A Quarter in Few

2

Operational

Total Revenues

− Service

− VAS

− Handset

EBITDA

CAPEX

3Q13 YoY 6M13 YoY

5,083 7.6% 9,655 7.1%

4,207 2.6% 8,152 1.9%

876 40.9% 1,503 47.9%

1,252 4.2% 2,456 3.0%

R$ Million

3Q13 YoY 6M13 YoY

Postpaid (mln users)

MOU (min)

ARPU

11.9 16.4% 11.4 13.9%

150 8.4% 146 15.1%

R$ 18.6 -1.6% R$ 18.3 -2.2%

Financial

1,175 52.3% 1,593 -0.4%

1,362 21.5% 2,377 25.0%

Network Check Point: Mobile BB Plan & Backhauling

3

POP MW

POP MW POP MW

POP MW

BSC-RNC Site

POP MW

Key Steps for Improvement: MBB/FTTS Project

Own fiber reaching ~85% of antennas at major

cities.

Targeting 38 main cities till year end.

FTTS: From 2-8 Mbps link to +100 Mbps.

Caching, Peering, Web Acceleration.

Macro coverage fine tuning for mobile

broadband.

574

2,394

979

1,660

Apr/13 Sep/13

4x

Downlink throughput (Kbps)

TIM

Market Average

Backhauling

Evolution

Results for Recife

Our 1st out of 38 cities

Source: TIM MBB (HSPA+ DC) 3G (HSPA)

Q2 Q3

MBB Coverage

Network Check Point: Backbone Evolution

4

2016 MASSIVE LD

BACKBONE

65,000 KM of FIBER

2013 FIBER TO THE

AMAZON

46,000 KM of FIBER

By YE13

2011 ATIMUS ACQUISITION

RJ & SP

20,500 KM of FIBER

2009 INTELIG

ACQUISITION

+ 15,000 KM of FIBER

98-08 PURE MOBILE

INFRASTRUCTURE

0 KM of FIBER

Fiber

Timeline

HLR

Resiliency

Macapá

Tucuruí Manaus

Jurupari Fortaleza

Maceió

Salvador

Vitória

Rio de Janeiro São Paulo

Florianópolis

Porto Alegre Santa Maria

Curitiba Umuarama

Campo Grande

Cuiabá Brasília

Rib. Preto

Porto Velho

Boa Vista

Belém

Goiânia Rondonópolis

Belo Horizonte

Existing network

Network in construction

LT Amazonas network

~R$200 million

27 cities

1,757 km

Capacity:

75 x 100 Gbps

Project Details:

Amazon Fiber

Backbone

Increasing

number of HLR

Centrals.

From 3 to 8.

4G Update…

(Lines; Market Share; Source: Anatel)

Customer Base Evolution

(Million lines; Source: Anatel; TIM)

Operational Performance (1/2): Base Evolution & Quality Indicators

5

59.1 59.6 60.3 60.8 61.0

10.3 10.7 10.9 11.4 11.9

Pre

Paid

Post

Paid

4Q12

70.3

3Q12

69.4

1Q13 2Q13 3Q13

71.2 72.2 72.9

D% YoY

+16%

+3%

+5%

May/13 Jun/13 Jul/13 Aug/13

Prudent strategy in the auction &

efficient roll-out paying-off

2,961

4,518

2,722

3,801

7,192 7,075

4,176

6,692

3Q12 4Q12 1Q13 2Q13 3Q13

P1 P3 P4 TIM

94.9

93.0

76.1

62.6

Jun-12 Oct-12 Feb-13 Jun-13

Anatel IDA - Index of Caring Performance Claims at Consumer’s Protection

Agency (SINDEC - Procon)

Customer Care Performance

(Points; Complaints over 1000 lines; Average monthly claims. Source: Anatel (last reported); SINDEC)

0.2

0.3

0.2 0.3

0.3

0.4 0.5

0.7

Jun-12 Oct-12 Feb-13 Jun-13

Anatel Complaints

Mix of Post Paid

(%; Source: Anatel)

14.8%

16.4%

3Q12

3Q13

99.9

98.0

92.8

84.9

23% 20%

26%

29%

Market Share

29%

SAC* & SAC/ARPU

(R$/gross adds; months)

Operational Performance (2/2): Strong Efficiency

6

Gross Additions

(Million lines; Source: TIM)

8.7

9.7

3Q12 3Q13

+17%

Bad Debt

(R$ Million; % of Gross Revs.)

33.6

30.5

3Q12 3Q13

-9% 80

56

3Q12 3Q13

-31%

1.1% 0.7%

Commercial

Network

SAC

(R$)

SAC/

ARPU

(months)

Total Traffic

(Bln minutes)

28.7

32.8

3Q12 3Q13

+14%

1.8 1.6

Leased Lines Costs

(R$ million)

3Q12 3Q13

0%

*Subscriber Acquisition Cost

% of

Gross

Revs.

Bad

Debt

Marketing: Keeping the Innovative Approach

Chip Torcedor

TIM SIM blister for each

team.

Increase Stickiness

14 Teams alread

sponsored

7

Liberty Controle Express

Pushing on Postpaid migration

Payment via credit card

jan/13 sep/13

~7x

+56%

sep/12 sep/13

Young

Young segment positioning

Member get member through

social network since 2010.

Nonstop

Innovation

Recent

Past

VOICE DATA

Recarga Troco International LD Infinity Web + SMS TIM Music

Talk unlimited on-net for

R$2 for 2 days.

Capture extra “charge”.

Leveraging on micro

recharge on physical

PoS.

Up selling approach,

targeting only customer

base.

US:R$0,20/min.

+ 8 countries: R$0,50/min

FMS initiative.

Capturing the unexplored

mobile international calls

market.

Market attended Today

through fixed carries.

Internet + unlimited SMS

on/off-net.

Pay per day.

Combining Web and

SMS offers.

Cross selling WEB and

SMS .

Unlimited download.

Pay R$0.50/day.

Over the top service.

Increase customer

stickiness.

Network friendly.

13 million songs already

downloaded.

1,122

1,362

3Q12 3Q13

39% 43%

46% 50%

52%

3Q12 4Q12 1Q13 2Q13 Jul 13

Marketing: Smartphone Supporting Data Growth

Data Users

(% of Data Users in CB; million users)

VAS Revenue Growth

(% of Mobile Services Gross Revenues; R$ Million)

Smartphone Sales

(% total handset sale)

19% 23%

Smart/Web phone Penetration

(% over total base of lines)

VAS

Gross

Revs.

VAS/Revs.

67%

57%

46%

46%

42%

13%

21%

24%

19%

30%

21%

22%

30%

35%

28%

3Q13

2Q13

1Q13

4Q12

3Q12

Smartphone Webphone Essencial

+22%

8

Smartphone approach to support

data usage growth.

EBITDA neutral. No subsidy Policy!

Leadership position in market of

handset (3Q13)

39% market share of

smartphones sold

19.9 24.5

3Q12 3Q13

29% 34%

+23%

Launching entry-level 3G tablet

46% Notebook

36% Tablets

17% Desktop

44%

56%

2010 2012 2014 2016

Devices Share at Sales

Live TIM: Maintaining the High Speed Mode

257

522

609

804 881

3Q12 4Q12 1Q13 2Q13 3Q13

Network Evolution

(000 Addressable Households ; Source: TIM)

Net Adds

(000 Clients; Source: TIM)

1Q13 2Q13

Customer Base

(000 Clients; Source: Anatel)

1.6

9.7

16.3

26.4

42.6

4Q12 1Q13 2Q13

Market Share SP+RJ (August)

(UBB >34MB ; Source: Anatel)

9

38 neighborhoods in SP

34 neighborhoods in Rio

3Q13 3Q12 3Q13 3Q12 4Q12

Accelerating sales and

improving ARPU;

Taking the lead as #1

challenger in Rio and São Paulo;

Reference as UBB service

provider ( >50% net share).

LIVE TIM

48.5%

OI 7.8%

NET 8.9%

VIVO 22.0%

GVT 7.1%

OTHER5.6%

Clients highly satisfied

13.3x

1.2

8.1 6.6

10.1

16.2

8,3

9,0

9,1

8,7

7,7

6,9

7,2

8,0

7,5

6,6

7,3

7,5

8,0

7,9

6,9

General Satisfaction

Bill

Conection Quality

Phone Attending

Offer

Clients highly satisfied

Source: TNS Market Research

6.0 7.0 8.0 9.0 10.0

P1 P2 TIM

Financials: Evolution Analysis

1,201

EBITDA

3Q12

EBITDA

3Q13

+10

ΔMkt

and Sales

ΔPers./G&A

and others

-97

ΔHandset

Margin

-6

ΔNetwork

and ITX

+38

ΔServ.

Revs

25.4% 25.3%

31.0% 31.5%

+107

+10.4% +1.2% -55.2% -0.7% +2.6% ΔYoY

+4.2%

622 876

4,100 4,207

Tho

usa

nd

s

Revenue

3Q12

Δ Handset Δ Fixed

Services

Revenue

3Q13

Δ Mobile

Services

+254 -45 +151

Service

Handset

4,722

-22.3% +3.9% ΔYoY

5,083

1,252

24.6%

30.5%

10

+40.9%

+2.6% EBITDA Margin

Service EBITDA Margin

EBIT Net Financial

Result

Net Income

9M13

Taxes and

Others

Depreciation/

Amortization

EBITDA

9M13

From EBITDA to Net Income

(R$ Million)

ΔYoY +2.2% +4.9% +48% -1.9% +2.1%

3,708 -2,045

1,663 -202 -454

1,007

Net Revenue Evolution

(R$ Million, % YoY)

EBITDA Analysis

(R$ Million)

+7.6%

+40.9%

+3.4%

3Q13:

R$315 mln

-15.6% YoY

624

843

1,314

Financial Position

Capex

(R$ Mln)

D Working Capital

(R$ Mln)

853 772

1,175

252

923

3Q11 3Q12 3Q13

320 413

3Q11 3Q12 3Q13

987

11

OFCF

(R$ Mln)

Net Debt

(R$ Mln)

3Q11 3Q12 3Q13

3Q11 3Q12 3Q13

Net DEBT /

EBITDA

(trailing 12m)

0.32 0.29 0.28

D OFCF YoY: +R$471

~94% in

infrastructure

+29%

+139%

+52%

-10%

+35%

+56%

1,458 1,550

252 LT Amazonas

1,446

1,194

LT Amazonas

Conclusions

Conclusions & Outlook

13

Infrastructure

Strategy & Offer Evolution

Efficiency

Continuous deployment of fiber

to support data traffic growth.

FTTS will now reach 38 cities by

YE2013 from 14.

New backbone routes to

increase resilience.

Signed first vendor agreement

on small cell coverage to

improve network access and

quality.

Continuous improvement in

network related complaints.

Finalized implementation of new

call center and data center

architecture.

Accelerated Capex.

Commercial side:

− Low SAC.

− Payback (SAC/ARPU) under

control.

− Bad debt stable at low levels.

Network side:

− Increasing MOU with stable

leased lines costs.

− Proprietary infrastructure

deployment.

Postpaid continuous growth,

better customer mix.

Maintaining solid data services

growth.

Continuous offer evolution

backed by innovative DNA.

− International calls.

− Infinity Web + SMS.

− “Recarga Troco” - “Change”

top-up.

− +70% of smartphones over

new sales.

− Good progress on Intelig and

Live TIM.

Triennial Plan 2014-16 to be disclosed on November 8th.