TIM S.A. (TIMS3) Earnings Call Transcript & Summary

So I'll ask real quick on our forward-looking statements as you know this is an obligations from SEC and also CVM so we read very quickly here. So we clarify that any statements that may be regarding prospects, projections and goals, constitutes the beliefs and expectations of the company's management. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to events that may or, may not occur. Investors should understand that factors internal and external to TIM S.A. may affect its performance and lead to results that are different to than those planned. I'll pass -- I'll explain the dynamics of events. So we can go through the agenda. So we start the day with opening remarks from our Chairman, Mr. Nicandro Durante. Later, we will have also Pietro Labriola, the CEO of the TIM Group also coming to send a message to you all. After that, we have our CEO, Alberto Griselli that will explain a little bit more about our strategy and our investment case. And then we will move forward to our strategy panels, where we'll go over all the details of our business. We start with Mobile where we will have the Chief Revenue Officer, Fabio Avellar is right here. Also Leonardo Capdeville, our CTIO; Renato Ciuchini Renato, our VP of New Business and Innovation. They will come in this panel to explain a little bit more on how we plan to consolidate the best value proposition in a value driven market. After this first panel, we will have a Q&A session with questions from the audience here present with us in New York as well as through our webcast. So you'll have the chance to ask all the questions that you want. After this quick Q&A, we have a small interval and then we come back with the panel regarding B2B, where we have very significant novelties. It's going to be very interesting. So stay tuned. Although it's after the break, please come back because this is going to be very interesting, as I said. And we'll have again Fabio Avellar, our CRO, in this panel as well as Fabrizio Bozzetto, our Chief Strategy Officer; and also Paulo Humberto Gouvea, our Head of B2B sales. After that, we stay with Fabio Avellar to go over the strategy regarding broadband. And he will explain how we plan to go profitably in this market. And then we closed these panels with Andrea Viegas our Chief Financial Officer, together with Auana Mattar, our CIO, where they will go over all the elements regarding our 360 approach on efficiency. So after these panels, we have Alberto coming back to close the event, talking about our third quarter results. We disclosed them yesterday. My personal opinion, the results were pretty strong. The market reaction seems to be good. So I hope you find them as well, very interesting to hear, and we'll complete with a final message regarding value creation. So with no further delays, I ask for us to play the video of our 25th anniversary celebration. Thank you. [Presentation]

Okay. Good morning, good afternoon or good morning to everyone. I'm very happy to be here. And I'd like to give a welcome to all of you here and that was joining us by call. It is great to open up this Investors Day. It is great for me. And I think that we have a lot of good stuff to show to all of you, and I hope that at the end of the session, you have a clear understanding where we are in terms of TIM Brazil. So as you know, we are celebrating 25 years in Brazil, has been quite of a journey, a lot of up and downs, but the last couple of years have been fantastic. We have set up a strategy a couple of years ago. And now the results are showing the last 2 to 3 years, you'll see the results are really, really strong. And I think that this is a testament that it was a strategy very well designed and very well executed. I think that Brazil has unique characteristics, and we are very excited about the challenges and the opportunities that you have there. You have seen that you have seen a consolidation of the industry that makes the players there much stronger. You see that the environment is you have the purchasing power, growing Brazil. So a lot of potential. And I said the investments that we have made, made us to be the leaders in 5G in Brazil, which is a great place to be and take advantage of. And I think the numbers are speaking by themselves. We showed yesterday in the quarter 3, and I honestly, I have been leading several companies in the world, many of you maybe know about that and I'm advising companies, and I don't like to talk about quarters. But in the case of TIM, it's not about the quarter, it's about the numbers that we have delivered throughout the years. And I think that, as I said, we are very well positioned. I believe that we are very well positioned to take advantage of the factors that I just mentioned because I think that you have an fantastic team to deliver that. But at the end of the day it is all about people, and that's why we brought some of our management team here. A lot of our people, and not expose them to you guys to understand the strength of the pipeline that we have in the company. And why, as a Chairman of the company, I feel very confident that you have all the tools to succeed in this market. So as I said, at the end of the day, it's not only about the numbers, it's not only about the results, it's about ethical behaviors that we have in the company. And I think that the governance structure that we have in the company has helped us to manage this quite well. I have been in the Board for 4 years, and the reason that I joined the Board is that because I thought that the potential of TIM at that time was fantastic. And as I said, you see during the presentations here, and why I was so excited about joining the company. I'm very happy to be here and share this with you. And I think that you have a Board that is a little bit beyond the average of the Boards of Brazil in terms of diversity, in terms of independence. And I think that all those factors together help the company to navigate the uncertainties of the Brazilian market. As you can expect, the ones that with the Brazilian newspapers, you understand what I'm saying about the political environment and things like that. I think the structure that we have in the company help us to navigate all those factors quite well. But as I said, I still think -- I'd like to emphasize that the heart of the business is about talent, and I think that we have an outstanding team in TIM to deliver the numbers. And I'm sure that we will see during the session today what I'm just saying. But at the end of the day it's all about innovation, it's all about leaders, it's all about executing the strategy. And I think that you see that I think that we are quite well positioned. So in conclusion, I think that this 25 years have been quite of a journey for the company and the strategy is delivering, execution of the strategies. I think that we are in a very strong place and I hope the next 3 hours, we will be able to relate to you guys what I just mentioned. With no further ado, I'd like to introduce Pietro Labriola, our CEO, Global CEO that will share some words with you.

Good afternoon, everyone. I wish [indiscernible] It wasn't possible. Nevertheless, with this message, I want to celebrate the 25th anniversary of our shining star, TIM S.A., and praise the hard work done by our TIM Brasil. As you know, not long ago I was leading this team and like to take on the responsibility of becoming the group CEO. Looking back, I'm 100% sure. I took the right decision to leave TIM Brasil in the end of Alberto Griselli and the rest of the team to complete the project we started in 2015 with [ Anatel ]. They've accomplished many things and are helping the group reposition itself. TIM Brasil is a core element to the present and the future of the group. To put it in perspective, Brazil accounts for almost 30% of our service revenue and even more for cash flow. These are not just numbers. This is the evidence of the investment that was done by our group in Brazil. Since 2015, there are evidence of the extraordinary work of our teams and the trust of our loyal customers in Brazil. Our efforts to optimize the capital structure and manage our debt levels through the delevering plan while we complete an operational turnaround in Italy, are paying off, and will help build a sustainable future for the group. And TIM Brasil will also benefit from this and is key to the transformation. I want to thank the entire TIM Brasil team whose dedication continue to propel us ahead. Together, we look forward to an exciting future, and I'm very confident that our journey will be marked by shear successes. Thank you for your ongoing support. And let's make the most of this Investor Day. I'm sure Alberto and his team have prepared great things for you, count on us and count me. See you soon.

So today, we celebrate 25 years of a successful journey of TIM Brasil. I would like to, in this brief introduction to the Investor Day, to keep the Investor Day with a short summary of our value proposition to investors what we believe makes us unique and how we are molding this transformation in our equity story. We see ourselves as a unique assets in evolving market. Let's have a look, so, okay, we're already here. So if you look at the Brazilian mobile market, it's healthier than ever before. And this is thanks to the combination of two forces: changes in the market dynamics on one side, a highly favorable demand on the consumer side. The combination of these two forces makes a structurally feasible the implementation of more for more strategy in the years to come. Let's see a bit more detail in this. So if you could go to the next slide, please. So on the changing dynamics, basically, what we are seeing is a shift from a volume-based competitive scenario to a value-based one. And this is due to a number of forces. The first one is the reduction of the number of players in Brazil from 5 to 3. It was a long and bumpy process. We got [indiscernible] as a result, the market today is much more rational, and we compete against our competitors, basically on quality of service, customer experience and innovation. And this is, why? Why? If you look at external and internal research, they all point to the fact that on the consumer mind, the quality of service is the #1 attribute when selecting an operator. So more rational and value-based market on one side. Let's go at a highly favorable demand dynamics. So the first point is related to the fact that mobile services is today essential, it's deeply enrooted in Brazilian daily lives. One data point for all 80% of banking transaction occurs on mobile phone in Brazil. And the PIX, the instant payment system, that has been recently introduced by the central government supporting this evidence. The second point is despite the fact that the service is widely available to a large group, to every Brazilian, the Brazil still lagged behind in terms of data usage. So if you look forward, there is a growth opportunity in data usage that in turn will materialize in a revenue growth opportunity. The third and most important factor is the fact that telco services are cheap in Brazil. So we have not been able to pass inflation over to our customers and are talking about LatAm inflation for a number of years. And today's service is cheap. It's cheap compared to other essential services in Brazil. and it's cheap if you compare Brazil versus other developing countries, just to make an example. If a Brazilian prepaid subscribers -- when a Brazilian prepaid subscriber wake up in the morning and he need to use our services to spend BRL 1.1 for unlimited voice, unlimited SMS and a decent amount of data, the same Brazilian customers had to spend more than BRL 4 for the famous Brazilian Cafezinho. And you need to spend at least BRL 8 to use the public system to go back and come back from work. So BRL 1 versus BRL 4 versus BRL 8. So it's definitely cheap. So when we look at a rational market with low data usage, a cheap pricing for an essential service, this all point to the sustainability of a more for more strategy in the years to come. So given this healthy competitive environment, what makes us unique. If you go to the next one. So first and foremost, our track record in delivering on promises as a matter of fact over delivering on promises. We are posting one of the best quarter in TIM Brasil history, and as I commented in the second quarter results, we are ahead of schedule in terms of revenue growth. We are firmly growing above inflation. EBITDA growth, which is expanding faster than revenues and free cash flow that is expanding at 60% 9 months versus last year. And one of the reasons we are delivering these numbers is related to the fact that upon completion on the Oi post-merger integration, we basically are capturing more synergy versus what we expected at a faster pace. So if you go to the infrastructure bucket, we managed to get to the highly important market of becoming the best network quality in Brazil in July in this year. And being consolidating this achievement over the last months. We've got some distinguished guests discussing this later on today. If you go on the decommissioning exercise, we are ahead of schedule. We will give more detail on that. So we managed to implement this faster than we expected. When we go to the commercial synergies, we implemented the more-for-more approach for postpaid in the first half, and we recently introduced it for prepaid a couple of weeks ago. When we look at the tax effect, we, after the incorporation of Oi S.A. into TIM Brasil. We got a goodwill that move in NPV from BRL 700 million to BRL 1 billion. And we finally closed the dispute with Oi together with the other buyers with an upside on the price adjustment. So all in all, faster and bigger synergies. With these results, we are outpacing and outperforming our peers in Latin America in terms of revenue growth. We're growing faster than everybody else. We got the highest EBITDA margin in the regions and expanding. And I think that most importantly, we have the fastest-growing operating free cash flow margin in the region. You can see on the left side of this graph. Behind these numbers, there is a clear strategy to draft the next-generation team, a strategy that is built upon our strength in mobile. Mobile, in mobile, we have the ambition to become the preferred operator in Brazil. It's our cash cow. It's a predictable model. we've got increasing returns. And through our operation in mobile, we've got the flexibility to fund new growth opportunities in other areas. B2B, we're going to give more detail throughout the panels today. B2B, it's a market that we are actually shaping, and we define it as a sort of blue ocean because it's a market that is new and will expand our total addressable market in the years to come. When we look at broadband, our ambition is to move wisely and selectively to ensure a profitable growth. Efficiency, it's one of our core strengths. It's a dogma, it's intrinsic in the way we run our business. And it's all about discipline in capital allocation and expenditure. All these four pillars support or better we run these pillars without losing sight of people, environment and society, which are integrated in our business and a competitive advantage as we see over the next slide. So guys. This is our overall strategy in a nutshell. I will go very briefly through each one of the points, and let's start clicking on mobile. So on mobile, you probably remember that in last Investor Day, we introduced the tripod concept. So best service, best network and best offer. This is the way to deliver the best value proposition to the Brazilian customers, which, in turn support our strategy to become the preferred operator in Brazil. We have significant development on all these three dimensions. The following panels will address that. And what I would like to highlight that if we look in the next slide, the operational KPI, they are all pointing to the fact that we are in the right direction. So, our ARPU is steadily growing over time with [indiscernible] Brazil on prepaid and postpaid. We are at around BRL 30 now. Our churn is going in the opposite direction. So we managed to get below the 1% point in this quarter, which is, again, on the low end of our results. At the same time, our net additions after the cleanup of Oi customer base are steadily growing. So quarter 3 really raised the bar in terms of our performance for the future. So let's click now. So this is about mobile. Let's click on B2B. So B2B is a bit more articulated. So the opportunity lies at the crossroads of verticals requiring telco infrastructure to transform the business and our ability to provide this infrastructure. Now Brazil is a bit different from the United States or developed countries in a way that mobile coverage reaches everybody, but we just reached a small proportion of the territory. That means that industries like agri business, logistics and transportation, and utility, lack the telco infrastructure to get digital end to end. And this is where the opportunity lies, and this is where the fit is best for us as a predominantly a mobile player. We refer to this as IoT, connectivity and solutions, and we are frontrunner in this business. We started first. We have an edge. We think we have the right to win, and the numbers are becoming a reality. So, since we last met 18 months ago in our last Investor Day, we have been awarded contract of BRL 300 million in value. And to make you some examples, in logistics alone, the leading private concessions in Brazil selected us to provide 4,500 kilometers of intelligent highways. We are talking to make it a bit more representative of the distance between New York and San Francisco. And over the last 12 months. If you look at the agro business, we currently illuminate 16 million hectares of land. And this help and support our customers to increase their productivity. We are talking about the size of the state of Florida to put this in context. And this is basically not just connectivity. We are building together with our partners and ecosystem solutions. And we are doing this primarily today as commercial partnership. Our 5G fund will support us in the same direction, and we may even look at inorganic activities in the future. This is not just revenue growth opportunities. The project that we closed so far are all accretive in terms of free cash flow margins versus the mobile ones. So we look at this as a sort of a blue ocean, a market that doesn't exist that we are shaping, and we are frontrunner in this quest. If we click on broadband, we are setting the stage for profitable and sustainable growth in this case. So you know the market is huge in Brazil. We're talking about BRL 40 billion. We're just at 2% given the strength and credibility of our brand, we can command a much larger share of this market. We get and we have a working machine in terms of value proposition, our value position is considered premium by our customers. This is supported on a number of KPIs. And we have an asset like full mobile like commercial approach that ensure quality in acquiring new customers. However, the market is not attractive or it's not that attractive at this point in time because there are 8,000 players. There are 26 different regional leaders competing on price. So we are actively working to define the right mechanisms at the service call level and the network level, and the right timing to accelerate our growth. Having the luxury, we are probably the only one to have this luxury to be able to wait for the right moment and the right environment to come along. If we move to the efficiency slide. So I was saying this is -- for those who follow us on our communication with the market, you will see that we have been evolving and we moved from a unidimensional OpEx-centric efficiency discussion to a cash cost approach. And you see some examples here. So we're talking about CapEx, and CapEx through Oi frequencies, today, we have a competitive advantage. We've got more frequency per sub, more megahertz per sub than anybody else. That gives us a competitive advantage in terms of the quality of service and our ability to grow demand. Every dollar spend is spent on increasing the efficiency of our network and the quality to our customers, including 5G. The second point, which is quite important, is related to the lease cost. So this lease costs, I was mentioning before, that we are ahead of schedule in terms of implementing our decommissioning plan. And so what is this ahead of schedule. You probably remember, we said that we would decommission 3,500 towers by the end of the year. We are currently at 4,200. So we are well out of schedule, 120%. But I think that what is more important and is that we learned a lot throughout this all, throughout this quite intense 12 months. And we are now applying what we have learned to our own portfolio further sustaining the sustainability of our cost line. In addition to that, we are back with the RAN sharing agreement with Vivo that we communicated a few years ago, that was frozen basically because of the post-merger integration with Oi, so we are busy doing something else. We are back on track. And this, again, is an important lever to the future sustainability of network costs. Last but not least, we did a lot of effort over the last year to get digital. It's 5 years that we are increasing all KPIs across the board. Nonetheless, we still believe that there is a further opportunity there, not only with Oi customers. There are other opportunities, other cost items that are not part of what we did so far and there are new technology, we'll discuss this a bit later, like Gen AI that will support us to further increase our efficiency. So at the end of the day, discipline in capital allocation, a control of expenditure are transforming TIM Brazil in a quite powerful free cash flow converting machine. Let's go to the final pillar of our strategy. That is about people, society, and environment. So when we discuss about people, here, basically, we are discussing about our ability to attract employees and to retain employees to implement our strategy. The objective is to make people empowered and satisfied with our workplace. And the good news is that we are reaching the highest level in ever in terms of favorability of engagement. So our employee engagement is 90% today. This is reflecting also in outside KPI. We made it to the Great Place to Work 2 years ago. And a few weeks ago, we have been awarded the 12th position in Brazil as a Great Place to Work. So we made a real good progress. There is another thing we are quite proud of, which is according to a number of KPI Refinitiv and Bloomberg. We are the most inclusive and diverse telco in the world. And we are according to Bloomberg, the most inclusive and diverse company in Latin America. This is a great asset to our employees. They love that. And it's just not internal. This is a great asset to our brand. If we move to society, society you will know or probably know that we got the largest coverage in Brazil, and we've got the largest rural coverage in Brazil. And this is already provide for digital inclusion of millions of customers. What we've been doing more recently is to develop digital services for example, with the digital bank, and we included that, we financial included the 1 million of Brazilian subscribers. After the success of the partnership with -- in the digital banking finance, we are now working in health and education to provide new services to our customers with a relevant social impact. Finally, environment, we are becoming more efficient and clean over time. We're going to complete this year with 100 clean energy plants in Brazil. This gives and support sustainability of our energy cost because this cost is lower than the captive cost, energy cost. We offer the same benefits, clean energy, and a discount to our own employees this year. So they are benefiting from the same benefits that we are getting for ourselves as a company. And we are now working in the B2B business to use our technology to allow our B2B customers to get the same benefits for themselves. [indiscernible] growing market, which is related to smart lighting, we'll discuss a bit later on, but talking about 50 million smart lighting poles. We already won 150,000 so far. It's another powerful and growing opportunity in the B2B sector. So guys, going back here, has been very fast. Recapping a bit what I said. So B2B, it's a new market for us, plenty of growth opportunity. The consumer mobile market is healthier than ever before. Second, we got a track record in execution. We keep over delivering on our promises and outpacing our peers in LatAm. Mobile is our cost strength, our cash cow, with increasing returns, allowing us the flexibility to invest in new avenues of product. B2B, a blue ocean for us, growing fast over the next years. We have an edge and is becoming a reality on our numbers. B2B is about profitable growth, so we're moving selectively. And when we look at the people, society, and environment, these are integrated with our business and source of competitive advantage. All these triggers a virtuous cycle, which is revenue growing above inflation, cash cost approach to efficiency that allow us to increase our cash flow, this expanding cash flow and cash flows margin allow us to increase shareholder remuneration and give us the flexibility in funds to invest in new avenues of growth. An example of this, and once again, over deliver, and please let's go on the next one, on our promises is the fact that we have decided to upgrade our guidance in terms of shareholder remuneration, we are moving from BRL 2.3 billion to above BRL 2.9 billion for this year ongoing. This is the new floor going forward. So guys, thank you for your attention so far. And I will ask Vicente to call the first panel. Thank you very much.

Thank you, Alberto. Thank you, Nicandro. Now for first panel I ask Fabio Avellar to join us. Also Leonardo CapDeville, our CTIO; Renato Ciuchini, also Ian our guest from Opensignal.

Well, thanks, Vicente. Good afternoon, everyone. It's a pleasure to be here. And to kick off the panel, I want to bring back the concept Alberto has just explained. We are operating in the best value proposition market, which means Brazilians want more than just low prices for chip service. In this context, we want to consolidate the best value proposition, which means through just three verticals, the best service, the best network and the best offer. And I have here the support of Renato and Leonardo going over with me these three verticals in the next few minutes. So regarding the best service, we did an amazing journey so far. The main goal here is to enhance the customer experience, improving each step of the customer journey, opening space for change to become a loved brand. Secondly, regarding the network, which is an amazing catch-up that we become the best network in Brazil. The third B represents our area of expertise, our area of excellence, but it's an ongoing effort to keep delivering disruption for our customers and innovation for the Brazilian market. So, let's get started. Talking a little more about how we are building the best service. We have been transforming the way we manage the relationship to our clients in the Brazilian market. One of the most important initiatives so far was to accelerate the predictive tools to anticipate demands, issues and pain points for our customers. In addition to that we improved the digital channels increasing by more than 20% as you can see on the first graph, this last year the digital interaction. One of the great examples I can give you of this new approach was our annual price adjustments. As you may know it's a crucial moment for the customers, usually complaints in churn increase and customer satisfaction fall. But this year, it was totally different. We improved our communication to clients, making it more understandable and transparent. We optimized the channels to connect to them. And we redesigned the way we treat our customers in our contact centers. These initiatives combined drives us to two different quarters in a row, reaching the lowest churn rates in whole TIM's history. The complaints level remains the same and the customer satisfaction continues to grow. Our success in solving the client's issue, as you can see on the second column, is driving us to be recognized as a best-in-class company even beyond the telecom industry in Brazil for many different institutions. And now these movements supporting us to improve our Net Promoter Score, as you can see on the third graph over there. And regarding the Net Promoter Score, the network plays a crucial role here in improving our customer experience and our customer perception. This way, I invite Leonardo to tell a little more about that.

My voice is not so good. Sorry for that. I have to scream a lot because I was championed in the 1 week ago. So we us these KPIs. Let's talking about the network. In fact, it's not so funny, we have a lot of work behind that, but I will try to explain our vision about this. We are talking about the best network, best network, but it is not just a claim. First, I'd like to remember that with the Oi towers that we acquired, we consolidated our leadership in terms of coverage, and we become the largest network in Brazil. We were the first company to be present in all of the cities of the country. We are talking about more than 5,000 cities in Brazil. At the same time, we acquired spectrum and we have the 5G. With this new spectrum and their 5G, we secured a premier position in terms of quality. Coverage and quality together means consistency. And as you can see in this KPI that's called network consistence quality that we are very well positioned on that. Later, we will discuss about this index, how it's calculated with the Opensignal. Well, adding on that, our strategic vision about the 5G. First, the 5G, we have to remember there is 100 megahertz spectrum. It's a lot of spectrum in C-band, where it means a lot of capacity and a very, very good quality or connectivity. If we will be open a lot of opportunity not just for customer experience on B2B, on B2C, but in B2B too. Well, we are advancing faster than our competitors. We are ahead. And with that, we are coverage, for example, all the neighborhood in the main cities in Brazil like Sao Paulo, Rio, Curitiba. And with that, we are implementing what we call offloading strategy. What it means? When we migrate the customer to the 5G, we have two different phenomenas. The first is the quality for the customer that we are migrating that is very good because they will use the 5G. But at the same time, we are reducing the loading over the 4G network. So we have a combination that is good for the customer who migrated to 5G, but it's good for the customer who remain in 4G by improving quality. Well, we can see that very clearly when we see these two indicators, that is the NPS. When the customer who migrated to the 5G has 2x higher NPS than the customer that stayed on the 4G. And at the same time, looking for the network quality, we can see that we are ahead in the 5G with a 20% point ahead than in 4G. All this full this virtuous cycle that we have in the first, differentiate ourselves in terms of innovation and superior quality. Second, as I mentioned, boosting customer experience on the 5G and in the 4G; and third, enhancing our CapEx efficiency. And why we are doing that? For two reasons. First, the gigabyte, the investment per gigabyte in 5G is lower than investment in gigabyte in 4G. The second with this strategy focused on the 5G, we are reducing the investment in 4G. In fact, we are all the time looking for this future-proof investment. We did that when we perceived that the market team moved from the 3G to the 4G, we were the first company to stop to invest in the legacy at that time and to invest in the 4G, after that, we see other opportunity that was the 4G massive MIMO. And now we are doing the same with this migration from the 4G to the 5G. Why this is so important? Because I'm looking for what is the investment for the next years, we can remain what we did in the legacy. For example, all these radio that I mentioned to you, this technique, and 4G massive MIMO is ready to the 5G. So when the traffic in 4G starts to decline, we just adjust the software and they can use this radio 4G to move to the 5G. With that, we will continue investing, but in an efficient way. We are using our big data and analytics to perceive what is the right time in the right place to invest in the 5G because we are looking where we have the device penetration, 5G device penetration, and the traffic. In the right moment, we decided to put the 5G there to complement use offloading strategy. So we're talking about the best network in that we are confident that it's not just a claim, we are talking about to measure the real customer experience that our customers are using in our network. For that, I'd like to invite Ian from Opensignal to explain about this. Please, Ian?

Perfect. Thank you for the introduction. My name is Ian [indiscernible] really within my role, I have any opportunity [indiscernible] data. So we collect from end-user devices and turn that into measures that we use to help operators, regulators, financial analysts to understand that real-world customer experience. So Opensignal is the global standard for measuring customer-centric network experience. If you're familiar with our business, we published reports in over 80 countries around the world. We do this on mobile and on fixed broadband, and we enable us with massive amounts of end-to-end measurements. We're collecting significant volumes of data and those datas get brought together into a series of very customer-centric measures that correlate, as Leo was saying, to indicators like NPS, network flows, and churn levels as well. Now Opensignal report on many different measures in the network because we're trying to represent all of the aspects that are important to consumers, and no consumer is the same. What's good for one consumer may not be good for another consumer. So if you see our metrics set, we measure everything from mobile gaming experience, live streaming experience, speeds, videos, to availability and consistent quality. And I think what's so important here is that a network can deliver excellent gaming experience, that can deliver live streaming video of 4K. But if it's not doing it each time, every time, that starts to build a negative customer perception there. So by focusing on network availability, and focusing on consistent quality, you're now building those foundations in the network. You're building the foundations on which the rest of your great experience is being built. So let me talk a little bit about consistent quality and availability, next. Consistent quality is the capability of the network to be able to support those most common network applications. This is not a black box like mean or average level. What we're doing here is we're measuring from end-user devices many times a day across all of the networks, the download and upload speeds. We're measuring latency, the lag that exists in the network. We're measuring the variation of the lag that's there, the packet loss and time to first bite. These are the things that as consumers, we all experience. If I have a large time to first bite, my browser is spinning when I'm trying to look at a web page. If I have high packet loss on my Zoom call, that Zoom call is breaking up. If I've got high jitter, I'm not going to win at Fortnite. These are the things that are impacting the customer experience coming through. When we look at the measures, we see that TIM's improvements are in consistent quality over the last 12, 24 months has gone from a position of second up to a leading position here. But what's also interesting, I think, and what's so important when you think about these things is to always look at this competitively as well. So the dynamic in Brazil is obviously improving. TIM are improving. The other players in Brazil also continued to improve. Yet that headroom is still there. On the right-hand side here, we've done a comparison to other global benchmarks. We've looked at other countries within the LatAm region. We've also looked at other countries sort of developing countries as well. And you can actually see that TIM performing incredibly well across all of the LatAm countries and really up with some of the more developed nations there as well. And one of the key points about Opensignal's methodology is that we have a methodology that is applied consistently across all the markets around the world. So essentially, we can compare Brazil to Bulgaria and Thailand to another country beginning with T that escapes me right now. But we can do that kind of widespread comparison coming through. If we move then to look at network availability, in network availability is a measure of the amount of connection of time that a consumer has. So how much time is a consumer able to access the network for. TIM has 1-hour network availability awards for over 4 years now. So consistently, TIM are connecting more of their customers more of the time than any other operator in Brazil. Most recently, we published our 5G global awards, and we awarded TIM a rising star for 5G network availability, 559% increase in the time that Brazilian consumers on the TIM network have been able to connect to their -- connect to 5G versus 12 months ago. This places TIM in the top 15 networks around the world in order to achieve this rising star award. And TIM are in great company. The network with the highest 5G availability globally is T-Mobile here in the U.S., and you think about the way that T-Mobile has been able to shift for market dynamics, TIM are in a great place to be able to do something similar in Brazil as well. And also in terms of no signal availability, i.e., a measure of time that customers are not connected to the network TIM had the least across Brazil as a whole. So just sort of in conclusion here then, Opensignal's benchmarks and measuring that end-to-end experience, they're doing it in a consistent way, and they're measuring the things are important to consumers here. These metrics correlate to important things like the NPS scores, they correlate to things like reduced churn. So become leading indicators or performing well from a network perspective becomes a leading indicator of being able to perform well commercially as well. And I think that the story for TIM is great and what TIM are doing for sort of their own subscribers in Brazil is excellent in terms of setting the bar, and I think this will only mean that they advance connectivity for all of Brazil as well. So with that, thank you, and I'll pass back to Leo.

Thank you, Ian. Well, Fabio, it seems that we built of a hurry. So you can explain how we will use that now. .

So we have a Ferrari. So let's test drive it. This concept is not actually new for the U.S. audience, but for the Brazilian user is totally new. And we are the pioneers in launching science initiatives in the whole Latin America. The main goal here is to change the market perception. If we have the largest and the best network. So let's tell people about it. But the best way to tell people is to invite them to test by themselves. The UX here is really amazing. I mean, easy, clean, and the marketing campaign so far has been amazing as well. Just for -- to give you an example, in TikTok, for instance, we have reached the highest engagement rates for the whole TikTok in Brazil ever. So better than talking about, let's stop talking, and let me show you our campaign, please. [Presentation]

Of how we're delivering innovation to the Brazilian markets. Actually, as you can see, our track record shows that you can stay on the forefront of innovation by delivering this kind of disruptive partnerships. So far, regarding prepaid users, for instance, we are the only player to deliver Amazon Prime video for our customer base. Regarding postpaid, we offer to our customers in the main -- in the two main Brazilian airlines, in-flight connectivity. And last but not least, we have closed a recent deal with Apple with an exclusive offer, being the unique operator to deliver Apple One service in the whole Latin America. And we are always working in something new. But the most important thing here is at the bottom of the page, as you can see, all the innovation embedded to our portfolio drives us to good results as well. We reached almost 360,000 new postpaid clients to our base in this last quarter. We have been decreasing very strongly our churn rate. And to give you a reference with these key features, our customer base becomes twice loyalty as the current portfolio. And as I just said, we are always thinking in some new things to deliver to the markets. And I'm really proud to release this today is the official launch of this partnership with Ambev that is one of the best important beverage companies in the whole world. We are joining force to deliver not only customer experience but innovation and customer engagement to our customer base as well. Every time we do initiatives like that, we try to deliver beyond giga benefits. In this case, for instance, we have combined a prepaid recharge with a chargeback in their mobile app, which in Brazil is called Ze Delivery. So I'll share with you also a video from Eduardo Lacerda, the CEO of Ambev Brazil. Let's watch the video. [Presentation]

So as we're talking about partnerships I invite Renato to the stage to go a little deeper in how we are building our environment of partnerships.

Good afternoon, everybody. Thank you, Fabio, for the introduction. Let me start by explaining a little bit our strategy regarding partnerships. Our partnerships are focused in delivering meaningful value to our customers. And, in some cases, additional revenue, either a fee or a revenue share, and is sometimes an equity stake in the company of the partners. What's a meaningful value for our customers? What do we mean by that? One example is just mentioned, no, it's cash back when you top up to a delivery platform, another one could be an enhanced credit card limit in a financial institution. Other one could be digital education for free or health services at a discount rate for our customers. So more -- that's what we mean by meaningful value, and that's what we look into those partners. And by having additional meaningful value we can generate more loyalty, more loyalty means less churn, means an extended lifetime of this customer, means a better financial result. So if I can achieve that with the partners, and on top of that, we can boost the results by receiving some type of revenue or equity in those companies, we can have a very good results out of this ecosystem. So we have put a framework here on the bottom right of this slide, it helps you understand how do we decide which markets to go after, which partners to go after. So in the vertical X, we have how much value is delivered by each one of the segments or the partners in terms of additional customer loyalty. And on the horizontal X, we have how much value is generated for TIM in terms of additional incremental revenue or equity in those companies. And when we look at this framework and then we decide which markets to go after, which partners to go after. So let me give you an example of how this works. If you look at YouTube Premium, it's a very desired product for our consumers, high value-added but it's going to generate a lot of loyalty, a lot of engagement, less churn. However, it's very unlikely that we're going to get a revenue share or an equity from Google for that deal. At the same time, on the other hand, we have a security portfolio that is standard of the market. So it doesn't generate a lot of added value to our consumers, but we receive revenue and equity from our partner in that deal. So that's why we have security here on this space, and we have like YouTube Premium here in the space. So this is the way we assess the market, and you look at this 2x and then we make decisions about which segments to go after which partners to go after. Given that our strategy, I think now it's clear, let's look at our capabilities about delivering against those partnerships. We believe we have built an ecosystem in the last 3, 4 years that is second to none in the industry. Now we've used our ecosystem of physical and digital channels, leveraging all the interactions that we have with our consumers, powered by all the knowledge that we have of our consumers. We have a lot of knowledge about our consumers. And we have propelling that with AI and propensity algorithms that allow us to focus different products for different segments. So we believe today, we have a very, very sophisticated machine that can deliver on this. So let me give you some KPIs here, operational KPIs that we have achieved that I believe are very important. 25% of our digital customers today, they have the app from C6 installed in their phones. This is more than probably most of the banks, the large bank institutions in Brazil. So we have achieved a huge penetration with this partnership. Now we still have 8 million customers from TIM that interact every month with the campaigns from our partners in the financial institution. And we have achieved 10 contractual targets in terms of customer base. That means millions and millions of customers. In the Education segment, we have a new partner Descomplica. We have the pleasure to have the CEO of Descomplica here today, Marco. Thank you for coming. In 4 months of operation, we have already achieved 300,000 customers engage in their platform, registering the platform, enjoying the benefits of the exclusive premium offers -- premium offers that we have for our base. That means more engagement. That means more loyalty. Just to give you an example, we have measured NPS of those customers. And those customers have an NPS that is 21 percentage points above TIM's average NPS. And the third sector that I want to talk about here is the health. We are in the process of rolling out the partnership with Cartao de TODOS, it's a company that we believe it's a really well positioned in the Brazilian market. We have run an operational trial for 3 months now only in the states of Rio and Bahia, which represents roughly 15% of the customer base and we have already achieved 1 million customers interacting per month with our campaigns in this sector. So if you look at the size of the trial and the size of the market and you look at the numbers here, this could be from a customer base penetration as big as the financial services. And so we have achieved an important milestones. We believe we have a very strong machine, activation machine but also, we have achieved some other important milestones here. From a social perspective, 0.5 million customers from TIM have gained free digital education in the last 3 years. This is a business that continues to grow year-over-year and has a free cash flow that is accretive to TIM numbers. So we believe we have an ecosystem that works. We have a good strategy. And we believe because of that, we have the right to play and right to win in segments that are being disrupted by digital and where subscription acquisition cost is a key success factor. So looking to 2024, we are very excited as a company in the health sector. Why we're excited about the health sector. Number one, it's a very large market. 150 million people in Brazil are uninsured from a health perspective. We have conducted a survey in our base, and 60% of our base said they are very interested in paying a monthly fee for a service that they can get discounted rates for exams or physical on -- personal consultations and medicines. So we have a big market. We have a big demand for that. And digital is still very early days. Only 10% of the acquisitions today are done through digital. So digital is like in this market like it was financial services 3, 4 years ago. So I think we are in the right timing in this market as well. And I believe we have the right partner. I think we have signed a contract with the best partner in the market today. Cartao de TODOS maybe not well known by many of you, but they already have 6 million customers, recurring paying families every month. They already do 1.2 million in-person consultations every month. They have 400 clinics in Brazil, same look and feel, same process, same systems. They cover every city above 80,000 inhabitants in Brazil. And the customers that use their service, they have a lifetime that goes beyond 60 months, which is going to help us reduce our churn, increase our loyalty. And the business model that we have set up with them also makes us very excited. Why is that? Because we're going to get a revenue share for every service from them that is contracted through our channels. And at the same time, they have 6 million customers, roughly 4 million not TIM. And if this customer migrates to TIM, they're going to get a cash back from us. So we're going to have -- we believe we have a big market, we believe we have the right partner. We're going to be able to bring new customers to TIM. We're going to be able to increase the loyalty of our customer base. We're going to generate a new additional revenue and I think last but not least, we're going to create a great social impact. A lot of people in Brazil, 150 million are only in the public system health system. For emergencies, big problems, maybe that works well. But for primary care, they are willing to have a different service. So I think this kind of solution also helps to offload the pressure that we have in the public health system. So I think this is a partnership that also can create a big social impact in Brazil. And talking about social impact, I'd like to bring a video from our big partner, Gerando Falcoes, a very well-known nongovernment organization in Brazil. It's a network of institutions, organizations that work on digital transformation entrepreneurial' ships, and they cover 6,000 favelas in Brazil, and we have done a very important partnership with them. I would like to play the video here. Thank you Fabio. Thanks. [Presentation]

So just to wrap up this panel. I want to bring back some main ideas here. First of all, is that this 3Bs framework is not actually new. We presented this 18 months ago in our Brazil Investors Day. And at that moment, the achievements we just showed you, TIM is really far and difficult. In summary, we have delivered a lot during those 18 months. In terms of best service, we still have a way to go. But as you just saw here, we are on the right path, and we have been improving a lot our customer experience indicators. When we talk about the best network, it was a long journey to reach the first position. But it's even more challenging to keep this position from now on. And finally, the best offer, we have to focus here on delivering innovation to our customers and disruption to the Brazilian market, delivering our more-for-more approach, accelerating the migrations and upgrades in our customer base and monetizing our base by closing strategic partnerships. And this way, we finished our first panel of the day. Thank you.

Thank you, Fabio. So now we'll start the first session of Q&A. We will be answering questions from the audience. Alberto, please come up. Andrea, if you will. We will also be answering questions from our webcast. Of course, we are in an event that its first language English. But if you have a question in Portuguese, don't worry, send your question through text, we will translate and answer it here as well. And I was informed that our translation for Portuguese is up and running right now. So good news for us. So the first question from the audience, do we have someone, feel free to raise your hand. You will receive the mic and say your name and the firm that you work for. And be answering the question with all of our guys here, they participate in the first panel and with the addition of Andrea Viegas, feel free to ask the first question. Not yet. Maybe our friends here are shy. So I will start with Bernardo Guttmann is an analyst from XP. And I will read his question. So just paraphrasing him. Good afternoon everyone. Congrats on the event and the listing anniversary. I have a question about B2B. You have highlighted the opportunities, but the company has always struggled to navigate and grow in this market. In my view, the company has a retail DNA, very focused on B2C. So my question is, how do you plan to pivot and transform the company culturally and organizationally to grow and capture these opportunities in the B2B market. I think we have more answers about this in the B2B section, but no problem. I think Bernardo had to send his question. So Alberto, please give it a little bit of a spoiler here.

Bernardo's considerations at the end of the day. So we are sort of a DNA of pure mobile and mainly consumer. So it's a right argument. I would say that it's a journey. And the fact that we are having a lot of success in terms of winning customers that select us for mission and business-critical services, it's a demonstration that the journey is long, but we are on the right track. Of course, we need to upgrade internally to respond and to fulfill our ambition of growth, but Bernardo, this is correct. And the fact is that we launched a strategic project within the company 1 year ago, that provide for a transformation of the B2B as you probably knew a few years ago that encompasses not only the commercial approach, but also the capabilities and the skills required to be successful. Another important point is that in this business, we are not alone. So we are building an ecosystem of partners that work with us to complete value proposition that are useful to our clients. And so we are quite inspired by the results that we are having and the fact that leading companies that select us to provide our technology to their services is, I think the real proof that the journey is long, but we have started and we have started at the right track.

Thank you, Alberto. Now we'll move to another question coming from Leonardo Olmos. He's an analyst from UBS. He will be joining us virtually from Zoom. So if our tech guys can open his mic, please?

Congrats on the event and the results. I'll focus on digital services. How can we track digital revenues in the coming quarters, and most importantly in the coming years, I noticed something for the mid to the long term. What will be the indicators that the digital revenues are picking up? I'm talking about health care and the finance things to discuss in this section. And if I'm not mistaken, to look at it now, we should be looking at the customer platform revenue, right, which was BRL 54 million, up 9% year-over-year. So this is my first question.

Leo, we had some trouble to understand you, but just to make sure we will -- Alberto -- will ask Alberto to answer you about the digital revenues, basically what we call to do customer platforms and things correlating to that. So Alberto I think we can start talking about this while we make sure that the audio from Leo is...

I didn't get because I ask a second question that I read actually get. But on the first question, basically, what we track, we track it internally, and we share on let's say, in some specific moment in our quarterly results with you guys. So the digital revenues, when we look at partnership, we look at value generation in a number of different ways. So the first way, which is common to all partnership that needs to add value to our customers. And so this is directly impacted in terms of reduction of churn and increased customer loyalty. So this is something that is across the board, valid for all partnerships that we do. Then when we look at the monetization of this partnership, we basically have a few options. So charge the customers, charge the partners, and get some equity. So we started the customer platform strategy a few years ago, and the main tool that we thought at that time was basically to have an equity partnership. Since then the world changed. And so at the end of the day, we are refocusing on this and complemented this with the potential revenue generation of this partner. And so this -- we measure this internally, and we share the progress with you over time. This -- it's an important component to fulfill our guidance of growing revenues above inflation, so it is just another line that contributed with B2B and broadband to allow in Brazil to grow its revenue in real terms in years to come.

So Leo, if you can repeat your second question, in order for us to answer it, please?

Yes. First of all, that was exactly my question. And then my follow-up, my second question will be about margin? How do you see this customer platform playing out in the future in TIM. So maybe it is margin dilutive, but is free cash flow accretive? How do you think about it?

Leo, it's accretive across the board at the end of the day because basically when we launched this partnership, let me give you a sort of a philosophical approach first, and then I will try to go into the P&L. So, when we look at this partnership, at a certain point, some of you guys ask us, it's diluting. So you're spending money to do this partnership. At the end of the day, what we do is that we have our own objectives that are quite clear, be more appealing to attract customers and provide value to our whole customer base to reduce churn. This is our objective. And when you look at the, our partner, they also have their objectives. And so we try to combine this to make it economically sustainable in the long term. So what does it mean this in practice? We just discussed, okay, let's discuss Prime. So Prime is a very important brand for our prepaid Prime's objective is to increase their e-commerce presence in Brazil in the segment where we closed the partnership with, which is e-commerce, which is prepaid. So when you combine the two things, the terms that we got with them is win-win. So it's not an important cost line in our P&L. Now when you look at the partnership as a whole, generally speaking, how do we market this. We have incremental cost in a way that from a communicating point of view, we try to use one of the existing slots that we have to -- so it's synergetic. It's not another campaign. It's a lot within our campaign. So it's not incremental cost. Then we have some specific resources allocated to the running of the partnership, which is primarily related to CRM activities, so they are accretive of the EBITDA margin, and we certainly accretive on the free cash flow margin because generally we don't have any CapEx or small CapEx involved in the launch of this project.

Our next question comes from the audience. I think from Ricardo from BTG has a question.

Yes. So amazing event. So my question, there was Anatel put up for public hearing maybe a few weeks ago, a regulation preventing the big telcos from doing RAN sharing agreement in cities with less than 100,000 people, right? And you just mentioned earlier today about how important the RAN sharing agreement is with Vivo, for instance, and so my question is, first of all, do you think this is going true, right? I mean what are the changes that this regulation is going to be approved? And second one is how that would change your plans to cover these smaller cities, I'm sure smaller but...

So I think that -- well, it's a public consultation. So there will be a discussion about this. RAN sharing at the end of the day, it's favorable for the final customers. So they got better quality at the end of the day. So let's see how the public hearing goes. But I think it's important to do some distinction. So we have been -- our agreement with Vivo has been approved, and it's related to 4G and for cities, for a part of cities below 30,000. What Anatel is looking for is primarily broadband, what you call broadband RAN sharing, which is related to 5G. The obligation to us to provide coverage to cities below 100,000 start in 2028. So it's something that is a bit more along the way. So we've got a number of years to go before discussing the 5G sort of agreement with Vivo or other companies. So we've got a long way to go until there. And there is a lot of value in the 4G sharing stand-alone plus the 2G divisional cost. So the answer is we'll see how the hearing goes. We are quite confident that it should be, let's say, allowed to provide shared infrastructure because at the end of the day, deliver more quality to the customers. Our agreement is open to other players that want to use. But we have a long way to deploy the agreement. We already have in place, see how it goes from there possibly extended. And then in 2028, address the 5G opportunity. It's a bit further on.

Okay. Just if I can do a follow-up now that we're talking about rules and regulations and all. I think the -- what is behind Anatel's idea is should increase competition, right? That's what they're trying to do, I guess. And there is another also piece of regulation that is up for public hearing, which is allowing smaller operators to use frequency as a secondary use of frequency, right? It's also part of the consultation. How does -- what's your view on that? Might TIM back...

We are very happy with competition. We're in a very competitive market. So if we just discussed that it took a number of years to go from five to three and the two operators have gone bankrupt in the process. And so you know that we have the largest MVNO share in the market. Anatel has been publishing regulation related to roaming for MVNO. We have an open discussion with them. Some we like it, some we don't like it, and we respond accordingly. I think that Anatel objective is fair enough, they want to increase local competition, mobiles business of scale. And at the end of the day, we already went through a number of subscale operators that were not successful. it's regulated. We're happy with it. We'll see what it -- what it works. I don't know, Mario if you want to add some color on this.

Just to complement...

Mario, please come on the stage. Mario is our VP of Regulatory Affairs, also ESG and press. So Mario, please.

Good afternoon to everybody. Thank you for being here. Just a piece of information. In order to implement the conditions of the acquisition of Oi, we put the availability of a piece of frequencies and nobody appears we didn't sell nothing of the piece of frequencies that [indiscernible] asked us to put in [indiscernible]. So this is why it's not a matter of cherrypicking frequency in some places in Brazil. It's a matter of investing a lot of money. But of course, it's fair enough that after a consolidation at -- the regulator tried to boost competition in some ways, we are following the rules.

Another point, maybe we can share on the quality of it. So if you look at Anatel, of course, they want to -- it's a normal they then want to increase competition at local level. They've got to frequency, they've got everything. What is important also to point out is that as Ian showed, Brazil ranked really very high in terms of the quality that us as a sector are provided to the Brazilian consumers. And if you look at the claims, we are focused -- we are shifting versus a value-based competition. And you see there, for example, another company for the entire sector are going down. So the operator are making an effort in deploying 5G fast faster than the regulator ask. You see that when we look at the [indiscernible] services, we are just below U.K. and above every other countries in Latin America, and you see that in terms of complaints, the numbers are constantly improving over time. So I think that the model that we are sort of being adjusted, a competitive model is producing a lot of benefits for the final users.

Okay. So our next question comes from Fred Mendes from Bank of America. He's joining us virtually. So please, if you guys can now open his mic.

Thank you, Vicente. Great, great event. Just -- I have just, I guess, a follow-up question on CapEx as well. I think that goes more to Leonardo CapDeville. Where do you think that the team needs to invest the most in 2024, right? Because, I mean, when you look here from the points you described, I mean, strongest network, largest coverage on 5G, it looks like there is room for lower CapEx in 2024 versus 2022. So just wondering where you believe you -- TIM should invest the most. And if you can just refresh our minds a little bit, what would be the level of maintenance in terms of net revenue? And what would be the level of expansion?

I think we had some trouble hearing you here. So if you can repeat, we just understood, and if you can also speak a little bit slower because I think this will help us here. You talked about CapEx and efficiency in network, but could you again repeat your question, please?

No, basically, it is just in terms of CapEx, right? When you look at what we have done so far, it looks like most of the CapEx has been deployed. 5G coverage, quality, everything. So basically, when I look at 2024, I was wondering where should we see most of the CapEx going to? And if there is room for lower CapEx year-over-year, assuming that most of the investment has already been done.

Thank you, Fred. I'll ask Alberto to start elaborating on this, and then we can move to other participants of our Q&A as well.

Yes. So in terms of CapEx, the changes versus our guidance. So we provided last year a figure of BRL 13.3 billion for the '23, '24, '25. So you will see that basically, we are running for the -- we are expecting to run over the next years at the same speed of this year. We're going to publish new guidelines on updated guidance in February next year. But roughly, we are looking at a constant or sort of constant and nominal CapEx for the next couple of years. So where does the CapEx investment goes. So I will give you some general guidance, and then I would like to share -- to ask Leo to complement on this, which is basically the following. A lot of CapEx is going clearly to the network. And in terms of network, the CapEx is going entirely to provide better service to our customers. And so we shared with you guys today that we have the leading mobile network in Brazil in terms of quality. And we are using -- once the coverage Leo mentioned, we basically reached every single cities. We are now basically providing better coverage and with 5G and 4G in the commercial areas that are more important to us. When you look at Brazil, it's a big country. So overall, we are leading in terms of quality, but we still have some opportunities on a regional level. And so the CapEx is going to increase the overall level of service of our customers and wider gap or close the gap on a regional analysis. Please, Leo.

Freddie. I guess that we will focus on the 5G in the next few years. So we commented before that we're reducing the 4G investment and when you look at what is the pressure over the CapEx on the network is related with capacity. The good point here is with the 5G, when deployed one site we have a lot of capacity for now and for the future. So when we're talking about Sao Paulo, for example, Sao Paulo city, we already coverage all the neighborhoods what means that we have available a lot of capacity to support the growth in the next few years. It's interesting to observe that our doubt when we started this strategy, was about the speed of the change from the device side, the handsets from the 4G to the 5G. At that time, we expect that the data will grow faster than 4G. In the reality, it's better than what we expected. Just to give you a number, we are expecting for the next 3 months that the total potential 5G traffic in Brazil, we will be around 30%. So it represents all the potential that we can capture with this 5G coverage and if that support capacity again now and for the near future. So this is one of the reasons that we are seeing and maintain this vision to reducing the CapEx over the revenue. Because as a comment, before the efficiency to deploy this capacity over the 5G is more efficient to do that in the 4G and not -- remember that we're talking about the -- even the investment that we did in 4G can be switched for their 5G just for applying software over the radios. So I know that the marketing every time that we're talking about a new wave of technology is a bit afraid about, okay, we did 2G, 3G, 4G and now 5G. But in fact, the 5G is the most efficient way to serve the marketing. Alberto commented about the opportunity that we have to increase the usage per subscriber in Brazil, and we can monetize in that. So we are confident that our focus on the 5G is the better way to do that.

Thank you, Leo. Thanks, Alberto. So the next question now comes from Andres Coello from Scotiabank. He will be joining us virtually as well. Andreas, please, if you can tune down your volume, I think will help us with the interference that we are getting here. And please open his mic.

So I'm just wondering about the timing of the increasing cash distributions to shareholders. You said you're going to pay now BRL 2.9 billion, but I'm wondering, that's for 2023, and then BRL 2.9 billion will be the base for 2024. So just wondering, the BRL 2.9 billion is for this year and next year, or next year we will have perhaps a little bit more? That's my first question.

Okay. Andreas, I think we got it. Basically, what he's asking about is regarding the increase in remuneration for shareholders, the growth to BRL 2.9 billion. And what he wants to know is regarding the timing of this, how much is in 2023? How much is in 2024? If this new guidance is going to the future, how these things...

So let me talk about the future, and then I will pass to Andrea for the timing of the payments. So we -- so it's a new floor. And so our guidance is a continuous improvement. So it's above BRL 2.9 billion this year and onwards. So we -- I think we have a consistent story of even if we don't have a formal policy to deliver on the promises that we make. So remember, we move from BRL 1 billion to BRL 2 billion, then from BRL 2 billion to BRL 2.3 billion, then from BRL 2.3 million to BRL 2.9 billion. The reason behind this is that our free cash flow margin and free cash flow are expanding pretty fast. And we said we're going to use them to improve shareholder remuneration. This is the driver behind the increase from BRL 2.3 billion and BRL 2.9 billion. So in the following years, the free cash flow will expand and therefore, it's a new floor. In terms of the timing of the payment, I would pass this to our CFO.

Yes. So related to the payments, we will complete the IOC payments this year. This BRL 2.9 billion is the new guidance that we will approve in the next assembly. So we -- for these years, we will complete the payment in IOC, and for attributed to this BRL 2.9 billion we will pay in the next, first quarter of the next year, like we used to do in our timing of payment -- of dividend payments.

That was very clear. And just one second question, if I may. My second question is on the fixed line deal in Italy. As you know, on Sunday, Telecom Italia approved the KKR offer for the fixed line network in Italy. And while this seems to be important because this will be the first time in 10 years that Telecom Italia has a real chance of exiting the junk status for the bonds, for the Telecom Italia bonds. So I'm wondering, in your opinion, from the Brazilian standpoint, what are the implications of Telecom Italia having a stronger balance sheet?

Thank you, Andreas. So basically, just to make sure everybody gets the right question. He wants to know the implications for TIM Brazil are related to the transaction that is being done in Italy from our controller entity. Alberto, I don't know if you want to comment a little bit on this. Of course, it's not a topic directly correlated to Brazil, but there are some implications.

To some extent, Pietro already answered this question indirectly in its opening remarks. So the objective of the transaction is a delayering at our main shareholder. If this gets approved, I'd approved by the Board of Directors there, at the end of the day, this means for us more flexibility in capital allocation. as many of you guys on the sales side are already captured in the comments to the -- upon the approval of the agreement. So if they, let's say, address the leverage problem, here on our side, we're going to have more flexibility in our capital structure.

Thank you, Alberto. Thank you, Andres. Well guys, we still have some questions, but we need to move on with the event. So we will start the second part of our panels with B2B. So I ask Fabrizio Bozzetto and Paulo Humberto to come up. Andrea, please, if you can remain. Okay. We have a small break before that. All right. 5 minutes. [Break]

Ladies and gentlemen, we are going to resume our event. So if you please take your seat. If we have a countdown also with our Zoom meeting, we can start that. Just a little bit for everyone to be seated, and we can start. So I just heard that I actually was quite unpolite. I didn't introduce myself. I'm Vicente Ferreira, Head of IR of TIM Brasil. I worked with the company for 20 years, 15 in IR. So good afternoon, everyone. Just kidding. But then we are good to go. So we can be back. We are going to start, resume our panels to go into details of our strategy and how we are executing it. As I mentioned in the beginning, B2B is an area of very interesting new things that we are starting to do, so we will have back Fabio Avellar, our CRO; also Fabrizio Bozzetto, our Chief Strategy Officer; and Paulo Humberto, our Head of Sales for B2B to start this panel. So please, Fabrizio?

Thanks, Vicente. Good afternoon, everyone. It's a pleasure to be here with you today. B2B is a new frontier for us. And what we have did in the past is different from what we are going to do in the future. We crafted this strategy a couple of years ago, and we started implemented. And in the past few months already, we are seeing bearing the first fruits. Fabio and Paulo will tell you a bit more in detail on the commercial front. On this opportunity, we see that the selected verticals in Brazil are going to have a great improvement in margin increase, digitalization through connectivity solution and application. And our opportunity rest in these verticals, starting from what Alberto mentioned a few moments ago. Mobile services reach in Brazil more than 90% of population, but less than 20% of territory coverage. This represents an industrial gap for these verticals affecting their opportunity and their capabilities to transform the distributed operation throughout the territory. So we are partnering with these clients in these verticals to help them to materially transform in their business. We have chosen two verticals like agribusiness, logistics and utilities that are very relevant for the Brazilian economy. These verticals accounts for 30% of Brazilian GDP, agri business alone represent 24% of the Brazilian GDP. In logistics, and in particular, highways, accounts for 60% of total cargo that are transported in Brazil. In utilities, we have more than 150 million meters that need some sort of automation, leveraging the connectivity. We also have more than 50 million poles that are in private public partnership, that will need connectivity to be remotely managed. When I was mentioning that B2B is a new frontier for us is because we are leaving aside traditional businesses that the telco usually serve to their clients to focus on IoT connectivity and IoT solution. This is a segment that is worth around USD 1.2 billion, USD 1.5 billion in Brazil at this moment, and is expected to increase fourfold in the next 5 years. To tap into this opportunity, we defined a three step approach. The first one is to focus on connectivity as a stepping stone to expand towards solution and services. In this first step, we already have achieved remarkable success and a strong track record as Alberto was mentioning and that Fabio and Paulo will show you later some clear example of that. The second step will be bringing solution beyond connectivity to our customers. This is something that is recent, but also in this step, we have achieved some very good case that is proving the concept. The third step is still and -- is still under construction. 5G-based solution are very unbranded at this stage. But as you may remember, a few months ago, we launched an initiative, our 5G investment fund. That is going to focus on support company to support and develop 5G use cases that we can later take to our clients. So you see our strategy is going to connect in the future on this topic. So far, we have talked about the opportunity and about how we are creating this marketing -- this market, leveraging our strengths and our mobile-driven solution. Now I want to talk about how we make money with it. This is a new market, the business model that we created has been changed over time and should be flexible to meet customer needs and demand. The first use case that we map is the mobile coverage as service. In this case, we provide dedicated infrastructure to our clients that need to cover farm, a plant and highway. For that, we are rightly remunerated through two elements. A fee for the technical development of the project, and then a recurring monthly fee for the connectivity, for the service that we provide. The second use case is related already to IoT connectivity is private network. The business model is very similar to the previous one. But in this case, we are adding additional elements and additional solutions to the previous one. So beyond the project deployment fee, beyond the connectivity fee, we also have a fee for the equipment resale. The third one that is smart lighting is an end-to-end solution. This is something -- this is something very new that our team has developed, in which we put together hardware, software, application and connectivity to solve a business issue of our clients. In this case, the public management of lighting. For this business model, we created three revenue streams, again, a project deployment that lead to an activation fee, recurring fee for the connectivity and then also the resale of the equipment that need to -- that support the client in managing the service in an end-to-end way. So now I invite Fabio to show you a bit more of our track record on the commercial side.

Thank you, Fabrizio. So thanks, Fabrizio. And our B2B business model is already up and running. In these three vertical Fabrizio has just showed us, main market leaders, as you can see with the logos here on the slide, has already selected TIM as their main provider of IoT solutions and connectivity. More than this, on new vertical is [ Horizon ]. And other players are looking for us, trying to become our customers looking for our IoT solutions. This vertical, we are calling Industry 4.0. And after 18 months working on that, these four verticals -- in these four vertical, basically, we closed already more than BRL 300 million in contracts. And the average length of this contract is 5 years, which means these are mid- to long-term commitments. More than that, all of this business is accretive to TIM's value creation. In other words, there are incremental operational free cash flow margin for our results. Another main point to remark here is the social impact that we are delivering so far. Now let's watch a video to go a little deeper on the four verticals we are working on. [Presentation]

So as you can see, the opportunities here are gigantic. And the social and environmental impacts are equally very relevant. These companies don't see us as a cost, but as an opportunity to increase their productivity and profitability, of course, through the digital transformation we are delivering to their companies. Now I'll invite Paulo to tell a little more what we have been done this last month.

Okay. Thank you, Fabio. Hi, everyone. I'm glad to be here and talk about our achievements on IoT projects. Starting with the logistics sector. As Alberto said, we closed more than 4,500 kilometers of highway. We've built a strong relationship with the road construction companies. In 2023, we won 3x more contract than 2022. Taking our mobile services from less than 1,000 kilometers to more than 4,500 kilometers of covered highways. TIM has became a preferred partner of intelligent highways. We were selected by almost all of players, if not all of them. This long-lasting partnership allows TIM to discuss solutions above connectivity like push-to-talk, over cellular, video surveillance applications and so on. Supporting those concessions on their road operation management. Moving to utilities. We are going to see the same growth pattern. Again, we became the preferred partner to provide smart lighting solutions for PPPs, public-private partnership companies among [ E.ON ], Enel and ENGIE. In 12 months, we grew exponentially. We reached 150,000 smart lighting points sold. Our smart lighting solution is an end-to-end solution, from the device and connectivity to the management platform. This solution developed with Brazilian partner tech uses seen any IoT connectivity with features like lamp demineralization, GPS and an embedded elect meter that increase the lamp life cycle and the operation productivity and efficiency. In cities like Porto Alegre, where we've already deployed 22,000 smart lighting points device. And in Curitiba, where we already closed a contract for more than 45,000 devices. As Fabrizio mentioned, those B2B use case show our ability to create a business-oriented position that also has a relevant impact over society and environment. Moving to our next vertical agri business. We are going to show a video that simplify our work that led TIM to cover more than 60 million hectares of land in Brazil. Please, let's play the video. [Presentation]

So finally, to wrap up the panel. I want to share with you not only what we have done so far, but also how sizable is each vertical we are working on. Firstly, as you can see, in the agri business, we estimate more than 350 million hectares of planted and farming area in Brazil. Just to give you a reference, this size is larger than the entire India. Secondly, regarding logistics, our efforts so far have been on highways. and we have more than 55,000 kilometers of highways that you can connect with our IoT solutions. To give you the big picture, today, Brazil has more than 1.7 million kilometers of roads. Last but not least, regarding utilities. We have more than 15 million poles spread all over the country. That can be right now we connect to our smart lighting solutions. What I'm saying here is that we are pioneers in an IoT business that is emerging in Brazil. Of course, competition will arise. But as pioneers, we are taking this advantage for building solid and long-term commitments to our customers. This way, TIM will prevail even when the competition arrives. This way, we finish our business-to-business panel. So let's move on. And it's time to tell you a little more about our broadband strategy. As Alberto explained earlier, we're using a selective approach to grow. We're setting the stage to take the opportunities of the market but a very sustainable and profitable way. And we can define our strategy by answering three main questions. The first question to be addressed is how appealing this opportunity is. In other words, is there a room to accelerate our growth in the Brazilian broadband market. Based on our size, as you can see on the slide, we have just 2% of a market which is worth more than BRL 40 billion, and have more than 45 million connections. By the way, the markets expect to grow even more, reaching above BRL 50 billion in the coming 5 years. Based on our strong credibility and well awareness in Brazil, of course, we can increase our revenues by capturing an important part of this market, which leads us to the second main question. Are we ready to accelerate? In this front, we have evolved a lot. We have optimized our go-to-market strategy, reflecting our new condition as a client call which means we are not the owners of the last-mile infrastructure. This way and moving to an asset-light model, we can be much more flexible and assertive in our investments. On the other hand, as you can see on the left part of the slide, companies that use the traditional model, the traditional system has almost the obligation to fill up the network they has acquired or developed. On the other hand, we, as an asset-light operator can focus on developing the best value proposition, leveraging the opportunities of cross-selling different areas all over the place, and having more rationality in our investments, for instance, in terms of communication and go to market. When you talk about the value proposition, we are offering the best one in the Brazilian market. We guarantee the best offer added with the best service. And do this by delivering the highest speed in terms of upload and download added with a premium selection of content providers. On top of that, regarding the service, we have been recognized as the best broadband in Brazil for one of the most prestigious and important media groups over there. As our latest achievement, Opensignal that's here with us today has ranked the team as the first place in the broadband's consistent quality. All these assets combined drives us to the highest ARPU and the best Net Promoter Score of the whole Brazilian market. This way, I'm pretty sure that we're fully ready to accelerate our growth. This leads us to the ultimate question. Is this the right time to accelerate the growth pace in Brazil? And the truth is the market condition is not yet favorable. As you can see on the map, we have more than 8,000 different players all over the country and 26 different market leaders in the different states. Of course, this fact puts enormous pressure on prices and a reducing trend on ARPU. On top of that, also neutral network companies helps the market in developing and deployment, the FTTH as you can see by the homes passed number. There is still room to find a more balanced and healthier equation between the net cost and the client cost. In summary, what I'm saying is that, firstly, of course, there is room to grow in the Brazilian market to the size of the market. Secondly, we are fully ready to accelerate due to our business model, asset-light model and our best value proposition to the Brazilian markets. But finally, the best choice now is to wait while the market finds its balance. Having no legacy for us is a gigantic opportunity. So we're going to focus on keeping the pace of our investments by a very healthy, sustainable and profitable growth. This way, I finished the broadband panel and I invite Andrea Viegas, our CFO, for the floor. Please Andrea.

Thank you, Paulo, and good afternoon, everyone. So, so far, it's very clear, our strategy is to how we're capturing most opportunity revenue. So now let's talk about how we spend efficiency while increasing our productivity. As an administration of these, we already have one of the highest margin ambition and our focus is on increasing the free cash flow margin. So we will do this acting in three fronts. First is OpEx, like Alberto as almost a mantra for us. We are continuing to working in a day-by-day basis. We also still have opportunities in our traditional digitalization and we are ready to the next level of with artificial intelligence. The second bucket of opportunities is lease, we are continuously on our decommission program that we are talking about for the last year and also a [indiscernible] the network sharing agreement with Vivo. In CapEx, we have a combination of 5G deployments, which generate more efficiency costs with our most robust spectrum portfolio. So let's go deeper into these initiatives. The first worth to mention is the digital -- the traditional digitalization and I will talk about some examples that we already have very good results. So the first one, the graph is the digital recharge penetration, it has almost 80% now. Then we have the 6% points expansion in sales on digital platform. The first adoption of PIX was very good for us because it generates more efficiency in several costs and also consolidate our bad debt level. And now we have less than 5% of human contact in our call centers. And we still have room to improve like Alberto mentioned. We will continue to, of course, e-commerce is a great opportunity because we only have 30% of our sales in digital channels. We are continuing to work in our customer value management and our cash -- bill-to-cash process. PIX is a game changer involved less collection cost, very good debt levels and also customer, a customer experience. And finally, we still have room to improve the digitalization of Oi performance customer. So besides the traditional, we have also a new wave coming. and now I will invite our CEO, Auana to talk about this new opportunity.

Thank you -- thank you, Andrea. Good afternoon, everyone. I'm very pleased to be here in our 25th listing anniversary. So I'll share with you some of our results. But as you could see from the previous presentation, TIM works with IT as a strategic enabler to make our value proposition in go-to-market. So at the tech side, we have created an ecosystem working with the biggest players of the world, making available services, products and customer experiences using the most advanced technology available. And now we have, since 2020, accelerated a lot of projects, mainly working, leveraging our investments on big data and cloud platforms. Consolidating the foundation to arrive here at this moment, talking to this next step where we plan to use AI combined with machine learning in Gen AI at scale. How we are planning to do this? As you saw, we are very focused on our acceleration of innovation also cost efficiently. So we defined 6 strategic domains that we are approaching. Today, I will focus only on two of these domains and sharing some results. As Leo mentioned, we have been using a lot of big data to achieve the best network position. And now we are going to a next level. We are combining our machine learning models with Gen AI, working specifically on network maintenance costs, and we are targeting already 10% reduction. This is a pilot that we are running in a very strategic regions from Brazil, and beyond efficiency, of course, we are targeting also the quality improvement, continuous quality improvement of our network and also customer satisfaction. On the customer service side, we have announced three projects underway. The first of the project we call TIM AIX. TIM AIX is a friendly front end that affects us by our call center attendants. In this front end, the call center attendant has access to the customer profiling, the customer context, sentimental analysis, and then can in a hyperpersonalized way, treat the customer demands. So we are already using a lot of AI here, but now we have just mixed TIM AIX with Gen AI APIs, and we have already measured a reduction of 30% on the treatment of demand. This is really promising for us. The second one is related to diagnosis analysis through cause synthesis. So we are running Gen AI on the root cause analysis in all of our back office sales. So this is what we call the customer voice. We are using -- taking profit of Gen AI to achieve assertiveness and be more effective. We have measured in this back office, an increasement of 40% in productivity. The third one is related to our cognitive bot. We are combining Gen AI with our cognitive bot, so we can assure bot retention and increased customer satisfaction, what drives to more digitalization. We have already measured 30 percentage points results on this. So we were assured that we are working a lot in a very accelerated pace based on compliance, ethics, security. And we will not be open in not accelerating the framework without this. So to show you a little bit about what we are doing. I will share with you the first project TIM AIX, part of it. So let's play the video, please. [Presentation]

So rest assured that we'll stay focused on that, and we see this opportunity, we stay in our accelerated pace implemented all this Gen AI project to support our value proposition of best offer, best network, best service. Thank you. Back to you, Andrea.

So after this very effective -- very good opportunities, let's talk about something not so impressive, but that's really important to us. Let's talk about lease. Lease is a vital cost line for us. And as Alberto mentioned in the beginning, we are very focused in reducing this cost. So we are now 20% above what we are planning for the end of the year in fiscal terms. And in -- this means that despite the mismatch between the physical uninstalled and the financial impacts, we are already capturing the benefits of this reduction in our early results before than we expect. As an example of this, in the month of September, we have 20% reduction in the rent cost related to the peak of this line. So -- this -- beside of this effort and generate more efficient in this cost, we discovered a new dynamic work with our towers company. So now we are focused on better contract conditions and the greater diversification of our supplies. As a matter of fact, now we already see opportunity in another 10% of our sites portfolio. So continues in the lease parts, we have a new opportunity that where with the network agreement with Vivo. So let's refresh what the agreement is. We have first, the shutdown of 50% of the 2G network from both companies. In this part of the agreement TIM will provide service for part of the territory, and Vivo will provide for the other part. The main goal here is to simplify the infrastructure, and of course, with the cost, mainly energy. Another part of this agreement is create a single grid network. And in this part, we will create 3G and 4G single grids for cities with less than 30,000 people. And one part, one of the conterpart will create this single grids and allow the conterpart to decommission their towers. So this will create a very significant efficiency in all costs related to the towers. The target here is to achieve 1.6 cities is well -- sorry, 1,600 cities and more than 2,400 sites. It's important to highlight that this agreement was approved by the Brazilian regulators. And also the main objective here is to improve the customer experience while allowed both companies to simplify and get more efficiency from their infrastructure. Finally, let's talk about CapEx. So as you know, network is a very important capital allocation for an operation and also a fundamental pillar for customer experience. And the trick here is how we combinate, increase our coverage and our quality network while we are continued to we are -- continuing to control our CapEx. So we will achieve this with the combination of built a more robust spectrum portfolio that generates more CapEx. As a matter of fact, today, we have almost 25% more spectrum capacity and the second player and 44% more than the third player. And the second part is in the 5G deployments. as Leo mentioned in the mobile section. This creates a virtuous circle where we achieve a more efficient cost per gigabyte, the 5G has 35% lower cost than 4G, and also the offload of the traffic from 4G to 5G, where can -- we have less investment in the network. So the combination of the two -- the combination of these two goals leads us to achieve our revenue per CapEx guidance an year ahead. So now I ask Alberto to join us for the closing.

Okay. Thank you again for hanging up with us until now, very pleased to see most of you still here. So I think it's a positive feedback. So this is the final, the closing remark of today's agenda before the final Q&A. And let's just go one up. Basically a recap of what we believe to be the best value proposition for investors have been discussed through these hours, whereby we aim to expand our cash flow and free cash flow margin based on two main factors: revenue growing above inflation, supported by a number of initiatives and cash cost approach to efficiency. I stressed in the opening of my remarks, the importance of sharp execution and our track record in doing that. Short-term results fuel long-term objectives. And I will go very briefly through the third quarter results that were quite rock solid. So let's have a look together at what we achieved. Next slide, please. So we increased revenues firmly above inflation at around 7.7% mobile service revenues and around 8% of net revenues. The highlight is postpaid that grew 9.5%, reached the highest ARPU for TIM in our history. Remember, it's the best ARPU in the market, both for prepaid and postpaid. Our prepaid revenues grew as well. In B2B IoT, the stuff they've been discussing in the previous panels, we increased in this quarter, 60% of our contracted revenue, so it's growing fast. And in broadband, faithful to our profitable growth. We are still running our cruise speed of around 9%, 10% like in the previous quarters. If we go into the next slide, you will see our performance in terms of EBITDA and EBITDA after lease. So in the quarter, our EBITDA grew 12% and as the result of revenues growing above inflation, OpEx growing below inflation and synergy from Oi kicking in. I think that the most remarkable is this results in EBITDA after lease as the effect of the successful decommissioning plan, our EBITDA after lease growing 21% year-over-year. If you go to the next slide, we'll see our performance in terms of net income and operating free cash flow. And you will see net income growing at 50%, operating free cash flow, reaching 40% with the highest record high free cash flow margin in our history. This indicator is operating free cash flow and operating free cash flow margin is the most important to us because at the end of the day, we capture all the efforts that we are doing across the P&L. And all the actions that we are putting in place mixed in Brazil, the fastest-growing free cash flow margin expansion in LatAm. And I'm pretty confident with the initiatives that we have in place, we've got everything to keep on growing this metric in the years to come. With this, I close this section and last session of today's panels and we move to the Q&A, right?

We'll start another Q&A. Yes, please. We have already a few questions here. So if you can hand the mic, we have Cesar, we have also here on this front. Yes, please.

Cesar Medina from Morgan Stanley. Takeaways for me is that on broadband, you're going to be very patient and that you're going to be generating way more cash than before. So what are going to be the uses of that cash flow generation? Is it circle remuneration, perhaps at some point in M&A? And if you get optimization of the capital structure of the company, like what are the uses of that?

Well, basically, Cesar, the user is basically when I mentioned the virtuous cycle. So we're going to expand our cash flow part of them will return to shareholder as increasing remuneration as we discussed and as we are doing, and part of them are to fuel our expansion verticals. So the B2B is quite accretive already and for broadband, at broadband we say that we -- it's not the right time to accelerate. We are not saying that we'll not accelerate. And so at the end of the day, this cash will stay with us to fund the new growth opportunities, potential M&A opportunities that might be attractive in the future, and further reduce our lever as we are doing.

One quick follow-up. Can you remind us B2B, what percentage of revenues is today?

B2B is made up of a number of things, Cesar. So you've got the legacy business and the new business. The new business is the stuff we have been discussing today. And basically, it's going from zero to the numbers that we just saw. When you look at the legacy business, it depends a bit on the perimeter that you look at related to mobile services to corporate clients, which is totally different from what we're seeing today. Fixed infrastructure and some kind of regulatory services related to that. And if you sum all the this up, we are roughly talking about 15% of our revenues 1-5.

Now we have Carlos, I think, from the audience as well.

[ Carlos Eduardo ] from Itau. Two questions. One, so the B2B and focus on IoT. We've heard promising opportunities since 4G was deployed. My question, I guess, is what has changed not just technologically but for the market that you guys are identifying this as a sizable opportunity now as compared to the 4G deployment a few years ago? And secondly, also, it seems that very currently, you showed the CapEx numbers going down, trending down. But as I understand, 5G is far from being fully deployed in Brazil within your network. It probably still needs a lot of density. So if you could help us understand conceptually how to reconcile these two realities of clearly the CapEx trending down significantly into the future and also the need for further infrastructure for 5G?

So Carlos, let me go quickly across the two. So when we discuss B2B, basically, what we saw today is 4G not 5G. Most of it is 4G. And what really changed is that our customers want to evolve their business. And the discussion that we're having with them is discussion about their strategy. So we are moving from mobile service, telco services when we discuss this with generally the procurement guys to discussion with the CEO. And so what is different now is they want to do it. They want to get digital end-to-end. They want to be sustainable. They want to increase their productivity. And this is the reason why they're asking us the technology required to do so. And this is particularly true where the connectivity is not available. And is Brazil is plenty of verticals where connectivity is not available. If you look at the agri business, the President of CNH saying that basically, just a small proportion of the agribusiness in Brazil is digital. They need to be digital. And so there is a long way to go. That's what we see as the main driver of this is customer demand. When you go in terms of CapEx. I think Leo addresses perfectly well in terms of how we concile increasing 5G investments versus CapEx sustainability. And basically, I think that on the coverage side, we are almost done. We got the largest coverage in Brazil. So the majority of investment is going to capacity. And when it's going to capacity, the capacity is going through 5G now. So we put 5G where we need extra demand to serve our customer demands and increase their quality. And 5G is more efficient than 4G. And so rather than doing a capacity expansion via 4G, we do implementing the 5G, which is a big highway, basically empty. And this is a long way to go before it fills up. There is another cost item which is related to the towers required for further density for 5G. So we will need them in a couple of years. And we foresee that we will not. Is not going to be the rooftop towers that you see in Brazil is going to be more on a street level side that are a lot less expensive. And when you see all the efforts that we are putting in place to reduce our current portfolio, the decommissioning and the RAN sharing, they will go into the direction of making this expansion sustainable over time. So lease is already 13% of our revenues, and we like to be at that level going down.

I don't know, as a follow-up in terms of the B2B business. If you can -- I'm sure it varies across projects, but if you can give us a sense of the ROIC on these kind of projects, that will be really helpful.

Well, I can give you the number, looking forward our IR. So it's -- if you look at -- we are running at 16%. I will give you the free cash flow margin. The ROIC depends a bit on the timing. So if you look at the mobile business, it's today running at 17, 17-point-something and going up. These projects are above those levels. So they are accretive. So it's 20 plus. It varies. There is a sort of dispersion but at an average it's 20-plus. There is a sort of dispersion -- on average, it's 20-plus.

The point is that they require less CapEx because the infrastructure is there, right? And that's what they're incrementally.

The infrastructure is paid by the customer.

Thank you, Carlos. Now we have a question from our Zoom webcast. Will come from Marcelo from JPMorgan. Marcelo, if you can tune down a little bit your volume on your end, and please ask your question.

Sure, Vicente. I hope you can hear me well. I'm going to ask my questions slowly. So congratulations. Thank to ask questions. I wanted to talk about FWA, fixed wireless access. In the past, the company was more vocal about the opportunities with this technology. But today, you didn't mention. What's the management's current view on this technology considering that you want to have a higher share of broadband? Is it not relevant anymore?

So Marcelo, it's -- let's put this way. If you look at our Investor Day last year, we didn't say it was relevant. We say there was -- was more of a niche opportunity in Brazil for a number of reasons. So if you look at FWA 1 year ago, when we discussed at our Investor Day, basically, we say the CPE costs were high in Brazil to make it let's say, viable and implementation for a larger public. So FWA is being deployed but in Brazil on the business sector already. So for example, in the banking systems, they use FWA and to provide the backup network, for example. So this is an opportunity that exists for some specific business verticals. When it comes to the opportunity for consumer, it does exist, but it's niche. So you need to have 5G. We are deploying 5G in main capitals. In make capital as you get fiber, the CPE is still, let's say, let's put this way. It's still a bit expensive now. It's going down. there is a lot of scale growing up, but it's still limited. And therefore, at the end of the day, in large capital, the opportunity is limited by the presence of fiber there. And since the fiber competitive environment is quite tough in terms of pricing, this is create a further complexity for FWA. So the opportunity to exist. It is in our road map, we got most important things to do on the revenue generation opportunities than FWA. We will probably discuss this again in the second half of next year.

So our next question comes also from the Zoom. It comes from Bruno Mara, SP Global. Seen already has one of the high -- the best margins of the industry. Do you see room for improvement on EBITDA margins going forward?

Well, we said that in our guidance, we believe that our EBITDA will grow faster than revenues.

Andrea, do you want to complement?

I think we still have room to improve our EBITDA after lease margin because we are continuing to do the decommission program.

And complementing on Andrea. When we look at the best way to measure profitability, we are really looking at the cash flow margins. And so it's a combination of EBITDA after lease and CapEx. And this is going to expand according to our guidance at double digit. So we are moving from this unilateral discussion about OpEx to more cash cost discussion to the bottom line. And we are very confident that the number is going to increase double significantly over the coming years.

Thanks, Alberto. Thank you, Andrea. The next question comes from [indiscernible] from HSBC. Is TIM confident of having BRL 2.9 billion as a base for shareholder remuneration in 2024? And beyond, even if some of the tax reform are implemented, such as interest on capital is removed? Second question is, can you provide a rough idea on how the company plans to navigate the proposal tax reforms? And the third one, well, this is lengthy. TIM guided to grow its service revenues above inflation. On ballpark, how much of the growth would be driven by price increases and how much would be driven by cross and upselling services. So basically, I'll talk about shareholder remuneration regarding tax reforms and how we're going to navigate and then how we move our...

From the third one, and on the revenue side. So when we look at the revenue side, I think that we have a few levers both on quantities and on price. So when we look at prepaid, so the answer is a bit different depending on the segment. When we're looking on prepaid basically, we see a market which is roughly 1/3, 1/3, 1/3. So I would say that in that case, the price factor is going to be the most relevant one for revenue growth in the future. When we look at postpaid, the situation is a bit different because we have 22% market share. The market leader is 44%. So I think that the growth potential there is more balanced. So it's likely to be -- as it is today, as a matter of fact, if you look at quarter-on-quarter, you will see that it's half roughly linked to the evolution of the customer base and the rest is linked to the ARPU. When we discuss the ARPU, then you've got a number of different levers that you're using throughout the years to increase it over time. So the price -- the more-for-more strategy that we use every year in our case is roughly once per year. Then we got the migration that is something that we are doing prepaid, control, control, postpaid, control, control. And then there is the actual upselling of services or digital services that have been the discussion that we had in the first panel of today. So it's a mixture of this element. For the shareholder remuneration, before passing the word to Andrea on the tax reform, I would say that we are comfortable with BRL 2.9 billion in the sense that we are upgrading our guidance and saying that BRL 2.9 billion is the new floor. And so we are -- of course, there are tax reform that's been discussed. The IOC discussion has been postponed a bit. But Andrea, please?

Yes. The BRL 2.9 billion -- as a matter of fact, the BRL 2.3 billion guidance now increase for BRL 2.9 billion is related to 2023 and considering the current situation in a tax perspective. Of course, if -- when we have the reform, we will see what's happened. But besides this, we are continuously considering an improvement in the shareholder remuneration. So you have to understand what the impact of tax reform to have some better discretion. But the main point here is that we will still continue to have a better remuneration of our shareholders.

If I may, just to add here. It's always good to understand that there are multiple ways of remunerating shareholders, paying dividends and IOC, just two of them. It's pretty common here in U.S. to use buybacks, for example, as a formal remuneration shareholders. This is not very common in Brazil, although we do have a program in place, there's a very small just related to the remuneration of our management. But this is, for example, an area that we could analyze and understand it makes sense according to what Andrea just mentioned that we need to analyze what's going to be the exact scenario for tax reform. Again, as you guys know, you follow Brazil, all of the political environment is always very changing and things. Sometimes, we think that's going to happen right away and then move forward 1 month, 2 months, 3 months and then change from 1 year to another. So these things are very fluid. We need to keep following to understand how things will evolve. And then we move accordingly with the mindset that Andrea and Alberto just mentioned that we will remunerate more our shareholders in the future. How we will do that will depend on the conditions that we have in place. So thank you for the question. Funny. And then we move to another one that comes from Isabella Butcher from [ Mobile Time ]. Can you guys give us more details about the Ze Delivery partnership, how is going to work, when it will be launched? How is C6 bank arbitration? And how is the importance of this partnership for TIM? How much revenue does the partnership yield for TIM ? This before I give it to Alberto, just mentioning regarding C6, this we have an ongoing arbitration with them. So we have constraints about disclosing information. So we won't be talking about the arbitration itself. Alberto, feel free to answer the part related to the delivery, and also Fabio.

I would ask Fabio to answer that.

Yes. So can you hear me? So regarding Ze Delivery, it's a brand-new strategy. I mean, a brand-new partnership actually. And we are starting this week with some like a proof-of-concept, I mean, like a pilot all over the place. I mean it's a national offer. Basically, we are giving to our prepaid users when they recharge when they top up the plans, they receive a cash back through the app of Ze Delivery Brazil. So that's the mechanic of the offer. The most important point here, and as Eduardo [indiscernible] in the video we just showed you, is that this is a very first opportunity to join together. So two main companies, very strong, not only in Brazil but in the whole Latin America, trying to increase the engagement of their customers. and deliver innovation to the markets. So I mean, the offer is pretty testing this from now on, from this week on. And probably in the beginning of next year, we're going to launch this as a huge campaign with our bed colleagues.

Thank you, Fabio. We are going to go now to our last question of the afternoon that comes from Vitor Tomita, he's an analyst from Goldman Sachs. Vitor is joining us from the Zoom webcast. So Vitor, please, if you can tune down your volume and ask your question.

Also regarding the size of the B2B opportunity, do you have a view on how large B2B could be as a part of TIM's revenue mix in the longer term? And also on how TIM usually differentiates itself when competing for B2B projects?

So let me give a start on this question. So on the long-term opportunity, I think, Vitor, what you can have a look at is the opportunities in the verticals that we show today. So for example, you see at least over the next years versus what we have today and what we've built over the last 12 months, 18 months. So it's a sizable opportunity that we are going after. And this doesn't include the new things that we're going to do. And that's the reason we call it a bit of a blue ocean because it's a market that it's forming the [indiscernible] before as Marcos, for example, pointed out before. So when we look at that, we look at not the end point because we don't know what it is. But the impact that this can have on our revenue growth potential. So it's something that is more today and it's growing. And where we are talking about BRL 300 million of contracted revenues and you start filing this up year after year, it becomes a sizable impact. It will become a sensible input to our revenue growth potential. So see, at this point in time, the end game, we don't know. We are after it. We see that it's material in the short term. We're going to build it over time. And that is going to -- it's looking at the number where we shared with you today, you can see that it's going to be important for our year-over-year revenue growth already in the short term.

Okay. Thank you. Guys, with this, we wrap up our final Q&A session, and we wrap up our event. Very pleased with your presence here. Thank you so much, and have a nice round of applause.