TIM (TIMS3) Q2 2024 earnings summary

Executive summary

• Achieved strong financial and operational results in Q2 2024, with service revenue up 7.2%–7.5% year-over-year, robust EBITDA and net income growth, and record operating free cash flow, driven by mobile and postpaid migration.

• Continued innovation in digitalization, AI initiatives, and customer service, with improved metrics and early benefits in NPS and cost reduction.

• 5G coverage expanded to 353 cities, with the highest market share gain in 5G over the last 12 months and leadership in 5G sites.

• Recognized for ESG leadership, diversity, and accessibility, winning multiple awards and achieving 100% renewable energy.

• Maintained a rational competitive environment, focusing on quality and value rather than price competition.

Financial highlights

• Total net revenue grew 7.5% year-over-year in Q2 2024, with mobile and fixed segments both contributing.

• EBITDA increased 8.2% year-over-year, with margin reaching a record 50.0% for Q2; EBITDA after lease grew nearly 14%.

• Net income rose 22.5% year-over-year, reaching the highest level ever for a second quarter.

• Operating free cash flow grew 79.2% year-over-year to R$948 million in Q2 2024.

• Capex was R$925 million, nearly flat year-over-year, with Capex/Net Revenue at 14.7%.

Outlook and guidance

• Confident in achieving full-year guidance despite a tougher comparison base in H2; expect revenue growth to slow in H2 due to less favorable comps and prepaid-to-postpaid migration.

• 2024 Capex guidance reaffirmed at R$4.4–4.6 billion, with continued investment in 5G and fiber expansion.

• Guidance for 2024 remains at 5%-7% revenue growth, with longer-term growth expected to moderate to 5%-6% as inflation declines.

• CapEx expected to close the year within guidance bands, with positive working capital anticipated in H2.

• Management emphasizes value creation and operational efficiency to deliver on the strategic plan.