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TIM Continues to Lose Market Share During Third Quarter; Fair Value Estimate Down to $12.50

Analyst Note

| Michael Hodel, CFA |

TIM’s strategy to hold the line on pricing even if it loses market share continued into the third quarter. The firm still managed to grow its wireless customer base but not nearly at the same pace as rival America Movil’s Claro. The fixed-line business also produced disappointing results during the quarter. Management remains confident that the Oi transaction will close by the end of the year and that its participation in the upcoming spectrum auction will prove successful. We are reducing our fair value estimate to $12.50 from $15, reflecting the combination of lower market share expectations and weakness in the Brazilian real (strength in the real had in part propped up our fair value estimate earlier in 2021). We continue to 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.

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 Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 9,379