A. Operating Results The following discussion of our financial condition and operating results should be read in conjunction with our audited financial statements as of December 31, 2025 and 2024, and for each of the three years in the period ended on December 31, 2025 included elsewhere in this annual report that have been prepared in accordance with IFRS Accounting Standards, as issued by IASB. Brazilian Political and Economic Overview The macroeconomic environment remained challenging for our operations throughout the last three years. In 2025, Brazil’s economy faced significant headwinds: GDP growth moderated amid tighter monetary conditions and subdued domestic demand, contributing to downward revisions of economic forecasts; heightened global policy uncertainty and trade tensions, including the imposition of additional U.S. tariffs on a substantial share of Brazilian exports — which affected key sectors such as coffee, meat, sugar, wood and machinery and reduced export volumes to the United States — created uncertainty for exporters and dampened market confidence; and ongoing fiscal and policy debates over structural reforms and budgetary measures increased economic uncertainty and political friction in Brasília. In addition, rising regional geopolitical tensions — particularly between the United States and Venezuela, which heightened concerns about security and investor risk in Latin America — added further uncertainty to external demand and market confidence. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Brazil—We may be impacted by volatility in the global financial markets”. Our operations and assets are located in Brazil. Accordingly, our results of operations are substantially affected by macroeconomic conditions in Brazil, including inflation rates, interest rates, Brazilian GDP growth, and employment rates, among other matters. The following table sets forth data on real GDP growth, unemployment, inflation and interest rates, and the U.S. dollar exchange rate for the indicated periods: As of and for the year ended December 31, 2025 2024 2023 GDP growth (%)(1) 2.3 3.4 3.2 Unemployment (%)(2) 5.6 6.2 7.8 Inflation (IGP-M) (%)(3) (1.05) 6.5 3.2 Inflation (IPCA) (%)(4) 4.3 4.8 4.6 CDI (%)(5) 14.90 10.9 13.0 SELIC (%)(6) 15.00 12.25 11.75 TJLP (%)(7) 9.07 7.43 6.55 (Depreciation) appreciation of the real against the U.S. dollar (%)(8) 11.4 (21.8) 9.4 Exchange rate (closing) of the real to the U.S. dollar (8) 5.5024 6.1923 4.8413 (1) Source: IBGE. (2) Source: IBGE (3) The General Market Price Index (Índice Geral de Preços do Mercado) (“IGP-M”), as measured by Fundação Getulio Vargas (“FGV”), represents data accumulated over the 12 months in each year ended December 31. Source: FGV. (4) The National Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo) (“IPCA”), as measured by IBGE, represents data accumulated over the 12 months in each year ended December 31. Source: IBGE. (5) The DI rate is the end of period interbank deposit rate in Brazil. Source: B3 S.A. – Brasil, Bolsa, Balcão. (6) This is the average adjusted rate of daily financing determined in the Special Settlement and Custody System (Sistema Especial de Liquidação e Custódia) (“SELIC”), for Brazilian federal securities (end of period). Source: Central Bank. (7) The long-term interest rate (Taxa de Juros de Longo Prazo) (“TJLP”), represents the interest rate applied by the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social) (“BNDES”), in long-term financings (end of the period). Source: BNDES. (8) Source: Central Bank, IPEADATA Sources: BNDES, Central Bank, Bloomberg, FGV, IBGE and IPEADATA The economic environment remained challenging for our operations throughout the last three years. The Brazilian GDP, as published by the IBGE, increased by 3.2%, 3.4% and 2.3% in 2023, 2024 and 2025, respectively. Prior to 2020, when the GDP grew 4.1%, Brazil was emerging from a prolonged recession after a period of a slow recovery, with only meager GDP growth in 2019 and 2018. The rate of growth of Brazilian GDP has a direct effect on consumer demand, which we believe affects demand for our products and services and, consequently, our revenue. In 2025, Brazilian inflation, as measured by the General Market Price Index (Índice Geral de Preços - Mercado), or IGP-M, published by Fundação Getúlio Vargas, or FGV, a private organization, was -1.05%, compared to 6.5% during 2024 and 3.2% during 2023. In 2025, Brazilian inflation, as measured by the Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Ampliado), or IPCA, published by the IBGE, was 4.3%, compared to 4.8% during 2024 and 4.6% during 2023. During 2025, the real increased against the U.S. dollar by 11.4%, following a depreciation of 21.8% during 2024 and an appreciation of 9.4% during 2023. The appreciation of the real against the U.S. dollar may help to keep inflationary pressures under control in Brazil. In periods of significant inflation, we may not be able to pass through our increased cost of goods to our customers and demand for our products may contract. The Brazilian Government approved a tax reform that was discussed for 30 years, and also approved a new tax framework, which brought more clarity regarding the fiscal direction. The Tax Reform was enacted on December 20, 2023 by National Congress, but it will need complementary and ordinary laws to be regulated. The transition period of the Tax Reform will begin in 2026 and is expected to come into full effect from 2033. In Europe, levels of economic activity entered a slower growth trajectory, as the war between Russia and Ukraine and the Israel-Hamas conflict, political tensions within the Eurozone and the effects of the United Kingdom formally leaving the European Union on January 31, 2020, or Brexit, continue (see “Item 3. Key Information—D. Risk Factors—Risks Relating to Brazil—We may be impacted by volatility in the global financial markets”). In the United States, it is unclear the degree to which current political divisions in the country will continue throughout the current four-year presidential term of President Biden, as well as the policies that will be adopted by the current administration and the effects of any such policies, if implemented. Impact of Inflation on Our Results of Operations In 2022, Brazil’s economic environment was relatively volatile due to the impacts of the COVID-19 pandemic, geopolitical divisions, and the Brazilian presidential election. Despite this environment, inflation fell in 2022 when compared to the previous year. After a peak in 2021, IPCA fell from a double-digit level to 5.6% by December 2022. Brazil's official inflation ended 2023 and 2024 at 4.6% and 4.8%, respectively. The rate is measured by the IPCA (Broad National Consumer Price Index). In a time of high inflation globally, the trajectory of inflation in Brazil is less worrisome when considered in comparison with certain other countries. However, having the ability to manage the impacts caused by inflation is essential in a country as volatile as Brazil. We have been able to manage those impacts in recent years due to: (i) our strong cost efficiency policy in which we implement multiple measures to control spending using digitalization initiatives, contract renegotiation, make-or-buy reviews; (ii) price readjustments to our postpaid clients, where the existing customers have their bills priced-up in a more-for-more strategy and (iii) elimination of low face value recharges, where prepaid clients are directed to higher face value top-ups when they need to recharge their credit. In 2023, 2024 and 2025, the main lines in our profit and loss impacted directly by inflation were personnel costs, rental costs, and lease costs. Those impacts were mostly offset by the aforementioned cost control measures and price increases. Critical Accounting Policies For the critical accounting policies, see our audited financial statements Results of Operations The following discussion should be read in conjunction with “Item 3. Key Information” and “Item 4. Information on the Company.” As set forth in greater detail below, our financial condition and results of operations are significantly affected by Brazilian telecommunications regulation, including the regulation of rates. See “Item 4. Information on the Company—B. Business Overview—Regulation of the Brazilian Telecommunications Industry—Wholesale Rates Regulation.” Our financial condition and results of operations have also been, and are expected to continue to be, affected by the political and economic environment in Brazil. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Brazil.” The following table shows certain components of our statement of income for each year in the three-year period ended December 31, 2025, as well as the percentage change from year to year. Year ended December 31, Percentage change 2025 2024 2023 2025 - 2024 2024 - 2023 (in thousands of reais) Revenue 26,624,721 25,447,930 23,833,893 4.6 6.8 Cost of services provided and goods sold (12,266,584) (11,893,115) (11,496,437) 3.1 3.5 Gross income 14,358,137 13,554,815 12,337,456 5.9 9.9 Operating income (expenses): Selling expenses (5,959,682) (5,908,816) (5,742,642) 0.9 2.9 General and administrative expenses (1,734,484) (1,798,005) (1,759,433) (3.5) 2.2 Other income (expenses), net (212,139) (258,781) (28,779) (18.0) 799.2 Share of loss of an associate (107,800) (82,526) (89,304) 30.6 (7.6) Operating income (expenses) (8,014,105) (8,048,128) (7,620,158) (0.4) 5.6 Profit before financial income and expenses 6,344,032 5,506,687 4,717,298 15.2 16.7 Financial income (expenses): Financial income 1,629,877 861,759 1,239,753 89.1 (30.5) Financial expenses (3,350,234) (2,817,346) (2,765,961) 18.9 1.9 Foreign exchange variations (63,664) 71,363 (7,057) N.A. N.A. Financial income (expenses) (1,784,021) (1,884,224) (1,533,265) (5.3) 22.9 Profit before income tax and social contribution 4,560,011 3,622,463 3,184,033 25.9 13.8 Income tax and social contribution (248,027) (468,582) (346,611) (47.1) 35.2 Profit for the year 4,311,984 3,153,881 2,837,422 36.7 11.2 Results of Operations for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 Revenue Our revenue consisted of: · mobile and fixed services: (i) local and long-distance voice, (ii) data and content (value-added services), (iii) interconnection, (iv) revenue from new partnership agreements, described as “Customer Platform” (financial, education, digital security, health and advertising), and (v) other services; and · goods sold: telephones, mini-modems, tablets and other equipment. The composition of our revenue by category of service is set out in Note 27 to our financial statements and discussed below. Our revenue for the year ended December 31, 2025, was R$26,624,721 thousand, an increase of 4.6% as compared to R$25,447,930 thousand in 2024. This variation was mainly driven by a 5.4% increase in mobile services revenue (“MSR”), supported by solid postpaid performance and a stronger value proposition, reflected in a 4.6% rise in mobile average monthly revenue per user (“ARPU”) (A measure used in the mobile telecommunications industry to evaluate the revenue generated by customers. ARPU is used by our management for decision-making purposes and by our management and investors to assess our operating margin per user and consequently our overall operating performance in a given period) and a low churn rate of 3.0% (“churn”, the rate at which customers disconnect or stop using a company’s service over a given period). Our management understands that a breakdown of revenue can be helpful in an analysis of our revenue dynamics. The details of our revenue are presented below: Year ended December 31, Percentage change 2025 2024 2025 – 2024 (in thousands of reais) Total revenue 26,624,721 25,447,930 4.6 Service revenue 25,855,539 24,587,499 5.2 Service revenue – mobile 24,518,820 23,256,261 5.4 Client generated 22,961,011 21,605,375 6.3 Interconnection 345,495 348,960 (1.0) Customer platform 128,570 218,690 (41.2) Others 1,083,745 1,083,236 0.0 Service revenue – fixed 1,336,719 1,331,238 0.4 Goods sold 769,182 860,431 (10.6) Service Revenue Service revenue for the year ended December 31, 2025, was R$25,855,539 thousand, an increase of 5.2% compared to R$24,587,499 thousand in the year ended December 31, 2024. Mobile Service Revenue (“MSR”) increased 5.4%, to R$24,518,820 thousand for the year ended December 31, 2025, from R$23,256,261 thousand for the year ended December 31, 2024, mainly due to an increase in client generated revenue due to consistent performance improvements in postpaid plans. In addition, in 2025, ARPU grew 4.6% in 2025 to an ARPU of R$32.8, with a churn rate of 3.0%, confirming TIM’s commitment to enhance monetization and retain its customer base. Interconnection revenue decreased by 1.0%, to R$345,495 thousand for the year ended December 31, 2025, from R$348,960 thousand for the year ended December 31, 2024, as a result of lower incoming traffic. Customer platform revenue decreased by 41.2%, to R$128,570 thousand for the year ended December 31, 2025, from R$218,690 thousand for the year ended December 31, 2024, primarily driven by: (i) a year-over-year comparison negatively affected by revenues recognized in 2024 from the EXA partnership, whose business model is based on activation fees and equity participation and which may be subject to seasonality; and (ii) a year-over-year comparison negatively affected by the conclusion of the strategic financial services partnership in 2025. Fixed service revenue increased 0.4% to R$1,336,719 thousand in the year ended December 31, 2025, from R$1,331,238 thousand in the year ended December 31, 2024, mainly due to the Company's strategy of carrying out a more selective expansion of TIM Ultrafibra. Revenue from goods sold decreased 10.6%, to R$769.182 thousand in the year ended on December 31, 2025, from R$860,431 thousand in the year ended on December 31, 2024, mainly due to lower sales volume as the Company focused on higher-value products. Cost of Services Provided and Goods Sold and Operating Expenses Cost of services provided and goods sold and operating expenses (comprised of selling, general and administrative expenses) increased 1.8% for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The following table shows the components of costs of services provided and goods sold and operating expenses (comprised of selling, general and administrative expenses) for each of the years indicated. Year ended December 31, Percentage change 2025 2024 2025 – 2024 (in thousands of reais) Personnel (1,483,685) (1,486,278) (0.2) Outsourced services (3,390,770) (3,570,851) (5.0) Interconnection and connection means (3,581,352) (3,091,741) 15.8 Depreciation and amortization (7,077,687) (7,026,035) 0.7 Taxes, fees and contributions (1,047,661) (1,092,491) (4.1) Rentals and reinsurance (797,452) (716,880) 11.2 Cost of goods sold (1,062,370) (1,104,460) (3.8) Advertising (688,991) (700,637) (1.7) Losses on doubtful accounts (765,783) (693,122) 10.5 Others (64,999) (117,441) (44.7) Total (19,960,750) (19,599,936) 1.8 Personnel Personnel costs and expenses remained broadly stable year-over-year, totaling R$1,483,685 thousand in the year ended December 31, 2025, compared to R$1,486,278 thousand in the year ended December 31, 2024. Outsourced Services Outsourced services costs and expenses decreased by 5.0% to R$3,390,770 thousand in the year ended December 31, 2025, as compared to R$3,570,851 thousand in the year ended December 31, 2024, primarily due to reduced customer service costs. Interconnection and Connection Means Our costs for interconnection and connection means increased 15.8%, to R$3,581,352 thousand in the year ended December 31, 2025, from R$3,091,741 thousand in the year ended December 31, 2024. This increase is mainly due to (i) higher expenses related to international roaming services; and (ii) higher expenses related to content providers in service plans Depreciation and Amortization Depreciation and amortization costs and expenses increased 0.7%, to R$7,077,687 thousand in the year ended December 31, 2025, from R$7,026,035 thousand in the year ended December 31, 2024. This variation was mainly explained by higher depreciation of transmission equipment and increased amortization of software. Taxes, Fees and Contributions Taxes, fees and contributions costs and expenses decreased 4.1%, to R$1,047,661 thousand in the year ended December 31, 2025 from R$1,092,491 thousand in the year ended December 31, 2024. The decrease was supported by the taxes linked to cost of services rendered and goods sold, see “Item 4. Information on the Company—B. Business Overview—Taxes on Telecommunications Goods and Services.” Rentals and Reinsurance Rentals and reinsurance costs and expenses increased 11.2%, to R$797,452 thousand in the year ended December 31, 2025, from R$716,880 thousand in the year ended December 31, 2024. This increase is mainly related to higher costs with real estate rental. Cost of Goods Sold Our cost of goods sold decreased 3.8%, to R$1,062,370 thousand in the year ended December 31, 2025, from R$1,104,460 thousand in the year ended December 31, 2024. This decrease is consistent with the reduction in goods sold revenue, mainly driven by lower sales volume. Advertising Advertising expenses decreased 1.7%, to R$688,991 thousand in the year ended December 31, 2025 from R$700,637 thousand in the year ended December 31, 2024. This decrease was primarily driven by lower marketing expenses compared to 2024, as the prior year included expenses associated with TIM’s official sponsorship of the Rock in Rio event. Losses on Doubtful Accounts Losses on doubtful accounts increased 10.5%, to R$765,783 thousand at the year ended December 31, 2025, from R$693,122 thousand in the year ended December 31, 2024. This increase was mainly driven by the expansion of our postpaid customer base, resulting in greater exposure to delinquency. Others Others decreased 44.1%, to an expense of R$64,999 thousand in the year ended December 31, 2025, from an expense of R$117,441 thousand in the year ended December 31, 2024. This decrease is mainly explained by a reduction in fines paid compared to the previous year. Other Income (Expenses), Net Other income (expenses), net, decreased 18.0%, to an expense of R$212,139 thousand in the year ended December 31, 2025, from an expense of R$258,781 thousand in the year ended December 31, 2024. This decrease is mainly explained by a reduction in civil and regulatory contingency provisions. Profit for the Year The following table shows our profit for the year, as well as the percentage change, for each of the periods indicated: Year ended December 31, Percentage change 2025 2024 2025 – 2024 (in thousands of reais) Profit before financial income (expenses) and income taxes 6,344,032 5,506,687 15.2 Financial income (expenses) (1,784,021) (1,884,224) (5.3) Income tax and social contribution (248,027) (468,582) (47.1) Profit for the year 4,311,984 3,153,881 36.7 Financial Income (Expenses) Net financial expenses decreased 5.3% in the year ended December 31, 2025, to an expense of R$1,784,021 thousand, from an expense of R$1,884,224 thousand in the year ended December 31, 2024. This decrease is mainly explained by: (i) higher yields from financial investments, supported by a more robust cash position and the increase in the interest rate over the past 12 months;; and (ii) financial revenue from the appreciation of the 5G Fund, an investment fund, created by TIM in partnership with Upload Ventures Growth, LP – an independent venture capital manager –, focused on solutions based on 5G technology Income Tax and Social Contribution Income tax and social contribution decreased 47.1% in the year ended December 31, 2025, to R$248,027 thousand, as compared to R$468,582 thousand in the year ended December 31, 2024. This variation is explained by: (i) higher volume of interest on equity recognized in 2025; and (ii) an increase in tax benefits. The effective tax rate also decreased to approximately 5% in 2025 compared to 13% in 2024. Profit for the Year As a consequence of the explanations above, our profit for the year ended December 31, 2025 was R$4,311,984 thousand representing an increase of 36.7% from our profit of R$3,153,881 thousand for the year ended December 31, 2024. Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 For a discussion of our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, please see “Item 5. Operating and Financial Review and Prospects—A. Operating Results— Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023” of our annual report on Form 20-F for the year ended December 31, 2024. Non-GAAP Financial Measures for the Years Ended December 31, 2025, 2024 and 2023 Year ended December 31, 2025 2025 2024 2023 (in thousand of US$)(1) (in thousands of R$) Net Debt(2) 1,843,052 10,141,213 8,999,341 10,187,261 Adjusted Net Debt(3) 2,019,535 11,112,294 10,512,938 11,642,314 EBITDA(4) 2,439,284 13,421,918 12,532,722 11,834,327 Adjusted EBITDA(5) 2,458,840 13,529,521 12,625,248 11,620,197 (1) Solely for the convenience of the reader, certain Brazilian real amounts have been translated into U.S. dollars at the selling rate of R$5.5024 to US$1.00, as reported by the Central Bank as of December 31, 2025. The U.S. dollar equivalent information presented in this annual report should not be construed as implying that the amounts in reais represent, or could have been or could be converted into, U.S. dollars at this rate or any other rate. (2) We calculate Net Debt as total loans and derivatives plus lease liabilities minus lease assets, cash and cash equivalents and FIC (Investment Fund). For a reconciliation of Net Debt to the most directly comparable IFRS measure, see “-Reconciliation of Non-GAAP Financial Measures-Reconciliation of Net Debt and Adjusted Net Debt.” (3) We calculate Adjusted Net Debt as Net Debt plus certain derivatives entered into for share subscription options and the financing entered into for the acquisition of 5G licenses. For a reconciliation of Adjusted Net Debt to the most directly comparable IFRS measure, see “-Reconciliation of Non-GAAP Financial Measures-Reconciliation of Net Debt and Adjusted Net Debt.” (4) We calculate EBITDA as net profit for the year plus net financial income (expense), income tax and social contribution and depreciation and amortization costs and expenses. For a reconciliation of EBITDA to Adjusted EBITDA, see “-Reconciliation of Non-GAAP Financial Measures-Reconciliation of EBITDA and Adjusted EBITDA.” (5) We calculate Adjusted EBITDA as EBITDA as adjusted for (i) equity in earnings and (ii) Non-recurring Income/Expenses. For a reconciliation of Adjusted EBITDA to the most directly comparable IFRS measure, see “Operating and Financial Review and Prospects—Reconciliation of Non-GAAP Financial Measures—Reconciliation of EBITDA and Adjusted EBITDA.” Reconciliation of Non-GAAP Financial Measures This annual report presents certain non-GAAP financial measures, which are not recognized under IFRS, specifically Net Debt, Adjusted Net Debt, EBITDA and Adjusted EBITDA. These non-GAAP financial measures are used by our management for decision-making purposes and to assess our financial and operating performance, financial position, liquidity and to make strategic decisions regarding the allocation of capital. For additional information on our Non-GAAP measures see “Presentation of Financial and Other Information—Special Note Regarding Non-GAAP Financial Measures.” Reconciliation of Net Debt and Adjusted Net Debt Year ended December 31, 2025 2025 2024 2023 (in thousands of US$) (1) (in thousands of R$) Total loans and derivatives 453,480 2,495,231 2,357,066 3,203,248 (+) Leases - Liabilities(2) 2,501,611 13,764,868 12,575,846 12,256,775 (-) Leases - Assets(3) 42,571 234,246 240,387 236,341 (-) Cash, Cash Equivalents 656,136 3,610,324 3,258,743 3,077,931 (-) FIC (Investment Fund)(4) 413,331 2,274,316 2,434,441 1,958,490 Net Debt(5) 1,843,052 10,141,213 8,999,341 10,187,261 (+) Other Derivatives(6) — — 522,822 502,453 (+) Financing of 5G Licenses(7) 176,483 971,081 990,775 952,600 Adjusted Net Debt(8) 2,019,535 11,112,294 10,512,938 11,642,314 (1) Solely for the convenience of the reader, certain Brazilian real amounts have been translated into U.S. dollars at the selling rate of R$5.5024 to US$1.00, as reported by the Central Bank as of December 31, 2025. The U.S. dollar equivalent information presented in this annual report should not be construed as implying that the amounts in reais represent, or could have been or could be converted into, U.S. dollars at this rate or any other rate. (2) Lease – Liabilities corresponds to the Company´s consideration for the right-of-use of the leased asset under the lease agreements under which the Company is the lessee. The amount of each agreement is accounted for at the lease’s commencement at the lower of the fair value of the leased asset and the present value of payments provided for in lease agreement. For more information, see note 17 to the financial statements. (3) Leases under which the Company, as a lessor, transfers substantially all the risks and rewards of ownership to the other party (lessee) are classified as finance leases. These leases are recorded as a lease receivable at the lower of the fair value of the leased item and/or the present value of the receivables provided for in the agreement. Interest related to the lease is recorded as financial revenue over the contractual term. For more information, see note 17 to the financial statements. (4) Comprises financial assets measured at fair value through profit or loss. For more information, see note 12 to the financial statements. (5) We calculate Net Debt as total loans and derivatives plus lease liabilities minus lease assets, cash and cash equivalents and FIC (Investment Fund). For further information on Net Debt, see “Presentation of Financial and Other Information—Special Note Regarding Non-GAAP Financial Measures—Net Debt and Adjusted Net Debt.” (6)Other derivatives entered into for share subscription options. (7)In 2021, TIM acquired 5G licenses through the Anatel auction, resulting in the recognition of an intangible asset corresponding to the licenses, as well as the associated obligations that we entered into to pay for such licenses. The payment for the licenses is scheduled to occur over a period ranging from 10 to 20 years, while payments related to the associated obligations were made between 2022 and 2024(8)We calculate Adjusted Net Debt as Net Debt plus certain derivatives entered into for share subscription options and the financing entered into for the acquisition of 5G licenses. For further information on Adjusted Net Debt, see “Presentation of Financial and Other Information—Special Note Regarding Non-GAAP Financial Measures—Net Debt and Adjusted Net Debt.” Reconciliation of EBITDA and Adjusted EBITDA Year ended December 31, 2025 2025 2024 2023 (in thousands of US$) (1) (in thousands of R$) Net profit for the year 783,655 4,311,984 3,153,881 2,837,422 (+)Finance income (expenses), net 324,225 1,784,021 1,884,224 1,533,265 (+)Income tax and social contribution 45,076 248,027 468,582 346,611 (+)Depreciation and amortization 1,286,290 7,077,687 7,026,035 7,117,029 EBITDA(2) 2,439,248 13,421,719 12,532,722 11,834,327 (+)Equity in Earnings(3) 19,591 107,800 82,526 89,304 Non recurring Income/Expenses(4) — — — (303,435) Adjusted EBITDA(5) 2,458,840 13,529,521 12,615,248 11,620,197 (1) Solely for the convenience of the reader, certain Brazilian real amounts have been translated into U.S. dollars at the selling rate of R$5.5024 to US$1.00, as reported by the Central Bank as of December 31, 2025. The U.S. dollar equivalent information presented in this annual report should not be construed as implying that the amounts in reais represent, or could have been or could be converted into, U.S. dollars at this rate or any other rate. (2) We calculate EBITDA as net profit for the year plus net financial income (expense), income tax and social contribution and depreciation and amortization costs and expenses. For further information on EBITDA, “Presentation of Financial and Other Information—Special Note Regarding Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.” (3) The adjustment for equity in earnings corresponds to our 49% ownership interest in the loss of I-Systems (formerly Fiber Co), which we account for using the equity accounting method. For more information about the share of loss of such associate, see Note 14 to the financial statements. (4) The adjustment for non-recurring revenues/expenses in 2023 corresponds to the net profit recorded as a result of the post-closing price adjustment related to our acquisition of certain assets of Oi Móvel. (5) We calculate Adjusted EBITDA as EBITDA as adjusted for (i) equity in earnings and (ii) non-recurring Revenue/Expense. For further information on Adjusted EBITDA, see “Presentation of Financial and Other Information—Special Note Regarding Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.” B. Liquidity and Capital Resources The main source of our liquidity for net working capital and investment is operating cash flow, complemented by short-term credit lines with local and international banks and long-term financing with national and international development agencies. The cost of our debts has been significantly reducing in terms of CDI, due to the expiration of certain contracts with higher rates and the disbursement of new credit lines with rates below market cost, despite the adverse macroeconomic scenario in Brazil, particularly the recent increase of Brazil’s base interest rate. In May 2024, we disbursed part of a credit line with Banco do Nordeste do Brasil S.A. in an amount of R$386.9 million and an average post-hedge cost of 56.82% of CDI and a term of two years. In July 2024, we disbursed part of a credit line with Banco do Nordeste do Brasil S.A in an amount of R$116.4 million and an average post-hedge cost of 56.75% of CDI and a term of two years. As of December 31, 2025, we have sufficient working capital to service our operating activities and ongoing investments. Sources of Funds Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Operating Activities Cash flows generated in our operating activities increased by 9.0% in 2025, to R$13,440,069 thousand from R$12,331,543 thousand in 2024. This increase was primarily driven by reductions in trade accounts receivable and recoverable taxes. Investing Activities Cash flows used in investing activities decreased to R$3,560,621 thousand in 2025 from R$4,953,872 thousand in 2024, primarily due to redemptions of marketable securities. Financing Activities Cash flows used in our financing activities increased to R$9,527,867 thousand in 2025 from R$7,196,859 thousand in 2024, mainly due to an increase in dividends and interest on shareholder's equity paid. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 For a discussion of our sources of funds for the year ended December 31, 2024 compared to the year ended December 31, 2023, please see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Sources of Funds—Year Ended December 31, 2024 Compared to Year Ended December 31, 2023” of our annual report on Form 20-F for the year ended December 31, 2024. Financial Contracts We are party to the financial contracts described below, each to be used for purposes of the development of our business, generally, unless otherwise expressly provided herein. In the case of loans linked to the IPCA we enter into rate swaps to hedge against inflation variations. As set forth below and as each agreement is described further in the following paragraph, in 2025, we did not obtain any new loans. The terms of our long-term debt contain cross-default clauses, restrictions on our ability to merge with another entity, restrictions on our ability to prematurely redeem or repay such debt and restrictions on sales and exchanges of assets. They also contain various financial ratio covenants. We are currently not, and do not expect to be, in breach of any covenant of our debt instruments, which breach would be construed an event of default under their terms. As mentioned above, our principal financing agreements are: · Credit Agreement, dated March 20, 2019, between Agência Especial de Financiamento Industrial S.A., or FINAME, an entity within the BNDES system, as lender and TIM S.A. as borrower, in the principal amount of R$390 million for exclusive use in the acquisition of new machines, equipment, industrial systems, components and automation and computing goods of national manufacture, accredited by the Computerized Supplier Accreditation (Credenciamento de Fornecedor Informatizado), or CFI, of the BNDES system. The new agreement replaces one of the sub-credits (Credit Line B) of the existing 2018 BNDES Facility with better interest rate and maturity conditions: a fixed interest rate up to 1.44% plus the TLP and maturity up to 10 years. There were no additional costs to sign this loan and was fully disbursed in November 2021. As of December 31, 2025, the total outstanding amount under this credit agreement was R$329.6 million. · Credit Agreement, dated as of January 31, 2020, between Banco do Nordeste do Brasil S.A. as lender and TIM S.A., as borrower, in the principal amount of R$752.5 million, secured by a bank guarantee and receivables. The agreement has a total term of eight years, with three years of grace period and five years of amortization period, with the use of proceeds for our capital expenditures plan for the next three years (2020-2022) in the northeastern region of Brazil pursuant to certain standard FINAME requirements, as described in the agreement. The credit line is divided in two tranches: (i) a R$325 million tranche at IPCA plus 1.44% per year or IPCA plus 1.22%, considering a 15% compliance bonus; and (ii) a R$427 million tranche at IPCA plus 1.76% per year or IPCA plus 1.48%, considering a 15% compliance bonus. On May 10, 2022, the disbursement of part of this credit line occurred with an amount of R$249.1 million and an average post-hedge cost of 69.02% of CDI and a term of 5.9 years. In May 2024, the disbursement of part of this credit line occurred with an amount of R$386.9 million and an average post-hedge cost of 56.82% of CDI and a term of 2 years. In July 2024, the disbursement of part of this credit line occurred with an amount of R$116.4 million and an average post-hedge cost of 56,75% of CDI and a term of 2 years. As of December 31, 2025, the total outstanding amount under this credit agreement was R$400.0 million. · Deed of Indenture for the Issuance of Simple Unsubordinated Debentures, Not Convertible into Shares, in a Single Series, for Public Placement with Limited Efforts of the Second Issuance of TIM S.A. (“Instrumento Particular de Escritura de Emissão de Debêntures Simples, da Espécie Quirografária com Garantia Adicional Fidejussória, não Conversíveis em Ações, em Série Única, para Distribuição Pública com Esforços Restritos da Segunda Emissão da Tim S.A.”), dated as of June 15, 2021, between TIM S.A., as issuer, Pentágono Distribuidora de Títulos e Valores Mobiliários S.A., as fiduciary agent. The total amount of the issuance was R$1.6 billion through the issuance of 1,600,000 debentures each with a nominal value of R$1,000 on the issuance date and in a single series. The debentures are non-convertible and unsubordinated. For all legal purposes, the issuance date is June 15, 2021, and the term of the debentures is of 7 years as from the issuance date, or June 16, 2028, and cost post hedge of CDI + 0.95% per year. As of December 31, 2025, the total outstanding amount under this credit agreement was R$2,049.2 million. This issue is a sustainability-linked title, in reliance on Brazilian Law No. 12,431, and we used the net proceeds of this issuance to finance our capital expenditure for the 2020-23 period. See Note 20 to our financial statements for a further description of such financing agreements. The following financial contracts were disclosed in our annual report filed on Form 20-F with the Securities and Exchange Commission on March 31, 2025, all of which have since matured and been repaid or have been prepaid by us: · Credit Agreement, dated as of May 2, 2018, between BNDES as lender and TIM Celular (now TIM S.A.) as borrower (the “2018 BNDES Facility”), in the principal amount of R$1,500 million. The agreement, involves three credit lines with equal conditions of interest rates and tenors: (1) Credit Line A, in an amount of R$1,090 million, with a fixed interest rate of 1.95% plus the TJLP and eight years tenor; (2) Credit Line B, in an amount of R$390 million, with a fixed interest rate of 1.95% plus the TJLP and eight years tenor; and (3) Credit Line C, in an amount of R$20 million, with a fixed interest rate of 1.95% plus the TJLP and eight years tenor. Each credit line is to be used for specific purposes as set forth in the Credit Agreement and there were no disbursements between 2019 and 2021. In March 2019, Credit Line B was canceled and replaced by FINAME DIRETO (as defined below at next bullet). · Loan Agreement, dated as of December 23, 2015, between Finnish Export Credit as lender, KfW IPEX as facility agent and TIM Celular (which has been merged into us in connection with the Reorganization), as borrower, in the principal amount of U.S.$150 million. The new Loan Agreement is divided in three tranches of up to U.S.$50 million to be disbursed in 2016, 2017 and 2018. There are no material restrictions on our ability to transfer funds to us in the form of cash dividends, loans or advances. Uses of Funds Our principal uses of funds during the three-year period ended December 31, 2025, were payment of dividends to our shareholders, capital expenditures, business combination and loan repayments. Material Capital Expenditures Our capital expenditures in 2025, 2024 and 2023 related primarily to: (i) developing our fiber optic network, (ii) deployment and expansion of the capacity of our 3G and 4G networks, (iii) expanding network capacity, geographic coverage and digitalization, (iv) maintenance of our networks and IT systems, (v) of equipment purchases relating to our migration to PCS operations, and (vi) developing new operational and information technology systems. The following table contains a breakdown of our investments in long-lived assets for the years ended on December 31, 2025, 2024 and 2023: Capital Expenditures Categories Year ended December 31, 2025 2024 2023 (in thousands of reais) Network 3,188,352 3,168,810 3,120,320 Information technology 805,335 893,113 779,833 Licenses 44,327 63,915 56,042 Other 503,556 425,261 548,119 Total capital expenditures(1) 4,541,495 4,550,378 4,504,314 (1) The material capital expenditures discussed in this section are recurring and operational in nature and exclude non-recurring capital expenditures, like expenditures in relation to the acquisition of certain assets from Oi Móvel. Capital expenditures totaled R$4,541 million in 2025, a slight decrease of 0.2% when compared to R$4,550 million in 2024, thereby reflecting annual stability and remaining consistent with the Company’s strategic goals. See “Item 4. Information on the Company—A. History and Development of the Company—Capital Expenditures.” Dividends Our dividends are calculated in accordance with our By-laws and Brazilian corporate law. Under our By-laws, we are required to distribute an aggregate amount equal to at least 25% of our adjusted net income to our shareholders, either as dividends or as tax-deductible interest on shareholders’ equity, each year ended December 31, if there are funds available for distribution. For the purposes of the Brazilian corporate law and in accordance with our By-laws, “adjusted net income” is the amount equal to the net profit adjusted to reflect allocations to or from: (1) the legal reserve, and (2) a contingency reserve for probable losses, if applicable. The following table contains a breakdown of the dividends and interest on shareholders’ equity paid (net of income taxes) by us to our shareholders during the years ended December 31, 2025, 2024 and 2023: Dividend Distribution Year ended December 31, 2025 2024 2023 (in thousands of reais) Dividends 1,790,000 2,050,000 1,310,000 Interest on shareholders’ equity (net of withholding tax) 2,210,000 1,450,000 1,600,000 Total distributions 4,000,000 3,500,000 2,910,000 Our Board of Directors approved the distribution of an aggregate of R$2,210 million as interest on shareholders’ equity surpassing the minimum required by Brazilian Law, with respect to our 2025 results. The amounts of dividends indicated in the table above for 2023 and 2024 were approved at the annual general meeting in 2024 and 2025, respectively. The amount of withholding taxes was R$331,5 million, during 2025. The amounts paid were R$820 million in 2025 and R$1,390 million in 2026 as of the date of this annual report. Additional dividends for the 2025 fiscal year, in the amount of R$1.790 billion, were also approved and paid in 2025. Moreover, on December 16, 2025, our Board of Directors approved the payment of R$420 million as interest on equity to be paid up to June 30, 2026. Funding and Treasury Policies We maintain a general policy of continually monitoring our financial position and treasury activities to ensure solid cost and expenditure control. In accordance with our funding and treasury policy, we will continue to monitor the market to take advantage of suitable instruments to finance our industrial Plan. We expect future financing to balance maturity, cost and TIM’s payment capacity. Leverage Management tracks the ratio of Net Debt to EBITDA, which we refer to as the financial leverage index, to monitor the sustainability of our debt levels and our ability to take on additional debt. The ratio is a common credit analysis metric in the telecommunications industry and shows approximately how many years it would take to pay back our indebtedness, assuming no new debt is taken on, EBITDA remains constant, and all cash and cash equivalents may be used to repay debt. In addition, we believe that the ability to take on additional debt is a critical factor that affects our success, as indebtedness may be required to make investments necessary to grow our business. We believe that our current financial leverage index, Net Debt to EBITDA, reflects conservative leverage levels and the ability to incur additional debt if needed for extraordinary investment. Investors should be cautious in comparing our financial leverage index to that of other companies that report a similar ratio of debt to EBITDA because EBITDA may be calculated differently from company to company, leading to financial leverage indexes that are not comparable. Accordingly, any such comparison may be misleading. The following table sets forth our financial leverage index for the reported periods: 2025 2024 2023 (in thousands of reais) Net Debt (non-GAAP) (unaudited)(1) 10,141,213 8,999,341 10,187,261 EBITDA (non-GAAP) (unaudited)(2) 13,421,719 12,532,722 11,834,327 Financial leverage index (non-GAAP) (unaudited)(3) 0,75 0.72 0.86 (1) We calculate Net Debt as total loans and derivatives plus lease liabilities minus lease assets minus cash and cash equivalents minus FIC (Investment Fund). (2) We calculate EBITDA as net profit for the year plus net financial income (expense), income tax and social contribution and depreciation and amortization costs and expenses. (3) We calculate the financial leverage index as Net Debt/EBITDA. Tabular Disclosure of Contractual Obligations The following is a summary of our contractual obligations (in present value) as of December 31, 2025: Payments Due by Period as of December 31, 2025 Less than 1 year 1-3 years 4-5 years More than 5 years Total (in thousands of reais) Total borrowings (post-hedge)(1) 642 1,691 111 51 2,495 Leases – IFRS 16(2) 1,508 3,020 2,363 4,747 11,639 Leasing (previous IAS 17 finance leases) 160 289 333 1,109 1,892 Total(3) 2,311 5,000 2,808 5,907 16,026 (1) Considering the balances related to derivative financial instruments as of December 31, 2025. (2) Leases in which we, as the lessee, substantially hold all the risks and benefits of ownership are capitalized at the beginning of the lease at the lower of the fair value of the leased item and the present value of the payments provided for in the agreement. Interest related to the leases is taken to statement of income as financial expense over the term of the contract. (3) Other than as set forth herein (see, for example, “Item 4. Information on the Company—B. Business Overview—Our Business”), we have no capital lease obligations, unconditional purchase obligations, or other long-term liabilities reflected on our balance sheet of our financial statements. Interest is not included in long-term debt since it is subject to variable interest. Contingent Pension Liabilities Until December 1999, we participated in a multi-employer defined benefit plan, or the Telebrás Pension Plan, that covered the employees of the Telebrás System who retired before the breakup of Telebrás in May 1998 as well as those who continued working for the operating companies after May 1998. We are contingently liable, jointly and severally, with the other New Holding Companies, for the unfunded obligations of the Telebrás Pension Plan concerning all such employees who retired before January 30, 2000. In December 1999, we changed to a defined benefit plan, or the PBS Plan, that covers only those former employees of Telebrás who continued to be employed by us after December 1999. In November 2002, we created a separate defined contribution plan, or the TIMPREV Pension Plan. Migration to this plan was optional for employees linked to the PBS Plan. Migration to the TIMPREV Pension Plan extinguishes the migrating participant’s rights under the PBS Plan. SISTEL and TIMPREV. We and TIM Celular (which merged into TIM S.A. in connection with the Reorganization) have sponsored a privately defined benefit pension plan for a group of Telebrás system’s former employees, which is managed by Fundação Sistel de Seguridade Social – SISTEL, as a consequence of the legal provisions applicable to the privatization process of these companies in July 1998. Given that in 1999 and 2000 the sponsors of the pension plans managed by SISTEL had already negotiated conditions for the creation of individual pension plans for each sponsoring company and the maintenance of joint liability only to the participants already assisted on January 31, 2000, we, like other companies, created in 2022, as a result of the former Telebrás system, the TIMPREV Pension Plan, a defined contribution pension plan meeting the most modern social security standards adopted by private companies, and enabling migration to this plan of the employee groups linked to SISTEL.On November 13, 2002, the Brazilian Secretariat for Supplementary Pension Plans, through official ruling CGAJ/SPC No. 1917, approved the statutes of the new pension plan, or hereafter the Statutes of the TIMPREV Benefits Plan, as a defined contribution plan, which provide for new conditions for granting and maintaining benefits, as well as the rights and obligations of the Plan Managing Entity, the sponsoring companies, participants and the beneficiaries thereof. Under this new plan, the sponsor’s regular contribution will correspond to 100% of a participant’s basic contribution, and TIMPREV’s managing entity will ensure the benefits listed below, under the terms and conditions agreed upon, with no obligation to grant any other benefits, even if the government-sponsored social security entity starts granting them: · Normal retirement pension; · Early retirement pension; · Disability pension; · Deferred proportional benefit; and · Death benefit. However, as not all of our employees have migrated to TIMPREV, the pension and health care plans deriving from the TELEBRÁS system listed below remain in force: PBS: defined benefits plan of SISTEL, which includes active employees who participated in the plans sponsored by the companies of the former TELEBRÁS system; PBS Assistidos: a multi-sponsored pension plan for inactive employees; Convênio de Administração: for managing pension payments to retirees and pensioners of the predecessors of the subsidiary companies; and PAMEC/Apólice de Ativos: health care plan for pensioners of the predecessors of the subsidiary companies. As happened with the Termo de Relação Contratual Atípica (“TRCA Plan”), we had understood, until December 31, 2010 that we were responsible for liabilities of PAMEC participants (health care plan) related to us. We have changed its position based on a revised legal construction of its internal and external lawyers. As a result, the liabilities previously recorded were written off. Under with the rules established by NBC TG 33 (R2) - Benefícios a Empregados (IAS 19 – Employee Benefits) issued by the Federal Accounting Council - CFC and approved by CVM Deliberation 695/2012, after revoked by CVM Resolution 110/2022 (CVM Resolution 110/2022), the plans having a surplus are not recorded by us, as it is impossible to recover these amounts. Furthermore, the amounts of contributions will not be reduced for future sponsors. On January 29, 2007, and April 9, 2007, through the Brazilian Secretariat for Supplementary Pension Plans- SPC, the Ministry of Social Security approved the transfer of the management of the PBS–Tele CelularSul, TIM PrevSul, PBT–TIM, Convênio de Administração, PBS–Telenordeste Celular and TIM PrevNordeste benefit plans (according to SPC/DETEC/CGAT Communications Nos. 169, 167, 168, 912, 171 and 170, respectively) from SISTEL to HSBC – Fundo de Pensão. The PBS Assistidos plan continues to be managed by SISTEL. The only exception is Plano PAMEC, which was extinguished, with us remaining responsible for coverage of the respective benefit, now called PAMEC/Apólice de Ativos. In addition to the plans coming from the TELEBRÁS system, there is also the plan administered by the CESP foundation resulting from the acquisition of AES Atimus. AES Telecom: Supplementary pension and pension plan’s installment, administered by the CESP Foundation, which is the responsibility of the company, with a view to the acquisition of Eletropaulo Telecomunicações Ltda. (“AES Atimus”), succeeded by TIM Fiber SP LTDA, later merged into TIM Celular which merged into us. Medical care plan Fiber: Provision for maintenance of health plan as post-employment benefit to former employees of AES Atimus (as established in Law No. 9,656/98, articles 30 and 31), which was merged into TIM Celular, which in turn was subsequently merged into us. In 2025, contributions to the pension plans mentioned above remained stable at R$1.0 million, consistent with the amount contributed in 2024 and slightly lower than the R$1.1 million contributed in 2023. C. Research and Development Research and Development We do not independently develop new telecommunications hardware and depend upon the manufacturers of telecommunications products for the development of new hardware. Patents and Licenses We hold no material intellectual property assets. Telecom Italia owns the rights to the “TIM” trade name, which is currently licensed to us. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business—Any modification or termination of our ability to use the “TIM” trade name may adversely affect our business and operating results.” D. Trend Information Customer Base and Market Share In the year ended December 31, 2025, our mobile subscriber base decreased by 0.1% to 62.0 million customers, compared to 62.1 million customers in 2024, reflecting a growth by 8.4% in the Postpaid customer base, and a decline by 8.3% in the Prepaid customer base. Related to the composition of our customer base, the Postpaid accounted for 53% of our total subscriber base in the year ended December 31, 2025, compared to 49% in 2024. The prepaid represents 47% of our customer base at the end of 2025, compared to 51% in 2024. Although no assurances can be given as to the size of our subscriber base and market share in the future, we intend to focus on maintaining and improving our strong position in the mobile and fixed telecommunications market in Brazil. Our strategies for doing so are outlined in more detail in “Item 4. Information on the Company—B. Business Overview—Our Strategy.” Trends in Sales and Prices We managed to maintain a good level of annual growth in service revenue, and we will continue to monetize our customer base using the strategy of “more for more” and focus on the development of all of our business lines. Among the initiatives put in place in 2023 that supported this performance, the following stand out the most: (i) the ongoing evolution of the volume-to-value approach, maintaining a high level of ARPU and upselling to our customer base; (ii) expansion of the network, consolidating TIM as having the largest mobile coverage in Brazil with the launch of 5G, which was made available in all of Brazil’s state capitals in 2023, and maintaining leadership in 4G; (iii) the solid execution of our ultra-broadband operation, with the rebranding of the service (TIM UltraFibra) and the expansion of fiber; (iv) the continuous advancement of our network and IT infrastructure; (v) the incessant pursuit for cost and investment efficiencies despite the scenario of high inflation in the first half of 2023; and (vi) the ongoing evolution of our customer platform strategy, materialized by partnerships in different verticals such as financial services, digital education, digital security and mobile advertising. In 2024 we consolidated our existing partnerships and planned for potential future ones. We continued to expand our network and IT infrastructure while pursuing cost and investment efficiencies despite the higher inflation scenario in the second half of 2024. In 2025, we reaffirmed our partnership strategy and, in our updated strategic plan, outlined a framework to monetize our existing customer base beyond core telecommunications through an expanded, partnership-driven ecosystem. During the year, we continued to expand our network and IT infrastructure while pursuing operating and capital efficiencies, despite the persistently high interest-rate environment in Brazil. 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. We expect that the adjustment of our prices will follow the market trend. The rates for our service plans, as well as a description of the main features of such plans, are set out in “Item 4. Information on the Company—B. Business Overview—Mobile Service Rates and Plans.” Average Monthly Revenue Per User (“ARPU”) ARPU is a measure used in the mobile telecommunications industry to evaluate the revenue generated by customers. ARPU is used by our management for decision-making purposes and by our management and investors to assess our operating margin per user and consequently our overall operating performance in a given period. Mobile ARPU (Average Monthly Revenue Per User) was R$32.8 for the year ended December 31, 2025, reflecting an increase of 4.6% as compared to the year ended December 31, 2024, which was R$31.4. This result shows TIM’s focus on seeking greater monetization of its customer base in line with its strategy. The ARPU of the Mobile segment, which excludes other mobile revenues and revenue generated by the Customer Platform, increased (i) by 4.3% YoY (2025:R$55.0 x 2024:R$52.7) in the Postpaid ex-M2M, having as its main driver a more rational environment, and decreased (ii) by 2.8% YoY (2025: R$14.4 x 2024: R$14.8) in the Prepaid. The result was supported by: (i) the continued focus on migrating the customer base to higher-value plans; (ii) churn levels under control, which remained practically stable throughout the year and (iii) the annual price adjustments. We understand that the ARPU is a relevant profitability metric that allows comparability with other peers in the telecommunication sector, calculated by dividing mobile services revenues by the average monthly customer base. Competitive Environment Brazil’s mobile telecommunications market is mature and remains highly competitive, shaped in recent years by the nationwide rollout of 5G and by the sector’s structural reconfiguration following the acquisition and integration of Oi Móvel’s mobile assets by TIM, Vivo and Claro. The acquisition of a portion of Oi Móvel’s mobile assets reinforced our strategic objective of supporting a more balanced and sustainable competitive market structure. It also enabled improvements in service quality and customer experience, more efficient asset utilization, portfolio optimization, accelerated technological innovation and the capture of operational synergies, while maintaining a disciplined approach to capital allocation and shareholder value creation. Technological evolution continues to influence competitive dynamics in the Brazilian telecommunications sector. The ongoing adoption of 5G, which has exceeded certain initial regulatory rollout milestones and, based on third-party industry projections, may become the predominant mobile technology over the course of this decade, could introduce additional sources of competition. This evolution may result in changes to market structure and competitive behavior and create opportunities for monetization, service differentiation and innovation. However, the extent and timing of any such opportunities remain subject to market conditions, regulatory developments, competitive responses and customer adoption patterns. Since the last spectrum auction conducted by ANATEL in November 2021, which awarded licenses across multiple frequency bands for 20-year terms, competition has intensified not only among the three national mobile operators but also through the presence of established regional providers, such as Algar Telecom and Sercomtel, as well as newer entrants that have launched 5G services in recent years, including Brisanet, Unifique and Ligga. These developments have driven increased investment in network infrastructure, expanded coverage and a more dynamic competitive environment. In addition, the Brazilian mobile market has experienced growing competitive pressure from mobile virtual network operators (MVNOs) and digital-first entrants, which have expanded their offerings and progressively increased their customer bases. Future spectrum auctions, together with the refarming and reorganization of existing spectrum, are expected to support continued network expansion and may further intensify competition, particularly among regional and alternative service providers. Beyond competition from traditional mobile telecommunications operators, competitive pressure from fixed-line and broadband service providers has increased and may continue to intensify. This trend reflects aggressive commercial strategies aimed at attracting subscribers through price competition and bundled offerings that combine mobile and fixed voice services, broadband and other digital services. In recent years, the Brazilian fixed broadband market has been characterized by a combination of organic growth and consolidation through strategic acquisitions. Organic growth has been driven primarily by the expansion of fiber-to-the-home networks and increased penetration within existing coverage areas, although overall growth rates have moderated compared to prior periods. At the same time, market fragmentation has continued to support consolidation initiatives. While earlier phases focused on transactions among smaller regional providers seeking scale and operational efficiencies, more recent transactions and discussions have involved larger regional ISPs and national operators, reflecting a more advanced stage of consolidation. In this context, one potential opportunity for fixed broadband providers is to leverage their existing customer bases through bundled offerings that combine broadband services with mobile solutions, including those supported by neutral mobile network infrastructure. There is also competition from other services outside the telecommunications industry, such as the global and local OTT providers who offer content and services based on the Internet, including voice calls and messaging without paying for network infrastructure. OTT applications have become so important to customers that in many cases they are bundled as free services by mobile operators. OTT communication apps have a business model that demands increased network traffic, but telecommunications companies are the ones required to finance and undertake the network infrastructure investment required to address the increased Internet traffic which comes from OTT applications. In line with our growth strategy of services beyond connectivity, we look into new markets characterized by their own unique competitive environments. Being an orchestrator of a digital partners ecosystem requires us to develop new capabilities and agility to adapt to new markets. E. Critical Accounting Estimates For information about our critical accounting estimates, see our audited financial statements included elsewhere in this annual report.