided into
three sections: design, execution and monitoring.
Our design team created a policy with “customer
experience” guidelines. This document defined expected behaviors and patterns in communication and interactions with customers,
outlined a monitoring model, as well as refactored the products and services development cycles, to better cover all elements of customer
experience.
the execution area sought to solve legacy issues,
with many of them concluded, which represented the efforts in the customer experience governance plan. These actions were grouped on four
strategic pillars:
· Customer Centric: being customer oriented, understanding their needs, the relationship and the value proposition the customer expects when interacting with us;
· User Experience: understand the perceptions and reactions of our customers, including their emotions, beliefs, preferences, physical and psychological responses, as well their behaviors before, during and after they use our products, offers and services;
· Customer Monitoring: making use of tools and techniques such as big data and predictive analytics to extract value from customer information, and to identify opportunities in revenue increase, reduced costs and improved quality; and
· Crew Experience: with the understanding that our employees are key to create great customer experiences, empower our employees so that it is clear we are a consumer-oriented organization.
In addition, we continued to use the so-called
net promoter score (“NPS”) as key performance indicator to assess customer experience and advocacy across specific customer
journeys, as well as overall customer perception of our services.
We have also sought to maximize customer satisfaction
through improvements in our processes and systems, including customer journey mapping, where employees are invited to assume the customer
perspective using empathy maps and design thinking tools. The goal of using these methods is to reduce customer effort, increase customer
success and to ensure positive emotions towards our brand.
In this context, our ombudsman function has expanded
beyond its original role of representing the company before official consumer protection authorities and handling escalations from other
service channels. The ombudsman now plays a strategic role in governance and in driving initiatives aimed at improving customer experience.
Reporting directly to the chief executive officer, the ombudsman is responsible for conducting market research, monitoring customer satisfaction
indicators and generating insights to support best practices.
The ombudsman also reinforces our customer-care
culture by operating as an independent accountability channel and supporting continuous improvement. Through analytical methodologies,
the ombudsman contributes to the prevention of recurring issues by mapping customer behaviors, profiles and key drivers of contact across
the ombudsman function and other second-level channels, including ANATEL, PROCON and similar authorities. By analyzing customer journeys
and interaction histories, the ombudsman identifies root causes of complaints and provides actionable insights, enabling accountability
across business units, supporting corrective actions and reducing the likelihood of similar issues affecting other customers. These activities
strengthen our governance framework and contribute to improvements across products, services and the customer service chain.
Customers’ Feedback
We gather the feedback of our customers through
multiple research and feedback mechanisms, primarily surveys, which enable us to gain deeper insights into customer journeys, needs and
pain points. These insights support continuous improvements to our services and products and contribute to clear and effective communication
with relevant stakeholders.
Our key research initiatives include customer
experience and satisfaction surveys, which monitor important performance indicators, such as the Net Promoter Score (NPS), across our
customer base and, where applicable, the broader telecommunications market. We also conduct brand image and communication surveys, as
well as studies focused on the attractiveness and usability of our services and products, to better align our offerings with customer
needs and expectations.
We view each customer interaction as an opportunity
to create additional value by offering new or more suitable services, refining personalized offerings and continuously improving customer
experience across our touchpoints. Through this approach, we seek to support customer satisfaction, informed innovation and sustainable
business growth.
Lines of Revenue
Our revenues from mobile and fixed services include:
(i) monthly subscription charges, (ii) network usage charges for local mobile calls, (iii) roaming fees, (iv) interconnection charges,
(v) national and international long-distance calls, (vi) value-added services, and (vii) co-billing. Additionally, we have revenues from
sales of products (mobile handsets and accessories), (viii) IoT solutions setup fee (ix) IoT monthly subscription charges and other customer
platform related revenues.
Monthly Subscription Charges
We receive a monthly subscription fee under our
postpaid mobile plans, which varies based on the usage limits under the relevant plan.
Network Usage Charges
ANATEL has defined that each National Code (CN)
represents a home registration area. Calls within the same home registration area are considered local calls. Each of our customers is
registered as a user of one of our home registration areas.
· VC1 (local rate): The VC1 rate is our base rate per minute and applies to mobile/fixed or mobile/mobile calls made by a customer located in the customer’s home registration area to a person registered in the same home registration area.
· VU-M: The VU-M, also known as an interconnection rate for mobile phones or mobile termination rate, is the fee another telecommunications service provider pays for the mobile companies for the use of their network. See “—Interconnection Charges.”
As determined by ANATEL (Act No. 3246/2023),
VU-M values are as follows:
Region of the GAP* Values starting in February 25, 2024 Values starting in February 25, 2025 Values starting in February 25, 2026
I R$ 0.01472 R$ 0.01503 R$ 0.01499
II R$ 0.01599 R$ 0.01650 R$ 0.01686
III R$ 0.01738 R$ 0.01779 R$ 0.01779
*General Authorization Plan (“GAP”)
for Personal Mobile Service
Roaming Fees
We receive revenue pursuant to roaming agreements
we have entered with other mobile telecommunications service providers. When a call is made from within our coverage area by a client
of another mobile service provider, that service provider is charged a roaming fee for the service used, be it voice, text messaging or
data, at our applicable rates. Similarly, when one of our clients makes a mobile call when that customer is outside our coverage area
using the network of another service provider, we must pay the charges associated with that call to the mobile service provider in whose
coverage area the call originates at the applicable rate of such mobile service provider.
Automatic national roaming permits our customers
to use their mobile telephones on the networks of other mobile service providers while traveling or “roaming” in the limited
areas of Brazil not covered by our network, complementing our current mobile coverage. Similarly, we provide mobile telecommunications
services to customers of other mobile service providers when those customers place or receive calls while in our network. Mobile service
providers which are party to roaming agreements must provide service to roaming customers on the same basis that such providers provide
service to their own clients. All such providers carry out a monthly reconciliation of roaming charges. Our roaming agreements have a
one-year term and automatically renew for additional one-year terms, which are regulated and previously approved by ANATEL.
The PGMC approved in 2025 the inclusion of Roaming
EIR (within the same registration area until December, 2031). Also, was determined to impose certain conditions, such as (i) reference
prices for roaming; and (ii) prohibition, for five years, of charging for M2M and IoT subscriptions (until September 2027 for us).
Interconnection Charges
We receive interconnection revenues for any calls
originated on another service provider’s network, whether mobile or fixed line, that are received by any mobile customer, ours or
of other providers, while using our network. We charge the originating service provider an interconnection fee for every minute their
call uses our network. Conversely, when our users place calls to numbers connected to other operators’ networks, we must pay those
operators the applicable interconnection fees.
We have entered into interconnection agreements
with most of the telecommunications service providers operating in Brazil. These agreements set forth, among other things, the number
of interconnection points, the technical standards for the transmission and reception of signals, and the applicable costs and fees for
interconnection services. All interconnection contracts must be submitted to ANATEL for approval. Nevertheless, even in the absence of
ratification by ANATEL, the parties remain obligated to provide interconnection services to one another.
The interconnection fees we were allowed to charge
other telecommunications companies, and which other mobile telecommunications companies charge us, were historically adjusted by inflation.
Transition rules were defined and applied until July 2014, as stablished by Resolution No. 639/2014. ANATEL subsequently issued the rule
for the definition of reference rates for entities with significant market power, based on a cost model, for VU-M, as well as maximum
rates for TU-RL. Since the issuance of Resolution No. 639/2014, interconnection fees have been decreasing based on a specific glide path,
until 2019. Starting in 2020, ANATEL has determined that VU-M values will rise slightly again. Currently, Act n. 3246/2023 provides for
the VU-M values, See “—Regulation of the Brazilian Telecommunications Industry—Interconnection Regulation.”
Long Distance
Telecommunications customers in Brazil can select
long-distance carriers on a per-call basis using the carrier selection code (CSP), a mechanism introduced in July 2003. By dialing
a two-digit code before dialing long-distance numbers, customers can choose their preferred carrier. However, ANATEL Resolution
No. 768/2024 introduced a major restructuring of local calling areas, redefining them to coincide with each National Code (area code or
DDD). As a result, all calls made between municipalities sharing the same DDD are now classified as local calls, which significantly reduces
the number of calls treated as long-distance and, consequently, decreases the situations in which CSP selection is required.
We continue to offer nationwide long-distance
services for mobile customers, and users of other providers may still select our service through our CSP code. CSP remains applicable
only to calls between different DDDs, narrowing its operational scope.
Under this structure, a customer is charged VC1
rates directly by us only for calls made and completed to a number registered within that customer’s home registration area. However,
long-distance calls are billed to the customer by the chosen long-distance carrier. When our customer selects another long-distance
carrier, that carrier pays us a VU-M fee for any use of our network to complete the long-distance call. The reclassification of
many previously long-distance calls as local calls reduces overall long-distance traffic, which may affect the volume of VU-M
revenues associated with long-distance interconnection.
VU-M is the fee paid to us by another telecommunications
service provider for the use of our network by that provider’s customers, in this case in connection with long-distance calls.
See “—Interconnection Charges.”
STIR SHAKEN - STIR (Secure Telephone Identity
Revisited) e SHAKEN (Signature-based Handling of Asserted information using toKENs)
ANATEL has intensified its actions to combat
fraudulent calling practices, including spoofing and robocalls. In recent years, ANATEL has encouraged the implementation of the STIR/SHAKEN
framework and, with the publication of Acórdão No. 201/2025, made call authentication mandatory.
Under this framework, the authentication requirement
initially applies to “large callers,” defined as entities originating more than 500,000 calls per month, which are required
to activate call-authentication mechanisms by February 2026. The objective of this measure is to mitigate spoofing and abusive calling
patterns by enabling reliable validation of calling numbers.
Interconnection routes between large service
providers have already been configured to support STIR/SHAKEN authentication. Further implementation steps and operational requirements
remain under discussion between service providers and ANATEL.
Number Portability
Due to the large number of small service providers,
ANATEL has worked to expand the numbering range that identifies number portability and therefore enables new providers in the Brazilian
market.
Co-Billing Services
Co-billing occurs when we bill our customers
for long-distance services rendered on behalf of another service provider. Beginning in July 2003, we started providing co-billing services
to other telecommunication service providers operating in Brazil. The fee to provide such service to the long-distance carrier is defined
by ANATEL and the rate charged to the subscriber follows the rating plan from the long-distance carrier.
Other service providers also perform co-billing
for TIM when their users use TIM’s CSP 41 to place long-distance calls, remitting the revenues from those calls to TIM.
IoT Solutions Setup Fee
We receive a one-time fee under our IoT solutions,
which varies based on the solution contracted, the number of IoT devices connected and the CAPEX invested by us on implementing the project.
IoT Monthly Subscription Charges
We receive a monthly subscription fee under our
IoT solutions, which varies based on the solution contracted, the number and data consumption of the IoT devices and other platforms.
Sales of Product
We offer a diverse portfolio
of handset models from several manufacturers for sale through our dealer network, which includes our own stores, exclusive franchises
and authorized dealers. We are focused on offering an array of handsets, including essential and smartphones devices with enhanced functionality
for value-added services, while practicing a policy of increasing 5G smartphone penetration. Our mobile handsets can be used in conjunction
with either our prepaid or postpaid service plans. In 2025, we continued to expand our technological products in our own retail stores,
including video game consoles, smart televisions, audio devices and other consumer electronics, supported by a more competitive pricing
strategy.
Billing and Collection
Our company-wide, integrated billing and collection
systems are provided by third-parties vendors. These systems have four main functions: (i) customer registration, (ii) customer information
management, (iii) accounts receivable management and (iv) billing and collection.
These billing systems give us significant flexibility
in developing service plans and billing options.
Certain aspects of billing customers in Brazil
are regulated by ANATEL. The new user rights regulation (“RGC”) – Resolution No. 765 published in November 2023, established
new rules, such as the possibility of total service suspension 15 days after the customer notification and the suspension of charges during
the suspension period. The application of these new rules became effective in September 2025.
In order to avoid delinquency and discontinuation
of service, however, we have invested in CRM models to identify customers with a higher propensity for early delinquency and also reinforced
credit history checks for our customers prior to service activation.
In August 2024, we launched
the new TIM invoice layout, making it easier to understand the bill and highlighting the QR code for payment. In December 2025, 68.4%
of the payments made by our customers were via PIX and we achieve a 99.1% penetration of digital invoices.
Pursuant to ANATEL regulations,
we and other telephone service providers periodically reconcile the interconnection and roaming charges owed among us and them and settle
on a net basis. See “—Lines of Revenue—Interconnection Charges” and “—Lines of Revenue—Roaming
Fees.”
Seasonality
We have experienced a trend
of generating a significantly higher number of new clients and product sales in the fourth quarter of each year as compared to the other
three fiscal quarters. Several factors contribute to this trend, including the increased use of retail distribution in which sales volume
increases significantly during the year-end holiday shopping season, the timing of new product and service announcements and introductions,
and aggressive marketing and promotions in the fourth quarter of each year.
Regional Overview
We provide 4G coverage in 5,570 cities to 100%
of the urban population of Brazil, making our 4G network the most extensive in the country.
Lastly, 2022 was marked by the launch of 5G technology
in Brazil, which seeks to meet the demand for higher connection speeds. We ended 2025 having launched 5G technology in 1,089 cities, reaching
over 70% of the Brazilian population, with a much higher number of antennas than required by ANATEL, allowing us to provide an even better
experience for our customers.
The following table shows information regarding
Brazilian mobile telecommunications, at the dates indicated.
As of or For the Year Ended December 31,
2025 2024 2023
Brazilian population (millions)(1)(2) 213.4 212.5 203.1
Estimated total penetration (%)(3)(4) 126.7% 123.9 126.1
Brazilian wireless subscriber base (millions) 270.4 263.4 256.4
National percentage subscriber growth (%) 2.7 2.8 1.7
(1) According to the last information disclosed by IBGE from the preview of the population of the municipalities based on data collected by the 2022 Demographic Census (December 2022), that was reviewed in the mid of 2023. For 2024 and 2025, it is an IBGE estimate. https://www.ibge.gov.br/estatisticas/sociais/populacao/9109-projecao-da-populacao.html
(2) The 2022 numbers were based on an estimate released by the IBGE and considering actual data collected in respect of 2023 and 2024, appeared to show an upward deviation which may have considered the population higher than it should have. https://informacoes.anatel.gov.br/paineis/acessos/telefonia-movel
(3) Percentage of the total population of Brazil using mobile services, equating one mobile line to one subscriber (December 2022).
(4) Based on information published by ANATEL.
Our Network
Our mobile
network uses 5G, 4G, NB-IoT, 3G and 2G technologies and cover 100% of the urban Brazilian population.
Between 2007 and 2014, we acquired new RF authorizations
used for 3G and 4G mobile telephone services at the 2100 MHz, 2500 MHz and 700 MHz bands. In order to move toward 4G services, in October
2012, we acquired additional bandwidth in the 2,530-2,540 MHz and 2,650-2,660 MHz sub-bands, with national coverage. In September 2014,
we invested approximately R$2.85 billion to acquire bandwidth in the 700 MHz range, which aligned with our strategy of expanding our broadband
and 4G service across Brazil. We began providing our services in the 700MHz range in 2016. See “—Regulation of the Brazilian
Telecommunications Industry—Frequencies and Spectrum Background.” In December 2015, ANATEL auctioned left over radio frequencies
in the 1,800 MHz, 1,900 MHz and 2,500 MHz bands. We submitted bids for the left over lots of the 2,500 MHz band, in the 2,500-2,510 MHz
and 2,620-2,630 MHz sub-bands – known as P-Band, which had originally been auctioned in 2012. This particular P-Band spectrum provides
4G mobile services. We acquired the lots for Recife, in the state of Pernambuco (Region AR 81), and Curitiba, in the state of Paraná
(Region AR 41), based on our bids which totaled R$57.5 million. The corresponding authorization terms were signed in July 2016. During
2017, several municipalities throughout Brazil had their analog TV signals switched off, freeing up the bandwidths in those regions for
4G mobile services. In 2018, the analog TV switch-off schedule was completed in regions where it is necessary to clean up the 700
MHz spectrum for the LTE. Therefore, by September 2019, all municipalities were able to receive our expanded 4G coverage through the 700
MHz band. Throughout 2024, the entity created to ensure the spectrum cleanup, called the Entity for Administration of TV and RTV Channel
Relocation and Digitalization Process, or EAD, was expected to be terminated after fulfilled its obligations. Nevertheless, in 2024 it
was decided that EAD will develop new projects related to LTE covered expansion, television upgrade and clean up maintains.
In November 2021, we invested approximately R$1.1
billion to acquire the 2.3 GHz, 3.5 GHz and 26 GHz spectrum bands, aligned with our strategy of deploying 5G technology. See “—Regulation
of the Brazilian Telecommunications Industry—Frequencies and Spectrum Background” and “—Regulation of the Brazilian
Telecommunications Industry—Authorizations and Concessions.” In connection with the conclusion of the Reorganization whereby
TIM Celular was merged into us, see “—Item 4. Information on the Company—C. Organizational Structure,” we hold
all of the authorizations previously issued in the name of other companies controlled, directly or indirectly, by TIM Participações.
RF authorizations are generally valid for a period
up to 20 years initially and are renewable for an additional equal period since the revision of the General Telecommunications Law in
2021, and our current authorizations started expiring in September 2022. As such, we have started requesting renewals for the same period
as the authorizations reach the end of their original term (for details on spectrum licenses and expiration dates see “—Regulation
of the Brazilian Telecommunications Industry—Frequencies and Spectrum Background”). In the case of authorizations that cannot
be renewed, current telecommunications law sets forth that the spectrum is returned to the Brazilian Federal Government under ANATEL’s
management. For this reason, revisions to General Telecommunications Law have had a meaningful impact in the sector, generating an environment
possibly more conducive to long-term investments.
As a result of our investment in infrastructure,
in March 2022 we announced that we had completed our implementation of the standalone 5G network CORE. This was necessary for us
to be able to provide fifth-generation services in accordance with government requirements. ANATEL approved a revised schedule for granting
access to the 3.5 GHz spectrum band in order to activate the 5G network in the Brazilian capital and Federal District of Brasília
after August 2022, commencing the commercial operations of 5G SA throughout Brazil. In 2022, we began the rollout and now have 5G coverage
in Brasília and all 26 state capitals reaching a total 1,089 cities at the end of 2025, with a special focus on the cities of São
Paulo, Rio de Janeiro, Curitiba, Recife, Salvador, Brasília e Fortaleza, where 100% of the neighborhoods were covered, allowing
traffic growth through a new, faster and more efficient access network.
We consider the purchase of any frequency made
available by ANATEL for the provision of mobile services as a priority, since having available frequency is core to our business. In 2021,
we made R$3,213 million in investments, primarily in capacity and coverage 4G, mainly using M-MIMO antennas, core functions virtualization,
expansion and capacity enhancement of our optical transport networks, infrastructure resilience, quality maintenance and enabling of fiber-to-the-site
and the mobile broadband MBB programs.
These investments allowed us to reach, by the
end of 2023, the milestone of all the 5,570 Brazilian cities with 4G coverage, or 100% of the country’s urban population. We are
thus the leader in 4G coverage in Brazil among mobile telecommunications providers, both by number of cities served and percentage of
population covered.
On July 22, 2020, we obtained ANATEL’s
approval, and, on June 3, 2020, obtained CADE’s approval for the execution of two agreements with Vivo aimed at sharing 2G, 3G and
4G mobile network infrastructure for agreed consideration, increasing the network cost efficiency through the initiatives Single Grid
and 2G Switch-off. These two sharing agreements reinforce the evolution process of the Brazilian telecommunications market in terms of
network infrastructure sharing. For details see “Item 4. Information on the Company—A. History and Development of the Company—Historical
Background—TIM and Vivo new sharing agreement.”
Our wireless network has both centralized and
distributed functions, and includes mainly transmission equipment, consisting primarily of more than 6 thousand 5G gNodes, 66 thousand
eNodeBs in our 4G network, more than 17 thousand NodeBs for the 3G layer and more than 13 thousand BTSs for 2G network as of December
2023, considering site-sharing, hardware equipment and software installation and upgrades. The network is connected primarily by optical
fiber transmission systems and MW radios distributed nationwide.
Another priority is developing our national network.
In December 2023, we continued to increase the quantity of sites connected by optical fiber, as well as integrating mobile sites acquired
with Oi assets, reaching more than 12,500 of sites connected by optical fiber. The results are consistent with ANATEL’s network
quality requirements, and with TIM retaining its solid performance in 2022. Since national coverage and quality of service has improved
substantially over the last few years, ANATEL has shifted its focus in recent years. ANATEL is now concentrating its efforts on smaller
geographic areas, particularly in those areas where service is still considered poor.
The AES Atimus Acquisition and consequent creation
of TIM Fiber (which was merged into TIM Celular in 2012, and TIM Celular was merged into us in 2018) has improved our optical fiber (or
fiber optic) network presence in more than 31 cities including the metropolitan regions of Rio de Janeiro, São Paulo, Salvador,
Goiânia, Recife, Manaus, Belo Horizonte and Distrito Federal. Our optical fiber network has capacity to offer high quality ultra-broadband
service, available through our TIM UltraFibra service and increase basic infrastructure to be applied in our fixed and mobile operations.
In 2021, we performed a carve-out and concluded
the closing of a transaction with IHS Fiber Brasil – Cessão de Infraestruturas Ltda., for the acquisition of a controlling
equity interest in FiberCo Soluções de Infraestrutura S.A. (later renamed I-Systems), a company established by us for the
segregation of network assets and the provision of infrastructure services, with the mission of deploying, operating, and maintaining
last-mile infrastructure for broadband access with us as the anchor customer. I-Systems began its operation with approximately 15,000
km of secondary network fiber, covering approximately 6.4 million households (homes passed), with 3.5 million in FTTH and 3.4 million
in FTTC.
At the end of 2025, our fixed infrastructure,
including remaining metropolitan infrastructure and long-distance assets, is highlighted by the following characteristics:
• an extensive fiber
transport network including a national backbone, regional fiber to the city and a metro network with more than 132,000 km of fiber;
• 2,000 cities connected
with optical fiber; and
• more than 17,000
towers connected with optical fiber.
Our switching exchanges and intelligent network
platforms enable us to offer flexible, high quality voice service at extremely competitive prices. Our satellite network covers distant
areas of the country and is being expanded and renewed to provide high private service.
As a general matter, telecommunications operators’
networks have tended to be designed, deployed and managed according to a vertical architecture model referred to as “end-to-end,”
where the hardware and software are proprietary and dedicated to each network function. With the growing demand for differentiated services,
the need for physical space, energy and speed has become critical and, consequently, companies’ capital expenditure and operating
costs have tended to increase.
Such network architecture based on monolithic
network elements requires a long time for development and deployment, impacting directly the time-to-market for launching new products
or services and, consequently, reducing the generation of new revenues.
NFV is the new architectural paradigm that aims
to address infrastructural network transformation as a key step in the evolution of the implementation of new systems and network infrastructure,
as it adopts the concept of consolidating standardized commercial off-the-shelf hardware elements that are available in virtual environments
for shared use across various applications, accelerating the ability to deliver services, reducing costs and improving customer satisfaction.
We aim to capitalize on the proposed benefits from such technology.
We understand that the NFV and the sharing of
resources and equipment is the way to establish an economically more efficient structure, by reducing investment and/or operational costs
while also reducing the time-to-market for launching new offers (an increasingly relevant factor in a competitive scenario).
By the end of 2025, we had 16 virtualized Core
Network Datacenters (DCC) located in Rio de Janeiro (2), São Paulo (2), Fortaleza (2), Salvador (2), Brasília (2), Belo
Horizonte (2), Belém (2) and Curitiba (2), in addition to 19 virtualized Edge Network Datacenters (DCE) located in Campinas, Porto
Alegre, Natal, João Pessoa, Florianópolis, Blumenau, Maringá, Londrina, São Luis, Goiânia, Recife, Santos,
São José dos Campos, Uberlândia, Varginha, Feira de Santana, Teresina, Manaus and Ponta Grossa. Most of our core
network functions are already running in a virtualized fashion by means of these network datacenters. The migration of additional network
functions to a virtualized datacenter will be based on a roadmap of virtual network functions, or VNFs, respecting the maturity of each
network function.
Similar to the movement of IT systems to public
cloud infrastructure, network functions have also been planned to be migrated to the cloud, respecting their particularities regarding
high availability and performance. In order to guarantee this movement, NFV architecture had an important role for the evolution of these
NFs from a Virtual environment (VNF) to a cloud environment (CNF). As result of this journey, we intend to move network workloads to a
hybrid cloud (on-premises and public cloud) throughout the next 3 years. We understand that cloud infrastructure is a second step (just
after NFV) to establish an economically more efficient infrastructure, not only for reducing investment/costs, but also for speeding up
project deployments and reducing time-to-market of new offers.
Based on the efficiency and on the robustness
of the technologies used in the NFV and IP networks, in virtualizing its core network, we are also optimizing capital expenditures.
Therefore, our commitment to quality infrastructure
and quality improvement allow us to develop projects such as: (i) unification of the functions of an intelligent network core signaling
network and network data base through unified data consolidation and (ii) the evolution of security platforms such as session border controller
that accomplishes IP interconnection with other operators. We expect from these and other projects to be able to reduce our operating
expenditures by decreasing leased lines and infrastructure sharing, simplifying maintenance processes and architecture/topology, increasing
resilience even in conditions of disaster recovery and improving the customer experience by increasing the speed in which calls are set
up and data is transmitted and improve the amount of time needed to make customers profiles available in our data base.
In 2014, we started to change our mobile packet
core platform to a unified packet core based on the most advanced 3GPP evolved packet core standards, providing a coordinated seamless
mobility management in a HetNet access environment (full multiple-access nodes for 2G/3G/4G/Femto) in order to support the huge increase
in data demand in the Brazilian telecommunications market, as discussed elsewhere throughout this annual report on Form 20-F. The evolved
packet core platform is also evolving to an NFV model, based on 3GPP’s control and user plane separation of EPC nodes. This enables
flexible network deployment and operation, by distributed or centralized deployment and the independent scaling between control plane
and user plane functions.
In 2017, we started to implement our VoLTE platform
following 3GPP standards, providing better voice quality and 4G service continuity, avoiding the need to resort to 2G/3G during voice
calls. The VoLTE platform was implemented in an NFV model since its inception, based on 3GPP’s nodes.
In 2018, we implemented a new security system
to access our new and legacy platforms, called “Secure Password.” It uses a secure shell, or SSH, security protocol, monitors
attempts of non-standard access and generates related warnings (IAM-Identity Access Management). This process involves password encryption
and a logical safe that only grant recovery to authorized users while also granting and recording access through video and text devices.
More specifically, it features: (i) password authentication with a maximum validity of 90 days; (ii) authorization through a login administration
interface; and (iii) audit (logs) generated by the system, allowing the traceability of user actions from the beginning to the end of
each operation. The system also sends logs to a centralized system as a historical database. Additionally, we have a plan to mitigate
network risk on a macro scale that prioritizes our critical network infrastructure based on a risk map and the Network Resilience Plan.
The Network Resilience Plan allows us to focus on the main issues, and these in turn become the basis for crafting short-, medium- and
long-term mitigation measures to enhance the robustness of the network.
In 2022, we started to implement our 5G SA Core,
following 3GPP standards, providing 5G SA services for our customers, with new capabilities like reduced RTT – Round Trip Time and
mission critical IoT services. The 5G core was implemented in a cloud environment (CNF).
Sources and Availability of Raw Materials
Our business and results of operations are not
significantly affected by the availability and prices of raw materials.
Site-Sharing and Other Agreements.
Network Decommissioning
From time to time, we are required to decommission
our network equipment for various reasons, including security, compliance, cost savings, resource optimization, efficiency, and others.
With a network as complex as ours, we periodically review our network requirements.
In 2025, we maintained the transformation pace
initiated in 2022 in our network decommissioning program. The decommissioning governance model, materialized in new projects to manage
our assets within budget limits and through an effective and consistent communication channel (“RADAR 4.0”), ensured the strategy's
execution. Automations and procedural improvements substantially reduced the number of service level agreements (SLAs) related to decommissioning.
Additionally, we increased production capacity through new service contracts and supported the growth of the tax and accounting teams
contributing to the decommissioning process.
As a result, we were able to meet the strong
increase in demand generated by strategic projects such as the completion of the SPE Cozani integration, the Vivo sharing agreement, the
integrity control commitments, and others. as of the date of this annual report, we have a more robust structure in place, ready to meet
the demand expected for 2026.
Site-Sharing Agreements
With the objective of avoiding unnecessary duplication
of networks and infrastructure, ANATEL allows telecommunications service providers to use other providers’ networks (long distance,
backhaul and spectrum frequencies, among others) as secondary support in providing telecommunications services, with a focus on reducing
costs and increasing the penetration of mobile services in Brazil. Therefore, we have allowed other telecommunications service providers in our region to use our infrastructure, and
we have used other providers’ infrastructure, pursuant to site-sharing agreements with such operators.
Based on such ANATEL policy, in November 2012,
TIM Celular (which has been merged into us in connection with the Reorganization) formalized with Oi an agreement for the reciprocal assignment
of their LTE networks (4G technology) in certain cities, which was approved by ANATEL and CADE, which is the Brazilian antitrust agency
and has the mission to ensure free competition in the market, not only by investigating and ultimately deciding on the competitive matter,
but also by disseminating a free competition culture.
In April 2014, TIM Celular
(now TIM S.A.) and Oi entered into an agreement for the joint construction, implementation and reciprocal assignment of parts of their
respective GSM (2G) and UMTS (3G) network infrastructures in cities with less than 30,000 inhabitants, which was also approved by ANATEL
and CADE.
In July 2015, TIM Celular (now TIM S.A.), Oi
and Vivo entered into an agreement for the reciprocal assignment of LTE network media (4G), like the agreement between TIM Celular (now
TIM S.A.) and Oi in 2012, but also covering frequencies sharing. As with the prior sharing agreements, ANATEL and CADE approved the agreement
between the parties. After Oi Móvel’s bankruptcy process, in 2022, we and Vivo requested CADE’s clearance for a contract
addendum, in order to continue the sharing agreement without Oi. This clearance was granted by CADE on February 13, 2023, and we are currently
in the process of finalizing and executing the amendment to the agreement.
Also in 2015, TIM Celular (now TIM S.A.), Vivo,
Claro and Oi filed with CADE a term of commitment with the objective of negotiating the joint contracting of one or more companies to
carry out the construction, installation and provision of infrastructure in indoor environments (such as shopping malls) in several locations
in Brazil, which was approved without restriction by CADE.
In November 2015, our predecessor entities, TIM
Celular and Intelig (which subsequently merged to form TIM), and Vivo filed an agreement to share UMTS network (3G) under a multiple operation
core network, RAN sharing model which includes frequency sharing in certain cities based on their rural coverage obligations, which was
also approved without restrictions.
In March 2018, due to the mediation process between
ourselves and Oi, a new RAN sharing agreement was executed, which changed the sharing modality described in the 2012 agreement (technological
evolution from the multi-operator RAN to the multi-operator care network) and included part of the 1,800 MHz radio frequency bands. CADE
and ANATEL approved the operation without any restrictions.
On July 23, 2019, we and Vivo entered into a
memorandum of understanding (“Vivo MoU”), to start negotiations regarding: (i) sharing of single-grid 2G network; (ii) establishment
of new infrastructure sharing agreements for the 4G network in 700MHz, directed to cities with fewer than 30,000 inhabitants, which in
the future may be expanded to larger cities; (iii) other network sharing opportunities in other frequencies and technologies; and (iv)
other opportunities in efficiency and cost reduction in operations and network maintenance. Vivo and us believe that the potential developments
from the concepts set forth in the Vivo MoU would result in improved services at both carriers, as well as synergies and efficiencies
in the allocation of investments and operating costs.
On December 19, 2019, pursuant
to the Vivo MoU with Vivo, two new sharing agreements have been entered into regarding: (i) the creation of a unique network in 2G technology;
and (ii) a single-grid agreement that will result in an expansion of 3G and 4G networks and a network consolidation in small cities (with
less than 30,000 inhabitants). Both agreements were approved without restrictions by CADE and ANATEL in 2020, reinforcing the evolution
of the Brazilian telecommunications market in terms of network infrastructure sharing. On September 2, 2024, we and Vivo submitted to
CADE and ANATEL the amendments to these sharing agreements. On October 22, 2025, CADE approved the addendum of the sharing agreement signed
in December 2019; however, such addendum remains subject to approval by ANATEL.
Our Operational Contractual Obligations
For more information on our material contractual
obligations, see “Item 10. Additional Information—C. Material Contracts.”
Roaming Agreements
We have entered into roaming agreements for automatic
roaming services with other mobile operators outside our covered areas. Automatic roaming allows our customers to use their mobile telephones
on the networks of other mobile operators while traveling abroad or out of our coverage areas in Brazil. Similarly, we provide mobile
services for customers of other mobile operators when those customers place or receive calls while visiting Brazilian cities within our
coverage. We provide services for the clients visiting our network on the same infrastructure basis provided to our own clients. All of
the mobile operators party to these agreements must carry out a monthly reconciliation of roaming charges with its roaming partners.
National Roaming Agreements
In 2017, ANATEL required
Claro, Oi, Vivo and us to guarantee the provision of mobile services (voice, SMS and data) in all cities with less than 30,000 inhabitants
through roaming agreements. Considering that in December 2023 we started to have our own coverage in 100% of the national territory, a
process was initiated to deactivate the use of roaming in other Brazilian operators. However, we continue to offer its coverage to other
operators. In 2023, ANATEL started to encourage the expansion of agreements to include highways.
International Roaming Agreements
We have international roaming agreements available
in 207 different countries with 457 international operators that encompass 595 individual (PMNs) networks. These agreements include at
a minimum voice service and may be enhanced based on the technology available on the visiting network and can include voice, SMS and data
(2G, 3G, 4G, 5G NSA and VoLTE). Our international roaming agreements have steadily expanded in recent years. By the end of 2025, we expanded
our 5G NSA data coverage to 81 countries, covering the main travel destinations for Brazilians. In addition, we offer 4G roaming in 137
countries and established VoLTE connections in 48 countries.
In November 2018, Brazil entered into a free
trade agreement with Chile, which resulted in the end of international roaming charges between the two countries. On October 13, 2021,
the Legislative Decree No. 33/2021, which approved the free trade with Chile, was sanctioned by the President of the Senate. With approval,
the agreement would come into force on January 25, 2022, and the end of roaming charges was expected by January 25, 2023. Due to a request
of the Chilean Regulator, the implementation of the Article 11.25 of the free trade agreement was postponed to July 25, 2023, when it
came into force.
In July 2019, Brazil entered into a free trade
agreement with other Mercosur member countries providing for the elimination of international roaming charges. On September 3, 2025, Legislative
Decree No. 192/25, which approved the elimination of international roaming charges for end users within Mercosur, was enacted. Although
the agreement is now in force, the effective elimination of roaming charges remains subject to implementation by ANATEL.
Regulation of the Brazilian Telecommunications Industry
General
The telecommunications sector is regulated by
ANATEL, which was established by law and is administratively independent and financially autonomous from the Ministry of Communication
(Ministério das Comunicações). ANATEL is responsible for reviewing and amending all administrative regulation
regarding services, completion and customer’s rights related to telecommunications, issuing formal authorizations, and performing
inspections, as set forth in the General Telecommunications Law and the Regulamento da Agência Nacional de Telecomunicações,
or the ANATEL Decree.
Despite liberalization, which occurred in 1997,
the Brazilian telecommunications market still faces persistent dominant positions held by fixed incumbent operators. In particular, broadband
access is currently offered by operators over their own infrastructure and the respective regulatory framework is not always based on
effective implementation of the wholesale access obligations.
In 1998, a presidential decree approved the first
General Plan for Universalization Goals (Plano Geral de Metas de Universalização) (“PGMU”), obligations
binding on the landline telephony services (Serviço Telefônico Móvel Comutado) (“STFC”), applicable
only for fixed incumbents. PGMU is reviewed every 5 years, and the last universalization plan, formulated by the government, was published
in January 2021 considering that fixed telephony concession will end in 2025. The PGMU V, replaces the 4G targets established in PGMU
IV for construction of a backhaul in the municipalities that do not have a fiber optic connection.
In 2019, PLC 79/2016 was approved and converted
into Law No. 13,879. The Law entered into force on October 4, establishing a new regulatory framework for the telecommunications sector
in Brazil allowing the fixed telephone concessionaires to adapt their agreements from a concession regime to an authorization regime.
Based on this new regulation, in 2024, the process of Oi Móvel’s and Telefonica’s migration from concession to authorization
was approved by ANATEL. (see “Item Review of the Current Regulatory Model for the Provision of Telecommunications Services”)
A presidential decree issued on June 30, 2011,
established a bidding process for 4G RFs, an important landmark for the telecommunications sector. The bid occurred in 2012 and, to guarantee
full rural service by 2018, ANATEL linked the 4G blocks in the 2,500 MHz band to the 450MHz band in specific geographic regions of Brazil.
As a result, the four winning operators of the 4G blocks in the 2,500 MHz band linked to the 450MHz band are subject to coverage commitments
in rural areas. Such presidential decree also resulted in two new regulations to measure mobile and fixed broadband quality standards.
Another important set of rules is the Decree
No. 9,612/2018, or the Connectivity Plan, which established a series of guidelines for execution of terms of conduct adjustment, onerous
granting of spectrum authorization and regulatory acts in general which includes: (i) expansion of high capacity telecommunications transport
networks; (ii) increased coverage of mobile broadband access networks; and (iii) broadening the coverage of fixed broadband access network
in areas with no available internet access by means of this type of infrastructure. It also establishes that the network implemented from
the commitments will be subject to sharing from its entry into operation, except when there is appropriate competition in the respective
relevant market. As well as Decree No. 10,480/2020 that regulates the Antennas Law (Law No. 13,116/2015) with the objective of stimulating
the development of the telecommunications network infrastructure.
Brazilian Federal Government
In 2021 there were some important ordinances
published, namely: (i) Ministry of Communications Decree No. 2,447/2021, which approved our issuance of up to R$5,753 billion in debentures;
(ii) Ministry of Communications Decree No. 2,556, which set priorities and goals for the establishment of investments determined by ANATEL;
(iii) Decree No. 10,748, which established the Federal Network for the Management of Cyber Incidents, regulating the National Information
Security Policy, which aims to improve and coordinate the bodies and entities of the federal public administration in the prevention,
treatment and response to cyber incidents; (iv) Decree No. 10,887, which provided for the organization of the National Consumer Defense
System, with the objective of guaranteeing greater protection to consumer relations, increasing legal certainty, and making the administrative
process more efficient; and (v) Data Protection Authority Decree No. 15, which established the Governance Committee, responsible for establishing
institutional strategies and strategic guidelines related to public governance.
Also, there were some relevant decrees involving
5G. They were: (i) Decree No. 10,799 which updated Decree No. 9,612/2018 (telecom public policies), allowing the Government’s network
to be built by other entities, not only Telebras; (ii) Decree No. 10,800 established the Amazon Integrated and Sustainable Program (PAIS).
One of its objectives is to expand telecom networks to the Amazon region, in addition to creating a management committee to monitor them,
among other provisions; and (iii) Ministry of Communications Decree No. 1,924/21 about 5G guidelines, mainly about network security;
obligation to provide an exclusive government network; backhaul for agribusiness; coverage of federal highways aligned with the Ministry
of Infrastructure, among others. In order to use the Universal Telecom Services Fund (FUST), (i.e., the contribution that the telecom
sector makes annually), Law No. 14,109/2020 was introduced authorizing the use of FUST, including by the private sector, to expand connectivity
in rural or urban areas with a low human development Index (HDI) as well as policies for education and tech innovation of services in
rural areas.
In 2020, the Decree No. 10,480/2020 was published
by the Brazilian Federal Government, which regulates antennas (Law No. 13,116/2015) with the purpose of stimulating the development of
telecommunications network infrastructure. This decree is aimed to foster development of telecommunication network infrastructure and
is a major step towards unlocking historical problems in the sector preventing its development, for example, some historical problems
that the regulation seeks to cure include free right of way on highways and railways, positive silence, small cells and dig once.
On June 15, 2021, Provisional Measure No. 1,018/2020
was transformed into Law No. 14,173/2021, reducing the charges for satellite internet terrestrial stations and changing some of the FUST
application rules.
The law reduces FUST collection between 2022
and 2026 for telecommunications operators that run universalization programs approved by the management council (yet to be approved) with
their own resources. The benefit will be valid for five years from 1 January 2022 and will be progressive: 10% in the first year; 25%
in the second year; 40% in the third year; and 50% from the fourth year onwards.
In addition, the new legislation removes the
obligation to share towers within less than 500 meters from each other. The withdrawal of this obligation was considered essential for
the implementation of 5G in Brazil, including to allow for the expected increase in density for the new technology. However, in 2024,
the Brazilian Supreme Court reinstated the effects of the regulation requiring telecommunications companies to share transmission towers
in the context of the Direct Action of Unconstitutionality (ADI) 7708, which is still ongoing.
In 2022, Decree No. 10.952/2022 was published,
establishing the transfer of R$3.5 billion of FUST collection for connectivity of students and teachers of basic public education and
data provided by INEP as criteria for transferring resources. The decree also stipulates that the resources may be used for a fixed connection,
provided that cost-effectiveness is proven or that there is no offer of mobile data in the location where the beneficiary students live.
In March 2022 Decree No. 11,004/2022 was published,
which defines how the Fund will be operationalized and foresees how the resources will be applied to any telecommunications service.
Also in 2022, Decree No. 11.304/2022 was published,
establishing new rules for the Customer Service (SAC). The new “SAC Decree” brought more flexible rules regarding service
hours, provision of protocol and digital service.
In 2023, Decree No. 11,856/2023 was published,
establishing the National Policy for Cybersecurity (PNCIBER) with cybersecurity guidelines in Brazil. This decree also creates the National
Committee of Cybersecurity.
In 2025, Decree No. 17,456/25 was published,
providing for the exemption from licensing requirements for telecommunications stations that are part of machine-to-machine (M2M) communication
systems.
On December 26, 2025, Law No. 15,320 was enacted,
extending until December 31, 2030 the tax benefits applicable to inspection fees for installation and operation, the Contribution for
the Promotion of Public Broadcasting, and the Contribution for the Development of the National Film Industry (CONDECINE) levied on telecommunications
stations that are part of machine-to-machine communication systems and small satellite stations.
ANATEL
Over the years, ANATEL has published several
Resolutions that apply obligations to the telecommunications sector, among which we can highlight:
Resolutions published in 2025
(i) Resolution
No. 772/2025 (January 2025): approved the Brazilian Frequency Allocation, Designation and Distribution Plan (Plano de Destinação,
Designação e Distribuição de Faixas de Frequências – PDFF), establishing the allocation, designation
and specific conditions of use applicable to relevant frequency bands;
(ii) Resolution
No. 777/2025 (April 2025): repealed and amended prior resolutions and approved the General Telecommunications Services Regulation (Regulamento
Geral de Serviços de Telecomunicações – RGST);
(iii) Resolution
No. 780/2025 (August 2025): amended the Regulation on Conformity Assessment and Type Approval (Homologation) of Telecommunications Products,
including requirements applicable to data centers;
(iv) Resolution
No. 783/2025 (September 2025): approved the revised PGMC; and
(v) Resolution
No. 785/2025 (December 2025): approved ANATEL’s planning for future tendering processes (auctions) for authorizations to use radio
frequencies associated with SMP under the Prisma framework.
Main Public Consultations held in 2025
(i) Public
Consultation No. 09/2025: planning for spectrum tendering processes to grant authorizations for the use of radio frequencies associated
with SMP;
(ii) Public
Consultation No. 30/2025: network sharing and roaming obligations applicable to highways and remote or underserved areas;
(iii) Public
Consultation No. 31/2025: use of artificial intelligence by ANATEL for monitoring and supervisory activities;
(iv) Public
Consultation No. 32/2025: review of the cybersecurity regulation applicable to the telecommunications sector (Regulamento de Cibersegurança
– R-Ciber); and
(v) Public
Consultation No. 48/2025: Conformity assessment requirements applicable to data centers integrated into telecommunications networks.
Telecommunications Self-regulation System
In March 2020, telecommunication operators signed
the Telecommunications Self-Regulation System, or SART, which proposes to establish common rules and procedures that must be followed
by all participating companies, in relation to the most material topics in the relationship between providers and customers, such as telemarketing
(approved in September 2019), offers (approved in March 2020), billing (approved in February 2021) and attendance (approved in March 2020).
Other Agencies
We also monitored and participated in Public
Consultations carried out by Brazil’s national electricity agency, Agência Nacional de Energia Elétrica, or
ANEEL, on topics related to infrastructure sharing (poles) and distributed generation.
In December 2025, ANEEL approved the draft joint
resolution on distribution pole infrastructure sharing, which has been forwarded to Anatel for further review and final deliberation,
as joint publication by both agencies is required for the new framework to enter into force. In this context, the matter remains included
in Anatel’s 2025 Regulatory Agenda, with final approval currently expected in the first half of 2026.
We also monitored and participated in Public
Consultation carried out by Ministry of Finance, regarding the Economic and Competitive Aspects of Digital Platform.
Review of the Current Regulatory Model for the
Provision of Telecommunications Services
In 2019, PLC 79/2016 was
approved and converted into Law No. 13,879/2019. The Law entered into force on October 4, 2019, establishing a new regulatory framework
for the telecommunications sector in Brazil, the major regulatory change in 20 years.
The new telecommunications framework allows the
fixed telephone concessionaires to adapt their agreements from a concession regime to an authorization regime. This change of concession
to authorization must be requested by the concessionaire and it should be approved by the ANATEL. In return, concessionaires must, among
other conditions, make investment commitments to expand fixed broadband services, in areas without adequate competition for these services
to minimize gaps and inequalities between Brazilian areas. Additionally, it also changes the rules on authorization of radiofrequency
uses, establishing subsequent renewals and allows Radiofrequency trading among players (spectrum secondary market).
In June 2020, the Brazilian Federal Government
published Decree No. 10,402/2020 which regulates Law No 13,879/2019 and provides for the adaptation of the concession instrument to authorization
of telecommunications service and on the extension and transfer of radiofrequency authorization, grants of telecommunications service
and satellite exploration rights. Oi, Claro, Telefônica and Algar have already signed Single Adaptation Agreement.
Decree No. 10,402/2020 establishes that the partial
or full transfer of the authorization to use radio frequencies between telecommunications service providers will be carried out against
payment by ANATEL and must be preceded by ANATEL’s consent, in addition to enabling the maintenance of obligations associated to
radiofrequencies (serving the public interest), the application of restrictions of a competitive nature when necessary/convenient and
the analysis of our tax regularity to which the authorization is being transferred. It also confirmed that the current authorizations
are covered by the new rule for successive renewals.
Authorizations and Concessions
With the privatization of the Telebrás
system and pursuant to the Minimum Law (Lei Mínima), Band A and Band B service providers were granted concessions under
Cellular Mobile Service (Serviço Móvel Celular), or SMC, regulations. Each concession was a specific grant of authority
to supply mobile telecommunications services in a defined geographical area, subject to certain requirements contained in the applicable
list of obligations attached to each concession.
Our predecessors were granted SMC concessions
and in December 2002, such SMC concessions were converted into PCS authorizations, with an option to renew the authorizations for an additional
15 years. We acquired PCS authorizations in conjunction with bandwidth auctions by ANATEL in 2001 and subsequently acquired additional
authorizations and operations under the PCS regulations as well.
In connection with the conclusion of the Reorganization
whereby TIM Celular was merged into us (see “Item 4. Information on the Company—C. Organizational Structure”). We hold
all of the authorizations previously issued in the name of other companies controlled, directly or indirectly, by TIM Participações.
Obligations of Telecommunications Companies
Among all the obligations imposed on telecommunications
providers, Resolution No. 632/2014 had the most significant impact. Pursuant to this resolution, ANATEL approved the adoption of a single
regulation for the telecommunications sector, the RGC, with general rules for customer service, billing, and service offers, which are
applicable to fixed, mobile, broadband and cable TV customers.
In November 2023, ANATEL published Resolution
No. 765/2023, which approved the new General Regulation on Consumer Rights (Regulamento Geral de Direitos do Consumidor –
RGC). This resolution revoked Resolution No. 632/2014 and established updated general rules governing customer service, billing and commercial
offers applicable to fixed-line, mobile, broadband and cable television services.
In December 2024, ANATEL’s Board of Directors
reviewed requests submitted by telecommunications operators seeking the suspension of certain regulatory obligations and approved measures
introducing greater flexibility in areas such as offer migration, data sources for adjustments, automatic renewals, billing during service
suspension, asymmetry applicable to small providers and partner-related fees. The revised regulatory framework entered into force in
September 2025.
PCS Regulation
In September 2000, ANATEL promulgated regulations
regarding PCS wireless telecommunications services that are significantly different from the ones applicable to mobile companies operating
under Band A and Band B.
According to rules issued by ANATEL, renewal
of a concession to provide mobile telecommunications services, as well as permission from ANATEL to transfer control of cellular companies,
are conditioned on agreement by such cellular service provider to operate under the PCS rules. TIM Sul, TIM Nordeste and TIM Maxitel converted
their cellular concessions into PCS authorizations in December 2002, and later transferred them to TIM Sul, TIM Nordeste and TIM Maxitel,
which are now TIM S.A. (following the Reorganization and various intercompany mergers discussed herein) subject to obligations under the
PCS regulations. See “—Authorizations and Concessions.”
In recent years, ANATEL initiated certain administrative
proceedings against TIM Celular (now TIM S.A.) for noncompliance with certain quality standards and noncompliance with its rules and authorization
terms. We have been fined by ANATEL in some proceedings and are still discussing the penalty imposed in appeals before the agency. As
a result of these proceedings, ANATEL applied some fines that did not have a material adverse effect on our business. As of December 31,
2025, the aggregate amount of fines under discussion in ongoing administrative and judicial proceedings totaled approximately R$250 million,
adjusted for inflation, and was classified as a “possible loss.”
On August 22, 2019, ANATEL’s board of officers
unanimously approved the execution of a regulatory agreement, or TAC, with TIM S.A., effective for the 4 years after its execution. The
agreement sets fines against us in the total amount of R$639 million. The commitment we assumed, as also approved by our Board of Directors
on June 19, 2020, foresaw actions to develop our services from three different perspectives: (i) customer experience, quality and infrastructure,
through initiatives to improve the licensing process of base stations and efficient use of resources, (ii) evolution of digital service
channels, decreasing complaint rates and user repair demands, and (iii) reinforcement of transportation and access networks. In addition,
the agreement also includes the commitment to bring mobile broadband through the 4G network to 350 cities with less than 30 thousand inhabitants
thus reaching over 3.4 million people and the application of Internal Controls Management to ensure compliance with the closed proposal
and the commitment to not impose inspection obstructions. As released to the market in June 16, 2020, and previously approved by ANATEL
on August 22, 2019, the TAC provided the implementation of the new infrastructure in three years, with our assurance that these areas
will be shared with other providers.
In October 2024, we signed
an amendment to extend by 90 days the deadline in connection with Year 4 Fiber installation commitment for 19 of the 82 cities, due to
the adverse weather event that affected the State of Rio Grande do Sul in April and May 2024. ANATEL has formally certified the timely
fulfillment of this commitment.
TIM has been presenting
its understanding to ANATEL in cases where the Agency pointed out signs of non-compliance with the Procedures for Determining Non-Conformity
of Schedule Items (PADIC) eventually instituted.
.We continue to do our best to fully comply with
our obligations under the PCS regime or with future changes in the regulations to which we are subject. See “—Obligations
of Telecommunications Companies,” “Item 3. Key Information—D. Risk Factors—Risks Relating to our Business”
and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.”
Significant Market Power
In November 2012, ANATEL published a competition
framework known as the PGMC. Also in November 2012, ANATEL published a series of regulations identifying groups with significant market
power in the following relevant markets as defined by the PGMC published in 2012: (i) wholesale offer of fixed access infrastructure
for data transmission through copper or coaxial cable in rates equal or higher than 10 Mbps (Act No. 6,617, of November 8, 2012); (ii)
wholesale offer of fixed infrastructure for local and long distance transportation for data transmission in rates equal or higher than
34 Mbps (Act No. 6,619, of November 8, 2012); (iii) passive infrastructure for transport and access networks (Act No. 6,620, of November
8, 2012); (iv) mobile network termination (Act No. 6,621, of November 8, 2012); and (v) national roaming (Act No. 6,622, of November
8, 2012).
In July 2018, ANATEL published the a new PGMC,
which revised PGMC published in 2012 and created new markets: (i) mobile network; (ii) data traffic; (iii) data traffic exchange (iv)
national roaming; and (v) high-capacity data transport. According to the PGMC published in 2018 proposal, cities in Brazil will be classified
by levels of competition (1 – competitive, 2 – moderately competitive, 3 – less competitive, 4 – non-competitive),
and asymmetric measures will be applied according to the market competition. In addition, also based on the proposal submitted to public
consultation, wholesale relevant markets will be defined as follows:
PGMC 2012 PGMC 2018
Wholesale mobile call termination Data traffic Data traffic exchange Wholesale mobile interconnection
National roaming National roaming
Full unbundling and bistream, or, wholesale fixed network infrastructure access less than 10 Mbps Wholesale fixed network infrastructure access
Leased lines, interconnection class V, interlinking, or, wholesale fixed network infrastructure transport less than 34 Mbps Leased lines
Ducts, trenches and towers, or passive infrastructure * towers regulated by law
– Wholesale fixed interconnection
– High capacity data transport
Under the PGMC published in 2018, TIM has been
classified as having significant market power in the following markets: (i) mobile network termination (otherwise referred to as the mobile
network termination market); (ii) data traffic; (iii) data traffic exchange; (iv) national roaming; and (v) high-capacity data transport
(five municipalities). The measures applied to a significant market power operator in those markets include: (a) the application of mobile
termination rates on a glide path based on a price cap system and the partial application of the bill & keep system (“B&K”)
(at a 50% threshold, (i.e., not a significant market power operator pays only if the terminated traffic on the significant market
power operator network is more than 50% of the total traffic exchanged); and (b) an obligation to offer the service of national roaming
service to operators not having significant market power.
The PGMC published in 2018 was revised by Resolution
No. 783/2025, issued by ANATEL. Under the revised PGMC published in 2025, we have been classified as having significant market power only
in the mobile network termination and national roaming markets, reducing the scope of markets in which significant market power remedies
apply. The measures applied to a significant market power in those markets continue to be the same as the ones described above. Due to
our classification as having significant market power in certain markets, we are subject to increased regulation under the PGMC 2025,
which could have an adverse effect on our business, financial condition and results of operations. Specifically, because we have been
classified as having significant market power in the mobile network termination market, the rates charged by mobile service providers
to other mobile service providers to terminate calls on their mobile networks, or VU-M, are regulated.
On July 4, 2014, ANATEL approved, by means of
Resolution No. 639/2014, a rule for the definition of maximum reference rates for entities with significant market power, based on a cost
model, for VU-M, TU-RL, and EILD. Pursuant to ANATEL’s rule, reference rates will decline based on a glide path until the cost modeling
known as BU-LRIC is applied (in 2019, for VU-M and TU-RL; and in 2020, for EILD).
On July 7, 2014, ANATEL published the corresponding
Acts Nos. 6,210/2014, 6,211/2014 and 6,212/2014, which determined the specific reference rates effective as of February 2016. On December
19, 2018, ANATEL published the corresponding Acts Nos. 9,918/2018, 9,919/2018 and 9,920/2018, which determined the specific reference
rates effective as of February 2020. Before coming into force, ANATEL started revising these acts and, on February 24, 2020, published
the new Acts Nos. 986/2020 and 987/2020. Finally, ANATEL published Act 3,246/2023,
in which it edited the reference values until 2027 from the change from top-down model to bottom-up model.
Because of our classification as having significant
market power in the national roaming market, we must also offer roaming services to other mobile providers without significant market
power at the rates approved by ANATEL.
Until July 2018, roaming reference values were
provided for in Act No. 9,157/2018. After deliberation by ANATEL’s Board, the new values are now provided for in Act No. 8,822/2022.
For additional detail, see “—Lines
of Revenue—Network Usage Charges,” “—Lines of Revenue—Roaming Fees,” “—Lines of Revenue
—Interconnection Charges” and “—Lines of Revenue—Long Distance” above.
Interconnection Regulation
Telecommunication operators must publish a public
interconnection offer on both economic and technical conditions and are subject to the “General Interconnection Regulatory Framework”
issued by ANATEL in 2005.
In October 2011, ANATEL established a mechanism
for reducing fixed-to-mobile call rates, that results on a glide path to the reduction of mobile interconnection rates (VU-M) from 2012
to 2018, in accordance with Resolution No. 600/2012.
In addition to the VU-M reduction, ANATEL established
a B&K rule between significant market power and non-significant market power PCSs. From January 2013 until February 2015, the B&K
was 80%/20%. On February 12, 2015, ANATEL approved, by means of Resolution No. 649/2015, the following new B&K percentages, amending
the percentages established by Resolution No. 600: 75%/25%, from 2015 until 2016; 65%/35%, from 2016 until 2017; 55%/45%, from 2017 until
2018; and 50%/50%, from 2018 until 2019, which was the object of a judicial suit (ongoing), in order to suspend its effects. In July 2015,
we filed a lawsuit seeking to annul Resolution No. 649/2015 and maintain the percentages originally established by Resolution No. 600/2012,
which currently remains pending a final decision. However, as discussed above, the PGMC set the partial B&K threshold to 50% (i.e.,
a non-significant market power operator pays only if the terminated traffic on the significant market power operator network is more than
50% of the total traffic exchanged). In addition, ANATEL determined the end of the existing additional 20% on the value of mobile
termination rate paid by significant market power operators to non-significant market power operators.
Related to fixed interconnection, ANATEL revised
the criteria for pricing the use of fixed networks in May 2012. According to such regulation, after January 1, 2014, a full B&K regime
(in which no payments are due for the traffic termination) was implemented for local STFC operators dealing with other local STFC operators.
Currently, therefore, no payments are due for the use of a local STFC operator’s network by other local STFC operator. With respect
to interconnection of STFC operators with long distance and mobile operators, we understand that, in 2012, when ANATEL issued PGMC published
in 2012, the asymmetrical measure that permitted STFC operators without significant market power to charge a TU-RL 20% higher than the
TU-RL charged by STFC operator, with significant market power was revoked. In September 2016, we filed a lawsuit on this subject, which
is still pending a final decision.
On July 4, 2014, ANATEL approved, by means of
Resolution No. 639/2014, a rule for the definition of maximum reference rates for entities with significant market power, based on a cost
model, for VU-M and TU-RL, and for EILD.
Wholesale Rates Regulation
Under our PCS authorizations, we are allowed
to set prices for our service plans, subject to approval by ANATEL, provided that such amounts do not exceed a specified inflation adjusted
cap. ANATEL currently uses the telecommunication services index (Índice de Serviços
de Telecomunicações), or IST, a specific price inflation index that it developed, in evaluating prices and determining
the relevant cap for prices charged in the telecommunications industry. As mentioned above, on July 4, 2014, ANATEL approved the calculation
of VU-M, TU-RL and EILD reference rates based on a cost model. We expect that the adjustment of our prices will follow the market trend,
and that the adjustment will be below the annual inflation rate based on the IST.
Number Portability
In March 2007, ANATEL issued a new regulation
regarding number portability in Brazil for fixed telephony and PCS providers. Portability is limited to migration between providers of
the same telecommunications services. For PCS providers, portability can take place when a customer changes its services provider within
the same Registration Area as well as when a customer changes the service plan of the same area. ANATEL finished the nationwide NP implementation
schedule in March 2009. In 2023, providers implemented a token to reduce portability frauds. In July 2024, a pre-token solution was also
implemented.
Value-Added Services and Internet Regulation
Value-added services are not considered under
Brazilian telecommunications regulations to be telecommunications services, but rather an activity that adds features to a telecommunications
service. Regulations require all telecommunications service providers to grant network access to any party interested in providing value-added
services, on a non-discriminatory basis, unless technically impossible. Telecommunications service providers also are allowed to render
value-added services through their own networks. Internet connection, when offered to users on a single basis, by parties other than telecommunications
service providers, is considered by Brazilian legislation to be a value-added service, and its providers are not considered to be telecommunications
companies. Current regulations allow us or any other interested party to offer Internet connection through our network. In such case,
Internet connection would be deemed as a portion of the telecommunications service that enables users to navigate the Internet.
In April 2014, the Brazilian President passed
Law No. 12,965/2014, known as the Legal Framework for the Use of the Internet (Marco Civil da Internet), or the Internet Framework,
which establishes the principles, guarantees, rights and duties for the use of the Internet in Brazil. Key topics covered in the Internet
Framework are: net neutrality; collection, use and storage of personal data; confidentiality of communications; freedom of expression
and the treatment of illegal, immoral or offensive contents.
The Presidential Decree No. 8,711/2016 was enacted
by the Brazilian President on May 11, 2016, and provided additional detail on the Internet Framework in three main aspects: (i) clarification
of the scope and implementation of the net neutrality rules, (ii) implementation of the rights and obligations related to privacy and
data protection regarding Brazilian Internet users, and (iii) governance of the Internet Framework, including authorities entitled to
enforce the legislations. See “—Review of the Current Regulatory Model for the Provision of Telecommunications Services.”
Privacy and Data Protection
On August 14, 2018, the Brazilian Government
passed the LGPD. This law is closer to the European Union General Data Protection Regulation, or GDPR, including significant extraterritorial
application and considerable fines of up to 2% of a company’s global turnover of the previous financial year. The LGPD came into
effect on September 18, 2020. However, the administrative sanctions provisions of LGPD only became enforceable as of August 1, 2021, pursuant
to Law No. 14,010/2020. Cybersecurity incidents and data breach or leakage events may subject us to the following penalties: (1) warnings,
with the imposition of a deadline for the adoption of corrective measures; (2) a one-time fine of up to 2% of gross sales of the company
or a group of companies or a maximum amount of R$50,000,000 per violation; (3) a daily fine, up to a maximum amount of R$50,000,000 per
violation; (4) public disclosure of the violation; (5) the restriction of access to the personal data to which the violation relates,
until corrective measures are implemented; (6) deletion of the personal data to which the violation relates; (7) partial suspension of
the databases to which the violation relates for up to 12 months, until corrective measures are implemented; (8) suspension of the personal
data processing activities to which the violation relates for up to 12 months; and (9) partial or full prohibition on personal data processing
activities. The Brazilian National Data Protection Agency, as well as other competent authorities, have initiated certain supervisory
and administrative sanctioning procedures, as well as individual or collective legal actions based on the violation of the data subject’s
rights and subject to civil liability.
We have implemented a dedicated privacy and data
protection governance structure to adapt our processes and technologies to the requirements of the LGPD. Among other measures, we have
introduced specific data protection clauses in contracts with suppliers and business partners; adopted internal and external privacy policies
addressing, among other matters, data retention and disposal, the exercise of data subject rights, privacy by design and by default, and
incident response and remediation; and implemented mandatory training programs for employees and the sales force, as well as tailored
training for senior management. In addition, in 2022, we participated in the preparation of the Code of Best Practices for Data Protection
in the Telecommunications Sector, which establishes protocols aimed at supporting compliance with the LGPD.
We continuously monitor our privacy and data
protection management program with the objective of maintaining compliance with applicable laws and regulations. In this context, in 2020,
2021, 2022 and 2025, we received the highest rating in the “Who Defends Your Data?” survey conducted by InternetLab in partnership
with the Electronic Frontier Foundation. This survey assesses how internet and technology companies protect users’ personal data.
These results reflect our ongoing efforts and initiatives to strengthen data protection practices and promote compliance with the LGPD.
Frequencies and Spectrum
Background
In connection with the PCS authorization auctions
in 2001 and 2002, ANATEL divided the Brazilian territory into three separate regions, each of which is equal to the regions applicable
to the public regime fixed-line telephone service providers. PCS services could only be provided under Bands C, D and E at that time with
initially 1800 MHz band and afterwards also the 900 MHz band. We acquired the D band in regions II and III and the E band in region I,
completing our national coverage when considering TIM Sul, TIM Nordeste and Maxitel coverage (each ultimately merged into us). On March
2016, the authorizations for the D and E bands were renewed.
In December 2007, we acquired new authorizations
for the 1,800 MHz frequency in São Paulo and Rio de Janeiro to improve our RF capacity in these regions. Within the same auction,
Claro and Vivo acquired authorizations to provide PCS services in regions where we had historically provided services but where Claro
and Vivo previously did not, using 1,800 MHz and 1,900 MHz bands. This resulted in increased competition in these regions. In the same
auction, Oi received authorization to provide PCS services in the state of São Paulo using 1,800 MHz (band M in the whole state
and band E in the state’s countryside).
In December 2007, we acquired 3G frequencies
sub-bands (1,900–2,100 MHz), with national coverage; these authorizations were granted in April 2008 and are valid until 2023. Oi,
Claro, Vivo and Algar Telecom also acquired 3G frequencies sub-bands in the same auction carried out by ANATEL. All the authorization
winners were subject to coverage and/or expansion commitments, divided by Municipality among the winners, in unserved areas.
In December 2010, ANATEL auctioned an empty 3G
band of radio spectrum consisting of (10+10) MHz in 2.1 GHz in the whole country (the “H Band” Auction), and other left-over
frequencies in the 900 MHz and 1800 MHz bands that had not been assigned in previous auctions. In this auction: we, Vivo, Claro and Nextel
(now America Movil) acquired blocks of frequencies.
In December 2011, ANATEL auctioned 16 blocks
in the 1,800 MHz band, which were sold to Claro, Oi, CTBC and TIM. As a result of our participation in the auction, we expanded our 2G
coverage and increased our presence in the northern and central-western regions of Brazil, including the states of Paraná, Espírito
Santo, Rio Grande do Sul, Santa Catarina and Minas Gerais.
In 2012, ANATEL established a bidding process
to comply with Presidential Decree No. 7,512 of June 2011, which set April 2012 as the deadline to auction the 2.5 GHz band, in order
to introduce 4G technology in Brazil. ANATEL modeled the auction with two national blocks of (20+20) MHz (W and Z) and two national blocks
of (10+10) MHz (V1 and V2). In order to guarantee full rural service by 2018, ANATEL linked the 4G blocks to the 450MHz band in specific
geographic regions of Brazil. Then, in 2022, through Act No. 12,827, published on September 13, 2022, the 450 MHz block was extinguished.
As indicated in the notice, the winners of the auction committed themselves to the waiver if services were not activated within the established
time frame.
We participated in the auction as a group bidding
in the name of TIM and Intelig (now known as TIM S.A.). We did not bid for the W block (Amazonas as a rural area), which we viewed as
having a high premium if compared to the X block (67%). We successfully acquired the V1 block, which in our view held the best capital
expenditure/operating expenditure profile associated with rural services in its selected regions (the States of Rio de Janeiro, Espírito
Santo, Santa Catarina, and Paraná). The joint bid allowed us to take advantage of the flexibility of the auction rules. These bands
brought heavy coverage obligations as its short-range characteristics demands large investments.
In November 2013, ANATEL approved the dedication
of a single band, of the 700MHz spectrum, exclusively to mobile services and in September 2014, ANATEL concluded the 700 MHz spectrum
auction that granted to us, Vivo, Claro and Algar the operation of the 700 MHz frequency for the 4G mobile technology, to be added to
the current LTE service in the 2.5 GHz RF. We bid on Block 2 of that auction, for national coverage of the 700 MHz band, and won the same
with a bid of R$1,947 million (a 1% premium over the minimum price of R$1,927 million).
The auction also required the winning bidders
to proportionally reimburse the broadcasters for the cleanup of the spectrum previously held and used by them. We spent R$1,199 million
to create in March 2015 the EAD with the other winning bidders, to ensure the spectrum cleanup. The price allocated to the cleanup of
the spectrum related to unsold blocks was shared proportionately among the winning bidders who bought the other blocks. To offset such
additional cost to the winning bidders, the price of the 700 MHz spectrum was discounted using ANATEL’s WACC methodology. In September
2019, all Brazilian municipalities can receive TIM’s expanded 4G coverage through the 700 MHz band.
In December 2015, ANATEL auctioned remaining
radio frequencies in the 1,800 MHz, 1,900 MHz and 2,500 MHz bands. We submitted bids for the left over lots of the 2,500 MHz band, which
had originally been auctioned in 2012. This particular band spectrum provides for 4G mobile services. We were the first ranked bidder
in the lots for Recife, in the state of Pernambuco, and Curitiba, in the state of Paraná, based on our bids which totaled R$57.5
million. The corresponding authorization terms were executed by ANATEL in July 2016.
In November 2021, TIM acquired 11 lots in the
5G Auction, with a total value offered of R$1.05 billion, in three frequency bands 3.5 GHz, 2.3 GHz and 26 GHz. The acquired bands have
a set of obligations that must be met with financial contributions or the construction of mobile and fixed network infrastructure.
Currently, according to Decree No. 10,402/2020,
which regulates Law No. 13,879/2019, it is possible to renew licenses for successive periods. However, some conditions are being disputed
with ANATEL and judicially, as well as pending validation by the Federal Court of Acounts - TCU (Tribunal de Contas da União),
such as value and term of renewal.
The actual scenario of frequencies granted to
us by ANATEL is presented on the tables below:
Territory Frequencies
UF 450 MHz 700 MHz 800 MHz 900 MHz 1800 MHz Additional 1800 MHz 1900 MHz (3G) 2100 MHz (3G)
Acre December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Alagoas December 2029 December 2028 December 2032 December 2032 - April 2038 April 2038
Amapá December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Amazonas December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Bahia December 2029 August 2027* August 2027* August 2027* - April 2038 April 2038
Ceará December 2029 November 2028* November 2032 December 2032* - April 2038 April 2038
Distrito Federal December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Territory Frequencies
UF 450 MHz 700 MHz 800 MHz 900 MHz 1800 MHz Additional 1800 MHz 1900 MHz (3G) 2100 MHz (3G)
Espírito Santo December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Goiás December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Maranhão December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Mato Grosso December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Mato Grosso do Sul December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Minas Gerais *** December 2029 April 2028* April 2028* April 2028* April 2032 April 2038 April 2038
Pará December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Paraíba December 2029 November 2028* December 2032 November 2032* - April 2038 April 2038
Paraná December 2029 November 2028* December 2032* and April 2032 for the cities of Londrina and Tamarana December 2032* and April 2032 for the cities of Londrina and Tamarana April 2032 April 2038 April 2038
Pernambuco December 2029 November 2028* May 2032* December 2032* - April 2038 April 2038
Piauí December 2029 November 2028* March 2032* December 2032* - April 2038 April 2038
Rio de Janeiro December 2029 March 2031* March 2031* - April 2038 April 2038
Rio Grande do Norte December 2029 November 2028* December 2032 December 2032* - April 2038 April 2038
Rio Grande do Sul December 2029 November 2028* city of Pelotas and its surrounding region March 2031* and April 2032 city of Pelotas and its surrounding region March 2031* and December 2032* city of Pelotas and its surrounding region April 2032 April 2038 April 2038
Rondônia December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Roraima December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Santa Catarina December 2029 November 2028* September 2032 December 2032* April 2032 April 2038 April 2038
São Paulo December 2029 March 2031* March 2031* Interior – April 2032 April 2038 April 2038
Sergipe December 2029 August 2027* August 2027* August 2027* - April 2038 April 2038
Territory Frequencies
UF 450 MHz 700 MHz 800 MHz 900 MHz 1800 MHz Additional 1800 MHz 1900 MHz (3G) 2100 MHz (3G)
Tocantins December 2029 March 2031* March 2031* April 2032 April 2038 April 2038
Territory Frequencies
UF 2300 MHz 2500 MHz V1 Band (4G) 2500 MHz P Band** (4G) 3500 MHz (5G) 26 GHz (5G) Additional 26 GHz (5G) Additional 26 GHz (5G)
Acre - October 2027 - December 2041 December 2031 - -
Alagoas - October 2027 - December 2041 December 2031 - -
Amapá - October 2027 - December 2041 December 2031 - -
Amazonas - October 2027 - December 2041 December 2031 - -
Bahia - October 2027 - December 2041 December 2031 - -
Ceará - October 2027 - December 2041 December 2031 - -
Distrito Federal - October 2027 December 2041 December 2031 - -
Espírito Santo December 2041 October 2027 - December 2041 December 2031 December 2031 December 2041
Goiás - October 2027 - December 2041 December 2031 - -
Maranhão - October 2027 - December 2041 December 2031 - -
Mato Grosso - October 2027 - December 2041 December 2031 - -
Mato Grosso do Sul - October 2027 - December 2041 December 2031 - -
Minas Gerais *** December 2041 October 2027 February 2030* December 2041 December 2031 December 2031 December 2041
Pará - October 2027 December 2041 December 2031 - -
Paraíba - October 2027 - December 2041 December 2031 - -
Paraná December 2041 October 2027 December 2041 December 2031 December 2031 December 2041
Pernambuco - October 2027 July 2031 (city of Recife) December 2041 December 2031 - -
Piauí - October 2027 - December 2041 December 2031 - -
Rio de Janeiro December 2041 October 2027 December 2041 December 2031 December 2031 December 2041
Rio Grande do Norte - October 2027 - December 2041 December 2031 - -
Rio Grande do Sul December 2041 October 2027 - December 2041 December 2031 December 2031 December 2041
Rondônia - October 2027 - December 2041 December 2031 - -
Roraima - October 2027 - December 2041 December 2031 - -
Santa Catarina December 2041 October 2027 - December 2041 December 2031 December 2031 December 2041
Territory Frequencies
UF 2300 MHz 2500 MHz V1 Band (4G) 2500 MHz P Band** (4G) 3500 MHz (5G) 26 GHz (5G) Additional 26 GHz (5G) Additional 26 GHz (5G)
São Paulo - October 2027 - December 2041 December 2031 December 2031 (except sector 33) December 2041 (except sector 33)
Sergipe - October 2027 - December 2041 December 2031 - -
Tocantins - - December 2029 March 2031* March 2031* March 2031* December 2031
* Terms already renewed for 15 years.
** Only covers complementary areas in the specified states. The Radio frequency Blocks of the Municipalities of the National Code 92, which were part of Lot 208, were returned.
*** Except for the cities in sector 3 of PGO for 3G and excess radio frequency.
(1) New renewal requests for 850 MHz are under discussion with ANATEL and the Federal Court of Accounts (TCU). Any potential denial of the renewal could result in the loss of the right to use the 850 MHz band, requiring a structural reconfiguration of the network to preserve voice and data coverage. Such reconfiguration would necessitate significant investments, with corresponding impacts on CAPEX and OPEX, as well as potential adverse effects on service quality.
Industrial Exploration of Dedicated Lines
In December 2010, ANATEL approved a public hearing
that considered alterations of the EILD, which established mechanisms for the operation of transmissions circuits up to 34 Mbps to increase
transparency between operators and concessionaires. In May 2012, ANATEL approved the new EILD regulations (Regulação
de Exploração Industrial de Linha Dedicada), or REILD, detailing mechanisms to optimize the operating structure for
transmission loop contracts in order to increase contract price transparency and affording equal treatment to independent service providers
from concessionaire groups. The REILD was subsequently revoked, as EILD was no longer classified as a relevant market under the PGMC published
in 2025. The REILD was subsequently revoked, as EILD was no longer classified
as a relevant market under the PGMC published in 2025.
Migration of the Mobile Networks with
Analog Technology
Quality Management Regulation
In the fourth quarter of 2017, ANATEL introduced
the Quality of Telecommunications Services Regulation (Regulamento de Qualidade dos Serviços de Telecomunicações
– “RQUAL”), which was formally approved in December 2019. Under this regulation, telecommunications service providers
are assessed against a set of quality and performance indicators and assigned a grade ranging from A to E, covering mobile, fixed-line,
broadband and pay television services at both national and municipal levels. Quality measurements are conducted in six-month cycles.
Pursuant to the RQUAL, ANATEL may adopt corrective
or preventive measures when deemed necessary, including consumer compensation, the imposition of mandatory action plans or other precautionary
measures aimed at improving service quality standards and strengthening consumer protection, such as allowing customers to terminate service
agreements without penalty in cases of persistently inadequate service quality.
Between 2019 and 2025, ANATEL conducted a series
of technical discussions with telecommunications operators to review measurement criteria, assess methodological refinements and address
factors that could affect the reliability of quality indicators. In December 2025, ANATEL published the first quality labels based on
performance results for the period from January to June 2025.
Throughout this process, we have participated
in discussions aimed at identifying recurring operational or systemic issues that could affect the accuracy or consistency of quality
measurements.
Fraud Detection and Prevention
Commercial Fraud Management
Develop strategies to mitigate the fraud risk
on customer identification in the processes related to the services provided by us, such as providing (i) digital and biometrics
authentication; (ii) analysis of the customer documentation; (iii) continuous improvement on fraud detection strategies using registration
and trafic data(iii) a list of known offenders to prevent fraud; (iv) a comprehensive staff training program f; (v) continuous monitoring
and identification of points of sale.
Security operations management develops
and implements strategies to mitigate risks across several key areas:
Network Security
Proactive measures to combat theft, vandalism,
and damage to our network infrastructure by applying physical and electronic protections. These include equipment tracking, the installation
of protective security measures, and the use of virtual and physical surveillance, combined with intelligence analysis.
Incident Investigations
Ensure the investigation of internal and external
fraudulent occurrences related to corporate matters, supporting the adoption of mitigation measures, as well as conducting actions for
the prevention and combat of internal and external fraudulent practices within the administrative environment.
Personal Security
Combined organizational, technical, and human
resources to safeguard and preserve the physical, intellectual, and emotional integrity of employees. Our efforts ensure that security
operations are in line with industry standards, compliance with the security operations mission.
Commercial Security
Reduce losses resulting from device theft by
installing safes for the secure storage of high-value devices in stores, prioritizing street-front locations, and implementing electronic
monitoring systems such as surveillance cameras and motion sensors to enhance security and identify suspicious activities in real-time.
Logistics Security
Provide support in preventing theft and merchandise
losses during transportation and storage by conducting risk analysis, monitoring results, and maintaining close interaction with logistics
operators.
Taxes on Telecommunications Goods and Services
The telecommunications goods
and services offered are subject to a variety of federal, state and local taxes (in addition to taxes on income), the most significant
of which are ICMS, ISS, COFINS, PIS, FUST, FUNTTEL, FISTEL, CONDECINE, IRPJ and CSLL, which are described below.
· ICMS. The principal tax applicable to goods and telecommunication services is a state value-added tax (Imposto sobre Operações Relativas à Circulação de Mercadorias e sobre Prestações de Serviços de Transporte Interestadual, Intermunicipal e de Comunicação) (“ICMS”), which the Brazilian states levy at varying rates on certain revenues arising out of the sale of goods and services, including certain telecommunications services. Currently, the ICMS tax rate for domestic telecommunications services is levied at rates between 17% and 29%. The ICMS tax rate levied on the sale of mobile handsets and other products such as modem and SIM cards averages between 17% and 24%. With respect to the sale of mobile handsets, among other goods, ICMS may be charged in a different tax regime, under which another taxpayer in the distribution chain of the goods (such as, for example, the manufacturer of the goods) is required to anticipate and pay ICMS amounts that would otherwise be due in other steps of the distribution chain. There is also an exception for certain handsets whose manufacturers are granted certain local tax benefits, thereby reducing the rate to as low as 7%.
· ISS. Since January 2018, the tax incidence over certain (but not all) value-added services has increased with the inclusion of those receivables within the ISS basis of calculation due to Law No. 157/2016, which is a municipality tax with rates varying from 2% to 5%.
· COFINS. COFINS is a social contribution levied on gross revenues. Since 2000, companies began to pay COFINS tax on their bills at a rate of 3%. In December 2003, through Law No. 10,833, COFINS legislation was further amended, becoming a non-cumulative tax, raising the rate to 7.6% for most transactions. However, telecommunications services revenues, among others, continued subject to a cumulative basis at a rate of 3%. In 2015, Decree No. 8,426 came into effect, which restored COFINS on financial revenues at a rate of 4%, except for some types of financial revenues (for example, revenues from foreign exchange variations of exportation of goods and services, revenues resulting from foreign exchange fluctuations of obligations undertaken by the company, including loans and financing and revenues related to hedging transactions on stock exchange values, and revenues from commodities and futures exchanges or over-the-counter transactions and related to our operational activities). In December 2022, Decree No. 11,322/22 reduced by half the PIS and COFINS rates levied on financial income earned by companies subject to the non-cumulative regime. The COFINS rates changed from 4% to 2%. According to the Decree, the reduction would take effect from January 1, 2023. However, on January 2, 2023, it was revoked by the newly elected Government, reestablishing the PIS and COFINS rates levied on financial income to its original values.
· PIS. PIS is another social contribution levied at the rate of 0.65%, on gross revenues from telecommunications service activities. In 2002, Law No. 10,637 was enacted, making such contribution non-cumulative and increasing the rate to 1.65% on gross revenues, except in relation to telecommunications services, for which the method continued on a cumulative basis at a rate of 0.65%. In 2015, Decree No. 8,426 came into effect, which restored PIS on financial revenues at a rate of 0.65%, except for some types of financial revenues (for example, revenues from foreign exchange variations of exportation of goods and services, revenues resulting from foreign exchange fluctuations of obligations undertaken by the company, including loans and financing and revenues related to hedging transactions on stock exchange values, and revenues from commodities and futures exchanges or over-the-counter transactions and related to our operational activities). As noted above, in December 2022, Decree No. 11,322/22 reduced by half the PIS and Cofins rates levied on financial income earned by companies subject to the non-cumulative regime. The PIS rates changed from 0.65% to 0.33%. According to the Decree, the reduction would take effect from January 1, 2023. However, on January 2, 2023, it was revoked by the new Government, reestablishing the PIS and Cofins rates levied on financial income to its original values.
· FUST. In 2000, the Brazilian government created the Fundo de Universalização dos Serviços de Telecomunicações (“FUST”), a fund that is supported by a tax applicable to all telecommunications services. The purpose of the FUST is to stimulate the expansion, use and improvement of the quality of telecommunications networks and services, to reduce regional inequalities and to stimulate the use and development of new connectivity technologies to promote economic and social development. FUST tax is imposed at a 1% rate, levied on gross operating revenues, net of discounts, ICMS, PIS and COFINS, and the cost may not be passed on to clients. Telecommunication companies can draw from the FUST to meet the universal service targets required by ANATEL.
· In 2005, ANATEL enacted Ordinance No. 7/05 requiring that FUST should be paid on revenues arising from interconnection charges since its effectiveness. A notice was issued deciding that we must adjust values on the FUST calculation basis to include interconnection revenues received from other telecommunications companies. A writ of mandamus was filed against ANATEL to avoid the terms of Ordinance No. 7/05. The first level decision was issued in our favor. Such decision was challenged by ANATEL and the Appeal judgment confirmed the first level decision. ANATEL appealed to High Courts to reverse the Appeal decision.
· In December 2020, Law No. 14,109 was approved with the purpose of stimulating the use of FUST to expand and improve the quality of telecommunications services, reducing regional inequalities and stimulating the use of new technologies to promote economic and social development. In the case of using FUST’s resources, the law requires the connection of all public schools by 2024 with broadband internet access. The law also provided a 50% reduction in the payment of the mandatory annual contribution of telecommunications operators to the Fund when they execute programs, projects, plans, activities, initiatives, and actions approved by the Fund’s Management Council using their own resources. This requirement remains in force until December 2016, but it may be further renewed.
· In the first quarter of 2022, the Brazilian Federal Government signed Decree 11,004/2022, which regulates the use of FUST and establishes directions for the use of resources by the Management Board, established in 2022.
· FUNTTEL. In 2000, the Brazilian government created the Fundo para Desenvolvimento Tecnológico das Telecomunicações (“FUNTTEL”), a fund that is supported by, among other sources of income, a contribution tax applicable to all telecommunications companies. FUNTTEL is a fund managed by BNDES and FINEP, government research and development agencies. The purpose of FUNTTEL is to promote the development of telecommunications technology in Brazil and to improve competition in the industry by financing research and development in the area of telecommunications technology. FUNTTEL tax is imposed at a rate of 0.5% on gross operating revenues, net of discount, ICMS, PIS and COFINS, and it cost may not be passed on to clients.
· FISTEL. Fundo de Fiscalização das Telecomunicações (“FISTEL”), is a fund supported by among other sources a tax applicable to telecommunications services, which was established in 1966 to provide financial resources to the Brazilian government for its regulation and inspection of the sector. Such tax consists of: (1) an installation inspection fee assessed on telecommunications stations upon the issuance of their authorization certificates, as well as every time a new mobile number is activated, and (2) an annual operations inspection fee that is based on the number of authorized stations in operation, as well as the total basis of mobile numbers at the end of the previous calendar year. The amount of the installation inspection fee is a fixed value, depending on the kind of equipment installed in the authorized telecommunication station.
· Effective in 2001, the installation and inspection fee is assessed based on net activations of mobile numbers (that is, the number of new mobile activations reduced by the number of canceled subscriptions), as well as based on the net additions of radio base stations. The operations inspection fee equals 33% of the total amount of installation inspection fees that would have been paid with respect to existing equipment. The public funds raised from this installation fee are appropriated to either the Brazilian Communication Company (“EBC”), or the Brazilian National Cinema Agency (Agência Nacional do Cinema) (“ANCINE”), in order to benefit Brazilian cinema industry. Also, ANATEL charges the installation inspection fee when there is an extension of the term of validity of the right to use radio frequencies associated with the operation of the personal mobile service. We understand that such collection is unjustified and is challenging this rate in court.
· On December 2020, Law No. 14,108 was sanctioned and exempts FISTEL for 5 (five) years from the base stations and equipment that integrate the machine-to-machine (M2M) ecosystems and, also, extinguishes the prior licensing. The definition and regulation of M2M communication systems shall be established by ANATEL. The Brazilian government also laid out in the budget law for 2021 a tax exemption forecast of FISTEL value. Additionally, in June 2021, Law No. 14,173 was approved, lowering the FISTEL fees on VSATs from R$201.12 to R$26.83.
· Law No. 15,320 of December 26, 2025, extended until December 31, 2030, the existing tax exemptions applicable to M2M communication devices and small satellite stations. The measure is effective from January 1, 2026, and will remain in force until December 31, 2030.
· IRPJ and CSLL. Income tax expense is a combination of two different types of taxes, the IRPJ and the CSLL. The IRPJ is payable at the rate of 15% plus an additional rate of 10% (levied on the part of taxable profits that exceed R$0.02 million per month or R$0.24 million per year). The CSLL is currently assessed at a rate of 9% of adjusted net income.
Regarding dividends, Law No. 12,973 ensured the
full and unconditional exemption on payment or credit of profits or dividends earned between 2008 and 2013, previously paid or not. Uncertainty
remained, however, in relation to exemption on profits and dividends generated in the calendar year 2014, if higher than the taxable income
in the same period in the case of companies that do not opt for early adoption of the new post-RTT tax regime that year. According to
the Federal tax authorities the exception is not applicable to the excess amount, or in other words, to the profits and dividends paid
more than the taxable income.
On November 27, 2025, Brazil enacted Law No.
15,270, which introduced a material change to the long-standing tax exemption regime applicable to profits and dividends. Under the prior
regime, in force since 1996, profits and dividends were generally exempt from taxation. The new law partially reverses this approach by
reintroducing taxation on profits and dividends paid to certain beneficiaries.
The applicable tax treatment varies depending
on whether the beneficiary is a resident or non-resident of Brazil.
For Brazilian resident individuals, a 10% withholding
income tax is imposed on the distribution of profits and dividends by the same legal entity to the same individual when the aggregate
amount exceeds R$50,000 in a single month. In such cases, the distributing legal entity is required to withhold the applicable income
tax at source.
If the individual’s total income in a given
calendar year exceeds R$600,000, profits and dividends received from 2026 onward must be reported under the Annual High-Income Taxation
Regime introduced by Law No. 15,270/2025. Any income tax withheld by the distributing entity during the calendar year may be credited
against the tax due under this regime.
Where the individual’s total annual income,
including profits and dividends and other income, does not exceed R$600,000, any income tax withheld at source on distributed profits
and dividends may be refunded, in accordance with the rules set forth in Law No. 15,270/2025. In addition, under the terms of that law,
a tax reduction may be available to Brazilian resident individuals subject to the Annual High-Income Taxation Regime if the combined effective
tax burden on corporate profits and distributed dividends exceeds the standard corporate income tax rate, which is currently 34% for us.
Dividend distributions to other legal entities
domiciled in Brazil remain exempt from income tax.
For non-resident individuals or legal entities,
as a general rule, profits and dividends paid or remitted abroad are subject to a 10% withholding income tax, regardless of the amount
distributed. Under the terms of Law No. 15,270/2025, a non-resident beneficiary may request a tax credit if the combined effective tax
burden on corporate profits and distributed dividends exceeds the standard Brazilian corporate income tax rate of 34%.
The new taxation regime does not apply to profits
earned through the 2025 calendar year, provided that the resolution approving the distribution of such dividends is adopted by the competent
corporate body by December 31, 2025, and the dividends are paid in accordance with applicable corporate law and regulations issued by
the RFB. Accordingly, we approved and paid dividends related to profits earned through the 2025 calendar year in December 2025.
Because dividend payments are not tax deductible
for the distributing company, Brazilian tax law provides an alternative form of shareholder remuneration known as “interest on equity,”
which allows companies to deduct the amount paid to shareholders from taxable net income, subject to statutory limitations.
These distributions may be paid in cash. The
interest is calculated in accordance with daily pro rata variation of the Brazilian government’s long-term interest rate (“TJLP”),
as determined by the Central Bank from time to time, and cannot exceed the greater of: (1) 50% of the net income (before taxes and already
considering the deduction of the own interest amount attributable to stockholders) related to the period in respect of which the payment
is made;
or (2) 50% of the sum retained profits and profits reserves as of the date of the
beginning of the period in respect of which the payment is made.
Any payment of interest to stockholders is subject
to withholding income tax at the rate of 15%, increasing to 17.5% as of 2026 according to Complementary Law No. 224 of December 26, 2025
(or, lower rates for some jurisdictions, such as, 12.5%, as provided in certain Double Taxation Treaties), or 25% in the case of a stockholder
domiciled in a Low or Nil Tax Jurisdiction. These payments may be qualified, at their net value, as part of any mandatory dividend. As
described herein, we paid interest on equity in 2025. Please refer to “Item 5. — Operating and Financial Review and Prospects—Dividend
Distribution—Interest on Equity” for detailed information.
Tax losses carried forward are available for
offset during any year up to 30.0% of annual taxable income. No time limit is currently imposed on the application of net operating losses
on a given tax year to offset future taxable income within the same tax year, nevertheless there is no monetary restatement.
Companies are taxed based on their worldwide
income rather than on income produced solely in Brazil. As a result, profits, capital gains and other income obtained abroad by Brazilian
entities are added to their net profits for tax purposes. Therefore, profits, capital gains and other income obtained by foreign branches
or income obtained from subsidiaries or foreign corporations controlled by a Brazilian entity are computed in the calculation of an entity’s
profits, in proportion to its participation in such foreign companies’ capital.
In the end of 2017, the RFB, issued Normative
Instruction No. 1,771/2017 in order to determine the tax treatment due to the accounting CPC 47 – Customer Contract Revenue, which
tax treatment went into effect in 2018.
IRPJ and CSLL are regulated by Decree No 9,580/2018
and Normative Instruction RFB No. 1,700/2017 in addition to other federal laws and decrees.
ANATEL Administrative Proceedings
Under the terms of its PCS authorization, TIM
Celular (now TIM S.A.) implemented mobile personal telecommunications coverage for the assigned area. Under such term of authorization,
TIM Celular (now TIM S.A.) is required to operate in accordance with the quality standards established by ANATEL. If it fails to meet
the minimum quality standards required, TIM Celular (now TIM S.A.) is subject to Obligation Non-Compliance Determination Procedures, or
PADO, and applicable penalties. ANATEL has brought administrative proceedings against the TIM Group, which are currently pending for (1)
noncompliance with certain quality service indicators (the quality management regulation, or RGQ, and/or RQUAL); and (2) default of certain
other obligations assumed under the Terms of Authorization and pertinent regulations. In its defense before ANATEL, the TIM Group attributed
the lack of compliance to items beyond its control and not related to its activities and actions. We cannot predict the outcome of these
proceedings at this time but have accrued the amount in our balance sheet as a provision for all those cases in which we estimate our
loss to be probable.
Disclosure Pursuant to Section 219 of the Iran Threat Reduction
and Syria Human Rights Act
Section
219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act. Section 13(r) requires an
issuer to disclose in its annual or quarterly reports filed with the SEC whether the issuer or any of its affiliates has knowingly engaged
in certain activities, transactions or dealings with the Government of Iran, relating to Iran or with designated natural persons or entities
involved in terrorism or the proliferation of weapons of mass destruction during the period covered by the annual or quarterly report.
Disclosure is required even when the activities were conducted outside the United States by non-U.S. entities and even when such activities
were conducted in compliance with applicable law.
In addition, we also disclose our affiliates’
activities relating to countries with economic sanctions. We entered into Roaming Agreements for the provision of telecommunication services
with mobile networks, from Cuba, Lybia, North Korea, Iran, Russia, Sudan, Syria and Ukraine (Crimea occupied territories).
In accordance with our Code of Ethics, we seek
to comply with all applicable laws.
Our activities relating to countries with economic
sanctions
We are not, to our knowledge, engaged in any
activities, transactions or dealings with the Government of Cuba, North Korea, Iran, Russia, Syria and the Ukrainian occupied territories
(Crimea, Donetsk, Luhansk, Kherson and Zaporizhzhia), or the Designated Countries.
The activities, transactions or dealings we had
in the year ended December 31, 2025 related in any way to Designated Countries are, to our knowledge, roaming agreements for the provision
of telecommunication services, which allow our mobile customers to use their mobile devices on a network outside their home network, or
Roaming Agreements. In our view, the amounts related to these operations, detailed below, are immaterial to our business. We do not have
any agreement with providers from North Korea.
Roaming Agreements with the following local mobile
phone operators:
· MTN Irancell and MCI Iran Telecom, in Iran;
· Etecsa (also known as Cubacel), in Cuba;
· Syriatel Mobile Telecom SA and MTN Syria, in Syria;
· JSC Kyivstar and LLC Lifecell, in Ukraine;
· Megafon, MTS, VIMPELCOM, in Russia.
The impact on our consolidated statement of
income arising from Roaming Agreements with networks of the Designated Countries is detailed as follows:
Year ended December 31, 2025
Revenues Charges
(in reais)
NorthKorea 0 0
Iran 1,663.26 0
Cuba 9,225.28 28.46
Ukraine 135.40 584.71
Russia 168,083.52 170,174.36
Syria 212.29 0
Total 179,319.75 170,787.53
Year ended December 31, 2024
Revenues Charges
(in reais)
North Korea - -
Iran 245,356.21 22,155.51
Cuba 4,075.07 74,339.97
Syria 46,283.17 106,635.55
Total 295,714.45 203.131,03
Year ended December 31, 2023
Revenues Charges
(in reais)
North Korea - -
Ukraine 1,321.00 390.48
Sudan 1,118.81 166.89
Russia 334,733.00 12,761.33
Iran 4,743.50 -
Cuba 140,192.00 48.00
Syria 87.73 -
Total 482,196.04 13,316.70
Telecom Italia activities
relating to Designated Countries
The information in this section is based solely
on information provided to us by our parent Telecom Italia for the purpose of complying with our obligations under Section 13(r) of the
Exchange Act.
Telecom Italia informs us that the activities,
transactions or dealings it and its consolidated subsidiaries had in the year ended December 31, 2025 that, to its knowledge, relate to
Designated Countries are (1) Roaming Agreements, (2) international telecommunications services agreements with international carriers,
which cover delivery of traffic, or International Carrier Agreements, and (3) commercial sale and other agreements, or Commercial Sale
and Other Agreements.
Telecom Italia informed us that the only activities
that it and its consolidated subsidiaries had in the years ended December 31, 2025 and 2024, that, to its knowledge, relate in any way
to the Designated Countries are:
Roaming Agreements
Its Roaming Agreements are with the following
local mobile phone operators:
· North Korea: none;
· Iran: Mobile Company of Iran (MCI), (Rightel Communication) Rightel Telecommunication Service Company, Irancell (MTN) Telecommunications Services Company, (TKC-KFZO) Telecommunication Kish Company, Taliya Communicational Development Company and Telecommunication Company of Iran (TCI);
· Cuba:- Empresa de Telecomunicaciones de Cuba - ETECSA (ex Cubacel and ex C Com);
· Syria: Syriatel Mobile Telecom SA (Syriatel), MNT Syria (ex Spacetel Syria).
Year ended December 31, 2025
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran 1 17 564 539
Cuba 1 110 1 (145)*
Syria - - 54 140
Total 2 127 619 534
Year ended December 31, 2024
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran 1 42 563 508
Cuba 29 357 1 (119)*
Syria - 2 53 138
Total 30 401 617 527
(*) Payables are positive due to traffic discounts
to be invoiced.
Year ended December 31, 2023
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran 4 67 571 467
Cuba 1 75 - 76
Syria - 3 54 139
Total 5 145 625 682
The amounts of revenues, charges, receivables
and payables are considered de minimis by Telecom Italia’s compared to its consolidated revenues, operating expenses, trade
receivables and trade payables, respectively.
International Carrier Agreements
Telecom Italia’s subsidiary Telecom Italia
Sparkle S.p.A., or TI Sparkle, has agreements with Empresa de Telecomunicacione de Cuba SA and Syrian Telecommunication Est. The purpose
of these International Carrier Agreements is to allow the uninterrupted exchange of international traffic. Consequently, Telecom Italia
intends to continue maintaining these agreements.
Year ended December 31, 2025
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran - - - -
Cuba 339 829 409 822
Syria - 3 3 8
Total 339 832 412 830
Year ended December 31, 2024
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran - - - -
Cuba 597 1,121 1,102 3,832
Syria - 5 14,180 16,596
Total 597 1,126 15,282 20,428
Year ended December 31, 2023
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran - - - -
Cuba 639 2,577 1,190 4,746
Syria 1 8 13,332 15,609
Total 640 2,585 14,522 20,355
The amounts of revenues, charges, receivables
and payables are considered de minimis by Telecom Italia’s compared to its consolidated revenues, operating expenses, trade
receivables and trade payables, respectively.
Commercial Sale
and Other Agreements
TI Sparkle provided until 2023 institutional
access to Internet to Syria by means of Seabone IP ports and data transmission capacity through international cable systems located outside
the Syrian territory.
. TI Sparkle also offers Internet Access services
to Telecommunication Infrastructure Company of Iran and Empresa de Telecomunicaciones de Cuba SA and Syryan Telecommunications H.Q.through
its international IP backbone system Seabone.
Year ended December 31, 2025
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran 1,002 0 2,650 690
Cuba 2,530 297 3,650 -
Syria - - 1,130 -
Total 3,532 297 7,430 690
Year ended December 31, 2024
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran 1,079 63 2,789 690
Cuba 3,547 336 7,410 336
Syria - - 3,697 -
Total 4,626 399 13,896 1,026
Year ended December 31, 2023
Revenues Charges Receivables Payables
(thousands of euros)
North Korea - - - -
Iran 1,039 28 2,447 626
Cuba 3,514 - 6,678 -
Syria 1 - 3,476 -
Total 4,554 28 12,601 626
The amounts of revenues, charges, receivables
and payables are considered de minimis by Telecom Italia’s compared to its consolidated revenues, operating expenses, trade
receivables and trade payables, respectively.
C. Organizational
Structure
We are part of the Telecom Italia Group, which
is engaged in the communications sector and, particularly, the fixed and mobile national and international telecommunications sector.
The operating segments of the Telecom Italia Group are organized according to the respective geographical location of the telecommunications
business (Domestic—Italy and Brazil). We are currently held, indirectly, by Telecom Italia, which as of December 31, 2025, held
68.19%% of our shares. As of March 30, 2026, the largest shareholders of Telecom Italia were Poste Italiane S.p.A. and BlackRock, Inc.
According to public filings and press releases by Telecom Italia and its shareholders, Poste Italiane held approximately 27.32% of Telecom
Italia’s ordinary shares, following (i) the acquisition, in March 2025, of a 15.0% stake in Telecom Italia’s ordinary shares
from Vivendi SE for a total consideration of approximately €684 million, at a price of €0.2975 per share, and (ii) the subsequent
acquisition, on December 11, 2025, of the remaining 2.51% stake in Telecom Italia’s ordinary shares held by Vivendi. Vivendi, which
had previously been Telecom Italia’s largest shareholder, thereby disposed of its remaining ordinary shares in Telecom Italia and
ceased to be the company’s main investor. BlackRock has also increased its participation in Telecom Italia. In a transaction reported
in a regulatory filing dated August 26, BlackRock’s aggregate interest in Telecom Italia’s ordinary shares rose above the
5% disclosure threshold, reaching approximately 5.1%, up from about 4.98% previously.
In 2019, Telecom Italia delisted all of its U.S.
listed securities and deregistered from the SEC, having filed Form 15F on July 9, 2019. Substantially all assets previously held by TIM
Participações consisted of our shares (known, until its corporate name change in September 2017, as Intelig, and into which
TIM Celular was merged in October 2018 in connection with the Reorganization, as set forth in more detail below) (incorporated in the
Federative Republic of Brazil and headquarters located in the State of Rio de Janeiro
On July 25, 2017, the TIM Participações
S.A.’s Board of Directors approved the Reorganization, under which TIM Celular was to be merged into us. In connection with the
Reorganization, Intelig was transformed by corporate act into a closely held joint stock company, and its corporate name was changed to
TIM S.A. On October 31, 2018, the Reorganization was concluded and the merger of TIM Celular into us was completed, transferring all of
TIM Celular’s operations to TIM S.A., and with us succeeding to all of TIM Celular’s assets, rights and liabilities. The Reorganization
had the objective of capturing operational and financial synergies, through the implementation of a more efficient process structure,
as well as accounting and internal control systems. This final step of the Reorganization resulted in efficiencies including: (i) tax
efficiencies related to the termination of intercompany transactions; (ii) the creation of one company with combined services (fixed and
mobile services) potentially resulting in a more efficient and swift response to the market’s needs, through the development of
new services and integrated offers, and enabling a better strategic positioning and competitiveness as well as a better customer experience;
(iii) optimization of resources and systems; and (iv) the recording by TIM Participações of an approximately R$952 million
tax credit. The minutes of the Reorganization were filed with and approved by the Board of Trade of the State of São Paulo (Junta
Comercial do Estado de São Paulo), in December 2018.
On July 29, 2020, our Board of Directors and the
Board of Directors of TIM Participações approved the Merger of TIM Participações into us, which became effective
on September 28, 2020. The Merger was part of a reorganization of TIM’s corporate group. The business carried out by TIM following
the Merger was the same as the business previously carried out by TIM Participações prior to the Merger. Upon the consummation
of this transaction and the approval of the listing of our common shares and ADSs on B3 and NYSE, respectively, TIM Participações
S.A.’s shareholders received one our shares in exchange for each share of TIM Participações that they held, in accordance
with the terms of the Merger Agreement.
On December 10, 2020, our Board of Directors,
after reviewing certain studies, approved the establishment of a new company, FiberCo, in preparation for the future segregation of assets
and the provision of residential fiber optic infrastructure services.
On December 16, 2020, FiberCo was established
as our wholly owned subsidiary, and on November 16, 2021, IHS acquired a 51% equity interest from us in FiberCo. As a result of the transaction,
FiberCo ceased to be our wholly owned subsidiary. We now hold 49% of FiberCo’s share capital and IHS holds the remaining 51%. With
the completion of the acquisition, FiberCo changed its corporate name to I-Systems. For more details on this transaction, see “Item
4. Information on the Company—A. History and Development of the Company—2023 Important Events—Completion of the transaction
between IHS and I-System.”
On April 20, 2022, we informed our shareholders
and the market in general that we had acquired 100% of the capital stock of SPE Cozani, making it a wholly owned subsidiary. The acquisition
of this company corresponds to the portion of the assets, rights and obligations of Oi Móvel that we acquired.
On June 28, 2022, the shareholders’ ratified,
at an extraordinary general meeting, our acquisition of shares representing 100% of the capital stock of SPE Cozani.
On March 30, 2023, our shareholders approved
our merger with SPE Cozani (then a wholly owned subsidiary) pursuant to which SPE Cozani would be merged into TIM S.A., subject to certain
conditions, including authorization by ANATEL and the closing processes that are required under Brazilian corporate law to consummate
the merger of two companies, pursuant to the Protocol and Justification of incorporation.
On March 31, 2023, at a meeting of our Board
of Directors, it was confirmed that the outstanding conditions for the merger of SPE Cozani had been met, with an effective date of April
1, 2023, following which date SPE Cozani was merged into us and ceased to exist as a separate legal entity. Pursuant to the merger, we
succeeded SPE Cozani in respect of all of its rights and obligations.
The following chart illustrates our current ownership
structure as of the date of this annual report on Form 20-F:
*Telecom Italia S.p.A. holds 1 (one) share of TIM brasil Serv and Part. S.A.
D. Property,
Plant and Equipment
Our principal properties consist of radio frequencies,
transmission equipment, switching exchanges and gateway equipment, which connect calls to and from customers and enables data traffic
connections, and radio base stations, which comprise certain signal transmission and reception equipment covering a defined area. At our
radio base station, we have also installed antennas and certain equipment to connect these antennas with our switching equipment. As of
December 31, 2025 (ref. Teleco), more than 15 thousand 5G gNodes, 32 thousand eNodeB, almost 20 thousand NodeB, 18 thousand BTS and more
than 132 thousand kilometers in fiber optic networks. We generally lease or buy the sites where our mobile telecommunications network
equipment is installed. Over the course of 2025, we had leased approximately 68,357 square meters of real property, all of which was available
for office space. We also lease approximately 28,494 square meters of stores operated by us. There are no material encumbrances that may
affect our utilization of our property or equipment. All our property and equipment is owned or leased domestically, we do not own or
lease any property or equipment outside Brazil.