Company’s Presentation

TIM Brasil

September, 2014

Visit our website and IR app:

www.tim.com.br/ir

AGENDA Macro & Industry Overview........5

Recent Results……………..………… 11

Network Evolution…………………. 19

Regulatory Update…………………. 23

Fixed Business…………………….…..27

Business Outlook…………….….…. 30

Historical Data & Others…….……34

TIM IR app

(English) TIM RI app

(Portuguese)

KNOWING TIM 3

KNOWING TIM BETTER

Gross Revenues (R$ Bln)

Customer base EoP (Million)

15,000 km fiber optical backbone

5,500 km fiber optical backhauling

Growth Via

Acquisition

Brazilian Law

“Nível” 1 “Nível” 2

Legal Requirements

Demand for transparency and

disclosures

Highest level of Corporate

Governance

Requirement of protection for

minority shareholders

100% Tag Along

Equal dividends rights

One single class of shares

Strict disclosure policy

Statutory Audit Committee:

• Report to Board of Directors

• Oversight Financial reporting

• Analyze anonymous complaints

Unique Telco company listed on the Novo Mercado

CORPORATE GOVERNANCE

TIM: A Huge Brazilian Company Presence in Brazil since 1998.

16th largest Private Company in Brazil (source: Exame Magazine - 2013).

Approximately R$30 billion of Market Capitalization.

74.2 million customers (27% Share)

The 2nd Player - Market and rev. share

More than 383,000 points of sales

More than 165 own stores

15 Customer Care Centers (16k attendants)

~13,100 Antennas

3,429 cities covered

95% of urban pop. covered

50,000 km of optical fiber network

~12,480 employees

23,000 indirect jobs

R$10.4 billion in taxes payments in 2013

R$3.9 billion invested in 2013

Sales

Network

Social &

Economic

GROWTH STRUCTURE

25 28

30

2011 2012 2013

4,7 5,0

5,2

2011 2012 2013

64 70

73

2011 2012 2013

EBITDA (R$ Bln)

Macro & Industry Overview

MACRO & INDUSTRY OVERVIEW 5

MACRO SCENARIO OUTLOOK

• Market consensus shows a softer growth.

• Telecom industry has shown resilience, specially in the mobile side, but it is not completely immune.

• Mobile sector will continue to benefit from fixed-mobile substitution, now also strong on data.

• Constrains of individuals budget points to an increase of mobile usage (low cost).

GDP Forecast (% YoY Growth)

Inflation Forecast (IPCA: 12 months)

Interest Rate Forecast FX Rate Forecast (R$/U$ - year average) (% Selic Target p.y. – year average)

Source: BaCen

5,9

6,4 6,2

6,0

2013a 2014e 2015e 2016e

8,2

11,0 11,8

10,0

2013a 2014e 2015e 2016e

2.20

2.40 2.50

2,18

2013a 2014e 2015e 2016e

2.30

1,30

1,70

2,60

2013a 2014e 2015e 2016e

TIM represents 30% of the industry mobile revenue* while has 27% of the market share

TIM

Source: Anatel and Players balance sheet

Vivo

Claro Oi

Mobile Fixed Fixed BB Pay-TV Group

Customers 2Q14 (000´s) 74.203 665 121 n.d. 74.989

Market share 2Q14 26,9% 1,5% 0,5% n.d. ---

Net Adds 2Q14 (000´s) 286 - 19 n.d. 305

Net Adds 12M (000´s) 2.008 31 61 n.d. 2.100

Net Revs FY13 (R$ Mln) 19.264 657 19.921

Mobile Fixed Fixed BB Pay-TV Group

Customers 2Q14 (000´s) 79.357 11.035 4.370 688 95.450

Market share 2Q14 28,8% 24,1% 18,8% 3,6% ---

Net Adds 2Q14 (000´s) 892 333 36 43 1.305

Net Adds 12M (000´s) 3.158 619 345 175 4.296

Net Revs FY13 (R$ Mln) 23.002 11.720 34.722

Mobile Fixed Fixed BB Pay-TV Group

Customers 2Q14 (000´s) 68.776 11.289 7.045 10.106 97.216

Market share 2Q14 24,9% 24,7% 30,3% 53,3% ---

Net Adds 2Q14 (000´s) 27 189 220 230 667

Net Adds 12M (000´s) 2.303 1.133 905 1.121 5.462

Net Revs FY13 (R$ Mln) 12.773 20.424 33.197

Mobile Fixed Fixed BB Pay-TV Group

Customers 2Q14 (000´s) 51.081 17.023 6.567 887 75.558

Market share 2Q14 18,5% 37,2% 28,3% 4,7% ---

Net Adds 2Q14 (000´s) 502 -240 3 58 304

Net Adds 12M (000´s) 1.373 -1.307 17 - 16 48

Net Revs FY13 (R$ Mln) 9.290 19,132 28.422

6

The mobile segment represents 75% of the industry access growth

*Mobile revenue considers only the 4 major players

Fixed / Mobile Fixed BB Fixed BB/TV Fixed / Mobile

Fixed Mobile Fixec BB/TV Fixed Mobile

BRAZILIAN TELCOS X-RAY

MARKET STRUCTURE CHANGING TOWARDS DATA USAGE

60% 36.8 mln

40% 24.5 mln

44% 16.2 mln

24% 8.8 mln

32% 11.8 mln

(40%)

(60%)

61.3 Mln

Possess Internet connection

Does NOT Possess Internet connection

Other

Lack of coverage

Too Expensive

53% of active connection base has currently a speed below 2Mbps

Total Households Households which does NOT possess

Households with internet connection and breakdown for households without internet connection:

MACRO & INDUSTRY OVERVIEW 7

3%

37%

51%

91% With Telephone

Only mobile phone

Mobile and fixed phone

Fixed phone only

Salaries up to R$1.2k

Salaries up to R$3.1k

57 mln

32 mln

2 mln

81 mln

106 mln

23 mln

53% of pop.

70% of pop.

Source: PNAD 2012, CETIC.br ‘ TIC Domicílios 2013, Company estimates

Re-visiting Market Structure

Market Data Revenues Growth 2016 vs. 2012:

> 13 bln Reais on Mobile (+100%)

>7 bln Reais on Fixed (+35%)

Households Profile

Purchase Power

Average Cost

83 mi

2

1

3

Access Growth (users in mln) 4

Fixed

Mobile

2009 2010 2011 2012 2013 Jun/14

118.5

23.2

+ 5X

R$41.90

R$96.00 Fixed: Voice and Broadband

Entry level plan

Mobile: Voice and Data PTIM’s entry level plan

Widespread use of Social Media (Social Network Users in Brazil 2011-2017)

BRAZILIAN INTERNET USAGE BOOM Internet Penetration in South America (Internet users per 100 inhabitants)

Strong adoption of Instant Messaging (WhatApp mln users)

High Penetration of E-commerce (E-commerce revenues in Bln US$)

8.4

11.0

17.0

2010 2011 2012

Amazon lauched operations in Brazil

in Dec/12

83 mln Internet users – Brazil is the 5th largest nation in the world of

internet users 66%

60% 59% 56%

46% 44% 41% 37%

32% 32% 30% 24%

Arg Col Chi Uru Bra Ecu Vem Per Guy Sur Bol Par

56.1 66.2

78.3 88.3

97.8 104.2

110.0

2011 2012 2013 2014 2015 2016 2017

#2 in Facebook active users (76mln) only after US

#2 in Twitter users (41mln) only after US

2nd largest market outside US

40

38

32

31

25

17

13

11

3

India

Brazil

Mexico

Germany

Spain

UK

Argentina

Russia

France

28% of mobile users in Brazil use Instant Messaging

apps

Source: SocialBakers, e-Marketer, Semiocast, G1.com, Folha de São Paulo

MACRO & INDUSTRY OVERVIEW 8

465 mln worldwide users

List of selected countries as of

Feb/14

Mobile 23.0

12.8 9.3 19.3

4.8

Fixed+Data+Pay Tv

11.7

20.4 19.1

0.7

4.9

Total 34.7 33.2 28.4 19.9 4.8 4.9

LEVERAGING ON PURE MOBILE COMPETITIVE ADVANTAGE

Long Distance Leader

50% Market Share

2nd Overall

74.2 million customers

Prepaid Leader

29.2% Market Share

Source: Companies Releases, TIM estimates; CETIC jun’13; Akamai ; PNAD - IBGE

FMS Focus

A pure mobile approach is the most suitable strategy to capture both opportunities

Oi

Claro

Vivo

TIM

29,5% 29,6% 28,7% 28,8%

25,5% 26,9% 27,2% 26,9%

25,6% 24,6% 25,0% 24,9%

19,1% 18,7% 18,7% 18,5%

2Q11 2Q12 2Q13 2Q14

Customer Base Evolution (Market Share)

Entering in Data World Via Mobile (mln users)

Voice FMS: TIM, with no legacies, can only gain on the trend (R$ billion, Net Revenue per Group 2013)

2Q14 x 2Q11

-0.7 p.p

+1.4 p.p

-0.6p.p

-0.6 p.p

Source: ANATEL

Mobile

Fixed 4.1

14.6

33.1

52.5

94.8

11.4

13.8

16.3 19.1 20.9

2009 2010 2011 2012 2013

+83%

+23x

28%

26% 23%

16%

4% 4%

Vivo Claro Oi

TIM GVT Nextel

Revenue Share

MACRO & INDUSTRY OVERVIEW 9

-9,83% -15,36%

1,38%

2Q12 2Q13 2Q14

9,4 9,7

12m 2Q13 12m 2Q14

0,8 1,0

12m 2Q13 12m 2Q14

Organic EBITDA (% YoY; Not including assets sales; Mobile as TIM)

Broadband Quality (Brazil’s Average Speed;

Source: Akamai)

Fixed Incumbents

Mobile

4Q132.7 Mbps

ANATEL: >78% of fixed broadband connections are below 4Mbps

Fixed Incumbents

Mobile (only TIM)

Source: Anatel

Net Revenues (% YoY)

MACRO & INDUSTRY OVERVIEW 10

Brazil Ranks 83th in Average Speed per Country

STRATEGY PAYING OFF

VU-M Impact

Total Access Net Addition (EoP Million)

23,4

48,0

12m 2Q13 12m 2Q14

2,4 1,8

12m 2Q13 12m 2Q14

Mobile

Fixed

Voice Data

-8,51%

-0,30% -3,51%

2Q12 2Q13 2Q14

5,19% 3,76%

1,42%

2Q12 2Q13 2Q14

5,62% 4,35%

5,39%

2Q12 2Q13 2Q14

Users’ Preference for Mobile

41%

50%

51%

2009

2011

2012

% HH w/ mobile phones only (Source: PNAD

2012)

Recent Results

19 23 28

28% 32%

39%

26k

100k

Postpaid segment grew by 7% and postpaid mix over customer base reached 16.5%, while SAC/ARPU remained below 2 months

19% 22%

27%

2Q12 2Q13 2Q14

HIGHLIGHTS Operational

2Q13 2Q14

+7% YoY

Data as % of revenues

Net Revenues: Usage (local + long distance) + VAS

Total OPEX (Δ% YoY) 11%

9%

2%

-3% -7%

EBITDA Margin

27% 25%

28%

2Q12 2Q13 2Q14

Data users (in mln) and % of total customer base

15.8%

16.5%

2Q13 2Q14

Mix of postpaid over total base

World Cup Figures (in the Stadiums)

Live TIM customer base

Financial

Gross Data Revenue growth at solid pace: R$1.6 bln in 2Q14

Net Revenues “Business Generated” (ex – incoming) grew by 7% YoY

Strong cost control: total opex dropped 7% YoY

EBITDA grew 8% YoY with margin gain

Data users reached 28 mln lines

Live TIM crossed 100 thousand customers milestone

+3 p.p. +5 p.p.

2Q13 3Q13 4Q13 1Q14 2Q14

Jul/14 Jun/13

2Q12 2Q13 2Q14

• Photos sent: 50 mln

• Outgoing calls: 5 mln

• Data traffic: 26.7 TB Maracanã Stadium

RECENT RESULTS 12

CORE BUSINESS ANALYSIS & PERFORMANCE

MTR cut full impact in 2Q

Handset sales at a healthy level although reduced growth

World Cup impact on commercial activities

Mobile Service Net Revenues Analysis (% YoY)

EBITDA Performance (mln; %YoY)

June

2013

June

2014

No Holidays 1 National holiday

3 Brazil’s games (1/2 day holiday)

Up to 2 municipal holidays in main cities hosting games

Net revenues from MTR -18%

-28%

2.4

3.1 2.7

2Q12 2Q13 2Q14

Total units sold (mln)

(Local + LD + VAS)

Business Received

2Q13 2Q14

1,232

2Q13 2Q14

ReportedEBITDA Margin

1

2

3

+7%

24.9% 27.9%

EBITDA

1Q14 2Q14

-30%

Business Generated

+3% -1%

*MTR Impact

+16% +8%

1,331

Total

6 months (YoY)

+8%

-26%

+4% 0%

(Incoming MTR + SMS)

Ex-MTR Ex-MTR

*MTR Impact

Ex-MTR

~170 mln*

~96 mln*

1,427

RECENT RESULTS 13

118.5

23.2

2009 2010 2011 2012 2013 Jun/14

2Q13 2Q142Q13 2Q14

READY FOR DATA OPPORTUNITY

# Access Growth (users in mln)

Brazilian Broadband: Low Average Speed (Mbps)

Fixed

Data Experience is Mobile

Capturing Data Opportunity

Mobile

2.7 2.6

4Q13 1Q14

10.5

13.7 3.6 2.5

Sources: Anatel, Akamai - State of Internet

Source: IDC Tracker

Source: Anatel

# Total Market Equipment Sold (units in mln)

Smartphone & Tablet

Notebook & PC

1Q14 2Q14

SMS

Web

Content & Other

1,500

Data Gross Revenues Mix (R$ mln; %YoY)

+22%

+1% -8%

+29% +33%

+45% +72%

BOU: Bytes of Use (Megabytes)

Days of Use

2Q13 2Q14 2Q13 2Q14

+40% +30%

In May, >45% connections in Brazil were < 2Mbps

+ 5X

∆ %YoY ∆ %YoY

+20% 1,578

RECENT RESULTS 14

42%

28%

17%

2%

1%

-8%

21%

20%

19%

25%

29%

33%

36%

30%

33%

45%

72%

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

Content & Other Web SMS

Historical Change in Data Mix (%YoY)

-1%

+13% +7%

-1%

CAGR CAGR

CAGR

75.7 76.2 79.4

68.9 72.2

74.2

63.0

66.5 68.8

47.8 49.7 51.1

47%

39%

20%

30%

21%

20%

12% 10%

2Q13 2Q14

23% 24%

24% 26%

40%

35%

11% 14%

2Q13 2Q142Q13 2Q14

CUSTOMER BASE EVOLUTION

# 1 player in prepaid

Strong growth in ‘Controle’ postpaid base

Austere disconnection policy

2Q12 2Q13

TIM

Source: ANATEL

2Q14

Vivo

Claro

Oi

4G Market Share (%; thd users)

3G Market Share (%; mln users)

28.9

30.2

41.5

16.2

Source: ANATEL

TIM TIM

1,281

990

655

334

Customer Base (mln)

Source: ANATEL

+8.4%

Source: Company

Prepaid Recharge (R$; % YoY)

118 mln 3.3 mln

RECENT RESULTS 15

v v

GO TO MARKET PROGRESS

Equipping Customer Base

% of smartphone sales among players in 2Q14

% of smart + webphone on TIM’s base in 2Q14

% of smartphone over new sales in 2Q14

Postpaid

o Reduce churn on postpaid o Attract dual SIM card users traffic o Renewed focus on corporate customers

o Leveraging on “pure mobile” distinctiveness o Expanding daily tariff scheme to new regions o Simplicity / Transparency

R$ 7 weekly service package

R$ 0.75 daily offer

Prepaid

35%

50% 62%

2Q12 2Q13 2Q14

39%

57% 71%

2Q12 2Q13 2Q14

41%

23%

28%

9%

P3

P2

P1

TIM

Managing customer base… To Infinity and beyond…

Penetration of smart + webphones drives data usage growth Source: GFK Group Source: Company Source: Company

RECENT RESULTS 16

4,065

Tho

usa

nd

s

2Q13 2Q14

3,985

170 Tho

usa

nd

s

96

2Q13 2Q14

+2.2%

FINANCIAL RESULTS ANALYSIS (1/2) Service Net Revenues (R$ mln; % YoY)

EBITDA (R$ mln; % YoY)

Reported Revenue

2Q13

Reported Revenue

2Q14

3,985 1,232

Reported EBITDA 2Q13

Reported EBITDA 2Q14

+186 -87

Δ Opex/ Others

Traffic/Data Δ Contribution Margin

24.9%

31.1%

1,331

27.9%

34.4%

EBITDA Margin

Service EBITDA Margin

+5.8% +4.4%

Efficient Cost Control

Interconnection (Δ% YoY)

Leased Lines Cost (Δ% YoY)

% Bad Debt/Sales (% over gross revenues)

Net Services Revenues Exposure

EBITDA Exposure

MTR Impact

-2.0%

~ 25%

~ 12%

2Q10 2Q11 2Q12 2Q13 2Q14

~ 35%

~18%

2Q10 2Q11 2Q12 2Q13 2Q14

MTR Impact

+15.8%

+8.0%

-31.3%

-10%

~1% ~1%

2Q13 2Q14

MTR Exposure

1,427

‘Pro forma’ EBITDA in 2Q14

4,155

‘Pro forma’ Revenue in 2Q14

stable

+208 -253 -36

ΔYoY +6.9% -29.6% -20.5%

Δ Others Δ Business Incoming

Δ Business Generated

ΔYoY

RECENT RESULTS 17

-1,227

2,648

-609

-1,654*

-1,786

182

+41%

FINANCIAL RESULTS ANALYSIS (2/2) Net Income - 6 months (R$ mln; % YoY)

Net Debt (R$ mln; % YoY)

EBITDA

692

738

6M13 6M14

+6.7%

>94% towards infrastructure

6M13 6M14

R$1,657 mln R$1,593 mln

2G

3G

4G 2G

3G

4G

1,984

4,521

2,537

Tho

usa

nd

s

Debt Cash Net debt

Jun/13

Jun/14

1,031

6,356 5,325

1,749 1,749

Tho

usa

nd

s

4,607 3,576

Debt Cash Net debt

+110% -48%

Investments

Cash Flow - 6 months (R$ mln; R$ YoY)

YoY

Net debt/EBITDA 12M: 0.19x

New BNDES Loan

CAPEX Δ WC OFCF 6M14

*Considering R$3 mln of LT Amazonas leasing adjustment

OFCF 6M13

LT Amazonas Leasing

+618 mln

RECENT RESULTS 18

Network Evolution

STRATEGY: INFRASTRUCTURE EVOLUTION

2016 MASSIVE LD BACKBONE

65,000 KM OF FIBER

2013 FIBER TO THE

AMAZON

46,000 KM OF FIBER BY YE13

Fiber to the site / Mobile Broadband Project Key to Data Growth

Targeting 38 cities in 2013,+100 cities till 2016.

From 2-8 to +100 Mbps.

LTE Ready.

Macro coverage fine tuning.

Focus on IP infrastructure, caching, peering.

INTELIG 15,000KM

2009 INTELIG

ACQUISITION

New backbone routes- Increasing resilience.

82% urban population

2013 2014 2015 2016

95% urban population

#NodeB / eNodeB (3G + 4G)

# BTS (2G)

2012 2013 2014e 2015e 2016e

New Sites Including

Small Cell.

POP MW

POP MW POP MW

POP MW

BSC-RNC Site

POP MW

2013 2014 2015 2016

LTE* 3G 2G

Fiber base Infrastructure

Backhauling Evolution Increased Coverage and Access Capacity

(# new elements)

Capex Evolution Towards Data (% of total Capex)

Small Cell Approach (# new elements)

NETWORK EVOLUTION 20

2Q13 2Q14

o Brasília o Curitiba o Rio de Janeiro

4Q13 2Q14

4Q13 1Q14 2Q14

INFRASTRUCTURE FOCUSED IN DATA

COVERAGE

Homogeneous Access Upgrade In all relevant areas Site densification Small cell / Wi-Fi

CAPACITY

Higher speed 4G roll out Mobile broadband

project acceleration Backhauling

infrastructure

AVAILABILITY

Always available Fine tunning Fiber rings /

redundance Resilience

DATA CENTRIC

APPROACH

TIM’s Infrastructure Strategy Network in Numbers

Number of 3G & 4G Sites

Number of Wi-Fi & Small Cell

~11.3 ~11.0

~13.1

Number of sites with fiber (FTTS)

Cities in mobile BB project

+3.5x 53 66

1Q14 2Q14

+13 cities

BioSite: New approach to coverage

Patent pending

+47%

1

2

3

After

Before

o New frequency at 900 MHz in SP

o Better indoor coverage

o Addressing capacity requirement

Completed actions

Initiating in:

NETWORK EVOLUTION 21

Capex Evolution (R$ mln)

Capex per Technology (R$ mln)

Fiber to the site expansion to ~100 cities Benchmark: Anatel Plan for 2012-2014 (R$ bln)

3G

2G

3G

2G

3G

4G

2011

~R$3,800 R$2,983

2014e

5.9 4.8 4.6

2.1

5.0

3.5 2.6

3.4

TIM Claro Vivo Oi

10.9

+31% +52% +98%

Copper

(2-8Mbps)

Before FTTS After FTTS

Metro Ring

Own Fiber

(300 Mbps)

From Copper

To Fiber based

Wi-Fi small cell approach

Total Capex

2,836

2,983

3,386

3,871

2011

2012

2013 19%

17%

20%

% over sales

2010

18% CAGR

11%

Source: 5th monitoring cycle of mobile telecom improvements plan released by Anatel on Feb/14

8.3

7.2

5.5

Actual from 2012 to Oct/13 Forecasted to Nov/13 until 2014 end

CAPEX ANALYSIS

NETWORK EVOLUTION 22

Regulatory Update

0.36 0.32

0.24

0.16

0.10 0.06

0.03 0.02

2012 2013 2014 2015 2016 2017 2018 2019

Auction expected for September

License period: 15 + 15 years

No additional obligation. Network and Spectrum sharing

opportunities

Switch off plan starting at the beginning of 2016

Minimum prices and clean-up costs not yet defined

4G Auction RFP

Leased line (EILD) reference price reduction, in 2016, from

~20% until ~80%

Establish regulated reference prices to leased lines speed up to

34 Mbps

On preliminary ‘static’ simulation show relevant OPEX reduction

MTR New Glide Path (R$)

Leased Lines - EILD

New parameters established

New MTR and EILD Analysis

Source: Anatel

Source: ANATEL, Commissioners Meeting on July 17th

Main measures until July, 2014

Cancelation within 48 hours, without human assistance

In case of dropped call, companies must call customer back

Minimum of 30 days for prepaid credits to expire

ANATEL's new costumer care policy - RGC

Source: ANATEL Resolution 632/2014, GEX Meeting on July 17th

REGULATORY UPDATE

TIM has been working to improve transparency and caring

REGULATORY UPDATE 24

30/Sep Auction

Format indicates soft competition: the spectrum will

be auctioned in four blocks of 10 MHz + 10 MHz;

No additional obligations (“naked auction”), synergies

with 2.5GHz auction obligations will be subject to

backhaul requirements;

Authorization for spectrum sharing in cities with pop.

<100k.

73

3 M

Hz

4

1st Round: Cap of 10 + 10 MHz

2nd Round: Cap of 20 + 20 MHz (in case of no bidders)

5 6

2 3 1

70

8 M

Hz

71

8 M

Hz

72

8 M

Hz

73

8 M

Hz

74

8 M

Hz

4

5 6

2 3 1

76

3 M

Hz

77

3 M

Hz

78

3 M

Hz

79

3 M

Hz

80

3 M

Hz

9

71

3 M

Hz

71

8 M

Hz

72

3 M

Hz

72

8 M

Hz

73

8 M

Hz

70

8 M

Hz

74

3 M

Hz

74

8 M

Hz

78

8 M

Hz

76

8 M

Hz

77

3 M

Hz

77

8 M

Hz

78

3 M

Hz

79

3 M

Hz

76

3 M

Hz

79

8 M

Hz

80

3 M

Hz

10 11 12 7 8 13 14

17 18

15 16 10 11 12 7 8

13 14 9

Auction details

Costs & Payment method

Minimum prices: R$1.9bi + R$0.9 (EAD*) per block;

License payment in up to six installments (36, 48, 60,

72, 84 and 96 months) preceded by a 10% down

payment;

Readjustment: IGPDI +1% per month;

Reimbursement values will be defined in the BID

terms and will be administrated by an independent

third party;

Channel repositioning, filters, TV converter, and other

mitigation techniques will be subject to

reimbursement.

Regional Blocks:

Conclusion of the Digitalization Plan

Auction Public Consultation

Band allocation Res. Anatel 625/13

Nov/13 Jan Feb 2015 2018

Analog TV switch off period

Mar Apr May Jun Jul Aug Sep

Conclusion of the Digitalization Plan

Interference tests

Public consultation bid and interference

Bid notice Interference Resolution Digitalization Plan

700MHZ AUCTION

o Block 5 or 15 and 16 CTBC Region 106 cities or 1 mln users

o Block 6 or 17 and 18 SERCOMTEL Region 2 cities or 67k users

o Block 4 or 13 and 14 Represents 98% of the population, equals to national

REGULATORY UPDATE 25

*Entity for Administration of TV and RTV Channel Relocation and Digitalization Process

Vivo

Claro

Oi

TIM

Source: ANATEL

4G Market Share on 2500Mhz (%; thd users)

2500 MHZ auction results

Spectrum Characteristics

5800 Mhz 2100 Mhz

850 Mhz

700 Mhz

< 700 Mhz

BTS Range (km)

0 2 4 6 8 10

Numbers of BTS

20 15 10 7 5 2

Band W

Band X

Band V1

Band V2

2500 MHZ rural coverage obligations

X band

W band

V2 band

V1 band

Roadmap

Presidential Decree Nº 5820/06

Rules to the Digital TV migration

2006 2012

ANATEL’s Resolution Creation of a study group to define the future and the

atribution of the band

2013

Ordinance Nº 14/13 Premises to 700 Mhz destination on the SMP

2015 2018

Shutting down Period

Feb/Apr 2013 - Subrange Atribution CP Nov/13 Res. Nº 625/2013 – Atribution of the Subrange

Paid ~R$0.3 bln

Paid ~R$1 bln

Paid ~R$0.8 bln

Paid ~R$0.3 bln

4G DETAILS

TIM

1,281

990

655

334

3.3 mln

47%

39%

20%

30%

21% 20%

12%

10%

2Q13 3Q13 4Q13 1Q14 2Q14

REGULATORY UPDATE 26

Fixed Business

2Q13 3Q13 4Q13 1Q14 2Q14

TIM SOLUÇÕES CORPORATIVAS: PLAN MOVING FORWARD IN Q2 Turnaround Plan on Fixed Business

2013 2012

-

2014

New sales revenues (R$; YoY)

Financial performance

Governance / Efficiency

Business development

Quality and Process

Activation time

(days)

Operational Improvements Paying Off

+

Segment EBITDA-CAPEX

Source: Company

Net Revenues (with intercompany)

2013 2014

Business Priorities

4Q13 1Q14 2Q14 Plan

Phases

Highlights

Financial sanitization

Infrastructure reinforcement

Market repositioning

o Positive EBITDA

o Cost efficiency

o Customer base

management

o New business unit

organization

o IT renewal plan

o Multiservice network

launch

o New branding

o New offers and

product launch

o Restructured sales

force

2H14

Showing results

o Sales growth

o Revenue

rebound

Business remodeling driving stable fixed revenues QoQ

+19x

2Q13 2Q14

-80%

FIXED BUSINESS 28

+34%

11.5

18.3

24.5

2Q13 0 1Q14 2Q14

Gaining more traction

Addressable HH (000 HH)

Gross Adds (000 users)

Customer Base (000 users)

May/2014

o Live TIM Extreme 1Gbps for R$1,999.90

o Live TIM Blue Box release: optional TV approach

Jul/2014

New speed: 70Mbps for R$119.90

Source: Netflix July 2014

Netflix Broadband Ranking (Average streaming speed representation)

31%

Positive Neutral Negative

Internet buzz

FIXED BROADBAND: LIVE TIM

New Offers

126 neighborhoods:

43 neighborhoods in SP

83 neighborhoods in RJ

Quality Experience

609

804

1,069 1,138

1,220

2Q13 3Q13 4Q13 1Q14 2Q14

8%

31%

21%

51%

72%

18% 2nd

3rd

4th

5th

6th

1st

Source: Gauge 1Q14

Source: Company

+113% 26k

100k

Jul/14 Jun/13

Market average

FIXED BUSINESS 29

Business Outlook

Accelerated Network Evolution for Data

KEEPING THE STRATEGIC FOCUS ON THE 2nd HALF Consolidating Recent Offers & Innovative Services

Strong Institutional Position

“Porta Azul” (Blue Door)

Evolving the Structure for the New Challenges

• Streamlining organization

• Adding new talent

• Stronger segment focus

o Consumer

o Corporate

o Residential

• 4G auction participation

• Leadership position

• Presence in dialogue with relevant institutions

4G 700MHz

Small Cells

BioSite Mobile

Fixed

VAS

TIM Protect

CONTENT

New Positioning

DATA CENTRIC APPROACH

Coverage

1

2

3

Capacity

Availability

BUSINESS OUTLOOK 31

21.3

27.5

2012 2013 2016e 2012 2013 2016e

+xx%

OFFER EVOLUTION

136 148

>170

2012 2013 2016e

18% 21%

>40%

VAS Gross Revs.

VAS/Revs. 30% 37% >50%

43%

55%

>75%

2012 2013 2016

+xx% +29%

+22%

Smart/Web phone Penetration (% over total base of lines)

Voice MOU (minutes)

Data Users (% of Data Users in CB; million users)

VAS Revenue Growth (% of Mobile Services Gross Revenues; R$ mln)

BUSINESS OUTLOOK 32

TIM PART: 2014-2016 GUIDANCE

Total Net Revenues

EBITDA

CAPEX

18,764 19,921

2012 2013 2014e 2015e 2016e

5,012 5,207

2012 2013 2014e 2015e 2016e

R$ million

R$ million

626

3,139

3,871

3,487

384

2012 2013 2014e 2015e 2016e

R$ million

Infrastructure

Others/Licenses

3,765

Guidance

2013-2016 CAGR:

Mid Single Digit Growth

2013-2016 CAGR:

Mid Single Digit Growth

Total CAPEX 2014-2016:

~R$11 billion*

*Does not consider 4G licenses (700Mhz).

BUSINESS OUTLOOK 33

Historical Data & Others

RECENT TOWERS DEALS

HISTORICAL DATA & OTHERS 35

QUARTERLY HISTORICAL DATA (R$ THOUSAND)

HISTORICAL DATA & OTHERS 36

Quarter

R$ Thousand

Description 1Q13 2Q13 3Q13 4Q13 1Q14 2Q142Q14 vs.

2Q13 (% YoY)

Gross Revenues 7,024,216 7,413,009 7,539,627 7,684,901 7,043,065 7,162,503 -3.4%

Gross Revenues Telecommunications Services 6,125,517 6,136,654 6,312,149 6,490,893 6,180,443 6,014,599 -2.0%

Telecommunications Services - Mobile 5,831,734 5,852,094 6,054,713 6,254,887 5,958,845 5,793,628 -1.0%

Usage and Monthly fee 2,694,316 2,777,176 2,884,968 2,953,344 2,801,736 2,751,247 -0.9%

Value added services - VAS 1,245,483 1,291,470 1,362,498 1,454,202 1,499,538 1,577,565 22.2%

Long distance 830,331 830,045 832,558 840,030 814,990 771,408 -7.1%

Interconnection 1,005,954 893,936 919,536 941,325 775,304 627,616 -29.8%

Others 55,649 59,466 55,153 65,985 67,277 65,792 10.6%

Telecommunications Services - Fixed 293,783 284,560 257,437 236,007 221,599 220,971 -22.3%

Gross Revenues Handset sales 898,699 1,276,354 1,227,478 1,194,008 862,622 1,147,904 -10.1%

Net Revenues 4,710,715 4,944,141 5,083,159 5,183,276 4,702,224 4,774,732 -3.4%

Adjusted Net Revenues 4,710,715 4,988,050 5,083,159 5,183,276 4,702,224 4,774,732 -4.3%

Net Revenues on Services 4,086,662 4,065,311 4,206,773 4,342,314 4,099,640 3,984,519 -2.0%

Adjusted Net Revenues on Services 4,086,662 4,109,220 4,206,773 4,342,314 4,099,640 3,984,519 -3.0%

Net Revenues on Products 624,053 878,830 876,386 840,963 602,584 790,214 -10.1%

Operating Expenses (3,486,942) (3,711,943) (3,831,158) (3,684,504) (3,384,936) (3,443,836) -7.2%

Personnel expenses (200,579) (200,623) (211,985) (218,688) (227,767) (229,822) 14.6%

Selling & marketing expenses (946,656) (973,227) (1,035,454) (982,561) (980,196) (1,025,703) 5.4%

Network & interconnection (1,352,476) (1,321,534) (1,344,279) (1,294,011) (1,194,478) (1,010,578) -23.5%

General & administrative (159,075) (152,075) (155,809) (157,766) (149,852) (178,396) 17.3%

Cost Of Goods Sold (655,634) (912,158) (906,944) (876,105) (645,844) (828,012) -9.2%

Bad Debt (72,631) (67,720) (55,534) (44,167) (76,103) (77,152) 13.9%

Other operational revenues (expenses) (99,891) (84,605) (121,152) (111,205) (110,695) (94,173) 11.3%

EBITDA 1,223,773 1,232,198 1,252,001 1,498,773 1,317,288 1,330,896 8.0%

EBITDA Margin 26.0% 24.9% 24.6% 28.9% 28.0% 27.9% 295 bps

Adjusted EBITDA 1,223,773 1,262,852 1,252,001 1,498,773 1,317,288 1,330,896 5.4%

Adjusted EBITDA Margin 26.0% 25.3% 24.6% 28.9% 28.0% 27.9% 256 bps

Depreciation & amortization (679,439) (671,297) (694,075) (723,061) (730,313) (757,072) 12.8%

Depreciation (364,335) (373,258) (376,195) (388,709) (401,829) (407,479) 9.2%

Amortization (315,103) (298,039) (317,880) (334,352) (328,484) (349,594) 17.3%

EBIT 544,335 560,901 557,926 775,712 586,975 573,824 2.3%

EBIT Margin 11.6% 11.3% 11.0% 15.0% 12.5% 12.0% 67 bps

Net Financial Results (71,085) (40,881) (90,237) (100,517) (35,834) (72,706) 77.9%

Financial expenses (167,024) (152,110) (209,124) (221,442) (177,911) (256,616) 68.7%

Net exchange variance (731) 2,034 (4,279) (1,435) (1,403) (560) -127.5%

Financial income 96,670 109,195 123,165 122,360 143,479 184,469 68.9%

Income before taxes 473,250 520,020 467,689 675,195 551,141 501,117 -3.6%

Income tax and social contribution (167,183) (134,462) (152,674) (176,221) (179,008) (135,504) 0.8%

Net Income 306,067 385,558 315,015 498,974 372,132 365,614 -5.2%

Adjusted Net Income 306,067 405,790 315,015 498,974 372,132 365,614 -9.9%

ANNUAL HISTORICAL DATA (R$ THOUSAND)

HISTORICAL DATA & OTHERS 37

Year

R$ Thousand

Description 2012 2013 2014 (YTD)

Gross Revenues 27,755,813 29,661,753 14,205,568

Gross Revenues Telecommunications Services 24,350,086 25,065,214 12,195,042

Telecommunications Services - Mobile 22,879,828 23,993,427 11,752,472

Usage and Monthly fee 11,086,671 11,309,804 5,552,984

Value added services - VAS 4,404,832 5,353,653 3,077,103

Long distance 3,217,921 3,332,965 1,586,398

Interconnection 3,969,138 3,760,751 1,402,920

Others 201,264 236,254 133,069

Telecommunications Services - Fixed 1,470,259 1,071,787 442,570

Gross Revenues Handset sales 3,405,726 4,596,539 2,010,526

Net Revenues 18,763,947 19,921,291 9,476,957

Adjusted Net Revenues 18,763,947 19,965,200 9,476,957

Net Revenues on Services 16,419,958 16,701,059 8,084,159

Adjusted Net Revenues on Services 16,419,958 16,744,969 8,084,159

Net Revenues on Products 2,343,989 3,220,232 1,392,798

Operating Expenses (13,751,989) (14,714,546) (6,828,772)

Personnel expenses (729,032) (831,876) (457,589)

Selling & marketing expenses (3,841,852) (3,937,899) (2,005,899)

Network & interconnection (5,353,476) (5,312,301) (2,205,056)

General & administrative (551,393) (624,725) (328,248)

Cost Of Goods Sold (2,604,978) (3,350,841) (1,473,856)

Bad Debt (250,972) (240,051) (153,256)

Other operational revenues (expenses) (420,286) (416,853) (204,868)

EBITDA 5,011,958 5,206,744 2,648,184

EBITDA Margin 26.7% 26.1% 27.9%

Adjusted EBITDA 5,054,088 5,237,399 2,648,184

Adjusted EBITDA Margin 26.9% 26.2% 27.9%

Depreciation & amortization (2,688,588) (2,767,871) (1,487,386)

Depreciation (1,458,563) (1,502,498) (809,308)

Amortization (1,230,025) (1,265,374) (678,078)

EBIT 2,323,370 2,438,873 1,160,799

EBIT Margin 12.4% 12.2% 12.2%

Net Financial Results (169,890) (302,720) (108,541)

Financial expenses (644,754) (749,700) (434,527)

Net exchange variance (4,151) (4,410) (1,962)

Financial income 479,015 451,391 327,949

Income before taxes 2,153,480 2,136,153 1,052,258

Income tax and social contribution (704,592) (630,539) (314,512)

Net Income 1,448,888 1,505,614 737,746

Adjusted Net Income 1,500,143 1,525,845 737,746

HISTORICAL DATA: OPERATIONAL & FINANCIAL RATIOS

ROA: NOPLAT/Avg. Total Assets. Calculation considers organic Net Income and EBITDA

HISTORICAL DATA & OTHERS 38

Year

Description 2012 2013 2014

Brazilian Wireless Subscriber Base (000`s) 261,808 271,100 275,707

Estimated Total Penetration 132.8% 136.45% 136.1%

Municipalities Served (GSM) 3,383 3,404 3,427

Market Share 26.88% 27.09% 26.91%

Total Lines (000's) 70,376 73,431 74,203

Pre-paid Lines (000's) 59,658 61,146 61,963

Post-paid Lines (000's) 10,718 12,285 12,239

Gross Additions (000's) 38,408 39,627 18,612

Net Additions (000's) 6,293 3,055 772

Churn 47.5% 50.9% 24.2%

Total ARPU 19.1 18.6 17.6

Total MOU 136 148 139

SAC 29 28 29

Handsets Sold (000's) 10,227 12,511 5,400

CAPEX (R$ Mn) 3,765 3,871 1,472

Employees 11,650 12,167 12,225

Stock Performance (base 100)*

TIM Celular S.A. Intelig

100%

TIM Brasil Serv. e Part. S.A. Free Float

Telecom Italia International N.V.

Telecom Italia

100%

TIM Participações S.A.

ON: 33% (805,662,701) ON: 67% (1,611,969,946)

100% 100%

STRUCTURE AND STOCK PERFORMANCE

*Last price as of 02/14/2014 HISTORICAL DATA 39

HISTORICAL DATA & OTHERS 39

-10%

00%

10%

20%

30%

40%

50%

60%

TIMP3 Ibovespa TSU

Cofins PIS/ PASEP ICMS Fistel Fust/

FUNTEL

TotalTotal Fust/ FUNTEL

PIS/ PASEP

ICMS Cofins Fistel

% Gross Revenues

TELCOS’ TAX BURDEN & HIGH INVESTMENTS

3% ~1%

28%

~5% 1.5% ~39%

32% of Revenues

Taxation represents almost 40% of companies gross revenues.

Tax Burden Composition Telecom Industry Tax Payments1 (R$ Bln)

Telecom Industry Investments2 (R$ Bln)

HISTORICAL DATA & OTHERS 40 Source: players Balance Sheet

1 Considers TIM, Telefonica, Oi and AMX 2 Considers TIM, Telefonica, Oi, AMX and GVT

45.7 46.0

2012 2013

36.8

38.4

2012 2013

Investor Relations Team

Avenida das Américas, 3434 - Bloco 01

6° andar – Barra da Tijuca

22640-102 Rio de Janeiro, RJ

E-mail: ri@timbrasil.com.br

Rogério Tostes

E-mail: rtostes@timbrasil.com.br

Phone: +55 21 4109-3742

Vicente Ferreira

E-mail: vdferreira@timbrasil.com.br

Phone: +55 21 4109-3360

Leonardo Wanderley

E-mail: lwanderley@timbrasil.com.br

Phone: +55 21 4109-4017

Rodrigo Godoy

E-mail: rcgodoy@timbrasil.com.br

Phone: +55 21 4109-3446

Luiza Chaves

E-mail: luchaves@timbrasil.com.br

Phone: +55 21 4109-3751

Visit our Website

www.tim.com.br/ir

Safe Harbor Statements

Statements in this presentation, as well as oral

statements made by the management of TIM

Participações S.A. (the “Company”, or “TIM”), that are

not historical fact constitute “forward looking

statements” that involve factors that could cause the

actual results of the Company to differ materially from

historical results or from any results expressed or

implied by such forward looking statements. The

Company cautions users of this presentation not to

place undue reliance on forward looking statements,

which may be based on assumptions and anticipated

events that do not materialize.

SAFE HARBOR AND IR CONTACTS

SAFE HARBOR & IR CONTACT 41