33% 42%

49% 56%

28.0% 27.9% 27.4%

30.1%

61.1 63.2

20% 30%

P1

26.7% 26.1%

28.4%

-22.9% -20.5%

-2.9%

2.6% 1Q14 2Q14 3Q14 4Q14

Innovative offers generating value: • Charging per day Infinity “dia”

• Controle WhatsApp

• Shared Data plans

RESULTS HIGHLIGHTS: A SOLID QTR TO CLOSE A SOLID YEAR

2

MTR cut impact still significant: ~R$372 million on EBITDA in 2014

75.7 million

customers

Customer Base

34

Data Acceleration

30%

Improving Profitability

Fixed

Turnaround on

EBITDA Margin

business

million users (+26% YoY)

Strong reduction of SMS business (-26% YoY in revenues)

Tougher macro environment: • GDP: +0.15%*

• Inflation: 6.4% in 2014

2014 Year Recap

New infrastructure approach: data centric

4G LTE auction: assured future positioning

Fixed corporate business turnaround completed

Live TIM: best in class fixed broadband

2 1

Dec/13 Dec/14

Prepaid (mln customers)

Control Plans (mln customers)

+3.4% YoY

Dec/13 Dec/14

+13.8% YoY

2Q13 4Q14

4G Market Share (%)

TIM

Gross Data Revenue Yearly Growth (ex-SMS) (% YoY)

1Q14 2Q14 3Q14 4Q14

EBITDA Margin (%)

1Q14 2Q14 3Q14 4Q14 2012 2013 2014

Net Revenues (Δ% YoY)

Source: Company and Anatel

P2

P3

2

*Central Bank consensus

+25 p.p

Solid financial results: Growth on EBITDA / EBIT / Net Income

Consistent growth on Business Generated revenues +6.3% (YoY)

EBITDA Growth:

4Q14 x 4Q13: +4.0% 2014 x 2013: +6.4%

2013 2014

2013 2014

-31%

Network & Interconnection Savings

Interconnection Cost (R$; % YoY)

Leased Lines Cost (R$; % YoY)

Relevant cost savings amid total data traffic growth of 39% in 2014 when compared to 2013

Regulatory price reductions and substitution of leased lines by own infrastructure

-10%

3.2

3.4

4Q13 4Q14

Equipping Customer Base

Handsets Sold (mln units)

% of smartphone sales among players in 4Q

+6.3% YoY Growth

+6.1% QoQ Growth

Source: Company and GFK Group

TIM 48%

P1 14%

P3 29%

P4 9%

Leading player in handset sales

Up 16 p.p. in 4Q14 vs. 4Q13

0.6%

0.5%

4Q13 4Q14

KEEPING THE FOCUS ON THE EXECUTION

3

Operational Efficiency

Fixed Business Progress

SAC (Subscriber Acquisition Cost) (R$; % YoY)

Bad Debt (% Bad debt over gross revenues)

SAC/ ARPU

24

21

4Q13 4Q14

-15%

1.3x 1.1x

-16%

Corporate Solutions New Sales (R$; % YoY)

Live TIM Ultra Broadband (customer base in thousand)

4Q13 4Q14

+39% 60

130

4Q13 4Q14

+2.2x

Solid Performance in Net Adds

Pre paid

1st in prepaid market share

+ 2.1 million clients in 2014

Post paid

25% of net share in December (ex M2M and broadband)

Control plans bases rose 14% YoY

2.5 GHz 2.1 GHz

1.8 GHz 850 MHz 700 MHz

radius (km)

0.458 0.61

INFRASTRUCTURE EVOLUTION… Innovative Coverage

4

Investment Profile

Site Densification

Cell coverage characteristics (Urban coverage simulation)

Capital allocation on innovative services:

Fiber (metropolitan + LD): expansion to ~55k Km in 2014

2G (voice)

3G+4G (data)

Number of 4G Sites Number of 3G Sites

4Q13 4Q14

1.9k

3.7k

4Q13 4Q14

9.1k

10.4k

Indoor coverage deployment

DAS (Distributed Antenna Systems) Solution

Femto Cells (corporate)

Wifi (consumers)

+92% +14%

R$3.9 bln Organic Capex +

R$2.9 bln (4G License & Clean up)

=

R$6.85 billion in 2014

Deployment in:

0.363 1.413 1.685

Rio de Janeiro Curitiba Brasília Manaus Natal São Luís

51%

87%

49%

13%

2013 2014

Band 850 MHz 900 MHz 1800 MHz

2100 MHz

2500 MHz

700 MHz

Possible Technologies

2G/3G 2G/3G 2G/4G 3G 4G 4G

Efficient Use of Spectrum Portfolio

Wifi and Small Cells

> 100% YoY

Fistel exemption

approved in Jan/15

Mobile Broadband Evolution (cities)

The 125 cities of the MBB project

represent 50% of the total network

traffic 39

53

66

83

125

4Q13

1Q14

2Q14

3Q14

4Q14

3,093

3,013

2,930

2,845

TIM P4 P3 P1

…UNDERSCORING QUALITY IMPROVEMENT

5

Source: Anatel

Source: Company’s survey of national satisfaction

TIM

P1 P3 P4

Customers Satisfaction

¹ Voice Network (repair and call completion) ² Data Network: Estimated by TIM and composed by a subset group of Additional Services complaint

Total Demands at Consumer’s Protection Agency (Procon) (Per economic group, in thousands)

Source: SENACON/MJ

10.6 14.0

23.6 27.2

42.2 46.3

21.4

28.0

4Q13 1Q14 2Q14 3Q14 4Q14

TIM

P1

P3

P4

Data Evolution

Data Accessibility Ranking (3G) in SP

4G Sites in State Capital Cities

Anatel

Average Satisfaction with Coverage and Quality of Calls (score assigned by the customer)

Least claimed company at

Procon

7.80 7.80

Nov-12 May-13 Nov-13 May-14 Nov-14

Network Complaints (number of complaints)

Voice network¹

Data network²

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

Voice network 2014 vs. 2013

-27%

Data network 2014 vs. 2013

-11%

Anatel Metrics

Customers Demands

Source: Anatel

Access

Anatel

Access

Access

Access

Access

99.24%

98.93%

99.20%

99.57%

98.88%

6

OFFER STRATEGY EVOLUTION CONTINUES

Data Customer Base (as % of total base)

Smartphone Penetration (% of smartphones over customer base)

14.9%

29.4%

49.5%

2012 2013 2014

Smartphone sales over 80% in 4Q14

Data ARPU (% YoY Growth)

18%

20% 21%

25%

1Q14 2Q14 3Q14 4Q14

Beyond Connectivity on Data

Controle WhatsApp

Data centric offer with no voice obligations

Data Package and WhatsaApp included in monthly fee

Differentiation among peers, with positive impact on postpaid performance

Data Revenues Penetration (% Gross VAS Revs / Gross Mobile Service Revs )

25.2%

27.2%

28.7%

30.9%

1Q14

2Q14

3Q14

4Q14

INFINITY TURBO 7 INFINITY “DIA”

6

+7.2 p.p

Protecting Core Revenue

+35 p.p.

R$ 0.75 DAILY OFFER

SHARED INTERNET PLANS

Offer Innovation Strong Data Progress

Leveraging on simplicity, transparency and convenience

30.3%

36.4%

44.6%

2012 2013 2014

1Q14 2Q14 3Q14 4Q14

RESHAPING THE BUSINESS Different Revenue Profile

Improving Profitability

Mobile Service Net Revenues (% YoY)

Mix of Gross Data Revenues (% YoY)

2013 2014

SMS

Web

Content & Others

+29% +39%

+45% +80%

+33%

+72%

+47%

+82%

1,500 1,578 1,677 1,862

Mobile First Margin* (Δ YoY)

Service EBITDA (R$ mln; % YoY)

Service EBITDA Margin (% YoY)

35%

38%

4Q13 4Q14

+2.8 p.p.

1,534

1,598

4Q13 4Q14

+4.2%

4Q13 4Q14

+4.5 p.p.

FY 2014 growth: +5.2 p.p. FY 2014 growth: +3.0 p.p. FY 2014 growth: +6.9%

+1.2% -19% -8.2% -24%

(Voice & Other)

(Data & SMS)

(Incoming MTR + SMS)

Gross Data Revenues Growth (% YoY of growth)

20%

22%

23%

28%

1Q14

2Q14

3Q14

4Q14

7

Excluding handset business

* Mobile First Margin = Business Generated less costs related to the service.

Business Received

Business Generated

-30%

+6.3%

2014

+4.8%

-34%

2014

4Q14

4Q14

2013 2014

3.4

3.3

2.9

Live TIM

GVT

NET

4Q13 4Q14

ACCELERATING FIXED BUSINESS PERFORMANCE

8 8

2014 business remodeling recap:

Customer base management

Multiservice network launch

Sales team reorganization

Brand repositioning

Re-designed service portfolio

Fixed + mobile integration for corporate clients

2013 2014

+3.5x

EBITDA Net Revenues (with intercompany)

Revenues from New Sales (YoY)

Outstanding product performance… (ISP speed ranking - Mbps)

…with solid operational and financial results

60

130

4Q13 4Q14

Customer Base (000 users)

+2.2x

ARPU (R$; YoY%)

+24%

New Line Payback (months)

21

14

4Q13 4Q14

1

15.9

8.9

8.8

Live TIM

NET

GVT

37

21

Download

Upload

1

1,490

2,194

1,069

1,503

4Q13 4Q14

Coverage (000 Households)

+41%

Addressable Households

Homes passed

+1.0%

2013 2014

+2.7x

-33%

5,168

167

Tho

usa

nd

s

1,558

97 1,499 123 -64 1,558

Tho

usa

nd

s

5,183 5,168 157 -307 4 132

Tho

usa

nd

s

+13.5%

9

FINANCIAL RESULTS ANALYSIS (1/2)

MTR Exposure

1,655

28.9%

35.3%

30.1%

38.1%

EBITDA Margin

Service EBITDA Margin

EBITDA (R$ mln; % YoY)

Reported EBITDA 4Q13

Reported EBITDA 4Q14

Δ Opex/ Others

Traffic/Data Δ Contribution

Margin

‘Pro forma’ EBITDA in 4Q14

+10.4%

+4.0%

Ex-MTR

MTR Impact

+3.5% +3.1% ΔYoY

Revenue Exposure (as % of net service revenues)

EBITDA Exposure (as % of EBITDA)

~ 25%

~ 12%

4Q10 4Q11 4Q12 4Q13 4Q14

~ 32%

~18%

4Q10 4Q11 4Q12 4Q13 4Q14

Reported Revenue

4Q13

Reported Revenue

4Q14

‘Pro forma’ Revenue 4Q14

Δ Others Δ Business Received

Δ Business Generated

Δ Products Revenue

5,335

+2.9%

- 0.3%

Ex-MTR

Δ % YoY +4.8% -33.9% +2.6% +16%

MTR Impact

9

5,207

5,538

5,910

2013 2014

372

+6.4%

MTR Impact

660

2013 2014

16,325

MTR Impact

-2.3%

Net Revenues Net Service Revenues (R$ mln, % YoY)

16,985 16,701

+1.7%

(R$ mln, % YoY)

700MHz Acquisition Capex

1,274

Tho

usa

nd

s

306 372

386 366

315 348

499 460

2013 2014

FINANCIAL RESULTS ANALYSIS (2/2) Net Income Evolution (R$ mln; % YoY)

Net Debt (R$ mln)

10

EBITDA 2014

Debt Cash Net cash

2013 2014

Debt Cash Net debt

Cash Flow - 12 months (R$ mln; R$ YoY)

Net debt/EBITDA 12M: 0.23x

Organic CAPEX

Organic Δ WC Organic OFCF 2014

Reported OFCF 2014

LT Amazonas Leasing

6,507 5,233

2Q

1Q

+10.6%

% YoY

3Q

1,506 1,546

+21.6%

-5.2%

-7.7% 4Q

Considering R$1.7 bln 4G pymt

*Organic figures excludes the 700MHz frequency acquisition and LT Amazonas leasing effect

700MHz Acquisition Effect on Δ WC

+2.7% FY

4,867 5,288

-421

Cash Flow - 12 months (R$ mln; R$ YoY)

Composed by: + NPV of the 700MHz clean up cost + Warranty Insurance + Monetary Adjustments

5.538

-2,923

-3,928

-96 1,514 182

1,181

-45

32.0%

34.9%

2012 2013 2014 2015e

Delivering important operational and financial results

Strong market positioning for growth

Renewed culture of innovation, quality and caring

Staying power and commitment with long term, with recognized

institutional leadership

Best governance in the industry: Novo Mercado MBB (cities)

CONCLUSIONS

11

New industrial plan to be presented on February 20, 2015

Changing Business Profile Focus on Execution Improving Profitability

Infrastructure Leveraging Growth

Revenue profile changing

Pre-paid data as key source of growth

TIM strategically well positioned with data focus on “big middle”

Business Generated Net Revenues Keeping costs under control, amid macroeconomic pressure

Keeping innovative offers:

• Infinity Day, Data Shared Plans, Controle Whatsapp plan, TIMmusic by Deezer, TIM Multibank (2015), Blue Box (2015)

Fixed turnaround completed: back to growth in 2015

Live TIM: from optionality to reality

TIM: A Solid Player

Building the Future

Tower sale

Big data analysis for Capex allocation

Investing Efficiently

4G LTE in 700MHz and 1,800MHz

EBITDA growth in 2014: +6.4% YoY

Margins expansion through opex savings and new revenues sources

(Voice & Other)

(Data & SMS)

Service EBITDA Margin (%; YoY)

+3.0 p.p.

2013 2014

39

125

Mobile broadband project

+86

2013 2014

74% 69% 64%

26% 31% 36%