TIM SA’s Q3 2024 result has indicated that its strategy toward expanding high-quality fiber connections while enhancing customer value through selective growth and effective customer retention is gaining momentum.
Key strategies include:
Expansion of TIM Ultrafibra
TIM SA’s fiber broadband service, TIM Ultrafibra, has seen targeted growth in new markets, particularly expanding into Rio Grande do Sul with coverage in 28 additional municipalities during 3Q24. This targeted, gradual expansion strategy aims to maintain network quality while penetrating regions with high demand.
Fiber-to-the-Home (FTTH) Emphasis
Over 94 percent of TIM’s broadband customer base now utilizes FTTH, reflecting the company’s strategy to emphasize fiber technology, which offers superior connection quality and aligns with customers’ increasing demand for high-speed and reliable internet.
Increasing Average Revenue per User (ARPU)
TIM Ultrafibra reported an ARPU of R$99, marking a 5.9 percent increase. This growth in ARPU indicates a focus on higher-value offerings and possibly premium service tiers within the broadband portfolio.
Selective Customer Migration and Reduced Churn
TIM SA prioritizes migrating customers from lower-value prepaid to postpaid plans, supporting higher revenue per customer. Additionally, they’ve implemented initiatives to reduce churn, which for postpaid customers declined by 0.7 percent in 3Q24, signifying a strong retention focus.
Strategic Product Offerings and Price Adjustments
The company is actively optimizing its product offerings, such as TIM Viagem international roaming packages, to provide added value and improve revenue from both TIM and non-TIM customers. TIM has also continued price adjustments, albeit at lower rates than in 2023, allowing for balanced growth without significant customer attrition.
Mobile Segment:
TIM recorded 62.1 million mobile lines in 3Q24, with a net addition of 895,000 new lines over the past 12 months and 163,000 new lines in the quarter.
The Postpaid segment grew by 9.2 percent, totaling 29.7 million customers — a net addition of over 2.5 million in the last 12 months and 709,000 in 3Q24.
The “Human Postpaid” subset, representing individual customers, reached 23.9 million, marking a 7.6 percent growth.
The Prepaid segment had 32.5 million customers, down by 4.7 percent, due to customer migration from Prepaid to Postpaid.
Fixed Segment:
The fixed broadband customer base for TIM Ultrafibra reached 793,000 connections in 3Q24, showing minimal growth at 0.3 percent as TIM has been more selective in geographic expansion.
The FTTH base, which comprises most of TIM’s broadband services, grew significantly, with an addition of 744,000 new customers, representing a 7.5 percent increase.
Operating Expenses (Opex)
Operating costs and expenses reached R$3,183 million in 3Q24, increasing by 4.5 percent. This rise is almost aligned with the 12-month inflation rate (IPCA) of 4.42 percent, highlighting TIM SA’s effective cost control.
Capital Expenditures (Capex)
Capex recorded at R$896 million in 3Q24, a 10.2 percent decrease. This reduction is due to substantial investments made in network and IT infrastructure during the same period in 2023.
Despite the lower investment, TIM continues to prioritize 5G, expanding coverage to 142 new municipalities in 3Q24.
Total Capex over Normalized Net Revenue dropped to 14.0 percent in 3Q24, down from 16.5 percent in 3Q23, reflecting TIM’s strategic focus on efficient capital allocation.
Year-to-date capex decreased 1.1 percent to R$3,176 million, keeping TIM’s 2024 Capex guidance unchanged at R$4.4 to R$4.6 billion.
TIM SA is balancing cost efficiency in Opex with strategic investments in 5G and IT infrastructure, ensuring ongoing network expansion while managing expenses effectively.
Baburajan Kizhakedath
