Good morning ladies and gentlemen. Welcome to TIM S.A. 2022 Fourth Quarter Results Conference Call. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company’s presentation. There will be a replay for this call on the company's website. We highlight that statements that may be made regarding the prospects, projections, and goals of TIM S.A. constitute the beliefs and assumptions of the company's board of executive officers. Future considerations are not performance to warranties. They involve risks, uncertainties, and assumptions as they refer to events that may or may not occur. Investors should understand that internal and external factors to TIM S.A. may affect their performance and lead to different results than those planned. Now, I will turn the conference over to the CEO, Mr. Alberto Griselli, CEO of TIM S.A.; and to Ms. Vicente Ferreira, Head of Investor Relations, to present the main messages for the fourth quarter of 2022. Please, Mr. Alberto, you may proceed.

Good morning, everyone. Thanks for attending our results conference call. 2022 was a year of relevant transformations in a volatile environment that required much focus on execution to deliver what we promised during the TIM Brasil Day. Looking at our results and what we accomplished, I'm sure we did a great job. Our plan to be the next generation team is at full speed. Let's recap some of those milestones of 2022. In April, we closed the deal with Oi and we started the immense job of integrating assets. In June, the Reclame Aqui web portal recognized us for our customer service excellence. We were also awarded the Great Place to Work certificate. In July, we began our 5G journey for real, with Brazil being the first country to be covered and we were the first operator to implement a standalone 5G network in Brazil. In the subsequent months, we leveraged 5G to differentiate ourselves from our peers in Brazil and to reinforce our innovation positioning. We adopted an all-in coverage approach in key Brazilian capitals and showcased the 5G experience in prominent events such as Rock in Rio and the Maracanã stadium. In the business space, we pioneered partnerships with industry leaders in various verticals such as agribusiness, automotive, and logistics. During the year, we became the operator with the broadest mobile coverage in Brazil. Those achievements were accompanied by a robust set of financial results. Our top line grew close to 20% year-over-year. Our EBITDA also presented significant momentum, closing the year with growth of more than 17% compared to 2021. This performance led our margin to exceed 47%. The proxy for operating free cash flow rose more than 26% yearly, which helped us fulfill our promise of BRL 2 billion in shareholder remuneration. We fulfilled all our promises to the market and our stakeholders. The entire set of goals we established in our guidance in May during our TIM Brasil Day was achieved. These solid industrial and financial outcomes correspond to one more year of long-term responsible progress towards an integrated ESG agenda, reflected by improvements in all our sustainability rankings. Environmental management highlights increasingly distributed, clear, renewable energy metrics and the continuous improvement of energy efficiency in network data traffic. We adhere to the highest international target-setting and monitoring standards in this roadmap. In the social sphere, TIM has been recognized for the second consecutive year as the worldwide Telco best practice in diversity and inclusion policies, which contributes to making our company one of the best places to work. Moreover, being the first and only Brazilian operator to have reached 100% of Brazilian municipalities covered is an undeniable contribution to digital inclusion. Governance was enhanced by the international recognition of our cybersecurity management and by the federal government's confirmation as a pro-ethics company. Additionally, we are using technology to help develop communities under a partnership with the NGO Gerando Falcões. So, when we say ESG is embedded in our strategy and everyday actions, it is not just a claim. Now, entering into more detail regarding our business performance, I want to highlight our revenue dynamics. In the fourth quarter, total net revenues grew more than 22%, with a significant contribution from mobile services that expanded greatly to reach a speed of 23% year-over-year. Fixed services maintained solid performance, going up by high single digit percentages. For the full-year figures, service revenues showed an excellent performance growing more than 19% year-on-year, driven by double-digit growth in mobile and high single-digit in fixed. It is worth highlighting the contribution from customer platform partnerships and fixed broadband, which we now call TIM UltraFibra. Since transactions closing with Oi, I've made this point every quarter. TIM's revenue performance was driven by more than the Oi assets acquisition. Our organic performance continues to be helped by the positive net effect of our commercial strategy, benign macroeconomic environment, and rational competition. Analyzing the segments individually, postpaid revenues in 2022 presented a solid pace, up more than 19% year-over-year with an ARPU excluding machine-to-machine lines of approximately BRL 45.2 in the fourth quarter. Prepaid revenues expanded more than 21% compared to 2021, pointing to an ARPU of close to BRL 14. Nonetheless, TIM's customer base and ARPU were significantly affected by the acquisition of Oi assets. In 2023, we should see a normalization in the volatility seen in those two indicators as we complete the cleanup of Oi's customer base from lines that do not generate any traffic or revenues. It is essential to highlight that the underlying trends for both postpaid and prepaid are positive. In postpaid, we are sustaining our volume to value strategy with innovative offers such as Amazon Prime and in-flight connectivity, coupled with continuous improvement of service levels. In fact, last quarter we registered our best Black Friday. In prepaid, all operational indicators are improving. The number of clients recharging, the total amount of top-ups, our share of gross additions, and our share of recharges are all showing significant improvement. Those are clear evidence of our success with innovations such as partnership programs and Prime Video. Since I'm discussing Oi's impact on TIM indicators, let's go deeper into the integration details. Integration is on track. We have completed the two most relevant steps of network integration and we are well advanced in the last phase. We expect to complete full integration by the end of the first quarter. As for client migration, we have totally completed the prepaid transition with close to 8 million lines moved to our systems. Postpaid has a similar scenario. We are close to finishing the migration with most of the remaining lines being machine-to-machine. The last point regarding the arrival of Oi's former clients is related to the cleanup I mentioned earlier. As you saw in November, we disconnected 5.1 million lines with zero traffic. Now, the customers are in our systems, and we will continue to analyze their behavior and profile; eventually, additional adjustments may be necessary. This quarter, we are also planning some migration of control lines to prepaid to reflect the real customer behavior. It is important to point out that these actions do not impact our revenues. The third element in the integration agenda is the commissioning process. Different from the other two, this activity started in October last year and will accelerate in 2023 following the end of the antitrust-required offering period. The first 500 sites were dismantled last quarter, and we expect their financial impact to appear in early second quarter. Differently from what appeared in some recent reports, the commissioning process is not delayed; in fact, it is ahead of schedule. Its financial benefits will build up during the year, leading to a more pronounced impact in 2023. Our scheduled plan is for 3,000 sites to be dismantled this year, leaving more than 1,000 sites for 2024. On mobile, let's discuss the evolution of our network. 2022 represented a major step in becoming the leader in network quality. Throughout the year, important milestones were achieved. Firstly, our indisputable leadership in 4G was confirmed. Secondly, we started in 5G, having the most available network and being leaders in key capitals such as São Paulo, Rio de Janeiro, Curitiba, and Recife, as a result of our all-in 5G deployment approach. Lastly, in the second half of 2022, we achieved the broadest mobile coverage, and in early January this year, we reached 100% coverage in Brazilian municipalities. The journey to build a differentiated infrastructure to transform customer experience and create new assets for brand positioning has only begun. We are on the verge of realizing the full benefits of closing the spectrum gap with our peers while becoming much more efficient in terms of CapEx. In the next couple of years, we will see this transformation materialize. 5G has a crucial role in this process. As I said last quarter, the 5G launch is a success. The smart coverage approach and well-thought-out device strategy are delivering competitive differentiation and improvements in customer experience. Additionally, the technology is starting to contribute to 4G CapEx avoidance as traffic load exceeds 10%. Please look for our communication on the 14th of this month when we will update our guidance. The next topic is an update in an area of the business where we have been relatively quiet in 2022. The truth is that we had a lot on our plates and had to prioritize. As we move forward with our strategic plan, we will focus on going beyond our telecom core. Today, we announced a new partnership in the health sector. TIM Brasil is joining forces with a well-established group to address the massive opportunity created by a population underserved by private healthcare services. Approximately 165 million people in Brazil do not have any health insurance, and when we analyze our client base, more than 60% face the same situation. The group we are partnering with is the largest popular medical network in the country, present in all states with more than 400 clinics, covering 100% of municipalities with more than 90,000 inhabitants. We plan to launch a digital solution to facilitate access to health services, starting with a premium offer to help build a distinctive value proposition. With this partnership and following LGPD rules, we can also offer and sell our telecom services to a client base of 18 million customers that use their clinics. Let's change gears to our fixed services. By now, you all know that we have rebranded TIM Live to TIM UltraFibra. The novelty marks the beginning of a new moment in the history of our FTTH services, elected six times as the best broadband in Brazil by Estadão’s Best Services Award. The name change aims to bring the service even closer to consumers, generating a clear and immediate association with its attribute of high download and upload speeds. A series of initiatives are planned to consolidate the new brand with the public, following the expansion of the service to new markets that will be announced throughout the year. The first move started in Paraná State where we launched TIM UltraFibra, and services will be available in 34 cities. Returning to 2022, our focus was to ensure a smooth transition to the new operational model using I-Systems as our network partner without impacting the growth profile of our broadband services. I believe it is fair to say we achieved that. We grew revenues at around 11% compared to 2021. We expanded the client base by mid-single digits while performing a massive migration from FTTC to FTTH. Now, we have more than 70% of our users with speeds above 150 megabits per second, improving customer experience and satisfaction while helping to reduce churn. As a result of our efforts to grow sustainably with high-value services and portfolio, we maintain robust FTTH ARPU levels of around BRL 98 despite competitive pressures. Now, I will pass the floor to Vicente, our Head of IR, to review the financial results.

Thank you, Alberto, and good morning, everyone. As explained earlier, the fourth quarter, as well as the full-year figures point to robust performance across all relevant lines of our results. Even in the face of important challenges, such as the high inflation level in early 2022, this is proof of TIM’s resilience and effective execution. Our OpEx line was impacted by this inflationary environment, along with other elements such as temporary service agreements with Oi, additional costs and expenses due to a more extensive customer and infrastructure base, and the rental costs for the fiber last mile. These elements are not new, and we've been discussing them for the entire past year. They drove OpEx to rise more than 20% versus 2021 in the quarter and for the full year. The good news is that most of those adverse effects will dissipate in 2023 because we will not face the same cost pressure from the TSA or because we will be comparing apples-to-apples under the FTTH asset light model. We also expect to start capitalizing on the additional opportunities to take the former Oi clients to the same level of digitalization as our TIM customers. In this context, fourth quarter EBITDA sustained an excellent performance, growing close to 20% year-over-year, combining organic evolution and M&A contributions. For the full year, EBITDA rose more than 17%, and margins stood at 50% in Q4 and 47.4% in 2022. If we excluded the impacts of I-Systems' rental costs, the EBITDA margin would have been 51.2% in the quarter and 49% for the year. As we've discussed in prior quarters, TIM Brasil is undergoing transformations that impose transitory impacts on its results. That's precisely the case for our below EBITDA lines. They are under pressure from the leasing contracts we acquired through M&A transactions. These short-term effects will disappear in 2024, but improvements will already be noticed in 2023. Alberto already shared some details of our site decommissioning program that will help us in this process. Having said that, it's important to note that looking exclusively at our net income performance can be misleading. To provide some context, over BRL 1 billion was attributed to depreciation and interest related to the leasing contracts without necessarily resulting in the same cash impact. Therefore, a better way of understanding our evolution is to rely on metrics of operating free cash flow. EBITDA minus CapEx, for example, grew robustly by more than 26% compared to 2021. The percentage over net revenues representing a proxy for free cash flow margin expanded to 25.5%. Another metric that's gaining traction in the market is EBITDA after leases minus CapEx. This is a way to account for the leases as if they were OpEx, essentially reversing the effect of IFRS 16. Again, in this metric, we observed a solid double-digit increase. As a result, despite posting a contraction in net income, we delivered on the BRL 2 billion promise we made. RMB 1.4 billion was already paid, and the additional 600 million is being proposed at the end of the shareholders' meeting. It's worth noting that TIM has over BRL 7 billion in distributable reserves. In closing my comments, I want to emphasize the strength of our cash position even in a year marked by significant disbursements, such as the payments related to Oi and the spectrum auction. This performance helped to maintain a healthy leverage level, with our net debt-to-EBITDA ratio reaching 1.4x, below our guidance for this metric. Now, I will hand the call back to Alberto to wrap up our comments.

Thank you, Vicente. 2022 was a remarkable year for us at TIM Brasil. The number of things we were able to deliver while maintaining high standards and achieving great financial results is something to celebrate. We fulfilled our promises to the market and our stakeholders. The entire set of goals we established in our guidance in May during the TIM Brasil Day was achieved: double-digit service revenue growth, check; double-digit EBITDA growth, check; an investment of BRL 48 billion, check; free cash flow margin above 24%, check; indebtedness below 2x EBITDA, check; and BRL 2 billion in shareholder remuneration, finally check. Those accomplishments confirmed that the first step toward building the next generation team was taken and we are on the right path to transform this company into the best mobile operator in Brazil. The second step starts in 2023 and will require the same level of focus and commitment from the entire company. Nonetheless, despite tough comparisons, our updated plan points to a better overall business dynamic compared to our regional expectations for 2023. We are forecasting a significant expansion in free cash flow margin, along with some improvements in EBITDA margin, both driven by efficiency and synergies that will enhance revenue, OpEx, CapEx, and lease structures. Ensuring that our shareholder remuneration benefits from those gains is central to our equity story. Stay tuned for February 14 when we will share our renewed guidance with the market. As I reach the end of my comments, I want to express my gratitude for the opportunity to close this first year as CEO of this fantastic company. No doubt that building this new chapter in TIM's history requires substantial effort, but I'm very confident we will succeed. That is why I want to share this special moment with the entire team and thank them for their outstanding work and commitment. Looking back, it was well worth going the extra mile. Without further ado, let's open the floor for questions. Please, operator.

Thank you, Mr. Alberto. Our first question comes from Bernardo Guttmann with XP. Please, Bernardo.

Hi. Good morning. Can you hear me?

Hello.

Okay. I hope you can hear me. The first question I wanted to ask is about the competitive environment in mobile. If you could please comment on how pre-paid, post-paid, and hybrid offerings are going to be affected? The second question would be about the impacts of Power decommissioning in 2023; how could we expect the impacts to be divided during the quarters of the year in terms of the financials? How much should we expect this impact to be?

Okay, Marcelo. Let me address these two questions. Regarding the competitive environment, if you look at the past few months and the overall dynamics, both prepaid and postpaid markets have been relatively rational. I would say that over the last 18 months, this trend appears likely to continue. As you know, as a sector, we haven't been able to pass through inflation for many years at entry prices. There are some positive updates; we initiated a prepaid price adjustment starting last year, which has already benefited our top line growth for prepaid. For post-paid, we have seen some positive news that came along just recently, with market leaders updating their control and postpaid pricing. Overall, I believe this rational approach will stay in the coming months. In terms of the lease and commissioning plan, we have an ambitious decommissioning plan that began in October last year with the dismantling of just over 500 towers in 2022, and we plan to decommission another 3,000 towers throughout 2023. The process involves physical activities required to dismantle the equipment. Economically, the savings will be recognized after a few steps between physical decommissioning and the actual recognition of the savings. In principle, it takes roughly three months to see the financial impact after physical decommissioning. So you will see the impacts ramping up over time. The first quarter will reflect the full value, and by the last quarter, we will accumulate the savings from the physical decommissioning. You can monitor our plan's effectiveness by observing the decrease in lease costs on a quarter-by-quarter basis.

Perfect. Very clear. Thank you.

The next question comes from Freddie Mendes with Bank of America.

Hello, good morning, everyone. Can you hear me?

Yes, Fred?

Okay. Perfect. Sorry. I have two questions here. The first one is about the effective tax rate. In our calculation here for this year, it remained at single digits, and obviously, you still have the IOC for 2023 and a few fiscal benefits. Can we expect this line to remain somewhat similar in 2023 over 2022? The second one is about CapEx. I know you have guidance, but just wondering in this scenario with the macro conditions being more challenging, if there's room to reduce CapEx for 2023? Thank you.

Okay, Fred. Let me start with the CapEx question and then I will have Vicente answer your question regarding the tax rate. Regarding CapEx, last year and this year have indeed been impacted by several one-off factors primarily associated with the Oi integration, which inputted something like 500 million over 2021 and 2022. Additionally, the deployment of 5G technology requires significant initial investment. In previous quarters, I noted that with the Oi acquisition, one of the most important synergies would come from the infrastructure aspect. We closed the gap in frequencies with the acquisition from Oi assets, contributing to approximately 70% of the overall synergies. Moreover, the deployment of 5G is enabling 4G offloads at a rate faster than initially expected. We anticipated that the industrial impacts would lead to nominal reductions in CapEx coming down the line. Therefore, I would say that the synergies from Oi materializing, and the 4G offload occurring faster than expected contribute significantly to increased CapEx efficiency. You will see these numbers reflected soon.

Hi, Fred. This is Vicente. Regarding the effective tax rate, it is important to clarify that we do not have specific guidance for the effective tax rate. Instead, let's discuss the drivers influencing it. The current effective tax rate is primarily driven by interest on capital and some credits we have related to previous credits. So, the drivers will remain the same in 2023 as well. We do not foresee significant changes in legislation or our taxation rules for this year. Therefore, the broad framework that is impacting our effective tax rate will remain quite consistent.

Perfect. Super clear. Thank you, Alberto. Thank you, Vicente.

The next question comes from Bernardo Guttmann with XP.

Hello. Can you hear me now?

Yes, Bernardo. Now we hear you.

Hi, good morning everyone. Thanks for taking my question. I have one question related to the fiber business. The company accelerated the launch this month in several cities in Paraná. I suppose that most of these cities are through the Vital network. In this sense, I would like to understand if this is a pilot project and what the rollout strategy will be for this new partner. Which regions should you focus on? Since Vital has a very large footprint, how do you plan to scale faster through this new model? Thank you.

So, Bernardo, as you correctly pointed out, we are now working with two partners, I-Systems and Vital. The strategy remains somewhat unchanged. I-Systems focus on deploying new clusters and building out fiber. We launched last year a joint venture, followed by a recent launch. The plan is to deploy new fiber where we don't find additional near-term networks, as this is an efficient way forward. The Vital partnership provides us with additional options since we can access a larger footprint with their existing infrastructure. As you've noted, we launched a pilot project in Paraná recently, an area where we are a leader in mobile, both in postpaid and prepaid segments. Our brand recognition is high and our commercial capabilities are strong. The pilot is proceeding in line with our expectations, and I believe we can share more details in the upcoming quarter once we consolidate the results. So far, the brand launch and offering are progressing well, but keep in mind that we are in early stages following our launch. The goal is to leverage Vital as a complement to I-Systems where they do not have coverage plans.

The next question comes from Victor with Credit Suisse.

Hi, good morning, Alberto, Vicente. I have just one question on mobile competition. We recently saw some competitors increasing their offers and store prices. I would like to know if you plan to follow suit.

Yes. Victor, there was some information in the initial response to the first question. The approach in the mobile market has been an emphasis on implementing a more-for-more strategy. This strategy centers on our customer base. However, to ensure long-term sustainability, we're always discussing the methods to adjust entry-point prices in stores as well as on our websites. This is necessary, particularly given that these prices have not been updated for many years now, and we have been unable to pass inflation on entry prices for some time. As you correctly mentioned, the market leader made changes just a few days ago. While we were planning to initiate similar adjustments internally, the market appears to be trending in the right direction. We took the initiative to implement prepaid price adjustments last year, where we position ourselves as co-leaders in the market. The market reactions have been positive, leading to improvements in prepaid revenues without any downside to our market share, indicating that everything is progressing well.

Great. Very clear. Thanks, Alberto.

Without any more questions from analysts, we will now start the public Q&A session from the webcast platform, which will be read by Mr. Vicente. Mr. Vicente, you may proceed.

The first question comes from an unidentified analyst regarding the Oi subscriber cleanup. Excluding this cleanup, there was a decline of 1 million in postpaid subscribers compared to the third quarter of 2022. What led to this decline in subscribers? Please, Alberto.

Okay. This is quite an important question because it gives me the opportunity to describe better the dynamics of our net additions. So, when we look at this, we have several phenomena taking place. First and foremost, our organic business, pre-Oi, is continuously growing in net additions, as evidenced in both the first and second quarters. However, we have a new layer related to Oi in the fourth quarter, in addition to some cleanup we executed on our customer base. On the Oi side, there are three main effects impacting the customer base. The first is the cleanup of the existing customer base, which led to around 5 million cancellations in November. This cancellation was finalized during the migration process. There could be some fine-tuning in the first quarter. The second aspect is the reclassification of control lines to prepaid. Oi labeled some customers as control, which should actually be classified as prepaid based on usage. This is estimated to be in the range of roughly 1 million customers. The third circumstance involves business contracts that gave rise to additional cancellations due to expired emergency contracts from government programs that had provided a significant volume of low ARPU lines. Around 500,000 lines from such contracts were canceled at the end of their contract terms. To summarize, these two cleanup and reclassification actions do not impact revenues since in the case of cleanup no revenues were recorded, and in the reclassification case, the revenues are maintained, but the customers are classified differently. Furthermore, we are improving our monetization of prepaid customers as we move forward through tailored marketing and offer systems.

The next question comes from Ryan Gomes. It's regarding bad debt. The bad debts on your balance sheet increased. Was this originated by clients from Oi, or does it reflect organic deterioration in TIM clients?

Okay. In terms of the overall performance of bad debt, our bad debt as a percentage of revenues has decreased. Therefore, we have observed an improvement in our overall KPI. If this question arises from an annual comparison, the recent increase is attributed to some adjustments made in the last quarter of 2022. However, our bad debt performance is improving over time, leading to a decline in the percentage of bad debt relative to our revenues. The collection curves indicate a positive trend, showing our ability to collect payments. Regarding Oi's customers, they typically exhibit slightly higher bad debt levels than our own customers. We view this as an opportunity to enhance our collection processes in 2023.

Thank you, Alberto. We have an additional question from our webcast. This comes from an individual investor congratulating us on our results and asking for more information regarding the Vital contract. Alberto, could you elaborate a bit on that, please?

Well, unfortunately, there is not much I can share regarding this contract since it's essentially commercial and specific to us. However, I can state that we have formed a contract that we believe aligns well with our business plan and expectations. Unfortunately, I cannot disclose specific numbers or contractual terms to the public. An important point to mention is that since we are operating as a second tenant, we do not have volume commitments or obligations with our partner.

I believe we have an additional question from UBS regarding the level of indebtedness. Is this level of indebtedness close to 1.4x considered ideal for the company, or do you believe you have room for improvement or could allocate capital differently moving forward? I’ll take this question. This 1.4x net debt-to-EBITDA ratio is actually lower than what we expected at the beginning of the year, and it’s even below our expectations for 2024. We are ahead of schedule in terms of deleveraging the company. We do expect to significantly enhance our free cash flow, which opens up opportunities either to achieve a better indebtedness level or distribute more to our shareholders. Alberto already mentioned this during the call. Therefore, keep an eye on the upcoming updated guidance on February 14 for more information on future expectations. The second question comes from André regarding the rollout of 5G. As we move into smaller cities, do you see possibilities for utilizing other technologies such as fixed wireless access to complement fixed broadband coverage? Would you like to address this one, Alberto?

Yes. Regarding fixed wireless access, we outlined our strategy during our Investor Day in May last year. There are a couple of opportunities. Firstly, we're prioritizing coverage. At TIM, as previously mentioned, we are implementing an all-in coverage strategy in major capitals. For instance, in São Paulo or Rio de Janeiro, we already offer widespread 5G coverage. The potential for leveraging this technology exists primarily in B2B contexts. We recently agreed with Itaú to implement fixed wireless access in several of their branches. In the consumer segment, in addition to coverage in key capitals, the current limitation for broader adoption of fixed wireless access is the availability of affordable customer premises equipment. However, due to increased manufacturing scale globally and commitments from some equipment manufacturers in Brazil to reduce prices, this barrier may be addressed by the end of this year. Consequently, we will be well-positioned to take advantage of this opportunity in the consumer segment, where we already have coverage on the pipeline likely for commercialization in 2024. This could serve as a worthwhile complement to our fiber offerings.

We currently have no further questions from our webcast platform. Therefore, we are concluding the Q&A session. I will now pass the floor to Alberto for his final comments. Please go ahead, Alberto.

Thank you, Vicente. I think it is fair to say that we enter 2023 as a larger and more robust TIM Brasil, in a more favorable telecom landscape with significant cash flow expansion opportunities ahead of us. In a couple of days, we will share updated guidance, and I’m very confident that we will again deliver on those guidelines this year. I look forward to meeting some of you in one-to-one meetings in the coming weeks, and I appreciate your attendance at our conference call.

Thank you. Thus, we conclude the fourth quarter of 2022 conference call of TIM S.A. For further information and details about the company, please access our website. You may now disconnect. Thank you once again, and have a nice day.