Tim S.A. Q4 FY2024 Earnings Call

Good morning, ladies and gentlemen, and welcome to TIM S.A. 2024 Fourth Quarter Results Video Conference Call. We'd like to inform you that this event is being recorded. There will be a replay for this call on the company's website. After TIM S.A. remarks are completed, there will be a Q&A session for participants. At that time, further instructions will be given. Now I'll pass the word to Vicente, Head of IR. Please go ahead, sir.

Hello, and welcome to TIM S.A's. fourth quarter 2024 Earnings Conference. I'm Vicente Ferreira, Head of Investor Relations. This video highlights our recent performance and the updated 3-year guidance. Afterwards, we will have a live Q&A session with CEO, Alberto Griselli, and CFO, Andrea Viegas. Please note that management may make forward-looking statements in this presentation; please refer to the disclaimer on the screen and on our Investor Relations website. Now let's review our results.

Hello, everyone. I'm Alberto Griselli, CEO of TIM Brasil. I'm pleased to present to you a robust set of results in a dynamic year when we overcame challenges and took advantage of our strengths to meet all of our targets. 2024 was marked by powerful cash generation, thanks to solid financial and operational results. We closed the year with service revenue growing 6.4% at the top of the guidance range. At this speed, we outpaced inflation, even with the second half of a tougher macro environment and an unfavorable comparatives base. In the fourth quarter, service revenues grew 5.1%. Our revenues were driven by mobile services, which expanded by 6.6% compared to 2023. In mobile, we highlighted the excellent performance of postpaid, which rose close to 9% year-over-year as a consequence of an expanding customer base with migration and a low churn of 0.7%. Our EBITDA ended 2024, increasing by 8% when compared to 2023, with another year of margin expansion. This shows the consistency and ability to operate efficiently. Our proxy for operating free cash flow grew close to 23% year-over-year. As a percentage of revenue, it will reach more than 20% in 2024. Innovative offers, continuous infrastructure development, and service improvements supported these strong financial results behind our 3B strategy, laying the foundation to deliver what clients value the most. We are focused on providing exceptional customer value through network quality, affordability, and service excellence. Under 'best network', we are concentrating on expanding 5G coverage across Brazil to migrate traffic and clients and positively impact client perception. We cover more than 600 cities, which is 20% more than the second player. As a result, 5G traffic has more than doubled compared to a year ago. For 2025, we will ensure consistency in network development while promoting the message of network quality leadership to consumers. The emphasis on technology innovation and network densification to address network gaps demonstrates a proactive stance in meeting customer needs and expectations as network quality becomes a core brand attribute. In 'best offer', 2024 was marked by innovation through content portfolio expansion while guaranteeing data monetization. We launched a new concept in postpaid and prepaid in parallel with transforming a historical gap into a differentiation element. We expect to deepen our distinctiveness with digital ecosystem expansion and a renewed more-for-more approach. Innovation will again play a role in using next best action tools to personalize and revamp our prepaid go-to-market strategy. To deliver the best service through 2024, we use technology to maintain service quality indicators at the highest standards. Digitalization continues to be an important source of opportunities, and our new app should become a relevant driver for that change. In 2025, customer journey evolution will continue aiming at reducing pain points and improving overall quality. A seamless experience in our digital channels, associated with resolvability features, and value-driven management of our clients showcases TIM's dedication to providing a tailored solution that meets diverse customer needs. In recent months, we have seen growing concerns about TIM's ability to overcome challenges imposed by its mature peers and new entrants, but we are confident in our strength in client attraction and retention, client monetization, and service experience. TIM outpaced its peers in growing the postpaid base by 7.3% year-over-year, reinforcing the idea that net additions should be rated relative to the size of the customer base and not only in the absolute number. We were the only large player to defend our market share in postpaid against the new entrants. As we have been explaining, this is primarily a game of migration and churn reduction. Thus, maintaining postpaid churn at a low level is vital to have a strong client base profile. Another area of clear strength for TIM is the monetization of its client base. We have the highest ARPU in the industry, above BRL 31, growing 6% versus 2023. To accomplish this, we combine a more-for-more strategy with upselling tactics to move clients up the ladder and cross-sell initiatives to expand our relevance in clients' pockets. Higher customer engagement also helps increase loyalty and consequently reduce churn. About 28% of our customers have more than one product. It's fair to say we have a diverse universe of metrics and sources when it comes to measuring service quality. There are the sector regulator, private protection agencies, public consumer protection agencies, and also internal metrics. When looking at the numbers from these different sources, it's clear that TIM has outstanding resolvability, being a champion in most of them, solving problems faster and according to clients' expectations. We still have room to improve regarding the number of complaints. We are the least complained about in some of these sources but have yet to close some gaps in others. Finally, we have the network evaluation. There is no doubt that TIM has the best network in Brazil. We are the first to be present in more places than anyone else, both in 4G and 5G. According to the recent report of Opensignal, TIM was the most awarded operator in the Mobile Network Experience report. We won 7 out of 14 categories, outpacing our peers, and these outstanding results highlight that we are the #1 operator in consistent quality for 3 years in a row, according to Opensignal; this metric connects to the most clients' experiences. The challenge we face for the network is related to perception, but this is a marathon and not a sprint race. Consistency in having the best network metrics and communicating this leadership to consumers is essential. In summary, we have our strengths and are working to ensure they remain a differentiating factor for TIM. At the same time, we are transforming our weaknesses into opportunities to further improve TIM's overall operational performance. Now I will talk about areas of opportunity to generate new revenue streams that are becoming more and more relevant to our mobile performance, and this will be the case for 2025 and the years ahead. Throughout 2024, we regained momentum in the development of our digital ecosystem. Our 5G fund managed by Upload Ventures reached 3 investees, and more recently, Minerva Foods became an LP, strengthening the fund's pioneering performance within an innovation ecosystem. Customer platform projects are evolving accordingly and bearing fruit in different segments. In health, Cartao de Todos reached more than 160,000 families enrolled over the last 6 months. In education, Descomplica maintains a solid rhythm to reach 800,000 enrollments in courses. In digital and entertainment services, the Exa partnership reached important milestones with TIM earning the right to subscribe to 27% of the company. Finally, our mobile apps and data monetization business is expanding rapidly as we integrate our proprietary inventory with Google and Meta while maintaining a consistent rollout of TIM Insights' new products. Another frontier for revenue growth is B2B IoT. Since the beginning of this project, we have summed more than BRL 700 million in contracted revenues. In 2024, we added BRL 270 million in new contracts, most of which refer to three verticals. The first is agribusiness, where we cover close to 20 million hectares with 4G. The second is logistics, with highways representing most of the growth while our coverage spans more than 5,600 kilometers of roads. The third is utilities, for which we sold more than 340,000 smart lighting units with connectivity services. During 2024, we focused on structuring sales processes and internal operations proactively to capture market opportunities and become a reference among B2B clients in these verticals. For 2025, we need to further develop this opportunity by aggregating solutions and expanding our addressable market. We are working with a robust pipeline of prospective clients across various verticals, so the future looks promising. Now we move along to more financial details with our CFO, Andrea.

Hello, everyone. I'm Andrea Viegas, CFO of TIM. I'm pleased to share that we ended the year with solid figures overall, confirming our capacity to increase cash generation and create more value for our shareholders. Once again, we delivered an EBITDA that grew more than inflation, with a 6.2% year-over-year increase in the fourth quarter. This contributed to a strong year with an 8% year-over-year increase in margin, reaching 49.6%. After accounting for lease impact, EBITDA after lease rose by double digits in 2024, with margin expanding by 1.7 percentage points. This was a consequence of our efforts to conclude the decommissioning tower projects faster than expected and to renegotiate our contracts. It's worth mentioning that most of the fines were paid, with only a small part remaining for 2025. Our net income grew double digits for the seventh consecutive quarter, consolidating a year delivering the highest organic net income in our history, reaching more than BRL 3 billion. Our shareholder remuneration achieved a new level, totaling BRL 3.5 billion with a yield of 10%. Our consistent operational performance, combined with discipline in capital allocation, resulted in CapEx over revenues reaching 17.9%. This drove strong growth in operating cash flow, which increased by almost 23% year-over-year, with margin expanding to 20.5% in 2024. Our balance sheet remains strong, supporting shareholder remuneration and future projects. The 2024 results affirm our ability and commitment to fulfill our promises even in the face of challenges. Now back to Alberto.

Before we conclude our results discussion, it is worth recapping some ESG developments in 2024, confirming TIM's commitment and highlighting partnerships and projects that generate positive social impact. Under the partnership with Gerando Falcoes, we transformed Favela Marte into a fully connected 5G community, illustrating TIM's dedication to bridging the digital divide. As always, our ESG initiatives are embedded in the company’s broad strategy. We are testing FWA solutions, learning how customers and networks behave in actual network conditions. In addition, we continue to perform outstandingly in multiple indexes and certifications. By integrating social responsibility into its core strategy, TIM enhances its brand reputation and contributes to long-term value creation. To conclude this section, it is worth highlighting that we met all of our targets. We stood at the top of the service revenue guidance range with excellent postpaid performance—check. EBITDA grew above revenues with margin expansion—check. CapEx remained flat in the middle of the range—check. Operating cash flow with robust performance grew by more than 20%—check. Last but not least, shareholder remuneration is confirmed at BRL 3.5 billion, following our proposal for the shareholder meeting to approve BRL 2 billion in dividends—check. Looking ahead, setting the stage for TIM's strategic direction in the coming years, we will enforce our focus on sustainable growth by adding new revenue opportunities and renewed efforts into efficiency, reflecting a commitment to long-term value creation. Our updated plan reflects changes in macro and telecom market conditions. We evolved our priorities to extract the most from our four strategic pillars: mobile, B2B, efficiency, and broadband. Each area is supported by specific strategies aimed at enhancing our value proposition in mobile, doubling down on B2B, extracting the most from our assets and resources, while monitoring opportunities to complement or transform parts of our business. The emphasis on people, society, and the environment underscores TIM's commitment to responsible business practices. By prioritizing these areas, TIM aims to strengthen its market position and drive sustainable growth in a competitive landscape. With that, we introduced new guidance for '25, '27, remembering that our projections are always subject to revisions in the face of material changes in the macro environment and business development assumptions. Our strategic guidelines for sustainable growth focus on revenue and EBITDA progress with margin expansion. This is a combination of mobile core evolution, increased relevance of new revenue streams, and renewed efforts in efficiency. Our investment plan points to a flat CapEx despite Forex oscillation, maintaining the leadership status of our network. Once again, this reflects a commitment to efficiency and operational excellence. These dynamics translate into strong cash flow evolution with margin expansion, and this cash being generated is returning to shareholders in the form of interest on equity and dividends. Once more, we are upping our targets for that as well. Reaching the end of this video, I want to thank our entire team for delivering such robust results. We endured main challenges and found solutions to keep our ship in the right direction and running at a solid pace. Now let's move to the live Q&A session.

Thank you, Alberto. Before proceeding to the Q&A, I would like to pass the floor to Alberto Griselli for initial remarks. Please, Mr. Alberto, the floor is yours.

Thank you, and good morning, everybody. Before we start the Q&A, just a remark on the material fact we just disclosed about C6 Bank. We basically went into an agreement that settles all the disputes, terminates the partnership, and monetizes our participation, subject to some regulatory approvals. The settlement confirms the strategic importance of customer platform initiatives in generating value for the company and its shareholders. We will continue to work to expand the ecosystem of partnerships, including new opportunities now in financial services. Additional details of the financial and economic impacts of this deal will be disclosed in due time. So we can now pass to the live Q&A session, please.

Thank you, Alberto. We will now start the Q&A session for investors and analysts. Our first question comes from Marcelo Santos from JPMorgan.

I have 2. First, on the guidance, what are the main macroeconomic assumptions embedded, like perhaps inflation effects? What are you considering to put those numbers? And the second is if you could discuss a bit of the outlook for prepaid. And if there are relevant initiatives that you were targeting to perhaps improve the trends that you can control?

Sorry, Marcelo, I was on mute. So when we look at the guidance, basically, this has been elaborated—our budget was conceptualized a few months ago when the situation was a bit easier on inflation, specifically on the other elements we are aligned with regarding Forex and GDP growth. But since the guidance has been issued today, over the last week, we've been working with assumptions on inflation that are in line with the current trends we are seeing now. Of course, there is a lot of volatility in inflation. A few weeks ago, we were below 5, and now we are below 5. So we need to deal with this. We are used to this since we operate in Brazil for a long time. But basically, the main difference was inflation when we prepared the budget, and we updated this with more actual numbers as we issued the guidance today or yesterday night. When it comes to prepaid, our performance is primarily driven by a number of factors. The first one is related to the migration of customers from prepaid to control; this is part of our strategy. And of course, this drains revenues from one side as we move in a accretive way on the other side. The benefits of doing this are that the revenue becomes a larger revenue in postpaid, and our ability to monetize postpaid and control is better than in prepaid. Then there is another factor that basically relates to everybody; ourselves and our competitors perform this strategy. So if you look at the recharge market as a whole, it's decreasing over time, and that's the context where we operate. In our case, in the fourth quarter, we had a tougher comparative base because in the same quarter of the previous year, we were issuing a price update from BRL 15 to BRL 17, so this explains the intensity of the decline for the last quarter. And just anticipating a bit, for the first quarter of this year, it’s a tougher comparative base versus the first quarter of last year because this year, for example, we have Carnival in March, which tends to reduce the number of available days for recharge. Having said that, we have been working on revamping or turning around our prepaid business. We launched a new offer, a new communication campaign as you probably remember from last year. So we are working across the board on the offer, on the communication, on the channel, and our own customer base to increase the performance of prepaid going forward. This takes some time, but our commercial team is fully focused on that.

Our next question comes from Bernardo Guttmann from XP.

Actually, I have 2 on my side. The first question is related to CapEx. Your guidance seems quite fair, but it’s somewhat surprising that CapEx remains stable, leading to a decrease in CapEx to sales in the coming years. We have already discussed the topic of greater efficiency and structural changes in the industry, but it would be interesting to understand more about the company's main efficiency levers. Is this level sustainable considering higher exchange rates? The second one is about your fiber operations. You mentioned that you are open to multiple options. I understand that the market is more challenging today, and more competitive, but valuations also reflect these dynamics to some extent. In this context, what is your appetite in this segment? Would you consider selling the current operation as well? Or is that off the table?

Okay, Bernardo, let me go for the first one on CapEx. When you look at CapEx, we have a number of levers. I will start with the easiest one. A big chunk of this CapEx is network CapEx. We have been able to reach the largest 4G coverage a couple of years ago, and we closed 2024 with the largest 5G coverage as well. Once you look at the drivers of this cost going forward, primarily, it's less about coverage, and it's more about quality of service and capacity. So this is the main driver. How do we address the efficiency of the CapEx deployment while maintaining the leadership in the quality of the network service that we offer? The first one is primarily related to the way we've negotiated with our main providers of 5G and network services, whereby we put together last year, and I discussed this in one-to-one calls—a quite competitive tender where we were quite successful in lowering the TCO of our network cost. By doing this, we took some execution activities on our side, like the swap of the network in São Paulo; we are shifting from one vendor to another. By doing so, and we optimizing the TCO, when you look at the numbers, $1 in 2025 will deliver more than $1 in 2024 because of the economies that we achieved. So this is the first driver, primarily for the optimization achieved last year. The second one is related to the assertiveness of the investment. We have a strong methodology for allocating CapEx where we have or expect to have commercial advantages. We call this the AAA approach, and we align everything: CapEx, commercial aspects, and communication to increase the efficiency of our capital allocation. Then you asked about the risk of Forex related to our contracts. I will pass this over to Andrea to explain a bit about how it works for us.

Bernardo, we have minimal exposure to exchange rate fluctuations since the majority of our contracts have an exchange rate band. As I mentioned, we have very little exposure to the fluctuations of the exchange rates.

Regarding your second question about fiber, a few comments before I articulate the answer on non-organic options. If you look at the market itself, as you rightly pointed out, the market is very competitive. There are numerous reports from the sales side highlighting this every month. The competition is particularly intense, especially regarding pricing. Therefore, it is not very attractive, irrespective of valuation, because addressing this without a stronger and widespread consolidation process is difficult. That is not happening at the end of the day. For us, it is a small business because it accounts for below 4% of revenues, and it is dilutive to our free cash flow generation. Our organic stance is basically to optimize the operation. Of course, when we state that we are open to all options, you have the extreme option of consolidation on one end and the other extreme of selling; there are various options in the middle. When we say that we are open to all, we are looking at all of them. We just need to find the right target at the right moment to advance one of these options.

Our next question comes from Leonardo Olmos from UBS.

I have a couple of them. The first one is regarding the C6 partnership. I know you cannot disclose how much you are monetizing from that partnership. We understand that, but it will probably be below what was on the balance sheet, right? So we may see a write-off that may be purely non-cash, but could that affect dividends, even though it is non-cash and on a nonrecurring basis? So that's my question on the C6 impact on dividends. The second one, unrelated, is if you could discuss the leasing: how much of the leasing is adjusted by IGP-M and what are other inflation metrics that are used to adjust leasing?

Leonardo, I will take the first one, and then I will pass the floor to Andrea for the leasing question. On the first one, actually, the monetization factor is there. We are talking about BRL 270 million in gross revenues accrued over the length of the partnership and the other BRL 520 million. This is a positive impact on our cash. We always say that we will generate more cash over time. Our cash flows are expanding, and this will have a positive contribution. When it comes to cash flow expansion, as you see in our guidance, we are increasing shareholder remuneration, focusing on dividends and interest on equity. Therefore, we have something more now coming to us over the course of 2025 that was not in our guidance. So the approach remains the same; if we do not distribute 100%, it’s due to opportunities we see in some verticals and business lines, but it positively impacts our cash profile.

Leonardo, regarding leasing, the major impact we have from inflation relates to ongoing negotiations. Currently, we have part in EPCA and part in IGP-M, but the majority is EPCA. We continue to negotiate, considering we ended the commission program with the sites that came from Oi, but Oi increased the network related to 5G. So we still have space to negotiate this contract.

So obviously, Andrea, the guidance already assumes all the current inflation situation, right?

Right.

Very good. And very good answer on the dividend, Alberto. Our next question comes from Vitor Tomita from Goldman Sachs.

We have 2 questions from our side. The first one is on the guidance. If you could give us a bit more color on the drivers for further margin expansion, given that your profitability is already quite high for the sector and given the inflationary pressures ahead? Our second question would be on the balance sheet side. We have noticed the receivables increasing faster than revenue continually over the last 3 quarters, even though receivables had been growing more in line with revenue prior to that. Could you give us some more detail on the dynamics for receivables?

Vitor, related to the guidance, as the previous guidance, we confirm that we increased the EBITDA margin revenue. We will do this with our continuing productivity. We had a very good result in the last quarter related to margin. The margin expansion will continue to happen in 2025. This growth will come from our continued focus to work in a zero-based approach, looking for new opportunities in digitalization in our processes. Also, as I mentioned, we renegotiated all the contracts linked to inflation and continue to spot opportunities in makeup initiatives. Regarding free cash flow, the increase in receivables is a functionality of our dynamics. Remember that we have seasonality in the first semester versus the second semester with differentities. This is within our expectations; we do not have any extraordinary effects that affect this. I hope I have addressed your question.

Just a quick follow-up. Looking at the previous quarters, there has already been an increase in receivables in the second and third quarter. So thinking more about the underlying trends there than just the seasonality.

No, sorry, if the seasonality works now. The seasonality of the—because you see an increase in the third quarter and the fourth quarter, right?

Yes.

So moving forward with the second semester, we have also an increase in IoT receivables along with an increase in B2B. The B2B segment has a very different dynamic from mobile consumer segments. We will see a near increase, but this relates to the increase in IoT revenues.

Our next question comes from Phani Kanumuri from HSBC.

So my first question is related to your revenue guidance. Is it fair to assume that most of this revenue growth is coming from postpaid growth, considering that your fixed segment and prepaid segment continue to be under pressure? And what part of—what percentage is actually attributed to the new initiatives that you have in terms of revenue guidance? The second one is, last year, there have been more challenges in terms of pricing and giving more for more. Do we see those challenges persisting this year? And is a price increase possible for the next few years near you?

Okay, I will take the two. When it comes to the growth drivers for revenues going forward, we have several major drivers. The big one is clearly postpaid. We have been performing well over many quarters, and we foresee this to continue driven by the price adjustment and the rationality of the market as we see it now. The prepaid-to-control migration will continue, as will the intra postpaid migration happening at double-digit rates, and these factors continue to drive revenues up. Yes, postpaid is an important driver for revenue growth. It’s fair to add that two other lines are also significant for revenue growth. One is related to the customer platform strategy we just discussed at the beginning of the call. It involves monetization opportunities in the partnerships we are running and the new ones we are creating. If you look at Cartao de Todos, for example, we launched it some time ago, and we have been tweaking the value proposition. In the last 6 months, we have brought in 160,000 subscribers; it’s a good number in our evaluation of the progress of the initiative. We are open again to explore opportunities in financial services; this is another large potential area. The third one is the B2B business line, where we have been capturing revenues over the last 2 years. We started basically the IoT solution from zero, and we will continue to push for that in the verticals we have identified, including an expansion of the portfolio and capabilities that we offer to our customers. When you look at these three lines, they are the main revenue growth drivers. Looking specifically at mobile and the rationality of the market, we see, and I perceive a constructive context in the market. It is true that last year was a bit more erratic, especially in the second quarter. Notably, one of our main competitors rethought some price adjustments implemented. They went down, but at the end of the day, it went back up by the end of the year. Unlike last year, we are not planning to be more aggressive. We aim to be intelligent in how we monetize our customer base, and I do not foresee increased aggressiveness on our part. If you look at the drivers for revenue growth in mobile—especially for postpaid—they generally strive for balance in growth patterns combining customer base growth and ARPU growth. If you analyze our revenue evolution in 2024, you will observe a balanced growth in both volume and price impact. We managed to outperform our competitors in postpaid. Price adjustments are crucial as they contribute to overall revenue growth, but we aim for balanced growth between quantity and price. Ultimately, price adjustments are important elements, but so are intra plan migrations. While it’s not disclosed, the number of pure postpaid accounts is increasing significantly as we continue to transition control accounts to postpaid, and this positively impacts postpaid revenue growth.

First of all, congrats on the fourth quarter results. My first question is regarding revenue growth and your revenue growth expectations. I would like to understand how much of this guidance would come from price increases. Regarding this, how do you see the company evolving in a competitive scenario? So do you imagine TIM potentially being more aggressive? My second question relates to the C6 partnership. As you mentioned, the end of this partnership opens a path for you to operate again in the financial sector. Do you have anything on your mind, anything you can disclose on the stock?

Okay, Cesar. Let’s address the first point. We see the market rationality still in place with some erratic behavior noted in the last half of 2024. We are not planning to be more aggressive; instead, we aim to be smarter about how we monetize our customer base. I don't foresee higher aggressiveness on our side. If you consider mobile revenue growth drivers, we look for balanced growth across customer base growth and ARPU growth. You can see in 2024's revenue evolution how we achieve balance between volume impact and price impact. We grew faster than competitors in postpaid, and price adjustments play a pivotal role in that. We strive for a balanced growth approach for postpaid revenues, considering both customer retention and acquisition, as well as pricing tweaks as appropriate. Regarding the financial sector, as we mentioned before, with C6, we are now reviewing available options in the market for the upcoming months. The integration of financial services and telecom is quite potent and we believe it can be significant again. We will begin exploring this path once we complete settlements with the previous partner.

Two very quick questions. The first on costs and expenses. You're decreasing the selling and marketing expenses both year-over-year and quarter-over-quarter while growing revenues. Can you help us make sense of that, especially in this particular competitive context? Secondly, just a follow-up on C6; do you have any timing as to when you can actually receive the proceeds from this ending of this partnership?

So I will take the first one, and I will leave Andrea for the second. When it comes to sales and marketing, a lot of improvements derive from digitalization. Digitalization proceeds across activities: I will cite a few examples. It primarily drives increased efficiency; when I say digitalization, I mean digital recharges, digital sales. A crucial example is the PIX adoption among our postpaid customer base. PIX operations had a lower unit cost expanding from 0 to 50% over the last 18 months. If you examine the call center or the ability to retain calls through digital channels, those improvements are apparent. These drivers of digitalization contribute significantly to our reduced sales and marketing costs. Looking ahead, we still have opportunities to pursue, such as with customer relations. We’re launching a new app that is currently in a soft launch phase and isn’t fully deployed among our customer base, but its functionalities will improve client interactions, such as addressing complaints. Thus, launching this app should further decrease our customer service costs. Therefore, we have several initiatives underway both inside and outside of sales, with the primary driver of the reduction being digitalization.

As Alberto mentioned, we cannot provide much detail on the timing of proceeds from the C6 termination. The BRL 520 million is pre-tax, and all the balance sheet effects will manifest in future quarters.

Our next question comes from Daniel Federle from Bradesco BBI.

I had 2 questions, if I may. The first one, I would like to know if you are feeling any impact from the new bank onboarding clients over the past 30 days. Second question, do you see any structural reason for TIM to grow less than peers or more than peers in mobile revenues going forward? And third, just to understand the impacts of inflation on revenue growth in the future. Should we expect that the higher the inflation, the higher the price increases, and then the higher the revenue growth? Or does that oversimplify the reality?

Okay, Daniel. Regarding the first inquiry, we don’t currently perceive an impact from the new bank. That’s a straightforward answer. Concerning our mobile revenue growth, you know we have a larger share of prepaid versus our competitors. Thus, when mentioning that the recharge market is dwindling, this affects us more than our peers. This triggers multiple initiatives, including in the B2B domain and the customer platform discussions we had during this call. To maintain sustainable revenue growth, we are taking these steps. As for passing inflation to our customers, we typically implement adjustments at specific times of the year. We believe this could impact our postpaid customer base. Over the past years, we had been passing on approximately the inflation extent, but certainly, there is a limit dictated by how much demand is affected by these increases, which is in turn associated with the overall economic climate and customers' disposable spending. Regarding price increases, we will continue to adopt a similar strategy to last year. Thank you all. I want to extend my gratitude to everyone for participating in our call today. A special thank you to our team. We remain fully focused on executing our 2025 strategy, addressing challenges presented by the macro scenario, and pursuing the upside risks identified in our plan. I would also like to invite you to the upcoming Telecom Italia, TIM Italia call on the 13th, in a couple of days, where we will have the opportunity to elaborate on how we plan to create additional shareholder value, addressing a topic we frequently get queries about. Thank you for your participation today, and I hope to see you again soon on the TIM Italia conference call.

This concludes the fourth quarter of 2024 Conference Call of TIM S.A. For further information and details of the company, please access our website at tim.com.br/ir. You can disconnect from now. Thank you once again, and have a wonderful day.