RESULTS HIGHLIGHTS: A SOLID QTR TO CLOSE A SOLID YEAR

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2 RESULTS HIGHLIGHTS: A SOLID QTR TO CLOSE A SOLID YEAR Customer Base 75.7 million customers Data Acceleration 34 million users (+26% YoY) Improving Profitability 30% EBITDA Margin Turnaround on Fixed business Source: Company and Anatel Prepaid (mln customers) 61.1 Dec/ % YoY 4G Market Share (%) 28.0% 27.9% 27.4% 63.2 P1 20% 30% TIM P2 2Q13 EBITDA Margin (%) 1 Dec/ % -22.9% -20.5% Control Plans (mln customers) Dec/13 33% 26.7% -2.9% +13.8% YoY 42% 26.1% 1Q14 2Q14 3Q14 2.6% 49% 56% 28.4% 2 Dec/14 Gross Data Revenue Yearly Growth (ex-sms) (% YoY) 1Q14 2Q14 3Q14 1Q14 2Q14 3Q EBITDA Growth: x : +4.0% 2014 x 2013: +6.4% Net Revenues (Δ% YoY) P3 +25 p.p 2014 Year Recap Consistent growth on Business Generated revenues +6.3% (YoY) Solid financial results: Growth on EBITDA / EBIT / Net Income New infrastructure approach: data centric 4G LTE auction: assured future positioning Innovative offers generating value: Charging per day Infinity dia Controle WhatsApp Shared Data plans Fixed corporate business turnaround completed Live TIM: best in class fixed broadband MTR cut impact still significant: ~R$372 million on EBITDA in 2014 Strong reduction of SMS business (-26% YoY in revenues) Tougher macro environment: GDP: +0.15%* Inflation: 6.4% in 2014 *Central Bank consensus 2

3 Operational Efficiency SAC (Subscriber Acquisition Cost) (R$; % YoY) KEEPING THE FOCUS ON THE EXECUTION Bad Debt (% Bad debt over gross revenues) 0.6% Handsets Sold (mln units) Equipping Customer Base +6.3% YoY Growth +6.1% QoQ Growth -15% Network & Interconnection Savings Interconnection Cost (R$; % YoY) 1.3x 1.1x SAC/ ARPU -16% 0.5% Solid Performance in Net Adds Pre paid 1 st in prepaid market share million clients in 2014 Post paid 25% of net share in December (ex M2M and broadband) Control plans bases rose 14% YoY % of smartphone sales among players in 4Q Leading player in handset sales Up 16 p.p. in vs. P3 29% P4 9% P1 14% TIM 48% Source: Company and GFK Group Fixed Business Progress -31% Leased Lines Cost (R$; % YoY) -10% Relevant cost savings amid total data traffic growth of 39% in 2014 when compared to 2013 Regulatory price reductions and substitution of leased lines by own infrastructure Corporate Solutions New Sales (R$; % YoY) +39% Live TIM Ultra Broadband (customer base in thousand) x 130 3

4 3Q14 2Q14 1Q14 Mobile Broadband Evolution (cities) The 125 cities of the MBB project represent 50% of the total network traffic Site Densification Number of 4G Sites 1.9k +92% INFRASTRUCTURE EVOLUTION 3.7k Wifi and Small Cells > 100% YoY Fistel exemption approved in Jan/15 Number of 3G Sites 9.1k +14% 10.4k Indoor coverage deployment DAS (Distributed Antenna Systems) Solution Femto Cells (corporate) Wifi (consumers) Innovative Coverage Deployment in: Rio de Janeiro Curitiba Brasília Manaus Natal São Luís Efficient Use of Spectrum Portfolio Band Possible Technologies Cell coverage characteristics (Urban coverage simulation) 2.5 GHz 850 MHz 900 MHz 1.8 GHz 2.1 GHz MHz 2100 MHz 2500 MHz 850 MHz 700 MHz MHz 2G/3G 2G/3G 2G/4G 3G 4G 4G radius (km) Capital allocation on innovative services: Investment Profile Fiber (metropolitan + LD): expansion to ~55k Km in G (voice) 3G+4G (data) 49% 51% 13% 87% R$3.9 bln Organic Capex + R$2.9 bln (4G License & Clean up) = R$6.85 billion in

5 Data Evolution Data Accessibility Ranking (3G) in SP Access Access Access Anatel 99.24% 98.93% 99.20% UNDERSCORING QUALITY IMPROVEMENT 4G Sites in State Capital Cities 3,093 Anatel 3,013 2,930 2,845 Network Complaints (number of complaints) Voice network¹ Data network² Voice network 2014 vs % Anatel Metrics Data network 2014 vs % Source: Anatel Access Access 99.57% 98.88% TIM P4 P3 P1 1Q13 2Q13 3Q13 1Q14 2Q14 3Q14 ¹ Voice Network (repair and call completion) ² Data Network: Estimated by TIM and composed by a subset group of Additional Services complaint Source: Anatel Customers Satisfaction Average Satisfaction with Coverage and Quality of Calls (score assigned by the customer) Customers Demands Total Demands at Consumer s Protection Agency (Procon) (Per economic group, in thousands) TIM P1 P3 P P4 P1 P3 TIM Nov-12 May-13 Nov-13 May-14 Nov-14 Source: Company s survey of national satisfaction 1Q14 2Q14 3Q14 Source: SENACON/MJ Least claimed company at Procon 5

6 Offer Innovation Protecting Core Revenue OFFER STRATEGY EVOLUTION CONTINUES Strong Data Progress Smartphone Penetration (% of smartphones over customer base) Data Customer Base (as % of total base) INFINITY TURBO 7 INFINITY DIA SHARED INTERNET PLANS 44.6% +35 p.p. 49.5% 36.4% 29.4% 30.3% R$ 0.75 DAILY OFFER Leveraging on simplicity, transparency and convenience 14.9% Beyond Connectivity on Data Smartphone sales over 80% in Data Revenues Penetration (% Gross VAS Revs / Gross Mobile Service Revs ) Data ARPU (% YoY Growth) Controle WhatsApp Data centric offer with no voice obligations 30.9% +7.2 p.p 25% Data Package and WhatsaApp included in monthly fee 3Q % 20% 21% Differentiation among peers, with positive impact on postpaid performance 2Q % 18% 1Q % 1Q14 2Q14 3Q14 6

7 Different Revenue Profile Mobile Service Net Revenues (% YoY) (Voice & Other) (Data & SMS) (Incoming MTR + SMS) Business Generated % Business Received % +4.8% -34% Mix of Gross Data Revenues (% YoY) Content & Others Web SMS +45% +29% RESHAPING THE BUSINESS 1,500 1,578 1,677 1, % +33% +80% +39% 1Q14 2Q14 3Q14 +82% +47% +1.2% -8.2% -19% -24% Gross Data Revenues Growth (% YoY of growth) 3Q14 2Q14 1Q14 20% 23% 22% 28% Improving Profitability Mobile First Margin* (Δ YoY) +4.5 p.p. Excluding handset business Service EBITDA (R$ mln; % YoY) 1, % 1,598 Service EBITDA Margin (% YoY) 35% +2.8 p.p. 38% FY 2014 growth: +5.2 p.p. FY 2014 growth: +6.9% FY 2014 growth: +3.0 p.p. * Mobile First Margin = Business Generated less costs related to the service. 7

8 ACCELERATING FIXED BUSINESS PERFORMANCE 2014 business remodeling recap: Customer base management Multiservice network launch Sales team reorganization Revenues from New Sales (YoY) Net Revenues (with intercompany) EBITDA +2.7x Brand repositioning Re-designed service portfolio Fixed + mobile integration for corporate clients +3.5x +1.0% Outstanding product performance (ISP speed ranking - Mbps) Live TIM GVT NET Live TIM NET GVT Upload Download with solid operational and financial results Coverage (000 Households) Homes passed 1,490 1, % Addressable Households 2,194 1, Customer Base (000 users) +2.2x 130 New Line Payback (months) 21 ARPU (R$; YoY%) -33% +24% 14 8

9 Thousands Thousands Thousands Net Revenues (R$ mln, % YoY) - 0.3% +2.9% Ex-MTR 5, ,168 Δ % YoY +4.8% -33.9% +2.6% +16% FINANCIAL RESULTS ANALYSIS (1/2) 5, MTR Impact 16,701 Net Service Revenues (R$ mln, % YoY) +1.7% -2.3% 16, ,325 MTR Impact 5,168 Reported Revenue Δ Business Generated Δ Business Received Δ Others Δ Products Revenue Reported Revenue Pro forma Revenue EBITDA (R$ mln; % YoY) 1, , % ΔYoY +4.0% EBITDA Margin +10.4% +3.5% +3.1% Ex-MTR 30.1% 1, ,558 MTR Impact 5, % +6.4% 5, ,538 MTR Impact Revenue Exposure (as % of net service revenues) ~ 25% EBITDA Exposure (as % of EBITDA) MTR Exposure ~ 12% 4Q10 4Q11 4Q % Service EBITDA Margin 38.1% ~ 32% ~18% Reported EBITDA Traffic/Data Δ Contribution Margin Δ Opex/ Others Reported EBITDA Pro forma EBITDA in 4Q10 4Q11 4Q12 9

10 FINANCIAL RESULTS ANALYSIS (2/2) Net Income Evolution (R$ mln; % YoY) FY 4Q 1, % YoY +2.7% -7.7% 1, ,867 5,288 6,507 5,233 Net Debt (R$ mln) Considering R$1.7 bln 4G pymt 3Q 2Q 1Q % % % ,274 Debt Cash Net cash Debt Cash Net debt Net debt/ebitda 12M: 0.23x Cash Cash Flow Flow months months (R$ mln; R$ YoY) (R$ mln; R$ YoY) , , ,923 Composed by: + NPV of the 700MHz clean up cost + Warranty Insurance + Monetary Adjustments -45 EBITDA 2014 Organic CAPEX Organic Δ WC Organic OFCF 2014 LT Amazonas Leasing 700MHz Acquisition Capex 1, MHz Acquisition Effect on Δ WC Reported OFCF 2014 *Organic figures excludes the 700MHz frequency acquisition and LT Amazonas leasing effect 10

11 CONCLUSIONS Changing Business Profile Focus on Execution Improving Profitability Business Generated Net Revenues Keeping costs under control, amid macroeconomic pressure (Data & SMS) (Voice & Other) 26% 31% 36% 74% 69% 64% e Revenue profile changing Pre-paid data as key source of growth TIM strategically well positioned with data focus on big middle Keeping innovative offers: Infinity Day, Data Shared Plans, Controle Whatsapp plan, TIMmusic by Deezer, TIM Multibank (2015), Blue Box (2015) Fixed turnaround completed: back to growth in 2015 Live TIM: from optionality to reality EBITDA growth in 2014: +6.4% YoY Margins expansion through opex savings and new revenues sources Service EBITDA Margin (%; YoY) 32.0% +3.0 p.p. 34.9% Infrastructure Leveraging Growth TIM: A Solid Player Building the Future 4G LTE in 700MHz and 1,800MHz Mobile broadband project MBB (cities) Investing Efficiently Tower sale Big data analysis for Capex allocation Delivering important operational and financial results Strong market positioning for growth Renewed culture of innovation, quality and caring Staying power and commitment with long term, with recognized institutional leadership Best governance in the industry: Novo Mercado New industrial plan to be presented on February 20,