TIMB

Business Context and Reporting Period

Company: TIM S.A.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: First Quarter ended March 31, 2026 (1Q26)
Date of Report: May 5, 2026

TIM S.A. reported consistent progress in 1Q26, driven by growth in Mobile and Ultrafibra services. The quarter included the full consolidation of V8.Tech following the acquisition of remaining shares, expanding the company's B2B and IoT capabilities. The company also announced a new strategic partnership with PicPay to expand its digital financial ecosystem.

Key Financial Metrics

Note: EBITDA and Net Income figures are normalized for non-recurring items. EBITDA-AL excludes fines from site decommissioning.

Material Changes vs. Prior Period

• Revenue Growth: Total Net Revenue grew 6.5% YoY, driven by a 6.5% increase in Service Revenue and a 5.4% increase in Product Revenue. Fixed Service Revenue surged 22.8% YoY, largely due to Ultrafibra growth and the consolidation of V8.Tech.
• Mobile Segment: Mobile Service Revenue increased 5.6% YoY. Postpaid revenue grew 7.5% YoY with a 7.6% expansion in the customer base, while Prepaid revenue declined 6.5% YoY as customers migrated to postpaid plans.
• Cost Structure: Normalized Operating Expenses rose 6.3% YoY. Increases were primarily due to higher Network & Interconnection costs (+13.2%) and Bad Debt (+23.8%), partially offset by a decrease in Selling & Marketing expenses (-2.8%).
• Profitability: Normalized EBITDA-AL margin expanded to 37.1% (+0.5 p.p. YoY). Net Financial Results improved by 11.5% YoY due to favorable mark-to-market effects on derivatives and higher returns on financial investments.
• Cash Flow: Operating Free Cash Flow increased significantly by 54.0% YoY to R$453 million, despite higher tax payments and working capital impacts.

Guidance, Outlook, and Strategic Initiatives

• Shareholder Remuneration: The Board approved Interest on Capital (IoC) of R$390 million for 1Q26. The company maintains a 2026 guidance to distribute R$5.3–5.5 billion in total shareholder remuneration.
• Strategic Acquisitions: TIM completed the acquisition of 100% of V8.Tech (IoT and AI solutions) and entered an agreement to acquire the remaining 51% of I-Systems (fiber infrastructure), subject to regulatory approval.
• Partnerships: A new partnership with PicPay was announced to integrate financial services, leveraging PicPay's 67 million accounts. TIM also expanded B2B contracts with Axia (5G hydropower) and deepened ties with Microsoft and Google for AI adoption.
• AI and Digital Transformation: The company is deploying AI agents across software development, targeting a 22% productivity gain and 60% license cost efficiency. 5G coverage expanded to 1,094 cities by March 2026.
• Risks and Contingencies: The filing notes a suspended payment of the TFF (Operating Inspection Fee) totaling R$4.6 billion recorded as a liability. Bad debt ratios increased to 2.1% of Gross Revenue due to postpaid base expansion.

Investor Verification Checklist

• Debt Profile: Verify the maturity schedule of the R$17.5 billion total debt, noting the significant portion tied to lease liabilities (R$13.7 billion) and the impact of the 5G License debt.
• Regulatory Liabilities: Confirm the status of the suspended TFF/Fistel fee payments (R$4.6 billion) and potential future cash outflows.
• Acquisition Integration: Monitor the regulatory approval timeline for the I-Systems acquisition and the financial integration of V8.Tech into the fixed segment.
• Prepaid Migration: Assess the sustainability of the prepaid-to-postpaid migration trend and its long-term impact on churn and ARPU stability.
• Working Capital: Review the drivers behind the R$686 million negative impact from working capital and taxes on Operating Free Cash Flow.