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TIM SA ADR TIMB

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Revenue Growth Accelerates at TIM as It Laps the Worst of the Pandemic and Lifts Prices

Analyst Note

| Michael Hodel, CFA |

TIM again gradually lost wireless market share in exchange for higher pricing during the second quarter. Revenue growth continues to accelerate modestly, even adjusted for the easy comparison versus the worst of the pandemic a year ago, and margins continue to drift higher. Management remains confident that the Oi transaction will close by the end of the year, viewing regulators’ recent request for additional information as routine. We aren’t changing our $15 per ADR fair value estimate. While TIM trades at a discount to our valuation, we prefer Telefonica Brasil for exposure to Brazil.

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Company Profile

Business Description

TIM is one of the top three wireless carriers by subscribers in Brazil, with 51 million subscribers, equal to about 22% of the market. TIM also owns some fixed-line assets, including an extensive long-haul fiber network and local networks that reach about 6.4 million locations (a bit less than 10% of the country). The firm is investing to expand its fiber network to more customer locations, currently reaching about 3.2 million premises with fiber-to-the-home service. The company is 67%-owned by Telecom Italia.

Contact
Avenida Joao Cabral de Melo Neto, 850, Torre Norte, 12th Floor, Room 1212
Rio de Janeiro, RJ, 22775-057, Brazil
T +55 2141094167
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type —
Employees 9,246

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