TIM Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: TIM reported strong top-line and cash performance with service revenue +6.5% YoY, mobile service revenue +5.6%, EBITDA after lease +7.8%, and operating cash flow up 16.8%.
  • Positive Sentiment: B2B is accelerating — contracted revenues reached ~BRL 1.1bn (+30% YoY) and the closed acquisition of V8 (≈BRL 40m contribution in Feb–Mar) adds cloud/data/analytics capabilities and is already included in 2026 guidance.
  • Positive Sentiment: Broadband recovery is consolidating with revenues rising for the second consecutive quarter, ARPU growth, four straight quarters of net additions, and the near-close of the I‑Systems deal to secure network control in key markets.
  • Negative Sentiment: Near‑term margin pressure from higher OpEx — seasonal international roaming and rising bad debt amid a weaker macro/price increases — plus one‑off accounting effects from the American Tower renegotiation and an EBITDA‑dilutive mix effect from V8.
  • Positive Sentiment: TIM is building ecosystem and efficiency levers via a PicPay partnership (67m accounts, commercial launch planned for Q3) and AI programs (reported >20% productivity gains in software development) supported by Google/Microsoft collaborations.
AI Generated. May Contain Errors.
Earnings Conference Call
TIM Q1 2026
00:00 / 00:00

There are 13 speakers on the call.

Speaker 8

Good morning, ladies and gentlemen. Welcome to TIM S.A. 2026 first quarter results video conference call. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. There will be a replay for this call on the company's website. After TIM S.A. remarks are completed, there will be a question and answer session for participants. At that time, further instructions will be given.

Speaker 12

Hello, I'm Vicente Ferreira, Investor Relations Officer of TIM Brasil. Welcome to our earnings call. We will review our recent results and the evolution of our strategic plan, then open the floor for Q&A with CEO Alberto Griselli and CFO Andrea Viegas. Before we begin, please note that management may make forward-looking statements, so please refer to the disclaimer on the screen and on our investor relations website. Now, let's review our results.

Operator

Hello, everyone. I'm Alberto Griselli, CEO of TIM Brasil. In early 2026, we prioritized execution amid rising external volatility and increasingly unpredictable conditions in Brazilian telecom. The year began with relevant M&A activity, preparation for a spectrum auction, and the new below-the-line offers, among other minor news. Despite that, mobile remains rational in broad terms, so much so that operators were able to recover inflation during these first months of the year. For TIM, clearly outlining our priorities has been essential. We aim for disciplined growth and cash flow generation as we advance our strategic initiatives. To summarize, in first quarter 2026, we finalized the agreement with V8, are close to completing the I-Systems deal, rolled out our annual mobile offer updates, enhanced our new B2B approach, and consolidated our broadband recovery.

Operator

On top of that, the first quarter confirms our consistency of our financial performance and strengthened TIM's long-term foundations. From first quarter 2026 financials, I want to highlight service revenue growth of 6.5% year-over-year, driven mainly by mobile and supported by continued improvement in fixed. Mobile service revenues grew 5.6%, confirming the resilience of our core business. Profitability also evolved positively. EBITDA grew at a solid pace, and the EBITDA after lease increased 7.8%, reflecting efficiency initiatives and disciplined cost management. At the same time, operational cash flow grew 16.8%, reinforcing the strength of our cash generation. These results reflect consistent choices around commercial discipline, cost control, and capital allocation. To provide further insight, let's discuss our recent mobile performance. Postpaid remains the main contributor to growth.

Operator

In the quarter, postpaid revenues increased 7.5% year-over-year, supported by customer base expansion and disciplined monetization. We continually adjust our go-to-market strategy to achieve balanced growth and profitability, attract suitable customers, manage churn, and offer sustainable propositions. In prepaid, revenues are still contracting year-over-year, since a part of this loss is self-inflicted by pre to post migrations, we see, for now, stabilization in the pace of decline as a good news. We continue to work on prepaid offers to better monetize them while improving the customer journey. Our 3B strategy, best network, best offer, and best service, continues to drive our consistent performance in mobile. In best network, we are advancing network swaps in Brasilia and Belo Horizonte, modernizing over 1,400 sites, and benefiting 3 million customers with the upgraded 5G.

Operator

These upgrades improve capacity, quality, operational efficiency, and strengthening the foundation of our mobile business under an AI-supported network. Under best offer, our Big Brother Brasil sponsorship supported brand engagement and commercial traction during the quarter, translating visibility into tangible business impact. In best service, the MyTIM app remains central to our digital strategy. The app reached 18.4 million monthly unique user and expanded its role in customer interaction, sales, and recharges, contributing to a more efficient service model. Our three B strategy will continue to be developed to deliver results in the mobile core, while we also seek new revenue opportunities through partnerships. At the end of the quarter, we closed a partnership with PicPay. The third largest digital bank in Brazil, marking our return to financial services through an ecosystem-based model.

Operator

This partnership brings together two strong brands and massive, rich platforms to build a unique value proposition for clients with the potential to create significant value for both companies. PicPay brings scale with 67 million accounts, BRL 550 billion in consolidated TPV, and strong engagement in digital payments. By joining forces, we aim to enhance customer engagement, increase interaction frequency, and create cross-selling opportunities through simple, fully digital journeys, ultimately delivering a more complete and integrated experience. Next, I like to turn to broadband and share recent developments. In first quarter 2026, the fixed business continued to show operational improvements. Revenues were up for the second consecutive quarter, supported by ARPU growth and by fourth consecutive quarter of positive net additions. These results reflect better execution, improved sales quality, and a more disciplined commercial approach in selected markets.

Operator

If broadband is a game of consolidating our recovery, B2B is about acceleration and delivery. As you all know, B2B has become a key pillar of our strategy to diversify revenues and expand beyond traditional connectivity. Our focus continue to be on connectivity-led solutions, particularly network as a services and IoT across verticals such as agribusiness, utilities, logistics, and industry. In the quarter, contracted revenues reached approximately BRL 1.1 billion, representing 30% year-over-year growth. This performance reflects both new projects and the scaling of existing contracts, supporting by our capillarity, technical expertise, and disciplined execution. A relevant milestone this quarter was our partnership with Axia. Together, we will implement the first hydro-powered plant in Brazil with 5G connectivity. This project illustrates how advanced connectivity can support safer operations, higher efficiency, and new digital use cases in critical infrastructure, reinforcing our position in utilities and energy.

Operator

Another strategic step was the acquisition of V8. This transaction adds capabilities in cloud, data, analytics, and digital solution, along with strong relationship across corporate accounts. By combining V8 expertise with TIM Scale and Connectivity's assets, we expand our ability to deliver more integrated solution and accelerate cross-selling opportunities. Since we are talking about technology, I want to give you an update on our artificial intelligence initiatives. Our AI program is becoming increasingly more transformative for the company, changing the way we do our daily activities, the way we hire and manage our people, and the way we plan and roll out our products. We are adopting agentic AI and other AI-based solution across the organization to run a range of tasks with varying levels of complexity. Productivity gains are becoming more pronounced. Early results in areas such IT shows gains of above 20% in software development.

Operator

Faster cycles, lower IT costs, and improved system performance are supporting the first phase of a long-term transformation. Additionally, we are expanding our partnership with Google and Microsoft to deploy AI solution across the entire organization while managing token usage through FinOps approach. Looking ahead, our priorities remain clear. We will continue to strengthen our mobile business by improving network quality, evolving our offers, enhancing service, while expanding our ecosystem through partnership. We will sustain operational improvements in broadband, and in B2B, we will continue scaling capabilities through connectivity, digital solutions, and V8 integration. The first quarter of 2026 demonstrate our unwavering commitment to progress, innovation, and disciplined execution. We are building sustainable value step by step, and we are well-positioned to seize future growth opportunities. Thank you for your continued trust and support. Now, let's move to the live Q&A session.

Speaker 8

Thank you, Mr. Alberto. We are now going to start the Q&A session. To ask a question, please click on the Raise Hand button. If your question has already been answered, you can leave the queue by clicking on the Put Hand Down button. Our first question comes from Gustavo Farias with UBS. You can open your microphone.

Speaker 3

Hi, everyone. Thanks for taking my questions too, on my side. The first one about V8.Tech and B2B in general. What could we expect on this line in terms of growth going forward? Just a consultation. Is this line already embedded in the guidance for the year? Well, in general, how you're thinking about B2B, both organically or inorganically going forward? The second question, if you could comment on about margins, okay? How you're seeing the pace of margin expansion going forward. In the quarter, we've seen some headwinds on OpEx.

Speaker 3

If you could help us separate what are the recurrent effects from the seasonal or one-off effects, maybe roaming costs, maybe renegotiation of contracts with tower companies, it would be very helpful. Thank you.

Operator

Hi, Gustavo. Thanks for the question. Let me address the first one and then I will hand it over to Andrea for the margin expansion. When it comes to our revenue growth, as we outlined in our strategic planning at the beginning of February, we got 3 vectors to support our revenue growth going forward. We got clearly the mobile core business, the broadband expansion, and the B2B expansion. The B2B expansion, the B2B vertical has been growing overall over the last years at a double-digit rate. Clearly, our base is relatively small within our total revenues, but the growth has been going forward at a double-digit rate. We expect this to continue in the coming quarters.

Operator

Clearly, this year we have, we finalized the closing of V8 in January and therefore, we have the V8 contribution starting in February. We have around BRL 40 million already in our numbers for February and March this quarter. V8 is also on a growth trajectory, and we expect to contribute to the double-digit growth, but on a larger base. To your question, if this is included in our guidance, yes. The answer is yes. It is. Okay, Gustavo, if it's clear, then Andrea can address the margins for you.

Speaker 3

Yeah, it's very clear. Thank you.

Speaker 1

Hi, Gustavo. Related to the margin, this quarter we have some pressure in OpEx, as you see. We have two major impacts. One is in the interconnection. In interconnection, we have two impacts. International roaming, that is a seasonal impact. We always have this in the first quarter, in our interconnection costs. This quarter is the higher one. The second is in providers. Providers, we mentioned before, we launch the control plans with the stream the beginning of the last year and the cost is a result of the growing of this plan. The second impact is in bad debt. Bad debt we have a higher level than the previous quarter. We have more pressure in the bad debt.

Speaker 1

This is related, even to B2C also, and to B2B, a consequence of our macro environment. For the second quarter, we expect to continue the pressure, especially because we have a price up in the first quarter. Related to the towers, ATC, as we announced in the last quarter, we have this renegotiation with American Tower. The renegotiation impact several lines. Was a structure negotiation. We're talking about more than 8,000 towers and more than 40 contracts. One of the impact, we have impact in the reduction of our debt, reduction of the lease. We also have reduction, change of the rate. We have several impacts.

Speaker 1

One of them is one-off in this quarter is related to the deferred deferred revenue but is in other expense. When we sold our towers to American Tower, around 4,000 towers, we received BRL 900 million. This gain was deferred during the period of the contract, around 20 years. When we renegotiation with American Tower, this contract related to this sold also was included. This period was reduced in about 2 years. In an average of 2 years. With 2 years less, we have the positive impact of less time to defer this gain. This is the impact that we have in this line, other income. We have another impact in the lease, another positive impact in the lease, referred to incentives.

Speaker 1

As I mentioned, we have several impacts to relate, several positive impacts related to American Tower. I'm sorry that was a long explanation, but I don't know it was clear.

Speaker 3

Yeah, very clear.

Operator

Gustavo, I can add one point in terms of margin expansion. Clearly we are going to expand our margins in the coming quarters. You have, as Andrea said, something seasonal, something that is more related to the macro environment or the price up like bad debt. At the same time, there are a number of initiatives that we are working on leases and on cost to keep optimizing the productivity of our company.

Speaker 3

Thanks for the answer. Just a follow-up, if I may, related to how we could think about margins, or margin impact coming from this consolidation of V8.Tech. I'm assuming a different margin profile, potentially more dilutive, than the overall connectivity business. Is that correct to assume?

Operator

Yes, it's correct to assume. V8 is dilutive in terms of, it's not coming with an EBITDA margin like the mobile business, but it's accretive on the bottom line. At the end of the day, on the EBITDA margin, you have a dilutive effect, which is specific of the business. Your assumption is correct.

Speaker 3

All right. Perfect. Thank you all.

Speaker 8

Our next question comes from Luis Chagas with XP. You can open your microphone.

Speaker 4

Hi, guys. Thank you, thank you for taking my question. From my side, I have two questions. The first one is, how do you perceive the current competitive landscape in mobile? The second question regards fiber. Your fiber results have been improving sequentially. Would you consider M&A or JVs to accelerate growth in this segment? How do you see the current environment in terms of M&A deal opportunities? Thank you.

Operator

Let me start with the competitive landscape. The competitive, Luis, landscape, it's constructive and on a above the line, broadly, rational. Of course, there are a number of discussion because, you know, this rationality, it goes up and down. There was some, let's say noise, in the in this first few months of the year. Overall, it's remain rational. I think that there are a couple of milestones that happened already and some that needs to happen. The first one that I think it's a good development is the price up in pure postpaid in the front book.

Operator

just to remember everybody, the pure postpaid remain roughly unchanged during the course of 2025, with the exception of some 1 competitor increase it, and 2 of us didn't do it. It's good news that this year, a few weeks ago, we increased our entry price and clearly all the other plans of around BRL 10. We moved from BRL 120 to BRL 130. 1 of our competitors already implemented the front book adjustment I think in February. The third one moved along a few weeks ago, also moving the entry point from BRL 120 to BRL 125.

Operator

This, I think it's a good message in terms of market rationality. It's above inflation in general. When it comes to the next milestones to look for is the control, so the hybrid plan. The hybrid plan is something that we did last year at around June, and we are assessing to implement this again this year for the third quarter, let's say, in a safe mode in terms of a hybrid plan. We would expect that it's something that everybody's considering. I got a positive outlook in my mind related to this.

Operator

On prepaid, I think that we are considering a number of options to make it balanced, because if you move up control, then there is something to be considered to be done in prepaid. Something is already being implemented on our side below the line, and we are looking at opportunities to do this in a More for More approach on the ATL front as well. This is for the competitive landscape. If it's okay, Luis, I will move to the other one.

Speaker 4

Yeah. It's okay.

Operator

And you-

Speaker 4

Thank you.

Operator

Okay.

Speaker 4

Thank you.

Operator

When you move to the fiber, I think that our priority now is to come to the closing of I-Systems. That is pretty close. The integration of I-Systems in our operation. This will further support our organic plan because we're gonna have control of the network in some key markets, like Rio de Janeiro and São Paulo. This is the short-term priority related to the fiber. The incorporation of the I-Systems deal is going to close pretty soon. In terms of non-organic, I think that here the question is, we have been analyzing opportunities, we are analyzing opportunities.

Operator

It's a mixture between strategic value, commercial value, and the impact on our role, P&L and the cash flow projections. We are looking for an accretive deal if this needs to happen. We are assessing, but there is nothing defined yet. I don't know if, Andre, you want to add something on the broadband. No, it's okay? Luis, good for you?

Speaker 4

Yes. Thank you. Very clear.

Speaker 8

Our next question comes from Maria Clara Infantozzi with Itaú BBA. You can open your microphone.

Speaker 6

Hi, everyone. Thanks for the opportunity. I have two questions from my side. The first one is related to AI. It called our attention, the focus of your speech and the potential profitability expansion coming from AI and the opportunities in terms of growth in the report. Can you please elaborate more how we should think about the opportunities coming from AI going forward? The second question is related to the PicPay partnership announcement. Can you please elaborate more on how should we think about this partnership? What is the opportunity here and the potential going forward? Thank you.

Operator

With the PicPay, we'll hand it over to Andrea for the artificial intelligence in general productivity. PicPay is a partnership that fill a spot in our customer platform strategy related to the combination of telco and fintech. As you guys all recall, we already had an initiative that has been running for years with the previous digital bank. We consider that as accretive to our revenue and cash flow generation. That was an equity partners. The PicPay differs in the fact that we are in a different phase of the market and the partnership is commercial. The idea is pretty simple.

Operator

We want to create a value proposition for our customers and PicPay customers that is better than the standalone value proposition. The cross-upsell our customer bases, generating revenue growth or commission payments. Loyalty, because we know that when we cross-upsell different packages to our customers, they tend to be more loyal. This is proved. At the same time, to develop lower customer acquisition cost channels for PicPay to cross-upsell on our customer base and vice versa. This is the idea behind the partnership. We're going to work with the two different brands. We associated the brands in the value proposition to our customers. We are looking for a commercial launch in the third quarter of this year.

Speaker 1

Hi, Maria Clara. Related to AI opportunity, as you know, we are working for the past two years. Now we are expanding the adoption of AI, rolling out to agents in the key verticals. We define two priorities, call center and network operation. Network operation, especially in the past part of maintaining. Also we are using agents to help some staff parts like legal areas, human resource, the, also the physical area. We are now starting to use agents also to collect. We are seeing the benefits. It's not a game change, but it's showing we are seeing positive impacts. The, our expectation is this continues to improve and improving our productivity.

Speaker 1

We are doing with very careful because all these initiatives needs CapEx, and we only start the initiatives when the accounts proves positive. That's why I mentioned it's not a game change, but it's a continuous improvement in our productivity. I don't know, Alberto, if you want to.

Operator

I think it's okay. Unless Maria Clara has some follow-up questions.

Speaker 1

Yes.

Speaker 6

Very clear. Thank you so much.

Speaker 8

Our next question comes from Rogerio Araujo with Bank of America. You can open your microphone.

Speaker 10

Hello, Alberto, Andrea, Vicente, Luisa. Thanks, all for the opportunity. I have a couple here. First one, inside the other operating expenses and revenue line where you recognized the gains with American Tower. There is also higher legal provisions of BRL 115 million this quarter versus an average of 55 in the past couple of years. If you could, please talk about the potential recurrency of these incremental provisions and the reason for that. Second question is regarding leases. Is there a strong potential for further lease renegotiations going forward, or most of that has been done? If you could also say, like, for example, American Tower, have you done already all the contracts have been renegotiated? Same for IHS. If you could talk about that.

Speaker 10

Also on leases, there is an incentive included in lease payments of BRL 66 million this quarter. Will that amount remain over upcoming quarters, maintaining the level of lease payments, or is this one-off and linked to quarterly renegotiations? If you could also talk a little bit about this recurrency. Thank you so much.

Operator

Rogerio, let me start with the leases with a general view, then we'll pass to Andrea for incremental information on the leases and the other question. When you look at the leases, basically we are working with 3 main approaches to keep optimizing our cost. Remembering that the cost they suffer an increased pressure that is coming from network expansion and inflation. In order to control this driver of cost increases, basically we are working on 3 different approaches. The first one is the negotiational approach, like the American Tower one. The deal that we closed with them, the renegotiation that we finalized with them.

Operator

The second one is the IHS that you mentioned, whereby basically we go on a make versus lease approach. The third one is sharing with other competitors. What is the status on each one of them? When it comes to the negotiation approach, we finalized the negotiation last year, and the benefits are appearing from this year onwards. We still have a couple of negotiation ongoing with other partners, and this will be information that we'll release in the coming quarters if we manage to finalize the negotiation. The impact is gonna be similar in logic to the American Tower one.

Operator

The make versus lease approach is going to be implemented over time, and therefore we substitute leases with CapEx and the overall economic analysis, it is positive for the CapEx one. This primarily is going through the objective of towers in area where a tower company have less interest because there is less ability to have two tenants, like for example, some of the regulatory coverage and the B2B segment. We also develop an ultra-cost solution that optimize our CapEx investment. The third one is the more medium term approach that is related to the sharing, that you know we are discussing with one of our competitor.

Operator

We did some progress, but we can enlarge the scope of this agreement, both in terms of number of competitors and the scope within the competitor we are working with. I would say that this is going to kick off more in the medium term because it needs time to be executed. Because basically you need to optimize and move electronics from one tower to another, so it takes a bit more time. This is for the general approach in terms of lease control management.

Speaker 1

Hi, Rogerio. Complement to the lease information that Alberto said, we have a one-off of BRL 65 million payment in lease. This is also a reflect of ATC agreement. As I mentioned before, we have several impacts. This is a one-off and was in this quarter. What we have with ATC that is recurring is the downsize in the lease that we have with them. This will be a recurring impact. Considering the other income that you ask, we have a positive one-off that was ATC also, that I explained was the fair revenue. We have some impact, also impact in the provision. A provision increase is a normal course what the event of analysis that we have, and it also is a one-off.

Speaker 1

You can expect that in the second quarter, this line will be, will return to the path that we normal have.

Speaker 10

Well, that's very clear. Thank you so much all.

Speaker 8

Our next question comes from Phani Kanumuri with HSBC. You can open your microphone.

Speaker 9

Hello. Thank you for taking my questions. The 1st one is on what is the reaction from the customers after you had increased your prices this quarter? Are you seeing an increase in churn? The 2nd one is regarding the recent 700 MHz auction. How does that change your competitive scenario in mobile? Thank you.

Operator

Let's start with the churn one, Phani. As we mentioned in the previous call, we executed back book prices in between the first quarter, second quarter. The impact on churn, it's expected. Basically this year, we noticed a smaller increase in the voluntary churn that is it's slightly higher versus the previous quarter but is still in the range of 0.8. That is the number that we share with you guys in previous earning calls. There was an increase in involuntary churn that then is reflecting also a bit in the context of the macroeconomic in the bad debt.

Operator

Generally speaking, this impact is higher in the first quarter and then tends to phase down in the second quarter. This is what we are going to expect going forward, and the end of April is already showing some sign of this trend happening. At the same time, you see that the effect is more pronounced in our postpay net additions. In January, there was a lower number. It was 30K, then it moved up to 50. In March, it's moving up to 80. We close April is going to be higher than 80. Basically, we are ramping up back to post price up impact. This is for the first question, Phani.

Operator

When it comes to the 700 MHz frequencies, these frequencies sort of crystallized a situation whereby some of our competitors are. This frequency, I don't know if you guys remember, that has already been assigned in secondary use to the small ISP in last year. Some of them are already using this frequency to provide voice services or extend 5G services to their customer base. From a practical perspective, these frequencies are already being used, and therefore, the auction crystallized the use from a secondary use to a primary use.

Operator

As the press has been reported, Conexis, this is the association of the mobile operators, and TelComp, which is the association of the ISP, have a number of objections related to the way the auction is being carried out. There are legal proceedings happening related to the overall auction mechanisms and clear results.

Speaker 9

Thank you.

Operator

To you, Phani.

Speaker 8

Our next question comes from Mathieu Robillard with Barclays. You can open your microphone.

Speaker 7

Hello. Good morning. Thank you for the presentation. I had a few questions. The first one was on energy costs. Now, I understand you do not disclose your energy costs, but obviously there's quite a bit of volatility in some of the prices, at least globally. I also understand that you have long-term agreement, but maybe if you could give us a bit of color in terms of what potential impact we could see if the situation stays as it is at the tier rates. Are you hedged? Are you in long-term contracts? That would be helpful. The second question was on tower, just to follow up. Can you clarify if you have caps on inflation for your leases? The third one was a bit broad, on D2D.

Speaker 7

Obviously, we're seeing a lot of the players launching D2D services across different countries. I think you guys also have an agreement with one of the potential providers. Just wanted to see how interesting you thought this vertical could be in Brazil. Thank you.

Operator

Mathieu, do you want to address the energy and?

Speaker 1

On inflation.

Operator

inflation, yes. sorry, Mathieu, I didn't get your last question.

Speaker 7

Yeah. Okay. D2D as in direct to device. direct to cell.

Operator

Sorry, satellite.

Speaker 7

Satellite.

Operator

Okay, cool.

Speaker 7

Yeah, yeah.

Operator

Understood. Yes.

Speaker 7

Sorry.

Operator

Okay.

Speaker 7

Not B2C.

Operator

Okay.

Speaker 1

Hi, Mathieu. Let's just start with energy. We don't disclose very much the energy cost, but we work with three lines of energy. We have the normal contracts, the open market. Then we have what we call Mercado Livre, that's when you buy a package, and we have the third one that is, how do you say? Farms of energy plant for renewable generation. With these energy plants, we have long-term contracts, and this also is including in our lease costs. And these energy plants give us a very good gain and protect us to the energy with the open market.

Speaker 1

In Brazil, we have a lot of impact related to rains and what we call red flag here, because the government that consider this tariffs. The energy plants protect us to this kind of a lack of predictability. We are starting invest in the energy plant in the, 3 years ago. I think 3 years ago. Now we have half of our costs are managed in this kind of plant that is also one of pressure that we have in leasing. We have a positive impact between in the general cost of energy. Relation to-

Operator

Andrea, just to complement Mathieu, there is an important issue that we launched last year, which is called auto generation, whereby we will extend this predictability, this control in a wholesale agreement to a larger proportion of our overall energy consumption. This project, it's in the process of being implemented. The expectation is gonna be live by the end of basically in the 4 quarters this year. We're gonna be farther edged versus price, potential price increases.

Speaker 8

Yes.

Speaker 7

Okay.

Operator

Yes. There is, sorry, on this, there is this gasoline that it runs on generators as a backup solution. We made sure that we provided some, let's put it this way, safety buffer for months to come.

Speaker 7

Okay. If I got it right, about 50% of your volume consumption, I don't know if it's the cost, but it's basically under the energy plan scheme, and that will increase throughout the year.

Speaker 1

Yes

Speaker 7

above 50%. Okay.

Speaker 1

Yes. Yes. Related to the tower inflation, we have all the contract is have inflation rates. We have the impact. What we work very hard and our goal is always have to least increase the inflation. Putting in other words, we observe the impact of the volume 'cause we have more towers related to the expansion of our network. We our goal is to increase leases at the maximum the inflation of the year. We observe the volume driven.

Speaker 7

Okay. Thank you.

Operator

As for the D2D solutions, this is clearly something, Mathieu, that we see as interesting in a continental country like Brazil. Because clearly as operators, we provide coverage to a limited surface area within the country. Therefore, it's something that is potentially interesting. Now the point is that while from a fixed broadband the product is up and running, and it's something that it's already gaining share in Brazil, for the same reason of continental coverage. The D2D solution, we understand that in the current format, it's a niche value proposition.

Operator

Therefore, here I think that the big question is, the cost of this sort of agreement versus the benefits that we deliver to the value proposition. This is something that we are looking at. Today it's basically, and if you look at the launches in many markets, it's something that is very specific or very segments in remote areas with text-like sort of capabilities. This is going to change in the years to come, so it will become more appealing. Therefore, I would guess that the cost-benefit analysis are likely to change over time.

Speaker 7

Makes sense. Thank you very much.

Speaker 8

Our next question comes from Marcelo Santos with JP Morgan. You can open your microphone.

Speaker 5

Hi. Good morning to all. Thanks for taking my questions. The first question is regarding the higher delinquency. You said that you expect this to continue in the next quarter. Would that prompt a more cautious credit analysis and potentially a slowdown in postpaid adds as you seek to control this? Because we saw the bad debt, we also saw the NPLs, the 1 to 30 days NPLs that had a big increase. Just wanted to say how to understand how you're going to react to this. The second question is a bit more technical. It's about the deferred revenue regarding a renegotiation with ATC. When you look at that line, like in the past, you always had a certain revenue on that line.

Speaker 5

Is just a part of the BRL 83 million debt that is known, kind of one-off-ish? You're going to continue to have a level but below? Just wanted to understand how this BRL 83 million are going to go forward given that you had this in the past.

Speaker 1

Hi, Marcelo. related to the bad debt, as I mentioned, yes, we are seeing a more pressure of bad debt in this quarter. A consequence of a deterioration of payment of our customers, B2B and also B2C, more B2C. I mentioned that we expect the pressure continue because we have the price up in the first quarter. As a consequence, as always, we have the price up, a consequence we have bad debts continues. You mentioned another thing about the debt.

Operator

Yes. No, but the debt, let me just put another piece of information. Marcelo, basically how we deal with it. Basically, because it's a credit. He was talking about the credit. You have a number of different mechanisms to control it, and clearly, the credit analysis is one of them. Then there are also some offer construct you can think of, like relying more on clients on credit cards, for example, on prepayment. There are a number of things that we are implementing already and assessing to cope with the current scenario.

Speaker 5

Okay

Operator

finalize on this.

Speaker 1

Related to the other income. When we sold the towers for American Tower, this gain was around BRL 900 million, was deferred during the period. Each month since 2018, we have around BRL 4.5 million in this line. This was for 20 years, beginning in 2018. When we make the agreement with ATC, this part of the contract that relates to the towers sold, was reduced in around 2 years. This reduction of 2 years is the impact that we have now. Once that we have 2 years less, we recognize this around BRL 80 million related to the 24 months that because our contract will end it sooner than we expect. We recognize this in this one-off operation.

Speaker 1

I don't know if I addressed your question.

Speaker 5

going forward it should go back to the 40-.

Speaker 1

We will continue for 4.2 because we also decommission some towers, so as will not be any more 4.5, it will be around between 4 and 4.2.

Speaker 5

Okay

Speaker 1

This will continue from as always. We always have this BRL 13 million impact each quarter related to this line, but this quarter we have BRL 13 million plus around BRL 87.7.

Speaker 5

Okay. Look, crystal clear on the ATC. On the higher delinquency impact on growth. Alberto, I understand that you have some options that you don't need to tough and crystallize, is it reasonable to say you'll be a bit more cautious in adding, like could we expect some pressure on adds or we cannot say that?

Operator

No. I wouldn't say, no, we couldn't say that. I say we're going to try to be more intelligent and selective. I mean, that I would say is rather than cautious. If you look at our net additions, as a matter of fact, it's performing well. There are a number of initiatives always in place because it's always a fine-tuning. Marcelo, when you go to the migration or acquisition in terms of you explore different segments, you explore different payment mechanisms, different offer construct. Basically this is something that is going on and we're gonna keep optimizing.

Operator

Of course, the macro, it's unknown, it's uncertain. We need to readjust our approach to the evolution of the macro environment. For example, this enroll plan, at the end of the day, can have a positive impact because it can release a bit of pressure on the level of debt of families. In general terms, what is happening is acquisition is improving bit by bit, as we move month-over-month. This is something that has been, and we highlight in the presentation.

Operator

When you look at the big broader impact, our acquisition has been improving, and this has been driving the net additions up in the first quarter and the churn has been dragging down a bit. Over time, the churn increase due to price up is going to slow down, involuntary, and the acquisition are likely to level off. The acquisition side is improving bit by bit.

Speaker 5

Okay. Thank you. Thank you very much.

Speaker 8

Our next question comes from Silvio Doria with Safra. You can open your microphone.

Speaker 11

Thanks for taking my question. I have a question about FISTEL. FISTEL is going to be discussed at the STF this week. What's the company expectation regarding the outcome?

Operator

Well, Silvio, we believe that we have, as we always say, a strong legal case. It's good news that FISTEL is now to be treated, starting next week, the 8th. It's going to start. We think that the discussion will take some months to articulate and move forward. What we think as a sector, we have a solid legal case in terms of the moderation of these tariffs related to their objective.

Operator

Let's see what it comes out, the 8th, where the Alexandre Moraes will put forward his point of view, and then there will be a discussion that will involve all the ministers there. We believe that it's gonna take some months yet to be addressed, hopefully by the end of this year.

Speaker 11

Got it. Thank you.

Speaker 8

Our next question comes from Daniel Federle with Bradesco BBI. You can open your microphone.

Speaker 2

Hi. Good morning, everyone. Thank you very much for taking my questions. The 1st 1 is a follow-up on the competitive landscape, but more focused on the hybrid, the control segment that I understand is more relevant for revenue dynamics than the pure per postpaid. By the same time last year, 2 of the 3 operators had already increased prices, 1 in February, the other 1 in the beginning of April. Far this year, no 1 has increased price. I would like to hear your thoughts on why that's happening. That's a very important development for the sector. There seems to be some rationality, but so far, no price increase. hear your thoughts here. The 2nd 1 related to clients generated revenue that decelerated from 6.3% growth to 5%.

Speaker 2

I would like to understand it if we should understand this as a deceleration trend or that's more volatility and should rebound going forward. Thank you.

Operator

Daniel, let me go on the first one. I would say that for the. Let's say the price up, you are right. They're quite important, especially for control. Not a lot in terms of the revenue they generate for that year. Basically the alignment between front book and back book is something important for the sustainability of the More for More strategy. This is therefore an important point. As for us, and then I will give you my reading for the others. As for us, we executed our adjustment last year, roughly in, I think it was June, after Mother's Day.

Operator

It now we are in a promotional period. It's Mother's Day. This sort of More for More strategy is going, is likely to happen afterwards. My view is that in our scenario, current scenario, we are seeing this happening in the third quarter across the board. As for the reason, in terms of why the other competitors didn't do it in February, that was something that I mentioned at the beginning. You know, this market repair, the More for More strategy and this constructive approach, and it's already happened, by the way, in the past. They got ups and down, right? We already saw ups and down in the past.

Operator

Daniel Federle, you follow the sector very closely, so you might remember that one of our competitors at a certain point implemented a More for More strategy in control, and then it went back again. It depends on each company targets strategy. It's not like a linear thing. I still think that as a whole, my outlook in terms of this happening in the third quarter is positive. The, I think, if you ask the same question to the other guys, you're gonna have a more complete answer. This is my view in terms of the overall process. It's never been linear in the past, and it's always ups and down.

Operator

My outlook is that This will unfold positively in the following months. At least this is the intention on our side. When it comes to the client-generated revenues, I would say that when you look at our revenue portfolio, you see that we have mobile. Now, we said in February that we wanted to complement with the growth from broadband and the B2B. This is happening. We always say that mobile is hinged upon postpaid growth in terms of ARPU and customer base and to a less extent a lower deceleration of prepay. Let's put it this way.

Operator

Nothing of this is changed. What is changed in this quarter, and you see that everything is accretive, mobile product, B2B, and broadband. When it comes to mobile in specific, we always say that the almost double digit would have come down to a higher middle digit, and this is basically what is happening. The mechanics in the engine remain the same with a slightly different intensity.

Speaker 2

Very clear. Thank you very much, Alberto.

Operator

Yeah, I got it too, right? Okay.

Speaker 8

Ladies and gentlemen, without any more questions, I am returning to Mr. Alberto Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

Operator

Guys, thank you all for joining today's video call. I want to thank the tireless efforts of our team for the consistent results and solid start of 2026. The environment is a bit more volatile, we focus on execution as a critical element to our strategy. I look forward to meeting all of you in the coming days on the one-to-one and group meetings. Thank you, everybody.

Speaker 8

Thus, we conclude the first quarter of 2026 conference call of TIM S.A. For further informations and details of the company, please access our website, ri.tim.com.br. You can disconnect from now on. Thank you once again.

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