Good morning, ladies and gentlemen. Welcome to TIM S.A. 2022 Third Quarter Results 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. [Operator Instructions] We highlight that statements that may be made regarding the prospects, projections and goals of TIM S.A. constitute the beliefs and assumptions of the company's board of executive officers. Future considerations are not performance to warranties. They involve risks, uncertainties and assumptions as they refer to events that may or may not occur. Investors should understand that internal and external factors to TIM S.A. may affect their performance and lead to different results than those planned. [Operator Instructions] Now, I will turn the conference over to the CEO, Mr. Alberto Griselli, CEO of TIM S.A.; and to Ms. Camille Faria, Chief Financial Officer and Investor Relations Officer, to present the main messages for the third quarter of 2022. Please Mr. Alberto, you may proceed.

Good morning, everyone, and thanks for attending our results conference call. I'm pleased to say we had another great quarter. We are presenting strong numbers in all lines. We are growing solidly and maintaining our high level profitability while delivering all the transformational initiatives we plan for 2022. TIM is now a bigger and better company. Also the next generation TIM path is just beginning. We move with great strides towards our goals. In the third quarter, our top line grew more than 24% year-over-year. Our EBITDA also presented great momentum accelerating to nearly 25% yearly growth, which led our margin to exceed 48%. For year-to-date figures, EBITDA minus CapEx rose 25%, with a cash flow margin above 25%. Until September, we announced close to BRL 1 billion in interest of capital, and we are very comfortable to fulfil our remuneration guidance of BRL 2 billion. Strategic initiatives are advancing according to plans. On 5G, our smart rollout approach is giving us leadership in coverage where it matters the most to TIM. Our integration process is evolving rapidly and we are already benefiting from it in multiple forms. Essential phases of the integration have already been completed. DSG front presented other relevant accomplishments in the third quarter and affinitive recognized TIM Brazil as the world's most diverse and inclusive telecom operator. TIM as an employer was awarded as a great place to work, while our client also gave us great scorings in Reclame Aqui portal for excellence in customer service. Additionally, we're using the power of technology to help developing communities under a partnership with the NGO, Geraldo Falcoes. So when we say ESG is embedded in our strategy, and everyday action, it isn't just a claim. Getting into additional detail in our revenue dynamics, we saw mobile service revenues…

Thank you, Alberto, and good morning, everyone. As Alberto explained earlier, the third quarter was marked by improvements in all lines of our results. Our OpEx, although still pressured by the same elements we saw in the previous quarter, presented a deceleration when compared to second quarter, 24% versus 25% year-over-year. This trend reflects a larger company following the M&A transaction, but all cost lines remain under control. With revenues growing faster than in the second quarter and OpEx expanding slower, EBITDA dynamics accelerated. EBITDA for the quarter increased by 24.5% versus third quarter 2021 with a stable margin of 48%. Net of the I-Systems costs, we would have had more than 28% of EBITDA growth with a margin of 49.5%. Of course, this record high EBITDA was driven by service revenue growth from organic performance and M&A amid an environment of cost under pressure and carrying a lot of transitory effects. Looking ahead, it's always important to remember that we are carrying the burden of the temporary service agreement with Oi that will end in April of next year. We expect a much cleaner OpEx dynamic in 2023 as both impacts from the TSA and I-Systems will start to disappear. Last quarter, some of you became a bit worried about our bottom line dynamic. And as we explained, there were many transitory and temporary effects. In the third quarter, some of these impacts already started to ease, but some will remain until we finish the asset integration and site decommissioning. Site leases continue to impact D&A and financial results significantly. And despite starting the decommissioning in the fourth quarter, we will only benefit from it later in 2023 and 2024. As a result, net income came in line with the third quarter of 2021 at BRL 473 million. And we feel very comfortable to fulfill our BRL 2 billion guidance of shareholder remuneration. Until December, we will announce a portion of the remaining BRL 1 billion in interest on capital and the rest will be proposed as a dividend. If the I-Systems deal negatively impact our costs, it benefits us even more on the CapEx side, positively affecting free cash flow. The saved CapEx is compensating for a good portion of our 5G rollout. Year-to-date, EBITDA minus CapEx is growing close to 25% and the free cash flow margin is exceeding 25%. Our cash position remains solid even after the payment for Oi assets. We closed the quarter with approximately BRL 3.7 billion in cash. So even after the court decision to transfer BRL 700 million to the escrow account, we will retain more than BRL 3 billion. This deposit will not impact our leverage guidance since we took into consideration the total payment to Oi. Additionally, our indebtedness level is comfortable. In the third quarter, the net debt-to-EBITDA ratio remained below 1.5x. Now I hand the call back to Alberto to complete the discussion related to the third quarter.

Thank you, Camille. It is fair to say we are executing firmly the plan we set ourselves to deliver in 2022. Despite a very tough and uncertain year, we expect to meet our financial and ESG targets. Our accomplishments in this first 9 months confirmed our progress to build the next-generation team, evolving step-by-step to become the best mobile operator in Brazil. Building this new chapter in TIM's history takes immense effort. So I'd like to thank the entire team for their outstanding work and commitment. Additionally, we have a new executive team member. Fabiane Reschke joined TIM Brazil as the new Legal Officer. She has a vast experience both in telco and other industries. So I'd like to give her a warm welcome and wish all the luck and success. It is great to have her on board. Now let's open the floor for questions. Please operator.

[Operator Instructions] Our first question comes from Marcelo Santos with JPMorgan.

The first question is the ICMS impact. I wanted to understand better, especially on prepaid, where they decided to increase the allowances and not change prices. Did this impact already happen? And how much of the quarter was impacted by ICMS? And the second question would be about the litigation with Oi. How did this impact the P&L and the balance sheet if in any way? Could you just describe how each parts moved because of this, for example, deposit in the escrow account? Did this impact, I don't know, earnings or taxes or anything?

Marcelo, so let me start with the first question, and then I will hand over to Camille for the second one. When it comes to prepaid, we already implemented the measures for gross additions and the customer base. Roughly it was August. And basically, we followed, as already commented in many occasions, with a larger gigabyte benefits for our customer base. So when you look at the combined effect, what you see already in the quarter is, let's say, a positive impact of the CMS reduction on the net revenues, but at the same time, there is a reduction of sort of cannibalization in recharges, then thereafter translating revenues because we have a big chunk of our customers that recharge more than once. And so basically, the additional gigabytes or megabytes that we're giving to the clients cannibalize their recharges. So what you see in the quarter is the net effect of the better net income due to SMS and the cannibalization of recharges due to the extra gigabyte that we are offering to the entire customer base starting in August.

It's working, okay. Marcelo, so regarding your Oi question, right now, we had no impact yet from the BRL 700 million deposit that we did. That's our part that we did on the escrow account. On the P&L, on the balance -- because we took a conservative approach and -- left the transaction as initially recorded in our numbers. With respect to the balance sheet, you will not see that in September, of course, because the deposit was made in October. But as of October, we'll have roughly BRL 700 million of cash moving from our cash position to a judicial deposit. But as I mentioned in my speech, that will not impact our leverage guidance for the end of the year because when we developed the guidance, we're already counting on the fact that we would have to pay the full price for Oi that was before the price adjustment request.

The next question comes from Diego Aragao with Goodman Sachs. Diego Aragão : A quick one from my side, I just want to get an updated view about your CapEx outlook and whether we should start thinking about potential change going forward. I mean if we will think about the first, with mobile integration process; secondly, initial results in 5G and then the asset-light model with this partnership with I-Systems, are you seeing any major efficient at this point that could eventually lead to a downward revision of your annual guidance? So this is the first question. And my second question is related to the B2B business. If possible, can you just help us to understand the economics of these projects you are presenting? If you can illustrate, for example, who is responsible for the related CapEx for network maintenance costs? How TIM is get paid in these type of projects? And lastly, what kind of margin you should achieve and the average level of return you were looking for? That would be great?

Okay, Diego. These are two very long questions to answer during the call. But let's go with the first one, which is easier. When it comes to the CapEx on the third quarter, you see that we are a notch below BRL 1 billion, but we expect to catch up in the last quarter and close this year in line with the guidance that we gave to the market. So there will be an acceleration in the last quarter. When you look at next year, basically what is going on is that what is being presented in the Investor Day is happening. So basically, what we say at that time that was made this year that we were assuming that 5G take-up would be in line with 4G take-up as we saw it in the last years. What is happening is that 5G take-up is going faster rather than versus the 4G take-up and this has a positive upside on CapEx for the next year. Basically, you got two big catalysator of CapEx efficiency. One is the Oi frequencies and towers. The second is 4G offload due to 5G. So since offload of 4G, it's proceeding ahead of what we planned, we're going to be able to materialize the upside in 2023 and '24, given to the fact that what we expected to be necessary 4G investment are no longer required. So we mentioned an upside of BRL 600 million in the Investor Day. This is actually, we see this materializing in the following years. So we are still discussing now and finalizing the industrial plan for '23, '24, '25, but the upside is coming along as we move with implementation of 5G. Same stuff for I-Systems. So basically, as you know, with I-Systems, we include a new OpEx line…

The next question comes from Leonardo Olmos with Banco UBS.

I guess two questions. The first one, just a quick recap on the decommission of the sites. You mentioned that you expect 400 sites in the remaining 2022, 3,000 sites in '23 and 1,300 in '24. I'm not sure I heard that for right. So just to recap that and if you could tell what is the impact of fines that you expect from this decommission process? That's the first question. I may ask the second after this.

[indiscernible] and let's go this. So the commission is in the 3 steps that you just mentioned. So you understood correctly what we said throughout the presentation. So the 400 is not that we are expecting to do it. We're already doing it. So of this 400, last week we were sort of 150 already implemented. So we are putting together the machine to make this happen this year and next year. So we are now ramping up the speed, and then we are going out to execute this speed next year. So there is a specific organizational group within the organization that is in charge of this. The plan is let's say ready and is being executed. So you understand is correct. So it's a small piece this year in -- as we speak already and in November, a big chunk next year and the remaining part in 2024. When it comes to the impact of the fees, the impact of the fees are already included in our numbers. And so basically, the amount -- I will hand it over to Camille to give you the details about the numbers that are part of our -- that is already in our balance sheet.

Thank you, Alberto. Leonardo 3 effects here, so the total amount of the expected fines was already included in our IFRS 16 debt as of second quarter. So it's roughly between BRL 600 million and BRL 700 million and it's there already. In terms of cash, of course, it will be paid when we decommissioned the sites. But in terms of our P&L, because it's part of our decommissioning plan, it's being amortized over time. So in the P&L, you already see the effect of the fines. It's a linear amortization over the period after decommissioning.

Very good. And my second question regarding Oi's client, can you please discuss the bad debt dynamics and if you plan to disconnect these clients eventually as a competitor did?

Yes, so Leonardo, let's say the bad debt dynamics are basically the normal bad debt dynamics of mobile operators. So we got bad debt on their side. The delinquency rates on our clients, it's a bit higher than ours. And it's business as usual, let's put this way. When it comes to the disconnection, we are planning -- we got a material number of customers that are inactive. So they do not generate traffic. So they are not using the service. And so what is going to happen is that starting from November and this quarter, the current quarter and the next quarter, first quarter of next year, we are going to initiate the process of cleaning up this customer base. Basically, this is a cost avoidance opportunity on our side. This is -- so basically, there are people and customers not using the service, but we've got some costs attached to it, like taxes, license costs, et cetera. So we are going to initiate the cleanup this month and carry out this according to time schedule this quarter, next one.

The next question comes from Marco Nardini with XP Investments.

I actually have two on my side, if I may. The first one is regarding 5G FWA. I would like to know when the company intends to launch FWA plans and when we will start to see its impact on TIM's revenue. And the second one is regarding company strategy on FTTH. The current company focused is capturing synergies with Oi and also 5G rollout. However, I would like to know if you could give us a little bit view on when could we expect major FTTH expansion, please?

Okay. So Marco, let's go to the first question in terms of FWA. In terms of FWA, you probably know we have been experimented the technology in 4G. We launched three pilots last year in 5G -- and we set out our view on this in our Investor Day. This view remain unchanged. So basically, it's an opportunity to leverage the available capacity of 5G. We believe this is an opportunity. And there are a few barriers that need to overcome to make it available in the consumer segment, which is basically a decent cover of 5G, and we are addressing this in main capital, for example, Rio de Janeiro, Sao Paulo, Curitiba. And then there is the, let's say, let's put this way, the affordability issue because today, the CPE is still quite expensive for the consumer market. Nonetheless, the size of CPA is going to expand rapidly over the next years. So we imagine that the affordability point could be addressed at the end of 2023, in the second half of 2023 and in 2024. This is an opportunity that we are going to attack for the consumer segment at that point of time if the CPA size and therefore, economies of scale make it viable for the consumer segment. It's a bit different for the corporate segment whereby we already uses FWA for top clients that, for example, required backup solutions. This is one use case for the -- so it's a complementary backup solutions for top clients, imaging, the financial services, bank branches. So it's an emerging opportunity. So we already have some inroads. So we expect this to scale up. It's not going to be meaningful on our revenues in the short term. This is for, let's say, FWA. When it comes to FTTH, the expansion of FTTH, basically, it's again in line with what we said in our Investor Day. So we have a plan with I-Systems, whereby they deploy the network, FTTH network, and then we grow our customer base and revenues. So this year, we opened 2 cluster; one in Joinville in the first half and now in Campinas. And so we are proceeding according to this space. So the pace of growth of our FTTH business is continuing, let's say, [ESS]. Now I believe this is, in the short-term, the right, approach because it combines -- it allows us to combine both volume and value in a market which is quite competitive. We've got 2% market share. We are growing. We got the highest ARPU in the sector. And so, we are basically balancing and trading off the speed of growth versus the value that this growth generates for us.

The next question comes from [Luca Branding] with Bank of America.

So two questions from my side. First of all, if you could comment on what we should expect from depreciation in the coming quarters, depreciation and amortization. It increased this quarter with the full 3 months of acquisition. So if you could comment what we can expect? And then second, in terms of the ARPU for the Oi clients, I know it's probably difficult to say what is exactly from Oi or not right now, but are you already working on up-selling those clients? Are you having any success on that? And what's the outlook for this?

Okay, let me -- Luca, let me take the second one, and then we'll pass it to Camille for the first one. When it comes to the ARPU of Oi customers, as expected the average ARPU is lower. It's lower on both segments and then the mix is more skewed versus prepaid. And therefore, you see the effect of this in our ARPU dynamics as they decrease year-on-year. When you look at quarter-over-quarter, the decrease is due mainly by the fact that we got 2 months this year and 2 months next year. Now we are totally focused on migrating smoothly the customers from Oi to our system, so to TIM. This is our priority. It is a complex and quite large exercise. We are talking about 70 million of customers, minus disconnection. So it's still a big number. So this is our focus. There is, of course, the opportunity to monetize these clients in the future because they are based on tariff plans, which are amongst the lowest in the marketplace. Nonetheless, this is not our priority as we speak. At this point in time, our priority is to migrate customers from the existing plants at Oi to equivalent or better plans in TIM Brazil. When it is done, we're going to take care of monetization opportunity.

With respect to depreciation and amortization going forward, we're not giving exact guidance on that number. But just to give you a view of what's going to happen, we are still carrying the burden of 7,200 towers that we got from the Oi, the contracts of 7,200 towers. As we mentioned earlier, we are going to commission roughly 400 towers this year only. As you remember, we are required by CAG to try to sell 50% of our antennas and we can't really decommission the towers while the sale process is ongoing. It started in July as we publicly announced. So we can only start massively decommissioning towers in 2023. So we'll still feel the burden of those additional towers for the remainder of 2022 and for part of 2023. And as we start to decommission the towers, then that burden is going to ease over time. And the process is expected to end by 2024. So we won't really see a normalized rate in our D&A until 2025, but of course, easing over time as we decommission the towers.

The next question comes from Daniel Federle with Credit Suisse.

The first one on the good EBITDA margin increase quarter-over-quarter. I would like to understand if part of that is coming from synergies from Oi assets and if those synergies are coming higher or faster than initially expected by the management? And the second question is more like a quick follow-up on the ICMS topic. We are seeing the financials that the company is provisioning, a portion of the ICMS that I understand to be like related to the timing mismatch between the reduction in the ICMS tax and the reduction in the billing. But it was not totally clear if these provisions are being deducted from revenues or if those provisionings are like an increase in costs.

So Daniel, let me take the first one on the EBITDA margin. Basically, there are -- so we are working across all the cost base items and this, justify the margin expansion. When it comes to the Oi contribution, I'll say that the bottom line is as simple as that. In the second quarter, we got what we got, and we -- and once we got it, we start working on this. I will give you an example. And if you take the energy cost, the energy cost -- we got all the base station with all the energy cost. And then once we got it, we start to switch off the energy cost for the BTS that we're going to decommission. And so it's -- I would say that you can take this as the fact that the second quarter was the initial few months of this process. Now we're moving ahead. So it's -- we are in line with what we have expected. We are not slower. We are not faster. But we are working quite hard to make sure that the synergy -- so the contribution margin from Oi is what we expected. There are a number of opportunities that we are going to capture like, for example, the taxes on the [Sallen] base in the future. And to this, you need to add the continuous job that we're doing consistently over our own cost base to drive the margin expansion that are a critical part of our guidelines and commitments. I will pass it to Camille to discuss the BRL 100 million there.

So regarding ICMS, so first your statement is correct. That provision is a result of the time mismatch between the moment in which we started to collect ICMS at a lower rate and the moment in which we reflected that reduction in the clients' bills. And it is a deduction of our revenues, both gross and net revenues, of course. So it's an impact on revenues, our revenues do not reflect that additional ICMS.

[Operator Instructions] Without any more questions from analysts, I would like to return the word to Alberto Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

Thank you, everybody, for attending our conference call. We have been very pleased to discuss with you the advance on our plans and our commitment to execute the value generation opportunities that we've been discussing this year. I want to thank, once again, the entire team for the huge effort that is being put in place over a huge number of initiatives that are running in parallel to transform TIM in the next-generation teams. Thanks to everybody.

As we conclude the third quarter of 2022 conference call of TIM S.A. For further information and details of the company, please access our website tim.com.br/ir. You may disconnect from now on. Thank you once again, and have a nice day.