18.8

19.9

2012 2013

4.1% 1.8%

4.2% 5.2%

1Q 2Q 3Q 4Q

1.4

1.5

2012 2013

2 HIGHLIGHTS

RESULTS: MAIN HIGHLIGHTS • Data Revenues +21.5% in FY13 • EBITDA Margin at 28.9% in 4Q13 • Services EBITDA Margin at 32% in FY13

Financial Performance

Efficiency

Network Improvement

Offer Evolution

Net Revenues (R$ bln)

SAC/ARPU (in months)

EBITDA (Δ% YoY)

• Subs. acquisition costs: R$28 in FY13 -6% YoY • Leased line cost reduction: -6.0% YoY in FY13 • Bad debt at lowest level: -4.4% YoY in FY13

• 39 cities fully covered with MBB project • 3G & 4G expansion (4G RAN sharing) • Network quality plan • Deployment of LT Amazonas Backbone

• Plans ‘Controle’ and Express • Promotional top up • Infinity Web + SMS • Base mix (Prepaid 83% / Postpaid 17%)

dec/12 dec/13

Total Base 73.4 mln users

1.6x 1.5x 1.6x

1.3x

1Q13 2Q13 3Q13 4Q13

Postpaid Customer Base

+6%

Net Income (R$ bln)

12.3

+15%

MBB Small Cells & Wi-fi

Active Fiber

39

2Q13 3Q13 4Q13

786

1Q13 2Q13 3Q13 4Q13

47

1Q13 2Q13 3Q13 4Q13

‘000 Km

10.7

(# of cities)

+4%

+4% in 2013

3 PRIORITIES

REVISITING PRIORITIES • Stabilized and improved network performance • Prepared network for data evolution • Optimized Capex and Opex allocation

• Improved customer base mix • Managed customer base with segmented offers • Evolved offers toward data and internet services • TIMmusic: >250k users in 4Q and 32 mln songs downloaded

• Participating actively in industry discussions • Recovered institutional image and dialogue • “Open Doors” transparency initiative generated excellent

results on customer interactions (>400k collaborations/month) • Took corporate governance to the next level (CAE)

• Seeking “Best Company to Work For” status • Reinforcing compliance culture • Driving sense of belonging and employee pride

3Q13 4Q13

% of sites with active fiber (FTTS phase 2) on the targeted 35 cities

TIMmusic and Infinity WEB + SMS

WEBSITE + APP “Portas Abertas”

1

Network Quality & Infrastructure

2

Strategy & Offer Evolution

3

4

Institutional Relationships

People & Organization

TV Campaign featuring employees

63% 95%

4 NETWORK

A YEAR OF NETWORK/QUALITY EVOLUTION: PRIORITY #1 Projects that are transforming TIM’s infrastructure

NOC Insourcing Project

Launching project of insourced network operating center

New Extension of LT Amazonas Backbone

Smallcell Pilot Project / Wi-fi rollout

1,800 km of fiber 27 cities

>150 cells implemented >600 hotspots with seamless authentication

Jurupari

Boa Vista

Belém Manaus

Macapá

‘Quality Plan’ Implemented (war room)

Completion of FTTS 1st Phase “MBB”

TIM Fiber Metropolitan Rings

100

2Q13 3Q13 4Q13

Quality improvement in critical cities

39 cities Improving customer experience Improve throughput 4G ready

>570 MSAN Fiber network stabilization Support backhauling for mobile infrastructure

Copper (2-8Mbps)

Before FTTS After FTTS

Metro Ring

Own Fiber (300 Mbps)

Flawless Deployment of 4G Strategy

RAN sharing successfully implemented >30% of 4G market share 1st Quarter

2nd Quarter

4th Quarter

3rd Quarter

# Cities completed

5 QUALITY

QUALITY IMPROVEMENT EVIDENCES

Improvement in all key Anatel

indicators compared to 2012

Narrowing gap between IDA’s 1st place

and TIM (2nd)

Stable Anatel’s complaints metric

Least claimed company at Procon

War Room helping to improve network

KPIs

Network KPI’s on target (%) (For the main 195 cities)

Claims at Consumer’s Protection Agency (Procon) (in thds)

Anatel Complaints over 1,000 lines

Source: ANATEL Source: SINDEC-Procon

7.6 10.3

6.2 9.2

16.0

11.6 9.3

11.8

4Q11 2Q12 4Q12 2Q13 4Q13

65%

70%

75%

80%

85%

90%

mar/13 dec/13

0.24

0.35 0.34 0.36 0.38

0.34

0.51 0.55

dec/12 mar/13 jun/13 sep/13 nov/13

TIM other

TIM other

Anatel’s Index of Caring Performance (in points)

Source: ANATEL

98.2 92.4

93.3 91.9

91.1 87.2

84.4 76.2

dec/12 mar/13 jun/13 sep/13 nov/13

TIM other

67.0 71.6

76.1 77.2

59.2

64.1

70.4 73.4

57.5 60.4

65.2

68.7

42.8 45.5

49.2 50.2

6 OPERATIONAL

CUSTOMER BASE EVOLUTION Customer Base & Net Additions (mln)

Growing above market

#1 player in prepaid

#2 player in voice postpaid

>3 mln net adds in 2013

Accelerating postpaid

performance

Austere disconnection policy

Base per Segment (% YoY)

3G Market Share (%; mln users)

4G Market Share (%; thd users)

4Q12 3Q12 2Q12 1Q13 3Q11 4Q11 1Q12 2Q13 3Q13 4Q13

TIM

Total Net Adds:

11.3

13.1

8.7

6.2

4.6

6.3

4.9

3.8

1.1

3.1

3.5

1.0

47%

41%

20%

31%

21%

17%

12% 11%

2Q13 3Q13 4Q13

TIM

538

405

222

145

60.3 60.8 61.0 61.1

10.9 11.4 11.9 12.3

Pre Paid

Post Paid

1Q13 2Q13 3Q13 4Q13

%YoY

+15%

+2%

Source: ANATEL

Source: ANATEL Source: ANATEL

26%

23% 23%

25%

41%

39%

9% 12%

4Q12 1Q13 2Q13 3Q13 4Q13

TIM

22.3

23.6

36.6

11.5

Source: ANATEL

39.3 mln Total Net Adds: 19.6 mln Total Net Adds: 9.3 mln

2012 2013

2012 2013

-6.0%

7 OPERATIONAL

MAINTAINING EFFICIENCY SAC - Subscriber Acquisition Cost (R$)

Bad Debt (R$ mln)

-11% +7% -9% -10% YoY

73 68

56

44

1Q13 2Q13 3Q13 4Q13

29 27

31

24

1Q13 2Q13 3Q13 4Q13

SAC/ Gross Adds

SAC/ARPU 1.6x 1.5x 1.6x 1.3x

% over gross revenues

Product Margin (Revenue – Cost)

+22% 10.2

12.5

Handset Sold (mln units)

Handset Business (% YoY)

+50%

Network Cost (% YoY)

2012 2013

Leased Lines (R$ mln)

2012 2013

+15%

Total Voice Traffic (bln minutes)

1.0% 0.9% 0.7% 0.6% 2013 Gross adds:

40 millions

Postpaid Base:

12.3 mln +15% YoY

Total Base:

73.4 mln +4.3% YoY

0

Total Data Traffic (megabytes)

YTD Nov/12

+78%

YTD Nov/13

129 136

148

2011 2012 2013

11% 21%

49% 47%

1Q 2Q 3Q 4Q

24% 48%

78% 64%

38%

26%

29%

8%

TIM Operator 1Operator 2 Operator 3

8 MARKETING

EVOLVING MARKETING PATH IN 2013: TRANSPARENCY, SIMPLICITY, QUALITY & INNOVATION

2013 April July August October

Net Adds Postpaid Mix (% Net Adds Postpaid/ Total)

4.4 5.4

18% 21%

2012 2013

VAS Revenue Growth (% of VAS Revenues over Gross Revenues; R$ million)

Smart/webphone over new sales (%)

Share of handset sales (FY13) (%)

+22%

Handset & Revenues Highlights

Customer Base Highlights

48%

52% Open Market

Operators

~39 mln smartphone/webphones users

2013

2012

VAS Prepaid VAS LDI Quality

March

MOU (Minutes of Use) (minutes)

Outgoing ARPU (R$)

1Q13 2Q13 3Q13 4Q13

70% 65% 83%

4Q11 4Q12 4Q13

+15%

9 MARKETING

STRATEGY TOWARDS DATA & INTERNET Re-visiting Market Structure

TIM’s Position

3%

37%

51%

91% With Telephone

Only mobile phone

Mobile and fixed phone

Households profile

Fixed phone only

Purchase power

Salaries up to R$1.2k

Salaries up to R$3.1k

Consumption

People that access Internet (10 years or +)

57 mln

32 mln

2 mln

81 mln

106 mln

23 mln

Households with internet connection (%; CETIC jun’13)

53% of pop.

70% of pop.

27%

43% 55%

4Q11 4Q12 4Q13

BOU (Bytes of Use) (average megabytes per user)

Source: Anatel; Company

Source: PNAD 2012, CETIC.br TIC Domicílios 2012

18 21

27

4Q11 4Q12 4Q13

Data Users (Monthly unique users; CAGR 11-13

3G Subscribers (mln users; CAGR 11-13)

Smart/webphone penetration (% over total base)

7 12 24

4Q11 4Q12 4Q13

Nov/12 Nov/13

Big opportunity for FMS on Data

+82%

+25% +75%

Yes

No

24.3 mln of households

83 mln 49% of pop.

Fixed

Mobile 21%

74%

40%

60%

TIM FIBER 10

TIM FIBER: RESHAPING THE FIXED BROADBAND MARKET Building Up Size

2.9%

9.1%

2Q12 4Q13

Penetration of new neighborhoods (sales/addressable HH)

7

10

16 18

1Q13 2Q13 3Q13 4Q13

Net Adds in 2013 (000 users)

Accelerating Growth

Addressable HH (000 HH)

522

1,069

4Q12 1Q13 2Q13 3Q13 4Q13

Customer Base (000 users)

Sep/12 Dec/13

60

Changing market dynamics Evolving overall market performance

TIM Fiber 44% Other

56%

UBB Market Share (SP + RJ) (connections >34Mbps)

Average Speed (Mbps)

Source: Anatel; Akamai 3Q13

84th position

43rd position

* 12 months average of price / Mbps Source: Anatel; Akamai 3Q13

Net Adds speed mix (SP + RJ) (Mbps)

Price per Mbps* (R$/Mbps)

4.0 2.8

2012 2013

5.0 1.0

2012 2013

29.8

0.7

2012 2013

GVT NET

Vivo

38.9

22.1 13.3

9.8 5.7 5.5 4.9

2.7

Live TIM

South KoreaJapan

USSP + RJ

AustraliaItaly

Brazil

1st position

57% 34%

26%

15%

17%

50%

4Q12 4Q13

> 34 Mbps

12 - 34 Mbps

< 12 Mbps

11 FINANCIALS

FINANCIAL RESULTS Net Revenues (R$ mln; % YoY)

EBITDA (R$ mln)

Fixing EBITDA Drags

Intelig: EBITDA-CAPEX (R$ mln) FISTEL Payments

(R$ bln)

MTR Exposure (%)

2,344 3,220

16,420 16,701

Revenue 2012

Δ Handset Δ Fixed Services

Revenue 2013

Δ Mobile Services

+876 -255 +537

Service

Handset

18,764

ΔYoY

19,921

+3.5% -28.0% +37.4%

+1.7%

+6.2%

+37.4%

5,012

EBITDA 2012

EBITDA 2013

ΔMkt and Sales

ΔPers./G&A and others

-95 -31

ΔNetwork and ITX

+40

ΔServ. Revs

26.7%

32.1%

+281 5,207

26.1%

32.0%

EBITDA Margin

Service EBITDA Margin

+3.9%

ΔYoY +1.7% +2.5% -0.7% +1.4%

Leased Lines Cost (% YoY)

1.04 1.04

2012 2013EBITDA

Revenues

+28%

+11%

+8%

-5% -12%

-10%

0% -1%

1Q 2Q 3Q 4Q

2013 2012

1Q 2Q 3Q 4Q

-6% YoY 2013 +9.7% YoY 2012 24%

4Q10 4Q11 4Q12 4Q13

30%

4Q10 4Q11 4Q12 4Q131Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

-

+

533

743

843

CAPEX Mix (%)

Dividends (R$ mln, payout)

12 FINANCIALS

FINANCIAL EVOLUTION Profit & Yield

1,278

1,449

1,506

2011 2012 2013

+13%

+4%

2011

2012

2013

CAPEX (R$ bln)

3.0

3.8 3.9

2011 2012 2013

+90% in infrastructure

Focus in transport infrastructure

Zero subsidy policy on

handsets

Total: R$ 3.9 bln

5,207 -3,561*

571 2,216

EBITDA CAPEX Δ WC OFCF

*OFCF does not consider R$310 mln of LT Amazonas leasing as CAPEX

Net Income (R$ mln)

56%

51%

42%

Capex/Sales 18.0% 20.6% 19.4%

Investments

Operating Free Cash Flow (R$ mln)

OFCF/Net Revenues: 11%

Expansion of +21.4% YoY

Payout

+39.3%

+13.5%

13 CONCLUSION

PERSPECTIVES FOR 2014 Network Evolution Offer & Commercial

Strategy

Network coverage expansion with increased rollout of Macro, Small Cells and Wi-Fi HotSpots

Acceleration of Mobile Broadband project from current 40 cities to over 100 cities

Focus on operational excellence and network availability by investing on people, systems and processes

Voice growth with migration to postpaid and bundling for Voice FMS

Speed up data growth with smartphones and tablets, innovative VAS, 4G offers and Data FMS

Fixed business growth coming back with positive contribution to results

Restructuring commercial channels Rational approach to pricing

Continuation of Quality Plan monitoring and execution

Expectation of 4G Auction for 700MHz Spectrum

Discussions on Sector Cost Modeling and MTR evolution

Keen attention to competitive environment trends

Recap of 2014-16 Business Plan

Smartphone penetration (Over total base of lines)

VAS Revenue Growth (% of Mobile Gross Rev.)

Data Users (% Customer Base)

Capex Evolution (% of Capex for Access Network)

43% 55%

>75%

2012 2013 2016e

30% 37%

>50%

2012 2013 2016e

18% 21%

>40%

2012 2013 2016e

3yrs - Plan Guidance:

Revenues: MID single digit

EBITDA: MID single digit

Capex: >R$11 bln

2013 2014e

2G

3G

LTE

Macro Environment