0Investor Relations - São Paulo, August 2nd, 2011

Agenda

Q2’11: Main AchievementsQ

Q2’11: Financial Results

Conclusions & Outlook

1

Q2 main achievements (continuous improvement)

Growth Acceleration(2Q’11 vs. 2Q’10)

Customer Base +25%Net Revenues +19.5%S i R +11 8%

11 EBITDA +12.7% (Normalized +23%)EBIT +122%N t I +178%Services Revenues +11.8%

# 1 in Brand Preference# 1 in incremental market share: at 39%

Brand attractiveness 22

Net Income +178%

MOU at 127’ (+15%)12 4 Mln internet unique users# 1 in incremental market share: at 39%

in 2Q11 (+2.7 Mln lines)

S h i h 33

12.4 Mln internet unique usersSmartphone penetration at 15%

100% Anatel network quality score+2,000 km of fiber in Amazonia+5,500 km of fiber in RJ/SP (AES Atimus)

Strengthening the foundations

33 R$ 14 bn CAPEX in 5 years (2009-13)R$ 8.5 bn CAPEX in 3 years (2011-13)AES Atimus acquisition signed in July

Ultra-broadband in Sao Paulo and Rio de Janeiro

44 Benefits of AES Atimus:- R$ 1 bn saving in 3 years- Attack untapped market (R$ 30 billion)

Unique fiber based infrastructureLargest capillarity in SP and RJ

The best corporate governance

55

Integration as of 4Q11

2

Migration to NOVO MERCADO accomplishedgovernance

Acceleration of Growth (1/3)

Q1

R$ Mln, IFRS

+23.0%+24.7%Customer

Base Customer

Q2 QoQ H1 YoYYoY 2Q11

YoY 1Q11

+13.8%

+19.5%

23.0%

Revenues

CustomerBase (Mln)

Revenues

52.8 55.5 +5.1% 55.5 +25%

3,752 4,252 +13.3% 8,004 +16.8%

YoY 1Q11

+12 7%¹

+9.0%

+11.8%ServiceRevenues Service

Revenues 3,463 3,744 +8.1% 7,207 +10.4%

+12.7%¹

+108 9%

+121.8%

+9.0%²Ebitda*

Ebit

Ebitda

Ebit

1,033 1,138 +10.2% 2,171 +10.9%

350 529 +51 4% 879 +117%

+291.0%

+177.8%

+108.9%

Net Income

Ebit

Net Income

350 529 +51.4% 879 +117%

213 350 +64.0% 563 +212%

Ebitda - Capex 736 420 -42.9% 1,156 +55%

Net Debt 1 671 1 998 +19.5% 1 998 -20,7%

3* ¹ +23.2% normalized ² +22.9% normalized

Net Debt 1,671 1,998 9 5 1,998 0,

Acceleration of growth (2/3)

2.7

Customer Base & Net Adds MoU & Outgoing Service Revenues

Mln users Min, R$ Bln

Data Revenues

127 15%, R$ Mln

+30% YoY +15% Y Y

1.7

2.1

3,32,7

2 437.844.4

55.5MoUNet Adds

73

110

734

550

1213

15

% Data/Service

+30% YoY +15% YoY +2pp YoY

2,4

Revenues(Voice Out)

CustomerBase

483 550

Data Revenues

+25% YoY +33% YoY+20.5% YoY

Q2’11Q2’10Q2’09Q2'09 Q2'10 Q2'11Q2’11Q2’10Q2’09

Generating More Revenues+% YoY

Total Revenues

R$ Mln

3,512 3,5594,252

+19.5% YoY

+% YoY

3 3503,744

DataMoUCustomer

Base

+25% +15% +33%

Service Revenues

+11.8% YoY

3,144 3,350

4

+25% +15% +33%

Q2’11Q2’10Q2’09CommunityExpansion

FMS(Voice)

Internet for everybody

Acceleration of Growth (3/3): Internet users expansion driven by smartphone penetration

Infinity Web / Smartphones

Infinity Web users (Pre Paid)

Unique users monthlyMln clients

6x

Daily Unique users, Mln clients

1.8

Infinity Web users (Pre-Paid)

Post Paid

12.4

6 1

2x

MarFebJanDecNovOctSepAug

0.3

MayApr Jun

Pre Paid

6.1

Smartphone penetration% Webphone+smartphone penetration on Customer Base

MarFebJanDecNovOctSepAug MayApr

2010 2011

Jun Jun’11Aug’10

000 units, handset sales

Handsets sold - volume

10%12%

>15%% Webphone smartphone penetration on Customer Base

+64%

+83%

3,507

1 9152,262

8%

2010 September 2010 Year End 2011 March 2011 JuneSmartphone

54%

1,915

28%48%

1,383

19%

5

Q2’11Q2’10Q1’11Q1’10

Brand attractiveness: #1 in preference and incremental market share22

3231

30

%, Mln lines

Preference

4 7

Net adds1H’11

Player 1

TIM

Player 3

Player 2

TIM #1 in preference

Market Share Recovery%

39% incremental

market

21

26

21

2830 4.7

3.7

%

25.5%

29.5%

2 %

25.5%

30.4%

25.4%

share

apr/may ’11

18

sep/oct ’10

apr/may ’10

sep/oct ’09

apr/may ’09

sep/oct ’08

apr/may ’08

sep/oct ’07

1919 3.9

2.2

Jun’11

19.1%

25.5%

dec ’10jun ’10dec ’09

23.6%

jun ’09dec ’08jun ’08

19.0%

24.9%

1110100909080807

With strong association to key attributesBest Positioned CompetitorTIM

Δ YoY%Rejection

%

1315

12

13

11

11

12

48

44

23

Best

Convenience +13pp

Δ YoY

10

9 88

sep/oct apr/may sep/oct apr/may sep/oct apr/may sep/oct

11

apr/may

44

40

30

41Network

Coverage

Promotions +10pp

+5pp

6

sep/oct ’10

apr/may ’10

sep/oct ’09

apr/may ’09

sep/oct ’08

apr/may ’08

sep/oct ’07

apr/may ’11 44

23Innovation +12pp

Strengthening the foundations (1/3)33

Overall Quality Set up callsDrop calls

Player 1

Player 2Player 3

100

Overall Quality Set-up callsDrop calls% achieved Anatel network target Drop calls rate, SMP 7

84

Originated calls completed, SMP 5

1.3TIM

90

9580 TIM

1.2

1.1

1.0

Target: <2.0

80

85TIM #1

72

76

Target: >67.0

0.9

0.8

0.7

TIM

75 68

0.6

0.5Jun/10 Aug/10 Oct/10 Dec/10 Jun/11Feb/11 Apr/11 Jun/10 Aug/10 Oct/10 Dec/10 Jun/11Feb/11 Apr/11 Jun/10 Aug/10 Oct/10 Dec/10 Jun/11Feb/11 Apr/11

TIM solid Network Reliability, achieving 100% of all Anateltarget indicators (10 out of last 12 months )

7

target indicators (10 out of last 12 months )

Strengthening the foundations (2/3): Committed to a fast Network Expansion33

TIM Brasil Capex – Organic growth* Development area

R$ Bln

C

D

E

AA

R$ Bln

14Bln

Backbone Backhauling Access

B

'09 '10 '11 '12 '13

8.5Bln

SwapsConsorthiaFiber in Amazonia

MicrowavesFTTSAES Atimus

2G capacity3G coverage

*Excludes spectrum licenses and acquisitions

AnnualCapex 2.7 2.8 2.9

NewNew

2G Network Capacity (voice)# ‘000 TRX installed

20 7

Backbone000 km

Backhauling (MW/FTTS)

>80%

Access 3G% of urban population covered% of sites connected with

own backhauling28,0

202 >80%

7,0

16,0 20,7

20%

80

115142 55%

2x

+2,500bps

8

'09 '10 '11 ’13’12’11’09 ’10

> 80% of Brazilian major cities connected via fiber by 2013

’13’10’09’08 ’13’10

Strengthening the foundations (3/3): Continuous Backbone expansion33

One of the best backbone in the country Intelig/TIM Backbone:

16 000 K

Boa VistaMacapá

Belém

16,000 Km

Fiber SWAP in

+

Manaus

Fortaleza

Porto VelhoA jú

M

M

2010:

~6,500 Km

+ Partnership TIM d T l b

Cuiabá Brasília

Goiania

Campo VitóriaBelo

Horizonte

AracajúSalvador

Uberlândia

M

M

Conjoint Building Network 2012:

~3,800 Km

and Telebras‘unlimited to all’

Active in capacitypGrande

Florianópolis

Curitiba

Rio de Janeiro

VitóriaHorizonte

São Paulo

MM Backbone LD Belém – Macapá - Manaus:

+Active in capacitySWAPPartnership with Telebrás for PNBL expansion

New Conjoint Building NtWk (3.8k Km)

New swap network (6.5k Km)

National Backbone (16k Km)

Porto Alegre ~2,000 km

TIM + Intelig:

9

New Network Manaus (~2k Km)

M Metro Swap Agreements(375 Km) TIM + Intelig: ~28,000 Km

Ultra-broadband in Sao Paulo and Rio de Janeiro:Acquisition of AES Atimus on track (Fiber Network)

44

Widespread fiber network in SP and RJ

GDP

RJ+SP R$1 3Tln

SP and RJ: Macroeconomics

SP/RJ metro – telecom market sizeR$Bln 3 0

‘000 Km

RJ+SP R$1.3TlnArgentina R$0.85 Tln

PopulationRJ+SP = 57MlnItaly =60Mln

•R$ 30 BlnTLC Market•27% of Brazilian GDP

R$Bln

Current TIM Revenue

3 Mobile

Twice as much fixed i b t

~3.0

SP RJ

~2.5

RJ+SP

SP/RJ States: R$50Bln (45% of Brazil)

TLC Market

Italy =60Mln

18

9FixedPeers

Untapped

Infrastructure MAP

incumbent backhauling in SP and RJ

SP RJ

N t k i gi

4 steps IntegrationSP and RJ: Addressable market

Metro Areas: R$30Bln (26% of Brazil)

Step 1

Step 2

St 3

Network sinergies(link swap; FTTS)

Mobile Data Acceleration

Corporate Data

OPEX/CAPEX

Mobile revenues

~30 Mln people

8 Mln households

Mobile PC

Step 3

Step 4

Co po ate ataSolutions

Ultra-broadband

Fixedrevenues4.5 Mln households

class A and B

@ Home

@ Hot spot

10

550,000 companies• Closing: Q4’11• Start-up: Q1’12

Novo Mercado: the icing in the cake55

Corporate Governance Level

1)One single class ofMa im m le el of 1)One single class of share, with equal rights:- VoteDividend

Maximum level of Corporate

GovernanceMinority shareholders

protection - Dividend- Tag along

2)Higher liquidityLegal

Transparency and disclosure requirements

protection requirements

3)Larger number of independent members on TIM’s Brazilian Laws

Legal Requirements

Level 1 Level 2

Other Telco

Board

4)Higher disclosure level

Brazilian Laws

“Lei das S.A”

Level 1 Level 2

level

Maximum level of Brazilian Corporate Governance Full Alignment: Stock option

l t T

11

Uniqueness: TIM distinctiveness in Latam telco plan to Top Management

Agenda

Q2’11: Main AchievementsQ

Q2’11: Financial Results

Conclusions & Outlook

12

Profitability

1,1381 010

Ebitda margin30.4%30.2%

Reported on +10.2% QoQ

R$ Mln, %

Subsidy capitalized

Ebitda

,1,010

925

85864

759

105+12.7% YoY 26.8%

28.4%24.6%

27.5%Reported on total revenues

Reported on service revenues

+23% A/Anormali ed

Q2’10 Q2’11Q2’09

529

Q2’09 Q2’10 Q2’11

Ebit margin 12.5%+51.4% QoQ

normalized

Ebit +122% YoY239

104

6.7%

3.0%

Q2’11Q2’10Q2’09

350

Q2’11Q2’10Q2’09

Net income as % of revenues+64.0% QoQ*332

Net Income

+178% YoY126 3.5%

8.2%

*-11 *0%

13

Q2’11Q2’10Q2’09 Q2’09 Q2’10 Q2’11

* Reported Q2’09 R$332 benefitted by R$343 Mln from FX variation on Intelig’s result; Organig R$-11

Continuous improvement of efficiency drivers

Bad Debt SAC*

IFRS

2 0%R$ Mln 3 1R$/gross add

96 90

2.0%1.8%

1.1%

Bad Debt % Gross Revenues -0.7pp 83

63

3.12.6

1.6SAC/ARPU -38%

$/g

66

Bad Debt

35

SAC -45%-27%

SubsidyARPU

Q2'09 Q2'10 Q2'11 Q2'09 Q2'10 Q2'11

R$/ th bil R$ Ml

26.9 24.221 6

-11% +3.7% QoQ

R$/month, mobile

6485

115

Zero Subsidy Strategy

R$ Mln

732

21.6

0826

Gross Handset

Revenues

286

380424

468

433

14*SAC = Advertising, +Subsidy + Commission

Q2'09 Q2'10 Q2'11Q2’11Q1’11Q4’10Q3’10Q2’10Q1’10

Net Debt Evolution

R$ Mln

2,171

Ebitda - Capex EBITDA – CAPEX YTD: R$ 1.156 +55% YoY14% over Revenues

Debt Profile

Gross Debt: R$ 3.30 bln (of which 80% in the long term)~22% of debt is denominated in foreign currency (100% hedged)

297CAPEX

EBITDA 1,0151,033

Average Annual Cost: 11.0% or 90.2% of CDI in the 2Q’11 vs. 10.0% or107.5% of CDI in the 2Q’10 (~90% of debt in soft loan)

100%30%

1H’11Q1’11

+408+478YoY

Ebitda - Capex

Net Debt 2Q 2011

35%

15%

Of Which: 486 mln in dividends

1,300

3,298

996

474

(327) 20% 1,9981,162

6661,6711,998

March 2011ending

2Q11 NET CASH FLOW

June 2011ending

<12M 12<36M 36<60M +60M TotalDebt

Cash NFP

NFP 1Q10 NFP 2Q102Q10 NET CASH

15

2.558 +37 2.520

NFP 1Q10 NFP 2Q10Q

FLOW

Agenda

Q2’11: Main AchievementsQ

Q2’11: Financial Results

Conclusions & Outlook

16

Conclusion Outlook

CB Expansion Consistency in ResultsMln lines

S

R$ Mln, IFRS

33.5%

32 3%

44,455,5 >60

Voice out Revenues YoY VAS Revenues YoY

20.5%

17 3%

Q2’11

Q1’11+

+

+

+

Q2’11

Q1’11 32.3%

31.4%

MOU increase Reducing exposure to MTR

jun/10 Jun/11 Dec/11

17.3%

11.0%

Q1 11

Q4’10

+

+

+

+

Q1 11

Q4’10

30%

23%5%

MOU increase Reducing exposure to MTR

115127

>140Min/month Voice in Revenues YoY

Q2’11Q1’11

+

EBITDA exposed to MTR*

23%

Q2'10 Q2'11

-2%-6%

Smartphone penetrationjun/10 Q2'11 Q4'11

AES Atimus

Q1’11

Q4’10

New PGMC draft by Smartphone penetration

8%>15% >18%

Smartphone, % CBAES Atimus

Closing by Year End

draft by Anatel

17

jun/10 Jun/11 Dec/114 steps integration

* Net of incoming revenues less interconnection costs

Challenging 3 main markets

Mobile Corporate Residential

FMS Community

Business Expansion

Convergency:

Partnerships

Attack to fixed

broadband market

(SP/RJ)1 2 3 DataFMS Voice

Community Expansion

p

Network

(SP/RJ)

Supporting heavy Supporting 1Gbps 100Mbps @homeNetwork

Evolutiondata approach (3G,

WiFi, LTE)

connectivity and

Clouding solutions

100Mbps @home

(digital home)

Cost saving OPEX/CAPEX saving R$1Bln

18