2nd QUARTER HIGHLIGHTS Operational

Financial

% of total customer base

Data as % of revenues

39%

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

27%

22%

19%

32% 28%

+5 p.p.

+3 p.p. 2Q12

Data users reached 29 mln lines

2Q13

2Q12

2Q14

Mix of postpaid over total base

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

2Q13

15.8%

Net Revenues “Business Generated” (ex – incoming) grew by 7% YoY 2Q14

Strong cost control: total opex dropped 7% YoY

2Q13 11%

9%

Total OPEX (Δ% YoY)

-3%

-7% 3Q13

4Q13

1Q14

Maracanã Stadium

2Q14

100k

2

Live TIM crossed 100 thousand customers milestone

28%

25%

EBITDA grew 8% YoY with margin gain

26k Jun/13

2Q12

• Photos sent: 50 mln • Outgoing calls: 5 mln • Data traffic: 26.7 TB

Live TIM customer base

EBITDA Margin 27%

2Q14

World Cup Figures (in the Stadiums)

2%

2Q13

2Q13

2Q14

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

16.5% +7% YoY

2Q13

2Q14

Jul/14

CORE BUSINESS ANALYSIS & PERFORMANCE Mobile Service Net Revenues Analysis (% YoY)

1 MTR cut full impact in 2Q

6 months (YoY) -1%

Total

+3% Ex-MTR 0% ~170 mln*

Net revenues from MTR

-18% -28% 1Q14

Business Generated

(Local + LD + VAS)

+7%

+8%

Business Received

(Incoming MTR + SMS)

-30%

-26%

2Q14

2 Handset sales at a healthy level although reduced growth 3.1

2.7

2.4

2Q12

3

2Q13

Total units sold (mln)

EBITDA Performance (mln; %YoY)

2Q14

World Cup impact on commercial activities June

June

2013

2014

No Holidays 1 National holiday 3 Brazil’s games (1/2 day holiday) Up to 2 municipal holidays in main cities hosting games

3

2Q14

2Q13

*MTR Impact

Reported EBITDA Margin

27.9%

24.9% Ex-MTR

+8%

EBITDA

*MTR Impact

1,232

2Q13

+16%

1,427 ~96 mln*

1,331

2Q14

+4%

Ex-MTR

READY FOR DATA OPPORTUNITY Capturing Data Opportunity

Data Experience is Mobile # Access Growth (users in mln) 118.5

Mobile

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

∆ %YoY +20%

1,500 Content & Other

+ 5X

∆ %YoY +22%

1,578

+45%

+72%

Web

+29%

+33%

SMS

+1%

-8%

Fixed 23.2 2009

2010

2011

2012

2013

Jun/14

Source: Anatel

# Total Market Equipment Sold (units in mln) Smartphone & Tablet

13.7

Notebook & PC

3.6

2.5

10.5

2Q13

2Q14

2Q13

1Q14

2Q14

Data Users (# mln users)

2Q14

+24%

29 23

Source: IDC Tracker

Brazilian Broadband: Low Average Speed (Mbps) 2.7

4Q13

2.6

1Q14

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

2Q13

BOU: Bytes of Use (Megabytes)

2Q14

Days of Use

Sources: Anatel, Akamai - State of Internet

+30%

+40%

WSJ: “Brazil - The Social Media Capital of the Universe” #2 in Facebook

#2 in Twitter

2nd largest market

#2 in WhatsApp

Sources: SocialBakers, e-Marketer, Semiocast, G1.com, Newspaper ‘Folha de São Paulo’

4

2Q13

2Q14

2Q13

2Q14

INFRASTRUCTURE FOCUSED IN DATA Network in Numbers

TIM’s Infrastructure Strategy Number of 3G & 4G Sites

1



2

DATA CENTRIC APPROACH

o New frequency at 900 MHz in SP

CAPACITY   

Higher speed 4G roll out Mobile broadband project acceleration Backhauling infrastructure

COVERAGE     

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

Completed actions

~13.1 ~11.3 ~11.0

o Better indoor coverage o Addressing capacity requirement BioSite: New approach to coverage Before

4Q13

1Q14

2Q14

After

Number of Wi-Fi & Small Cell

+47%

4Q13

2Q14

 Patent pending  Initiating in: o Brasília

3

AVAILABILITY    

Always available Fine tunning Fiber rings / redundance Resilience

o Curitiba o Rio de Janeiro

Number of sites with fiber (FTTS)

Cities in mobile BB project

+3.5x

2Q13

53

66

2Q14 1Q14

5

+13 cities

2Q14

CUSTOMER BASE EVOLUTION

Customer Base (mln)

Vivo TIM Claro

79.4

76.2

75.7

74.2

72.2

68.9

68.8

66.5

63.0

47.8

49.7

51.1

2Q13

2Q14



# 1 player in prepaid



Strong growth in ‘Controle’ postpaid base



Austere disconnection policy

Oi

2Q12 Source: ANATEL

Prepaid Recharge

4G Market Share

3G Market Share

(R$; % YoY)

(%; thd users)

(%; mln users)

3.3 mln

118 mln 47% 40% 41.5 35% 24% 23% 11%

2Q13 Source: ANATEL

6

26% 24%

14%

2Q14

39%

1,281 TIM

TIM 30.2

30%

990

20%

655

+8.4%

21% 28.9

20% 12%

16.2

2Q13 Source: ANATEL

10%

2Q14

334

2Q13 Source: Company

2Q14

GO TO MARKET PROGRESS Postpaid

Prepaid Managing customer base…

To Infinity and beyond…

v

R$ 7 weekly service package

v R$ 0.75 daily offer

o o o

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

o o o

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

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

% of smartphone sales among players in 2Q14

% of smartphone over new sales in 2Q14

62% 9% P3 28% P2 23% P1 Source: GFK Group

7

71%

50%

TIM 41%

57%

35%

2Q12

39%

2Q13

2Q14

2Q12

2Q13

2Q14

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

Source: Company

REGULATORY UPDATE

New MTR and EILD Analysis MTR New Glide Path (R$)

Leased Lines - EILD New parameters established

0.36

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

0.32

~20% until ~80%

0.24 0.16

 Establish regulated reference prices to leased lines speed up to

0.10 0.06

2012

2013

2014

2015

2016

2017

0.03

0.02

2018

2019

34 Mbps  On preliminary ‘static’ simulation show relevant OPEX reduction

Source: Anatel

4G Auction RFP

ANATEL's new costumer care policy - RGC Main measures until July, 2014

 Auction expected for September

 Cancelation within 48 hours, without human assistance

 License period: 15 + 15 years  No

additional

obligation.

Network

and

Spectrum

opportunities

sharing

 In case of dropped call, companies must call customer back  Minimum of 30 days for prepaid credits to expire

 Switch off plan starting at the beginning of 2016  Minimum prices and clean-up costs not yet defined

Source: ANATEL, Commissioners Meeting on July 17th

8

TIM has been working to improve transparency and caring

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

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

4Q13

1Q14

2Q14

2H14

Phases

Financial sanitization

Infrastructure reinforcement

Market repositioning

Showing results

o Positive EBITDA o Cost efficiency

Highlights

o Customer base management

o New business unit organization o IT renewal plan o Multiservice network

Business Priorities

o New branding

o Sales growth

 Governance / Efficiency

o New offers and

o Revenue

 Business development

product launch

rebound

 Quality and Process

o Restructured sales force

launch

Operational Improvements Paying Off Activation time

New sales revenues

(days)

(R$; YoY)

Financial performance Net Revenues (with intercompany) 2014

2013 +19x -80%

Business remodeling driving stable fixed revenues QoQ

Segment EBITDA-CAPEX + 2Q13

2Q14

2Q13

3Q13

4Q13

1Q14

2Q14 2012

Source: Company

9

2013

2014

FIXED BROADBAND: LIVE TIM

Gaining more traction Addressable HH

Gross Adds

Customer Base

(000 HH)

(000 users)

(000 users)

1,069

1,138

100k

1,220 26k

+113%

804

+34%

24.5 Jun/13

18.3

609

11.5

Jul/14

126 neighborhoods:  43 neighborhoods in SP

2Q13

3Q13

4Q13

1Q14

2Q14

2Q13

0

1Q14

Source: Company

2Q14

 83 neighborhoods in RJ

Quality Experience

New Offers

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

(Average streaming speed representation)

31% 31%

o Live TIM Blue Box release: optional TV approach

Netflix Broadband Ranking

Internet buzz

 May/2014

1st 51%

18% 3rd

Market average

8% 21%

72%

4th

 Jul/2014

New speed: 70Mbps for R$119.90

5th Positive

Source: Gauge 1Q14

10

2nd

Neutral

Negative

6th

Source: Netflix July 2014

10

FINANCIAL RESULTS ANALYSIS (1/2)

Service Net Revenues

EBITDA

(R$ mln; % YoY)

(R$ mln; % YoY) +15.8%

Thousands

Thousands

+2.2%

-253

+208

4,065

ΔYoY

+8.0%

-2.0%

+6.9%

-29.6%

-36

3,985

4,155 170

MTR Impact

ΔYoY

-20.5% 3,985

Reported Revenue 2Q13

Δ Business Generated

Δ Business Incoming

Δ Others

Reported Revenue 2Q14

‘Pro forma’ Revenue in 2Q14

+186

-87

+5.8%

+4.4%

24.9%

EBITDA Margin

27.9%

31.1%

Service EBITDA Margin

34.4%

Reported EBITDA 2Q13

Traffic/Data Δ Contribution Margin

Reported EBITDA 2Q14

Δ Opex/ Others

Interconnection (Δ% YoY)

EBITDA Exposure

~ 35%

% Bad Debt/Sales (% over gross revenues) ~1%

-31.3%

stable

2Q13

2Q13

2Q14

~18%

~ 12%

2Q14

Leased Lines Cost (Δ% YoY)

-10% 2Q10

2Q11

2Q12

2Q13

2Q14

2Q10

2Q11

2Q12

2Q13

2Q14 2Q13

11

‘Pro forma’ EBITDA in 2Q14

~1%

~ 25%

MTR Impact

Efficient Cost Control

MTR Exposure Net Services Revenues Exposure

1,427 96

1,331

1,232

2Q14

FINANCIAL RESULTS ANALYSIS (2/2) Net Income - 6 months

Investments

(R$ mln; % YoY)

R$1,657 mln

R$1,593 mln 738

+6.7%

692

4G

2G

4G 2G

3G 3G

6M13 6M13

6M14

6M14

>94% towards infrastructure

Cash Flow - 6 months

Net Debt

(R$ mln; R$ YoY)

(R$ mln; % YoY)

Jun/14

Thousands

Thousands

Jun/13

6,356

5,325

1,749

1,749

2,648

-1,654*

-1,786

2,537 4,607

4,521

Debt

Cash

1,031

Net debt YoY

Debt

Cash

Net debt

+41%

+110%

-48%

Net debt/EBITDA 12M: 0.19x

-1,227

-609

3,576

1,984

12

New BNDES Loan

+618 mln

182 EBITDA

CAPEX

Δ WC

LT Amazonas Leasing

OFCF 6M14

OFCF 6M13

*Considering R$3 mln of LT Amazonas leasing adjustment

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

Accelerated Network Evolution for Data 1

Capacity

Mobile

BioSite

DATA CENTRIC APPROACH

2

Coverage Small Cells 4G 700MHz

3 Availability

Fixed VAS

CONTENT

New Positioning TIM Protect

“Porta Azul” (Blue Door)

Strong Institutional Position

• •

4G auction participation

Leadership position

Evolving the Structure for the New Challenges

•

Streamlining organization

•

Adding new talent

•

Stronger segment focus o Consumer

•

Presence in dialogue with relevant institutions

o Corporate o Residential

13