Good morning ladies and gentlemen and welcome to TIM S.A. 2024 Third Quarter Results Video Conference Call. We would like to inform you that this event is being recorded and all participants will be in 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 section for participants. [Operator Instructions]

Hello, everyone and welcome to TIM S.A.'s earnings conference for the third quarter of 2024. Thank you for joining us. I'm Vincente Ferreira, Head of Investor Relations. This video shares the key highlights of our recent performance and the strategic initiatives we are implementing to continue our sustainable cash flow growth afterward, we will host a live Q&A session with our CEO, Alberto Griselli; and our CFO, Andrea Viegas. Before we discuss our results, I remind you that management may make forward-looking statements and this presentation may contain them. Please refer to the disclaimer on the screen also available on our earnings materials and Investor Relations website. With that, let's move to our results.

Hello, everyone. I'm Alberto Griselli, CEO of TIM Brazil. Once again, we delivered solid financial and operational results in the quarter marked by cash flow generation. But before we discuss our results in detail, let me introduce a relevant part of our effort to improve our brand perception. In September this year, the Rock in Rio fast develop took place. This is the biggest music festival in Latin America, lasting 7 days and attended by more than 700,000 people. TIM is a master sponsor which reinforces a connection between the company and music that dates back to 2003. Since then, we have kept this connection but now we are expanding this as a platform to reshape clients' perceptions of our brand. Mobile network operates in extreme conditions during this type of event. So we use the music festival to showcase our 5G network strength and reliability, while innovating in how we interact with our clients and prospects. This year's results were remarkable. TIM was the number 1 brand mentioned with enormous favorability and color cell brand exposure. We expect that investments like this will help us close the gap in brand perception and clear the way for future growth. Back to our financial results. In the third quarter, we achieved a 6.1% growth in service revenues, outpacing inflation and maintaining the sustainability of our revenue dynamics in face of already expected tougher second half of the year. Our revenues were driven mainly by mobile services which expanded by 6.3% compared to third quarter '23. Mobile ARPU is an important lever, rising close to 5%, while post-paid customer base improved with migration and a new record low churn at 0.7%. Our EBITDA grew by 7.5% during the same period with another quarter of margin expansion. After third quarter 2024, we have…

Hello, everyone. I'm Andrea Viegas, CFO of TIM. I'm a pleasure to share that our performance continues to be strong with a clear highlight on our cash generation capacity as we had anticipated and communicated over recent quarters, supported by solid revenue growth above inflation, our EBITDA demonstrates robots results with a 7.5% increase and another quarter of margin expansion. After accounting for lease impacts, EBITDA after leases grew nearly 9%. Our tower decommissioning project no longer has a material impact. A few tariffs were made to be financially decommissioned, we find still to be paid. However, these numbers have significantly decreased. As a result, the EBITDA after leases margin expanded by an additional second point year-over-year. Driven by TIM's overall strong performance, our net income saw double-digit growth when compared to third quarter '23, despite a lower interest on equity. Additionally, operation cash flow grew over 20%, with margin expanding to 25%. Despite the country challenge with Forex exchange pressure, we're managing to maintain our CapEx levels within guidance bands. Our 9 months results are also quite positive with operating cash flow nearly 30% growth and exceeding 21% as a percentage of revenue. This third quarter confirms what I highlighted in our previous call. Seasonal negative impact on working capital and CapEx have indeed reverted. Even with nearly BRL2 billion in debt and interest payment, we generate almost BRL2.3 billion in cash before dividends. These results underscore the strength of our strategy and I'm confident we are on track to meet our year-end guidance, even with a more challenging comparison base in the second half. Now, back to Alberto.

To conclude our quarter discussions, it is worth recapping some developments in the past 3 months. We saw some new pricing movements from our peers but competition remains healthy and we believe it will remain like that. So much so that we reformulated our post-paid portfolio without using the pricing lever to improve the value proposition. We are carefully looking into our prepaid dynamics and adjusting our offer and go-to-market to regain momentum. We will implement our GenAI use cases that prove to be promising for our customer experience and efficiency. We will keep developing our business while caring for our people, society and the environment. The third quarter was marked by outstanding cash flow performance. We were also pleased with the post-paid contribution and the efficiency of our operations. We are positive we will deliver on our promises on all guidance lines. Therefore, out of our 3-year guidance we gave, we confirm our intention to distribute an additional BRL2.7 billion in shareholder remuneration between dividends and interest on equity totaling BRL3.5 billion for 2024. The journey towards our aspiration of becoming Brazil's most preferred mobile operator requires firm commitment and consistency. I'm sure we have the right people to deliver this throughout hard work, creativity and discipline. Now, let's move to the live Q&A session.

Thank you, Mr. Alberto. [Operator Instructions] Our first question comes from Marcelo Santos from JPMorgan.

Alberto Andrea. I have actually two. The first question is on prepaid. I wanted to get a better assessment on how do you think you're doing in this market? Like are you losing space? You mentioned in the release some lower recharges in some group. So just wanted to better understand the performance. The second question is more in general about mobile service revenues. Not all the peers reported yet but you have been growing a bit below peers. So just wanted to understand the elements here. Do you think this is more of value-added services are growing a bit less? Or is this more on the prepaid that's dragging you? So, just wanted to get your assessment.

Thank you, Marcelo. Hi, everybody. So let's go with the first one that it's somewhat related to the second one. So when it comes to prepaid, so what we are observing in this quarter, in this last 3 quarters that we are sort of going sideways. So if you look at our prepaid revenues, you will see quite similar numbers quarter 1, quarter 2 and quarter 3. And if you look at our competitors' numbers, you are likely to see a quite similar pattern. When you look at the year-over-year performance, we had quite a good 2023 on prepaid. And therefore, the comparison is a revenue decrease on a quarter-for-quarter starting second quarter this year. And this is basically due to a few factors. So let's recap what happened in the last quarter of last year, when we did some price adjustment across the board. Once we did this price adjustment across the board, basically, we made 2 things. We created a sort of a better incentive to migrate for prepaid to control. And so in this 2024, we have a faster prepaid to control migration so far. And this is, of course, impact our prepaid revenues. At the same time, we found out some less frequency of recharges in specific group of prepaid after the price adjustment. And so a sort of negative elasticity that created a negative impact on our prepaid revenues growth potential. And so we got something that is intended and something that was not intended. And this explains our prepaid performance in the first quarter, second quarter and third quarter. A couple of months ago, we launched an upgraded value proposition to improve our prepaid performance going forward. That is basically centered around 3 concept. The first one is to be more appealing on prepaid…

Our next question comes from Vitor Tomita from Goldman Sachs.

So 2 questions from our side. The first one would be on the post-paid side now, if you could give us an updated view on how you are seeing competition in post-paid, especially at the lower end of post-paid, the controller plans where you have been carrying out prepaid to post-paid migrations and also recently launched a new plan portfolio? And my second question would be on the mobile advertising initiative. If you could give us a bit more color on how that has been evolving and how it is being operationalized in particular, what are the most common ways you usually display the ads to clients if it's mostly commonly done via push notifications or via videos that they can watch or other methods. And on whether there are strong growth there in mobile ads has been more concentrated in your own hedging inventory or on sale of third-party inventories. Those would be my questions.

So let's go on post-paid, the first question and the competitive dynamics over there. So on pure post-paid, that the post-paid that's roughly the higher post-paid plans with an initial price point of around BRL110, BRL120, we see quite a rational environment. So there are no big movements or updates there. And if you look at what we control -- what we define as the mid post-paid or entry post-paid which is the control plans or hybrid plans, we have been executing a price adjustment front book and back book in between the first quarter and the second quarter. Another competitor did something quite similar; in quite similar time period, so in between the first quarter and the third quarter. And Claro did the same sort of movements in -- at the beginning of July and they decided to roll it back at the end of July -- at the end of July. So they went back to where we -- they were before the upgrade. I would say that is something related to -- something that didn't work out. So once you do a price adjustment, you're intentional on that. So the fact that they went back signaled to us something that it didn't work out on their side. But the price difference is quite thin among the big players. And what happened and it's been on the press and your reports over the last few days is the launch of an MVNO by new bank with position the offer in this group of control sort of prices and they're a bit more aggressive versus us. We tend to look at this offer as a BTL offer that they intend to cross and upsell to their customer base. And to this respect, this offer is quite similar to our…

Our next question comes from Gustavo Farias from UBS.

Two from my end. The first one on prepaid and in the light of a less frequent recharging -- recharges in the prepaid market, do you guys see any impact -- relevant impacts of bets in prepaid? And my second question, if you guys could give us more color on the increase in leasing expenses quarter-over-quarter.

So Gustavo, let me take the first one and then I will pass the second one here to Andrea. So on the first one, the less frequency for prepaid, it's related to a sub -- so when you look at prepaid, you basically have different groups of customers in terms of profiles. So from 1 side, 1 extreme, we have lower income customers. And on the other side, on the opposite side, you have people without any economic restriction but people that prefer to pay on a prepaid mode. And so when I say that there is less frequency, the less frequency tends to impact the lower income segments. And in our view, it's related to the price adjustment that we did last year. The bet impact, we don't have any data that suggests that bet is impacting in a negative way the profile of our recharges.

Gustavo, related to the leases; we already expect an increase in the second half of this year. We have this increased major for 3 points. The inflation adjustment related to our regular contracts. We also have new sites that came from our 5G expansion. And also, we have new contracts such as the solar -- the energy contracts that we have that also impact in these. What we are working is -- continues to generate efficiency in design and we expect this line grow above the revenue of -- the growth of revenue will be higher than the growth of this lease. So for the first -- for the next quarter we still have this impact but the expectations to be under their control and lower than increase of the revenues.

Our next question comes from Phani Kanumuri from HSBC.

So the first question is regarding how you're placed for price readjustments next year, considering that Claro has taken back and rolled back at price readjustment this year? And the second question is regarding CapEx guidance, specifically for 2025, '26 with the recent depreciation of BRL versus USD, do you see a risk to the guidance?

So, the first one which is on price adjustment for next year; I'm not sure I got the second one, correct. You got it. Okay, so on the first one, when it comes to the price adjustment, so the idea for next year is to repeat what we did this year in between the first quarter and the second quarter which is finally, the -- what we call the front book price adjustment and the back book price adjustment. And of course, so the distinction about these 2 is the following. It's -- we have been doing this year in 2024 and 2023, the 2 movements together. So we increased the back book prices and the front book prices. And for next year, when it comes to the back book prices, we're going to execute it anyway as we were executing beforehand. When it comes for the front book price adjustment, this, of course, it's impacted by the overall movement of the industry. Now, if you look at -- so on post-paid, we feel pretty comfortable that we are at the right price point. So we should be able to execute both together. For control today, we are at a price point where Vivo is at BRL60, we are at BRL57 and Clara is BRL55, so like the enterprises. So they are very close to each other. We, therefore, are 100% sure on back book price adjustment and likely to do an inflationary adjustment also on front book prices as we did in 2024 and 2023, given the current competitive environment.

Related to the CapEx, we are in line with what we expect. CapEx the division of a quarter is not the big vision. We have to see the full year. And although we have a low -- a lot of efficiency generated by our contracts with 5G, we expect to maintain our guidance in the CapEx of full year. I don't know if I addressed your question correctly.

Not so -- my question was that since BRL has been depreciating, Brazilia has been depreciating versus USD. Does it impact your CapEx guidance, especially in 2025 and 2026?

Okay. The exchange rate, we have -- we are in a good place related to our contracts, the band that we have for exchange rates. Until now, we have no impact related to the dollar. In 2025, we are working with the same range and we -- for now, with these exchange rates that we have now, we don't see any impact for 2025.

Maybe it's worth adding, Phani, that we just closed a new round a big [indiscernible] with the 5G providers which is a big chunk of our CapEx or network CapEx a couple of months ago. And so the banks that we are looking at and we have they are banks that are compatible with the current exchange rates, of course. If it changes a lot, then we may have an impact. But in the current status, we are okay even because we just closed the contracts for the next 3 years. And so the real was sort of already depreciated versus U.S. dollars.

Our next question comes from Gabriel Vaz de Lima from Morgan Stanley.

My question is on 2025 growth. Considering the macro and considering the new plans launched by Nubank, do you see risks of growing above inflation next year? And what's your thoughts on growing above inflation for 2025?

Well, Gabriel, our plan is to grow above inflation. And so far, we see the elements in place to be able to grow above inflation. So -- the growth is primarily driven by -- if you look at post-paid, you look at an increase of customer base, an increase of ARPU which is in turn related to the price adjustment and we are planning to do this price adjustment as just -- I just discussed on Phani's question. And if you look at our performance on post-paid you will see that we have a growth driven on post-paid primarily on customer base growth and ARPU growth. So I don't see this changing next year. On prepaid, we put in place the efforts and the commitment to parts to improve our performance. If you -- what I already mentioned, if you look at quarter-on-quarter, you will see that we are going sideways and what we are looking at now is a month-over-month increase. And so we launched the offer a couple of months ago. It generally takes a few quarters to kick off. So we're looking now at the operational KPI and we are positive on a number of them. So the trend should improve going forward. And we have another set of revenues like the customer platform revenues and the B2B revenues that is increasing constantly over time, not only in the contracted revenues but also in terms of the pipeline that we are looking at. And so when you look at the inflation projection for next year and the efforts that we are putting in place, we are still comfortable that we are going to grow above inflation as in our current guidance that for next year, it's in between 5% and 6%. Just remember what is our target. So for this year, it was in between 5% and 7% and starting next year, it's between 5% and 6%.

Our next question comes from [indiscernible].

So I have 2 on my end. The first one is I would love to hear your thoughts on the evolution of the customer from prepaid to control to post-paid. Maybe if you can talk a little bit about like the percentage of people who move to control and how many of those eventually maybe move to pure post-paid. And what are the difference in churn rates between control and pure post-paid. And how also price sensitive the 2 different types of post-paid consumers are? That will be the first question, please. And on the second one, maybe for Andrea. The OPEC control has really been remarkable aside from what you just mentioned, Alberto, about the above inflation ARPU increase for next year, is there any further room that you can see for savings in OpEx so you can deliver further margin expansion?

So let's take the first one. So when it comes to prepaid to control migration, it's a good proportion of our net addition today. So it's something that it represents, I would say, on average, something like 50% of our overall number is growing double-digit year-over-year. And one of the stimulus to that is the fact that we price adjust prepaid and the fact that we are quite able to select the right customers to migrate from prepaid to control as well as control to control and control to pure post-paid. So when we design these migrations, what we look at is a fairly huge number of subgroups. We are talking about tens and for each of them, we provide the starting point and the ending point which is different among different groups, so got a quite different lending point in terms of pricing and benefits. The way we designed this migration strategy is roughly the following. We look at ARPU increase which is 1 of the driver and we look also at not increasing share and bad debt. So that's the reason why we've got all these subsegments and that our marketing is working on the time. We select a group of people. We try -- we start migrating people from that offer to another one. We look at the overall effect in terms of ARPU, churn and bad debt. And when we find a favorable equation, we scale it up. So we do the ARPU increase being quite cautious with potential negative impact of churn and/or bad debt. And so this -- it's a fine tuned and optimized on a daily basis by our marketing team. And so this is the way we look at that. And that's the reason why we keep on growing revenues without growing either bad debt which is quite stable at 1.9% of revenues or churn which is a record low. So we do this in a cautious way to increase the accretiveness on revenues but without impacting negatively our cost or our other operational KPI like churn, so like creating a washing machine. Carlos, that was clear, was elaborate, I'm not sure you got the points that you were after.

Yes. I mean on the first one, very clear. And then on the second one, was just thinking about potential margin expansion for next year, I was saying that the OpEx control has been very remarkable. So maybe you can shed light into what items within OPEC, you can maybe have a little bit of control to take it down so you can deliver the actual margin expansion aside from the above inflation pricing, please?

Carlos [ph], working in efficiencies. Ours -- it's a continuous acting [indiscernible]. We are always looking for another opportunity and now we are working with some trials, reference to this activation challenge to work especially in the maintenance of the network and the carrying of the customer, the cost interest. So we always try to find another opportunity. Of course, we already have a very high margin but our intention is to continue to grow the OpEx lower than the growth of the revenue. So room for improvement, we are always looking for. And our focus is to deliver at least maintain -- that we have and especially in [indiscernible] -- we think we expect to increase a little bit our margin.

And Carlos [ph], if I may add, if you want to look at the different, let's say, categories we are looking at we got discipline. So having everybody sort of committed to deliver -- to spend something and deliver something on top of the expenditure. And then we have the technology that Andrea just mentioned, like artificial intelligence is the last weave that we are implemented. So where we stand which we demonstrated that we have the efficiency on a limited scale -- and so we already moved this year from limited scale to full deployment. And so we are working to capture the synergy at full scale. The third lever that I think is worth mentioning is the continuous make versus buy decisions. And for example, we got -- we implemented in the past several business process outsourcing initiatives for tower, fraud and billing. We just closed another one for a piece of our infrastructure services and working on another one on customer value management. So it's discipline, it's technology and it's a constant review of make versus buy activities in search of productivity increase and quality increase.

Our next question comes from Daniel Federle from Bradesco BBI.

Alberto, do you see room for making plans more simple, like easier to understand or removing SVAs? And do you see any reason for making them simpler this way? Additionally, if you see room for any significant improvement in the customer experience in-store and in the app and what the time line for making those experiences much better if it's something that takes time or that you could change from 1 year to the next? And the second question is given that we have new players come into the market, peer mobile players, how do you see the importance of a convergence offer, like bundle of fixed and wireless?

Daniel, let's go the first one. When it goes to the quality of the service that we provide, we -- this is an imperative of our strategy and important element of the more-for-more strategy. So we say, okay, if we compete less on price, of course, we need to compete more on the perceived quality and value perceived by the customers. So when it comes to the more-for-more strategy, what we have been doing and what we did with the new post-paid portfolio, both pure post-paid and control portfolio that we just mentioned is include benefits that the customer value and generally this fall into the categories of bundle. And when we say that the customer value we know that they value because we know how many of them are subscribed to something else versus a mobile service. So if you look at our presentation, you will see that in post-paid, we have been growing this penetration 11%. And we say, okay but what is the starting line. We are talking about something in the range of 30% to 40%, depending on the group of bundle penetration in our customer base. So it's pretty high. And so customers value this. And this is about the benefits and the bundling of the benefits. The other thing that we are working, so it's not just perceived value but perceived quality is to simplify a number of processes. And so when you look at the control plans and post-paid plans that we just formulated, they have significant improvements in what we identified, we know that are some customers' hurdles. So it's a continuous process that started years ago and we keep on working every month to improve the customer experience. You see this reflected in increased NPS as is presented in our results.…

Our next question comes from Lucca Brendim from Bank of America.

I have two here from my side. The first one, usually working capital has a positive dynamic for TIM in the fourth quarter. I just wanted to confirm if that will be the case in a similar manner this year as well? And the second one, you had a very strong performance in other mobile revenues. This quarter, it was up more than 20% year-over-year. You mentioned it was related mostly to some IoT projects. So we wanted to understand a little bit if that is something recurring. Is that a one-off? And if there are other initiatives in this line that could be helping results going forward?

Okay. Lucca, so let me start from the second one because you sort of -- you already gave the answer also besides the question. So other is something that is there to stay. It's intentional and it's part of our strategy. So when you go to others, you have a number of things inside like the customer platforms strategy, the IoT strategy. We discussed, I think it was the first quarter, the roaming revenues that, by the way, are coming because we have a better position in post-paid. So it's something that is growing. It needs to grow, its intentional and will keep growing. This is for the second question. For the first question, when you look at the -- our dynamics, I would say it depends on what KPI you are looking at. So we are trying to balance revenue growth, margin expansion and free cash flow growth. So we will see in the fourth quarter, the same dynamics happening and this is -- basically, we are talking about revenue growing above inflation and margin expanding and free cash flow growing. When it goes specifically to the revenue dynamics, what is likely to happen at this point in time is that you will see what we are seeing today. So we will see the post-paid performing well. The others keep growing and the prepaid sort of going sideways. I think it's going to be a tough comparison because in the last quarter of 2023, we priced up and so the -- our prepaid revenue line is likely to perform sideline on a -- sideline is probably not the right because there is some seasonality in the first quarter in November and December. But nonetheless, we got a difficult comparison because we priced up prepaid in the last quarter of 2023.

Relates to the working capital, we have this particular dynamic that in the first half of the year, we have a negative working capital, in the second -- second half, we have a positive. So this has always been like this. And I confirm that the fourth quarter will have a positive working capital. If you look it from the first one to the fourth, we're coming -- increased the working capital. This is, like I mentioned, related to our dynamic, especially the dynamic with our major suppliers.

Our next question comes from Carlos Sequeira from BTG Pactual.

I have a few questions. One on pricing. Alberto, you mentioned that the price points of the controlled package, they are very similar between [indiscernible] and that's true. But then came Nubank and made an offer that is like BRL10 lower than the cheapest one out there. So my question is, do you think this price point -- usually control plans, especially the entry-level clients, they're price-sensitive, right? Do you think this price at like BRL10 less would be enough to like change the price dynamics going forward? I mean how do you see that evolving? I know maybe it is too early, I don't know but just how you think about now that we have this new guy out there. I know we have to blame card on that but anyway, it is what it is.

So if you look at -- if you do the comparison like BRL60 versus BRL45, of course, or BRL55 versus BRL45, there is a difference. Now I think that as always is life, you have different customer groups. And so you got people that value the more-for-more strategy. So the offers are not quite comparable because if you look at the BRL55 offers, you go there are bundles like the Netflix bundle that I was just mentioning. And so there is extra value there and we know that customer is like that. Of course, there are a subset of customers that are more sensitive to price. And for these customers, this sort of offer might be appealing. But Carlos, you need to remember that we are comparing a BTL offer to what we call front book office offer. We do have BTL offer. So, when you migrate the prepaid to a control plan, you don't move it from BRL30 to BRL60 or BRL55 because the step is too big. So you've got a number of offers in between there. And therefore, this -- I think it's fair to compare BTL with BTL. And if you do that, the gap is not that big. And therefore, we will need to see how these play off. For the time being, the scope is quite limited. If you are a customer, you want to change, you can make a number portability, it's quite a difficult process. You don't make a number portability, you need to call. When you call, we know what to do. So, I don't think that with what we have on the table today, the pricing dynamics will change.

No, perfect. Okay. And another question that I always wonder too is, I mean, you're growing top line super-nice above inflation for several quarters which is amazing. We know how tough it is to grow above inflation in the sector. But then there are other maybe bigger growth opportunities out there or maybe broadband or B2B. How are you seeing these opportunities going forward? I think how meaningful you think that can be?

So, let's talk -- both the 2 that you mentioned, they are both meaningful. So let's start with the B2B one. So the B2B one, if you look at the contracted revenues, we are accelerating quite fast. We have a robust pipeline. We've got a lot of actions going on. We identified nice verticals where we moved first, we got some kind of advantage. And when you look at that, you have the organic opportunity and you have the opportunity to enhance our set of capabilities to capture a wider set of the B2B revenues. And this could go, as we said on our Investor Day and in many meetings through organic growth which is material and nonorganic growth also to enhance the set of capabilities that will allow us to provide a larger portfolio. So on B2B, I think the answer is quite straightforward. It is important for us. It's an important pillar of our strategy we are pursuing it with assertiveness and we want to succeed in that. When you go to broadband, the answer is a bit more complex because you have a marketplace which is quite competitive. It keeps being competitive. And as a matter of fact, competition is expanding because you have 2 levels of competition. You've got the national level, whereby everybody is sort of stable with the entry with a price at around BRL100 per subscription. But when you go on the regional level, you have a number of municipalities where the price competition is quite strong and you see prices going down to BRL50 or something like that. Then the number of places where this is happening is increasing. So you have a situation whereby the market environment is not attractive because of a lot of competition that is pressure in churn and ARPU. So the point is we, of course, have the opportunity to grow in a space where we have 2% market share but the time is not right now to accelerate and that's the reason we maintain our sales selective and when it comes to nonorganic opportunities, they need to have a strategic fit at the right price. So it's something that I think it's less relevant in the short term versus the B2B focus that I just mentioned.

Perfect. That's very clear. And if I may, 1 last question on CapEx for sales. And it has been falling quarter after quarter, year after year, right? I mean we've been seeing that happening, not only [indiscernible] other companies or other geographies as well. In your case, you're probably this year, maybe CapEx sales will be a little higher than 17%, somewhere between 17%, 17.5%. How low do you think you can get? I mean, looking longer term, right? I mean can it be like around 15%? What is the number that you think it's a reasonable number for CapEx to sales going forward, please? I know it's not a direct question; it can be anything but some idea.

Well, Carlos, it's, so the floor -- if you see -- I remember that a couple of years ago, we were discussing with investors where it's very difficult to go below 20% and we went below 20%. And now we closed 18.9%. We are going down this year another point likely, we see that our CapEx are quite under control. So when we look at CapEx, you got the situation whereby we want to deploy our CapEx and we want to maintain our lead in terms of network quality and reliability. And so we want to do both things together. And it's playing quite nicely on our side because in terms of coverage, we sort of did a big chunk of the job already because we are the only operator with 100 municipality covered with 4G. The second one, I think it's -- if you are a 5,570 municipality. The second one, I think, is 4,900. So there is a big gap. On 5G, we are deploying faster. And so everything that we are doing is to increase quality and we are doing it. We are managing to keep a lead and with the last negotiation that we had with our vendors, we have an extra bundle of security that the intensity that we have today it's good to increase and to maintain a competitive advantage as we have today. And we didn't have this in the past. So it's more an effort of communicating this to the customer base rather than delivery delivering it on a technical point of view. So to make the story short, basically, we see our CapEx constant over the next years with revenue growing. And so if you do the math, you would see that the ratio will keep going down in the next -- in the medium term in the next 2 to 3 years. And so I don't see significant risk that may derail this trend.

[Operator Instructions] Our next question comes from Gabriel Gusan from Citi.

A quick one on my side. Kind of inverting the question from Carlos on broadband. If it doesn't make sense to invest and grow more in this market, would it make sense to sell this operation to someone else help to leverage the parent company, specialty dividends and things like this?

Today, we've got an optionality at the end of the day, right? So we have -- we are a telco player, we have 2%. So we've got a quite credible brand. We've got a huge customer base. We've got a quite widespread commercial network. So if you look at broadband, it's an adjacency that we might -- we might pursue with, I would say, with sort of ease given our set of competencies. So it's an optionality. If we get to the conclusion that broadband the current context that won't change, we may want to sell it. But at the end of the day, as if we don't see from a consolidating point of view, quite an attractive market that would be valid for selling as well. So we see the market consolidating in the future. On the service co level and on the network co level and we believe that we can play a part on it. And if we change demand in terms of -- we don't want to play part on it, the sell could be an option.

Ladies and gentlemen, since there are no further questions, I will turn the floor to Mr. Alberto Griselli for his final remarks. Please, Mr. Alberto, you may proceed.

So everybody, thanks for staying with us today. So we are 9 months into the year, we have been delivering across the board in terms of revenue growing above inflation, margin expansion, expanding at EBITDA level, EBIT after lease level and the free cash flow level. We got a sound strategy going forward. We've got 2 months to go to finalize this year's results. I want to thank the entire team for the efforts so far and the last couple of months to conclude 2024 according to our plans. Thank you, everybody.

This does conclude the third quarter of 2024 conference call of TIM S.A. For further information and details of the company, please access our website at tim.com.br/ir. You can now disconnect. And thank you once again.