Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TIM SA (TIMB, Financial) achieved a 6.1% growth in service revenues, outpacing inflation and maintaining sustainable revenue dynamics.
- The company reported a 7.5% increase in EBITDA with continued margin expansion, marking 13 consecutive quarters of expanding margins.
- TIM SA (TIMB) showcased strong cash flow generation, with operating cash flow reaching a record high for the third quarter, growing above 20% year-over-year.
- The postpaid customer base grew close to 8% year-on-year, with a new record low churn rate of 0.7%, indicating improved customer loyalty.
- The company is expanding its digital ecosystem and B2B initiatives, with significant growth in mobile ads and data monetization revenues, which more than doubled in the past 12 months.
Negative Points
- Prepaid revenues have been stagnant, with the company experiencing lower recharge frequencies in specific customer groups.
- TIM SA (TIMB) has been growing mobile service revenues at a slower pace compared to some peers, partly due to challenges in the prepaid segment.
- The company faces competitive pressure from new market entrants like Nubank, which has launched aggressive pricing strategies in the control plan segment.
- There is a risk of forex exchange pressure impacting CapEx levels, although the company currently maintains its guidance.
- The broadband market remains highly competitive, with significant price pressure and limited short-term growth opportunities, impacting strategic decisions in this segment.
Q & A Highlights
Q: How is TIM SA performing in the prepaid market, and what factors are affecting its growth compared to peers?
A: Alberto Mario Griselli, CEO, explained that TIM's prepaid revenues have been stable over the past three quarters, with a decrease in year-over-year performance due to price adjustments made last year. These adjustments led to increased migration from prepaid to control plans and less frequent recharges among lower-income segments. TIM has launched a new value proposition to improve prepaid performance, focusing on market appeal, recharge frequency, and app usage.
Q: Can you provide an update on the competitive landscape in the postpaid market and the impact of new mobile advertising initiatives?
A: Griselli noted that the postpaid market remains rational, with recent price adjustments by competitors. TIM's strategy focuses on a more-for-more approach, offering additional benefits like Netflix subscriptions without changing prices. Regarding mobile advertising, TIM's initiatives are primarily on its own inventory, using apps and communication channels to expand reach and efficiency.
Q: What are the impacts of less frequent recharges in the prepaid market, and how are leasing expenses evolving?
A: Griselli stated that less frequent recharges mainly affect lower-income segments, with no significant impact from betting activities. Andrea Marques, CFO, added that leasing expenses increased due to inflation adjustments, new 5G sites, and energy contracts, but TIM aims to maintain revenue growth above lease growth.
Q: How is TIM positioned for price adjustments next year, and what is the outlook for CapEx guidance amid currency fluctuations?
A: Griselli indicated that TIM plans to execute both back book and front book price adjustments next year, considering industry movements. Marques assured that current exchange rates do not impact CapEx guidance, as recent contracts with 5G providers are aligned with current rates.
Q: What is TIM's strategy for growth in 2025, considering macroeconomic factors and competition from new entrants like Nubank?
A: Griselli expressed confidence in growing above inflation, driven by postpaid customer base and ARPU growth, improved prepaid performance, and expanding B2B and customer platform revenues. TIM's guidance for next year targets 5-6% growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
