20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report

Commission file number: 001-39570

TIM S.A.
(Exact name of Registrant as specified in its charter)

TIM, Inc.
(Translation of Registrant’s name into English)

THE FEDERATIVE REPUBLIC OF BRAZIL

(Jurisdiction of incorporation or organization)

João Cabral de Melo Neto Avenue, 850 – South Tower – 12th floor
22775-057 Rio de Janeiro, RJ, Brazil
(Address of principal executive offices)

Camille Loyo Faria
Chief Financial Officer and Investor Relations Officer
TIM S.A.
João Cabral de Melo Neto Avenue, 850 – South Tower – 12th floor
22775-057 Rio de Janeiro, RJ, Brazil
Tel: 55 21 4109-4167
ri@timbrasil.com.br
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, without par value*		New York Stock Exchange
American Depositary Shares, as evidenced by American Depositary Receipts, each representing five Common Shares	TIMB	New York Stock Exchange

* Not for trading, but only in connection with the listing of American Depositary Shares on the New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Title of Class	Number of Shares Outstanding
Common Shares, without par value	2,420,804,398

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☐ U.S. GAAP

☒ International Financial Reporting Standards as issued by the International Accounting Standards Board

☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

table of contents

Page

Presentation of Information	ii
Forward-Looking Information	iii
Part I	1
Item 1.   Identity of Directors, Senior Management and Advisers	1
Item 2.   Offer Statistics and Expected Timetable	1
Item 3.   Key Information	1
Item 4.   Information on the Company	29
Item 4A.   Unresolved Staff Comments	83
Item 5.   Operating and Financial Review and Prospects	83
Item 6.   Directors, Senior Management and Employees	104
Item 7.   Major Shareholders and Related Party Transactions	115
Item 8.   Financial Information	116
Item 9.   The Offer and Listing	122
Item 10.   Additional Information	128
Item 11.   Quantitative and Qualitative Disclosures About Market Risk	142
Item 12.   Description of Securities Other than Equity Securities	143
Part II	145
Item 13.   Defaults, Dividend Arrearages and Delinquencies	145
Item 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds	145
Item 15.   Controls and Procedures	145
Item 16.   [Reserved]	146
Item 16A.   Audit Committee Financial Expert	146
Item 16B.   Code of Ethics	146
Item 16C.   Principal Accountant Fees and Services	147
Item 16D.   Exemptions from the Listing Standards for Audit Committees	147
Item 16E.   Purchases of Equity Securities by the Issuer and Affiliated Purchasers	148
Item 16F.   Change in Registrant’s Certifying Accountant	148
Item 16G.   Corporate Governance	148
Item 16H.   Mine Safety Disclosure	149
Item 16I.   Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	149
Part III	150
Item 17.   Financial Statements	150
Item 18.   Financial Statements	150
Item 19.   Exhibit Index	150
Technical Glossary	151

i 

Presentation of Information

In this annual report, TIM S.A. (formerly known as Intelig Telecomunicações Ltda., or “Intelig”), a publicly held company (sociedade anônima) organized under the laws of the Federative Republic of Brazil, is referred to as “TIM” or the “Company”. References to “we,” “us” and “our” are to TIM together with, where the context so requires and as explained more fully below, TIM Participações S.A. (“TIM Participações”), our prior parent holding company, which was merged into the company in September 2020, TIM Celular S.A. (“TIM Celular”), which was merged into the Company in October 2018, TIM Sul S.A. (“TIM Sul”) and TIM Nordeste Telecomunicações S.A. (“TIM Nordeste”), both of which merged into the Company in May 2005. Collectively, these transactions are referred to herein as the Reorganization.

References in this annual report to the “common shares” are to the common shares of TIM. References to the “American Depositary Shares” or “ADSs” are to TIM’s American Depositary Shares, each representing five common shares. The ADSs are evidenced by “American Depositary Receipts,” or “ADRs,” which are listed on the New York Stock Exchange, or the “NYSE”, under the symbol “TIMB.”

Market Share Data

We calculate market share information based on information provided by Brazil’s National Telecommunications Agency (Agência Nacional de Telecomunicações) (“Anatel”). We calculate penetration data based on information provided by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística) (“IBGE”).

Presentation of Financial Information

We maintain our books and records in reais. The financial statements included in this annual report were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). As a complement to the IFRS principles, the Company also applies accounting practices established under Brazilian corporate law and rules issued by the Securities and Exchange Commission of Brazil (Comissão de Valores Mobiliários) (“CVM”), for the Brazilian Stock Market Exchange and Anatel to comply with the regulatory requirements. The selected financial information for the Company included in “Item 3. Key Information—A. Selected Financial Data” should be read in conjunction with, and is qualified in its entirety by, the IFRS financial statements of the Company and “Item 5. Operating and Financial Review and Prospects” appearing elsewhere in this annual report.

The Merger, which occurred in 2020, as defined below, was accounted using the predecessor method of accounting, through which the historical operations of TIM Participações are deemed to be those of the Company. See “Item 4. Information on the Company—A. History and Development of the Company—Historical Background.” Accordingly, the financial statements included in this report reflect:

· the historical operating results and financial position of TIM Participações prior to the Merger;

· the consolidated results of the Company and TIM Participações following the Merger;

· the balances as of and for the years ended December 31, 2020 and 2019 represent consolidated amounts;

· as of December 31, 2021, due to the fact that we sold 51% of the share capital of I-Systems (formerly FiberCo) to IHS, we no longer had any subsidiaries and so no subsidiaries were presented in our financial statements. As such, the balances as of December 31, 2021 are individual. See Note 1 to our financial statements included elsewhere in this annual report.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying our accounting policies. Those areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3 to our financial statements.

All references herein to the “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil. All references to “U.S. dollars,” “dollars” or “U.S.$” are to United States dollars.

ii 

Solely for the convenience of the reader, we have translated some amounts included in “Item 3. Key Information—A. Selected Financial Data” and elsewhere in this annual report from reais into U.S. dollars using the commercial selling exchange rate as reported by the Central Bank of Brazil (Banco Central do Brasil) (“Central Bank”), at December 31, 2021 of R$5.58 to U.S.$1.00. These translations should not be considered representations that any such amounts have been, could have been or could be converted into U.S. dollars at that or at any other exchange rate. Such translations should not be construed as representations that the real amounts represent or have been or could be converted into U.S. dollars as of that or any other date. See “Item 3. Key Information—A. Selected Financial Data—Exchange Rates” for information regarding exchange rates for the Brazilian currency.

Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

The “Technical Glossary” at the end of this annual report provides definitions of certain technical terms used in this annual report and in the documents incorporated in this annual report by reference.

Forward-Looking Information

This annual report contains statements in relation to our plans, forecasts, expectations regarding future events, strategies and projections, which are forward-looking statements and involve risks and uncertainties and are therefore, not guarantees of future results. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or revise any forward-looking statements after we file this annual report because of new information, future events and other factors. We and our representatives may also make forward-looking statements in press releases and oral statements. Statements that are not statements of historical fact, including statements about the beliefs and expectations of our management, are forward-looking statements. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “predict,” “project” and “target” and similar words are intended to identify forward-looking statements, which necessarily involve known and unknown risks and uncertainties. Our actual results and performance could differ substantially from those anticipated in our forward-looking statements. These statements appear in a number of places in this annual report, principally in “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects,” and include, but are not limited to, statements regarding our intent, belief or current expectations with respect to:

· general economic, political, social and business conditions in Brazil, including the impact of the current international economic environment and the macroeconomic conditions in Brazil including the upcoming Brazilian presidential election of 2022 and the ongoing military conflict between Russia and Ukraine;

· Brazilian telecommunications industry conditions, size and trends;

· characteristics of competing networks’ products and services;

· estimated demand forecasts;

· the COVID-19 pandemic and other actual or threatened epidemics, pandemics, outbreaks, or other public health crises, could have an adverse impact on our business;

· the size of our subscriber base, particularly any increase in our postpaid subscribers;

· development of additional sources of revenue;

· strategy for marketing and operational expansion;

· achieving and maintaining customer satisfaction;

· development of higher profit margin activities, attaining higher margins, and controlling customer acquisition and other costs; and

· capital expenditures forecasts, funding needs and financing resources.

iii 

Because forward-looking statements are subject to risks and uncertainties, our actual results and performance could differ significantly from those anticipated in such statements and the anticipated events or circumstances might not occur. The risks and uncertainties include, but are not limited to:

· our ability to successfully implement our business strategy;

· increasing competition from other providers and services in the telecommunications industry, particularly global and local Over The Top (“OTT”), competitors providing communication services like Voice over Internet Protocol, (“VoIP”), calls and messages;

· the trend towards consolidation in the Brazilian telecommunications market;

· our ability to respond to new telecommunications technologies that are received favorably by the market;

· our ability to efficiently operate our systems and controls that are subject to failure or to cyber-security risks;

· our ability to expand our services while maintaining the quality of the services provided and a positive customer experience;

· our ability to operate efficiently and to refinance our debt as it comes due, particularly in consideration of political and economic conditions in Brazil and uncertainties in credit and capital markets, such as in the context of the ongoing COVID-19 pandemic and the military conflict between Russia and Ukraine;

· performance of third party service providers and key suppliers on which we depend, as well as credit risk with respect to our customers;

· government policy and changes in the regulatory environment or in the legal framework in Brazil, particularly as an economic group classified as having significant market power in some markets subject to increased regulation;

· our dependence on authorizations granted and renewed by the Brazilian government;

· the effect of economic and political conditions, such as inflation and exchange rate fluctuations;

· the growing requirements and new regulations and standards regarding Environmental, Social and Governance (“ESG”) disclosure could generate yet to be identified obligations and expenditures; and

· other factors identified or discussed under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report.

iv 

Part I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A.       [Reserved]

Selected Financial Data

The selected financial data presented below should be read in conjunction with our financial statements, including the notes thereto. Our financial statements included herein, the balance sheets as of December 31, 2021, and the results of operations and cash flows for the year ended December 31, 2021 have been audited by Ernst & Young Auditores Independentes S.S. The report of Ernst & Young Auditores Independentes S.S. on such financial statements appear elsewhere in this annual report.

Our financial statements included herein and the selected financial data as of and for the years ended December 31, 2021, 2020 and 2019 derive from the respective year-end financial statements audited by Ernst & Young Auditores.

The following table presents a summary of our historical financial and operating data for each of the periods indicated. Solely for the convenience of the reader, real amounts as of and for the year ended December 31, 2021 have been translated into U.S. dollars at the commercial market rate in effect on December 31, 2021 (as reported by the Central Bank of R$5.58 to U.S.$1.00). See “—Exchange Rates” for information regarding exchange rates for the Brazilian real. You should read the following information together with our financial statements and the notes thereto included elsewhere in this annual report and with “Item 5. Operating and Financial Review and Prospects.”

1

	As of and for the Year Ended December 31,
	2021 U.S.$	2021 R$(1)	2020 R$	2019 R$
	(in thousands, unless indicated otherwise)
Income Statement Data:
Revenue	3,236,206	18,058,027	17,267,812	17,377,194
Cost of services provided and goods sold	(1,513,087)	(8,443,023)	(7,996,615)	(7,433,731)
Gross income	1,723,119	9,615,004	9,271,197	9,943,463
Operating income (expenses)
Selling expenses	(828,277)	(4,621,788)	(4,443,027)	(4,986,289)
General and administrative expenses	(308,850)	(1,723,384)	(1,673,290)	(1,717,859)
Share of loss of an associate	(2,074)	(11,572)	-	-
Other income (expenses), net	89,206	497,771	(351,854)	1,275,542
Profit before financial income and expenses	673,124	3,756,031	2,803,026	4,514,857
Financial income (expenses) and foreign exchange variations, net	(116,990)	(652,806)	(810,622)	21,210
Profit before income tax and social contribution	556,134	3,103,225	1,992,404	4,536,067
Income tax and social contribution	(26,174)	(146,051)	(164,150)	(913,940)
Profit for the year	529,959	2,957,174	1,828,254	3,622,127
Basic earnings per share (in R$/U.S.$ per share)	0.22	1.22	0.76	1.50
Diluted earnings per share (in R$/U.S.$ per share)	0.22	1.22	0.76	1.50
Number of shares outstanding:
Common shares (in millions)	2,420	2,420	2,420	2,421
Dividends per share	0.07	0.37	0.38	0.35
Balance Sheet Data:
Property, plant, equipment and intangibles assets	5,178,043	28,893,479	27,127,773	27,280,490
Total assets	8,928,170	49,819,186	41,654,417	40,348,924
Leases, Loans and Financing	2,313,442	12,909,004	10,723,867	9,809,958
Shareholders’ equity	4,499,481	25,107,106	23,182,745	22,431,818
Share capital	2,415,393	13,477,891	13,477,891	9,866,298
Cash Flows Data:
Operating Activities:
Net cash flows from operating activities	1,806,109	10,078,087	8,673,871	7,064,726
Investing Activities:
Net cash flows used in investing activities	(1,198,816)	(6,689,396)	(5,293,356)	(3,712,642)
Financing Activities:
Net cash flows used in financing activities	(131,786)	(735,366)	(3,089,273)	(2,142,804)
Increase (decrease) in cash and cash equivalents	475,506	2,653,325	291,243	1,209,280
Cash and cash equivalents at the beginning of the year (2)	461,522	2,575,290	2,284,048	1,075,530
Cash and cash equivalents at the end of the year (2)	937,028	5,228,615	2,575,291	2,284,810

(1) the balances for the years ended December 31, 2020 and 2019 represent consolidated amounts. As of December 31, 2021, due to the fact that we sold 51% of the share capital of I-Systems (formerly FiberCo) to IHS, we no longer had any subsidiaries and so no subsidiaries were presented in our financial statements. As such, the balances as at December 31, 2021 are individual. See Note 1 of our financial statements included elsewhere in this annual report.

(2) As a consequences of the merger of TIM Participações S.A. into TIM S.A. during 2020, end of year balances for each of 2019 and 2020 do not correspond with beginning balances for each of 2020 and 2021, respectively, due to our reporting balances for TIM Participações S.A. in 2019, TIM S.A. on a consolidated basis for 2020 and TIM S.A. on a stand-alone basis for 2021.

2

Brazilian Economic Environment

Our business, prospects, financial condition and results of operations are dependent on general economic conditions in Brazil. The table below sets forth data regarding gross domestic product (“GDP”), inflation, interest rates and real/U.S. dollar exchange rates in the periods indicated:

	2021	2020	2019
GDP growth (contraction) (%)(1)	4.5	(4.1)	1.1
Inflation (deflation) – IGP-M (%)(2)	17.47	23.14	7.30
Inflation (deflation) – IPCA (%)(3)	10.06	4.52	4.31
SELIC (%)(4)	9.25	2.00	4.50
DI Rate (%)(5)	4.43	1.90	4.40
TJLP (%) (6)	5.32	4.55	5.57
Appreciation (devaluation) of the real against the U.S. dollar (%)	(7.4)	(29.34)	(4.02)
Exchange rate (closing) – R$ per U.S.$1.00	5.5805	5.1967	4.0307
Average exchange rate – R$ per U.S.$1.00(7)	5.3950	5.1612	3.9453

(1) Brazilian GDP was calculated using the new procedures adopted by the IBGE.

(2) The General Market Price Index (Índice Geral de Preços do Mercado) (“IGP-M”), as measured by Fundação Getulio Vargas (“FGV”), represents data accumulated over the 12 months in each year ended December 31.

(3) The National Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo) (“IPCA”), as measured by IBGE, represents data accumulated over the 12 months in each year ended December 31.

(4) This is the average adjusted rate of daily financing determined in the Special Settlement and Custody System (Sistema Especial de Liquidação e Custódia) (“SELIC”), for Brazilian federal securities (end of period).

(5) The DI rate is the end of period interbank deposit rate in Brazil.

(6) The long-term interest rate (Taxa de Juros de Longo Prazo) (“TJLP”), represents the interest rate applied by the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social) (“BNDES”), in long-term financings (end of the period).

(7) Average exchange rate of each year.

Sources: BNDES, Central Bank, Bloomberg, FGV and IBGE.

Similar to 2020, 2021 continued to be significantly impacted by the COVID-19 pandemic. Following the commencement of wide scale vaccination globally in late 2020, and with the advance of vaccination in Brazil throughout 2021, combined with the consequent easing of mobility restrictions, Brazil’s gross domestic product (GDP) grew by 4.5%, slightly offsetting the contraction of 4.1% in 2020. The trade balance closed 2021 with a surplus of U.S.$ 61 billion, representing a growth of 21.1% compared to 2020. It is worth mentioning the 38.2% increase in imports that more than offset the 34% increase in exports. Inflation, measured by the IPCA, reached 10.06%, its highest annual rate since 2015, exceeding the midpoint of the target set by the Central Bank, which was 3.75% for the year. The performance is explained by the impacts of the growth of foods and beverages prices, driven by the strong demand for these products, the rise of dollar and the prices of commodities in the international market. The SELIC, or basic interest rate, was lowered progressively to 2.00% on August 5, 2020 before increasing again and reaching 9.25% as of December 31, 2021. This movement is explained by stimulus measures being undertaken to prompt an economic recovery following lock-down measures implemented by the government in response to the COVID-19 pandemic and a temporary high inflation impact expectation. The Brazilian government and Central Bank have taken and will likely continue to take actions to change or adjust economic policies as a reaction to turmoil in the financial markets and increased volatility caused by the COVID-19 outbreak.

Despite the overall positive economic impact of the approval of the public pension reform in 2019, instability continued to characterize Brazil’s political environment, leading to uncertainties regarding the approval of other necessary reforms such as fiscal and administrative reforms. We cannot predict the effects of further political developments on the Brazilian economy, including the policies that President Jair Bolsonaro and his economic team

3

submit for congressional analysis in the last year of his term in office, which may be approved or not and might affect our business and the Brazilian economy.

In Europe, levels of economic activity entered a slower growth trajectory, as political tensions within the Eurozone and the effects of the United Kingdom formally leaving the European Union on January 31, 2020, or Brexit, continue (see “Item 3. Key Information—D. Risk Factors—Risks Relating to Brazil—We may be impacted by volatility in the global financial markets”). In the United States, it is unclear the degree to which current political divisions in the country will continue throughout the current four-year presidential term of President Biden, as well as the policies that will be adopted by the current administration and the effects of any such policies, if implemented.

Exchange Rates

In respect of foreign exchange, the Brazilian real depreciated 7.4% compared to the U.S. dollar in 2021. During the year, the exchange rate showed a depreciation of the real since December 31, 2020 due primarily to the impact of the COVID-19 pandemic on the Brazilian economy and the uncertainties related to the Brazilian fiscal policy. There can be no assurance that the real will not appreciate or further depreciate against the U.S. dollar or other currencies in the future.

In the past, the Brazilian government has implemented various economic plans and utilized a number of exchange rate policies, including sudden devaluations, periodic mini-devaluations during which the frequency of adjustments ranged from a daily to a monthly basis, floating exchange rate systems, exchange controls and dual exchange rate markets. Since 1999, the Central Bank has allowed the real/U.S. dollar exchange rate to float freely, and, since that time, the real/U.S. dollar exchange rate has fluctuated considerably. We cannot predict whether the Central Bank or the Brazilian government will continue to let the real float freely or intervene in the exchange rate market by returning to a currency band system or otherwise. The real may depreciate or appreciate substantially against the U.S. dollar.

During the first part of 2022, the real appreciated as compared to the U.S. dollar. On April 13, 2022, the selling real/dollar exchange rate was R$4.68 to U.S.$1.00. The real/dollar exchange rate fluctuates and, therefore, the selling rate on April 13, 2022 may not be indicative of future exchange rates.

B.       Capitalization and Indebtedness

Not applicable.

C.       Reasons for the Offer and Use of Proceeds

Not applicable.

D.       Risk Factors

Summary of Risk Factors

This section is intended to be a summary of more detailed discussions contained elsewhere in this annual report. The risks described below are not the only ones we face. Our business, results of operations or financial condition could be harmed if any of these risks materializes and, as a result, the trading price of our shares and our ADSs could decline.

Summary of Risks Relating to our Business

· We may be unable to successfully implement our business strategy.

· Future partnerships or joint ventures that we make or enter into may not bring the expected financial results and could cause harm to our image as well as financial costs

4

· Any acquisitions or investments in other companies, products, or technologies could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our operating results

· We face various risks related to the COVID-19 pandemic and other health epidemics and outbreaks, which may have material adverse effects on our business, financial condition, results of operations and cash flows.

· We face increasing competition from other providers and services, which may adversely affect our results of operations.

· Our operations depend on our ability to efficiently operate our systems and controls that are subject to failure that could affect our business and our reputation.

· We face various cyber-security risks that, if not adequately addressed, could have an adverse effect on our business.

· Our operations could be suspended or interrupted as a result of natural or man-made disasters or other unexpected events.

· We may be unable to implement our plans to expand and enhance our existing networks in Brazil in a timely manner or without unanticipated costs, which could hinder or prevent the successful implementation of our business plan and result in revenues and net income being less than expected.

Summary of Risks Relating to Brazil

· Anatel classified us as an economic group with significant market power in some markets and we are now subject to increased regulation.

· The Brazilian government under certain circumstances may terminate our authorizations or we may not receive renewals of our authorizations.

· Risks related to Brazilian economic and political conditions may negatively affect our business.

· The Brazilian government has exerted significant influence over the Brazilian economy and continues to do so. This involvement may have an adverse effect on our activities, our business and on the market prices of our shares and ADSs.

· Changes in Brazilian tax laws may have an adverse impact on the taxes applicable to our business and over our prices.

Summary of Risks Relating to our Common Shares and the ADSs

· Our controlling shareholder has power over the direction of our business.

· Holders of our ADSs are not entitled to attend shareholders’ meetings and may only vote through the depositary.

· Holders of our ADSs or common shares in the United States may not be entitled to participate in future preemptive rights offerings.

· Cash dividends, interest on shareholders’ equity and other cash distributions, as well as judgments seeking to enforce our obligations in respect of our shares or ADSs in Brazil will be payable only in reais.

· Holders of ADSs or common shares could be subject to Brazilian income tax on capital gains from sales of ADSs or common shares.

5

· An exchange of ADSs for common shares risks loss of certain foreign currency remittance and Brazilian tax advantages.

Risks Relating to our Business

We may be unable to successfully implement our business strategy.

Our business will be adversely affected if we are unable to successfully implement our strategic objectives. Factors beyond our control may prevent us from achieving our strategy.

Our business strategy is aimed at improving revenues and selective growth, while maintaining financial discipline. To achieve this goal, we seek to strengthen our market position by leveraging mobile telephony to increase broadband usage and by exploiting opportunities arising from emerging technologies and customer behavior changes.

In respect of our strategic efforts regarding broadband, we are seeking to increase our presence in the residential broadband market by investing significant efforts and resources to expand our footprint and the density of our fiber optic broadband service (“FTTx”), providing a higher-speed fixed connection closer to the customer residence, branded as TIM Live, and launching our fixed broadband service through mobile network, a solution known as fixed wireless access (“FWA”), when we offer broadband through LTE or 4G wireless communication networks as a type of fixed wireless access. The provision of fiber optic broadband service is a highly capital intensive business that brings a long-term return on investments and increases the risks to our operation. As a new business, fixed wireless access also brings new risks, particularly related to market response and customer behavior, that could negatively impact the use of our mobile network resources.

Additionally, in the second half of 2020 we initiated the deployment of a new technology in our mobile network, which we refer to as 5G DSS (Dynamic Spectrum Sharing). 5G DSS is a new feature that allows the deployment of LTE and 5G in the same frequency band and dynamically allocates radio resources between the two technologies based on user demand. This technology results in certain benefits like a smoothing handover between 4G and 5G networks, a correct Time-to-Market for the launching of the 5G, technology, and a better use of the spectrum between technologies as the penetration of 5G terminals increases, without the need for a spectrum reframing. However, it is expected that 5G traffic will increase in the near future as a result of the commencement of wide-scale deployment of 5G on a standalone architecture basis (known as 5G SA) in conjunction with 5G Dynamic Spectrum Sharing (known as 5G DSS). This increase in traffic may impact the network resources which serve users with legacy technology such as LTE. In addition, implementing new functionalities using 5G SA carries with it the inherent risks that come with implementing any new technology.

Our ability to implement our strategy is influenced by many factors partially or completely outside our control, including:

· an increase in the number of competitors in the telecommunications industry that could reduce our market share;

· increased competition from mobile virtual network operator companies, which offer telecommunication services to customers by leasing network capacity from traditional network providers, without their own network infrastructure;

· increased competition from global and local OTT, providers who offer content and services based on the Internet including voice calls and messaging without owning network infrastructure;

· increased competition in our main markets that could reduce the prices we charge for our services and could have an unintended adverse effect on our results;

· our ability to strengthen our competitive position in the Brazilian mobile telecommunications market;

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· our ability to develop and introduce new and innovative technologies that are received favorably by the market, and to provide Value-Added Services to encourage the use of our network;

· controls and system technology failures, which could negatively affect our revenues and reputation;

· the introduction of transformative technologies that could be difficult for us to keep pace with and could cause significant revenues decrease;

· our ability to operate efficiently and to refinance our debt as it comes due, particularly in consideration of political and economic conditions in Brazil and uncertainties in credit and capital markets;

· our ability to most efficiently scale our structure;

· our ability to attract and retain qualified personnel;

· performance of third party service providers and key suppliers on which we depend, such as any difficulties we may encounter in our supply and procurement processes, including as a result of the insolvency or financial weakness of our suppliers;

· government policy and changes in the regulatory environment or legal framework in Brazil;

· the effect of exchange rate and inflation fluctuations;

· the outcome of litigation, disputes and investigations in which we are involved or may become involved;

· the costs we may incur due to unexpected events, in particular where our insurance is not sufficient to cover such costs;

· large scale adverse events that could cause negative effects, requiring a long recover period, or even impact permanently the socioeconomic environment, such as natural disasters, political instability, or pandemics;

· the real possibility of an increase in taxes by state governments and the Federal Government in order to balance their financial deficit;

· the increasing demand on our system bandwidth to manage the continuous growth of mobile data traffic, which in turn requires further investments in infrastructure or the acquisition of additional spectrum frequencies in order to maintain network quality and prevent turnover, especially in big cities, where the population is highly concentrated and the costs of network expansion are considerably high; and

As a result of these uncertainties, there can be no assurance that our strategic objectives can effectively be attained in the manner and within the time frame described.

Future partnerships or joint ventures that we enter into may not bring the expected financial results and could cause harm to our image as well as financial costs

We may enter into relationships with other businesses in order to expand our platform, which could involve preferred or exclusive licenses, additional channels of distribution, or discount pricing or investments in other companies. Negotiating these transactions can be time-consuming, difficult, and expensive, and our ability to close these transactions may be subject to third-party approvals, such as government regulatory approvals, which are beyond our control. Consequently, we can make no assurance that these transactions, once undertaken and announced, will close.

Furthermore, our established partnerships are subject to common litigation risks and we can make no assurance that these established partnerships or future partnerships will not become involved in any type of dispute. We may also be required to initiate litigation to protect our interests.

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Any acquisitions or investments in other companies, products, or technologies could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our operating results.

Our business strategy has included, and may in the future include, acquiring other complementary products, technologies, or businesses. We evaluate and expect in the future to evaluate potential strategic acquisitions of, and partnerships or joint ventures with, complementary businesses, services or technologies. For example, in 2021, we entered into the Oi Agreement, as defined herein, with respect to the Acquisition of Oi Group’s UPI Mobile Business, which we expect will add value for us and our shareholders. However, we may not ensure that any benefits will materialize, and we may suffer losses in connection to the used funds and to the opportunity costs related to such transactions.

Acquisitions or investments may result in unforeseen operating difficulties and expenditures and we may not achieve the anticipated benefits from certain acquisition, partnership and joint venture due to a number of factors, including:

· inability to integrate or benefit from businesses, services, customers or technologies that we acquire or with which we form a partnership or joint venture in a profitable manner;

· unanticipated costs or liabilities associated with the acquisition;

· inability to finance any businesses, services or technologies that we acquire or with which we form a partnership or joint venture;

· difficulty integrating the accounting systems, operations, and personnel of the acquired business;

· difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;

· diversion of management’s time and resources from other core business concerns;

· adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;

· the potential loss of key employees;

· use of resources that are needed in other parts of our business.

In addition, we may not be successful in identifying acquisition, partnership and joint venture targets or our competitors may be willing or able to pay more than us for acquisitions, which may cause us to lose certain acquisitions that we would otherwise desire to complete.

Also, to the extent we pay the purchase price of any acquisition in cash, it would reduce our cash reserves, and to the extent the purchase price is paid with our common shares, it could be dilutive to our shareholders. To the extent we pay the purchase price with proceeds from the incurrence of debt, it would increase our level of indebtedness and could negatively affect our liquidity and restrict our operations.

Furthermore, even if any such transaction is consummated, we may be unable to successfully integrate the new operation, business or partnership contemplated thereunder or to realize expected benefits and synergies in a timely and effective manner due to difficulties in negotiating or aligning interests with potential partners or counterparties.

We face various risks related to the COVID-19 pandemic and other health epidemics and outbreaks, which may have material adverse effects on our business, financial condition, results of operations and cash flows.

We face various risks related to health epidemics and other outbreaks, including the global outbreak of COVID-19. The COVID-19 pandemic, changes in consumer behavior related to illness, pandemic fears and market downturns, and restrictions intended to slow the spread of COVID-19, including quarantines, government-mandated actions, stay-

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at-home orders and other restrictions, led to reduction of demand for our services and our ability to provide those services, disruption and volatility in the global and Brazilian capital markets and had a negative impact on global, regional and national economies and disrupted supply chains and reduced international trade and business activity.

The COVID-19 pandemic continued to have a significant impact throughout the 2021 financial year, and imposed tremendous challenges on society, public health and the economy. Amid increased vaccination, the emergence of new variants of the virus, escalating inflation, and rising interest rates, our business proved to be resilient in delivering solid results by late 2021, meeting all the targets established with our shareholders. .

The COVID-19 pandemic and government measures in response thereto continues to impact our business and operations, to a lesser extent, and depending on the duration of the epidemic, related restrictive measures as well as the effect of governmental regulations imposed in response to the pandemic, we may continue to be adversely impacted by the pandemic. If the pandemic continues for an extended period, it may also reduce demand from our post-paid clients for more expensive plans or certain services (e.g. roaming) or even lead to plan cancellations or increased delinquency. Protracted restrictive measures could also lead to disruptions in our logistic chain, in our suppliers’ production or deliveries or in our ability to deliver our products (such as new devices or SIM cards) or to service our network on a timely basis, which may have a material adverse effect on our business and results of operations. If significant portions of our workforce are unable to work effectively as a result of the COVID-19 pandemic, including because of illness, quarantines, facility closures, ineffective remote work arrangements or technology failures or limitations, our operations would be adversely impacted. Our availability indicators, repair performance and installation of new accesses/projects can be impacted by the effects of increased absenteeism in the field workforce and in our experts teams, or even by the imposition of Lockdown by COVID-19 that act as obstacle or hinders the displacement and access of field maintenance teams to equipment stations. We may have our supply chain for technological product inputs (like spare parts, transmission and commutation equipment, handsets and modems) impacted by any delay in the manufacturing process of vendors in their countries of origin, due to a new wave of COVID-19 that can imposes a new Lockdown. Our business could be adversely affected in many ways, potentially for a prolonged period of time, for example as a result of the impact of overall market declines and increased market volatility due to the COVID-19 pandemic, which could also ultimately negatively impact our ability to refinance our debt or raise capital in favorable terms.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this ‘‘Risk Factors’’ section, such as those relating to our ability to successfully implement our business strategy (see “—We may be unable to successfully implement our business strategy”) the credit risk of our customers (see “—We are subject to credit risk with respect to our customers”), our dependence on key suppliers and contractual relationships with other telecommunications providers (“—We depend on key suppliers, certain inputs and contractual relationships with other telecommunications providers which are critical to our ability to provide telecommunications services to our customers”) the Brazilian government’s influence over the Brazilian economy (see “—Risks Relating to Brazil—Risks related to Brazilian economic and political conditions may negatively affect our business,” “—The Brazilian government has exerted significant influence over the Brazilian economy and continues to do so. This involvement may have an adverse effect on our activities, our business and on the market prices of our shares and ADSs”) and volatility in global and domestic financial markets. See “—Risks Relating to Brazil— We may be impacted by volatility in the global financial markets” and “—Risks Relating to Brazil—Developments and the perception of risk in other countries may adversely affect the Brazilian economy and market price of Brazilian issuers’ securities.”

As economic activity contracted, an increase in defaults in the telecommunications sector would be expected, which would hurt operators’ cash flows at a time that connectivity is even more relevant for society. With social isolation measures in place to contain the virus, the broadband connection fostered remote communication, allowing for continued operation of various economic and educational activities, as well the population’s access to information.

Goodwill impairments may be required in relation to acquired businesses.

We have made business acquisitions in the past and may make further acquisitions in the future. It is possible that the goodwill which has been attributed, or may be attributed, to these businesses may have to be written down if our valuation assumptions are required to be reassessed as a result of any deterioration in the underlying profitability, asset quality and other relevant matters of the businesses. According to the relevant IFRS accounting

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standard, impairment testing in respect of goodwill is performed annually, or more frequently if there are impairment indicators present, and comprises a comparison of the carrying amount of the cash-generating unit with its recoverable amount. There can be no assurances that we will not have to write down the value attributed to goodwill in the future, which would adversely affect our results and net assets.

We face increasing competition from other providers and services, which may adversely affect our results of operations.

We face competition throughout Brazil from many providers in the personal communications service (“PCS”), market. We compete with providers of mobile telecommunication, VoIP services (“Voice over Internet Protocol”), and landline telecommunications services – including by bundling voice and data to customers in a single offer. Due to this increasing competition, we may incur higher advertising and commercial costs as we attempt to maintain or expand our market share. Other than TIM, the following main competitors also hold authorizations to provide PCS with national coverage: Claro S.A., under the brand name Claro, Telefônica Brasil S.A. (“Telefônica Brasil”), under the brand name Vivo and Oi S.A., under the brand name Oi. Moreover, all PCS providers with national coverage offer third generation, or 3G, and fourth generation, or 4G, mobile telecommunications network technology, reducing differentiation. With the recent acquisition of Oi Mobile assets by TIM, Vivo and Claro, we believe that the likelihood of further consolidations in the Brazilian telecom market among the main competitors are remote, but if further consolidations driven by our main competitors were to occur, those consolidations may favor their strategic advantage with increased market power and access to greater financial resources, thereby weakening our market position.

We also expect to face increased competition from other services outside the telecommunications industry. Technological changes, such as the development, roll-out, and improvement of 4G and 5G mobile networks, may create new revenue streams but also hinder traditional services, introducing additional sources of competition, as is already the case with services like VoLTE calls, messages and SMS. These OTT communication apps are often free of charge (i.e., no subscription fee), accessible by smartphones, and usually allow their users to have access to potentially unlimited messaging and voice services over the Internet, bypassing traditional and more profitable voice and messaging services. As a result, voice traffic is migrating to data and offers from almost all competitors have started to include unlimited voice, thereby accelerating commoditization. Furthermore, very often OTT applications become so important to customers that they are bundled as zero-rated services, or OTT applications for which data usage is free. These and other factors, including the regulatory and tax asymmetry, are responsible for the increase in the competitive pressure we are facing in the mobile market.

OTT application service providers also leverage existing infrastructures and generally do not operate capital-intensive business models associated with traditional mobile network operators like TIM. Technological developments have led to significant improvements in the services provided by OTT applications – particularly in speech quality delivered by data communications apps, strengthening their positioning and relevance as competitors. In addition, providers with strong brand capability and financial strengths have turned their attention to the provision of OTT application services. In the long term, if non-traditional mobile voice and data services or similar services continue to increase in popularity, as they are expected to do, and if we and other mobile network operators are not able to address this competition, this could contribute to further declines in mobile monthly average revenue per user (“ARPU”), and lower margins across many of our products and services, thereby having a material adverse effect on our business, results of operations, financial condition and prospects.

OTT service providers concentrate the content, the means to create it and the distribution channel. With these resources they are dedicated to creating new ways the user can interact and consume content. As a result, operators like TIM are challenged to rethink Value-Added Services and may stumble upon limitations beyond technology, such as regulation, thereby not having enough leverage to compete.

Additionally, we expect that the 3.5GHz rights that were acquired by regional providers may provide them with an opportunity to become mobile network operators (“MNOs”). In addition, the new neutral network, which is proposed to be offered by Winity Telecom (the winner of the 700 MHz spectrum), may leverage mobile network capacity for internet service providers (“ISPs”), thereby allowing the ISPs to extend their offerings to their current broadband customer base with bundle offerings, which may increase their competitive offering in the marketplace.

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We expect that new products and technologies will be developed frequently and that those already established will be in continuous evolution, implying a variety of potential consequences for us. These new outcomes may, in the best scenario, reduce the price of our services by providing lower-cost alternatives or, in the worst scenario, render our products and services obsolete, requiring significant investments in new technologies. If such changes occur, our main competitors in the future may be new participants in the market without the burden of an installed older infrastructure. The amount of investment needed to upgrade our premises and to stay effectively competitive could be significant.

Rising competition may increase our churn rate and could continue to adversely affect our market share and margins. Our ability to compete successfully will depend on the effectiveness of our marketing efforts and our ability to anticipate and adapt in a timely manner to developments in the industry, including the technological changes and new services that may be introduced, changes in consumer preferences, demographic trends, economic conditions and discount pricing strategies by competitors. It is difficult to predict which of many possible factors will be important in maintaining our competitive position or what expenditures will be required to develop and provide new technologies, products or services to our customers. If we are unable to compete successfully, our business, financial condition and results of operations will be materially adversely affected.

We may be unable to respond to the trend towards consolidation in the Brazilian telecommunications market.

The Brazilian telecommunications market has been subject to market consolidation. For example, in 2014, Telefónica S.A. acquired all of the shares of GVT Participações S.A from Vivendi S.A. In 2019, Nextel Brazil was acquired by Claro S.A. In August 2020, Bordeaux Fundo de Investimentos (Bordeaux Investment Fund) acquired the Brazilian regional operator Sercomtel Telecomunicações following its privatization. Subsequently, in November 2020, Bordeaux was successful in a competitive auction to acquire Copel-backed Copel Telecom. In December 2020, we presented a joint offer with Telefônica Brasil S.A. and Claro S.A. for the acquisition of Oi Group’s UPI mobile business, as part of Oi Group’s judicial reorganization (a form of bankruptcy protection under Brazilian law) which started in June 2016. See “Item 4. Information on the Company—A. Information on the Company — A History and Development of the Company—Historical Background.

The economic and regulatory environment faced by some relevant telecommunications companies in Brazil, such as Oi, Sercomtel, a local phone and Internet service provider in the state of Paraná, and Sky, could also be expected to encourage the consolidation trend or even the entry of a new competitor in the Brazilian telecommunications market. In 2018, via a new resolution, Anatel reduced one of the main regulatory barriers to consolidation in the mobile market.

Resolution No. 703/2018 changed the spectrum cap regulation by increasing the amount of spectrum bandwidth an operator is allowed to retain, depending on frequency range and applicable antitrust measures. If such consolidation occurs, it may result in increased competition within our market. We may be unable to adequately respond to pricing pressures resulting from consolidation in our market, adversely affecting our business, financial condition and results of operations. On November 5, 2020, Anatel Resolution No. 736/2020 amended Resolution No. 703/2018 by establishing new maximum limits for the spectrum between 1 GHz and 3 GHz, with the allocation of L Band (+ 90 MHz in the 1.5 GHz band) for SMP. We may also consider engaging in merger or acquisition activity in response to changes in the competitive environment, which could divert resources away from other aspects of our business.

In this regard, potential acquisitions have inherent risks such as increasing leverage and debt service requirements, combining company cultures and facilities, potential exposure to successor liability, and the need to raise additional capital, which may not be possible at that time. Any of these and other factors could adversely affect our ability to achieve the anticipated cash flows at acquired operations or realize other anticipated benefits of acquisitions, which could negatively affect our reputation or operations.

We may face difficulties responding to new telecommunications technologies.

The Brazilian wireless telecommunications market is experiencing significant technological changes, as evidenced by the following, among other factors:

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· shorter time periods between the introduction of new telecommunication technologies and subsequent upgrades or replacements;

· the deployment of the new 5G SA technology and the expansion of 5G DSS technology, matched with the simultaneous management of multiple layers of legacy technology, such as GSM, 3G, and 4G through different spectrum bands, which also involves managing the LTE radio access network, or RAN, sharing agreement among TIM and other companies (see “Item 4. Information on the Company—B. Business Overview—Site-Sharing and Other Agreements”);

· an increase in market competition in respect of residential fixed ultra-broadband, requiring operators (including former fixed Internet providers which had provided services using copper and coaxial technologies) to accelerate investments in fiber capillarity deployments. This factor becomes more significant when considering the country's continental dimensions, new market opportunities and the need to provide comparable service in capacity and quality to locations far from large centers, thus boosting investments in IP Backbone and datacenters;

· new customer behaviors, particularly migrating services from voice to data, requiring new planning models and accelerating the evolution of communications to increasingly occur on the IP network;

· ongoing improvements in the capacity and quality of digital technology available in Brazil;

· the launch of voice over LTE, known as VoLTE, which increase significantly the quality of voice calls and allows companies to traffic voice as data through their 4G networks;

· the beginning of the deployment of a new technology in our mobile network, on an architecture called 5G standalone (known as 5G SA), which requires unprecedented levels of automation across an end-to-end network to fulfill the needs of new services and applications. The 5G SA network needs to be flexible, programmable and distributable in nature, so that it can provide the necessary flexibility to reduce time-to-market and provide the greatest performance and efficiency gains. As a result of the development of 5G SA, products and services supplied by service providers can be more greatly differentiated as between competitors, as 5G SA better enables the provision of custom services, including, for example, services with very high throughputs and/or very low latencies;

· the expansion of the Internet of Things, or IoT, technology in all of its forms and applications, requiring the creation of new platforms enabling its operation in new areas of the value chain. In this sense, we are strengthening the IoT ecosystem with new partnerships and expanding the monetization of the customer base, leading in the agribusiness vertical and expanding our participation in it; also through the partnership with Stellantis, through a customized data solution for their connected cars, etc.;

· the forthcoming introduction of 5G technology, which creates specific demands on bandwidth and performance, and takes advantage of network virtualization, distributed cloud at the wireless edge, and allows multiple logical networks to run on top of a shared physical network infrastructure, known as network slicing, for traffic control in a service-based architecture;

· the recent acquisition of the 100 MHz frequency nationally in the 3.5 GHz band, in addition to 40 MHz blocks in the 2.3 GHz band in the South and Southeast regions of Brazil (excluding São Paulo);

· the development of cloud solutions to provide platform as a service (PaaS), software as a service (SaaS), or infrastructure as a service (IaaS), in order to drive down costs;

· the acceleration in the use of artificial intelligence, or AI, and machine learning in order to use resources more efficiently, reduce spending and increase agility;

· the development of user interface, or UI, and user experience, or UX, technology; and

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· the widespread implementation, in the near future, of Embedded Subscriber Identity Module, or eSIM, technology, which is a small microchip built into phones as an alternative to the conventional physical SIM card setup, and which will enable our customers to switch faster to other providers, thereby increasing competition.

We may be unable to keep pace with these technological changes, which could affect our ability to compete effectively, and the investment required to adopt these new technologies will be significant, both of which could have a material adverse effect on our business, financial condition and results of operations.

Our operations depend on our ability to efficiently operate our systems and controls that are subject to failure that could affect our business and our reputation.

Our success largely depends on the continued and uninterrupted performance of our controls, network technology systems and of certain hardware. Our technical infrastructure (including our network infrastructure and information technology, or IT, systems for mobile telecommunications services) is vulnerable to damage or interruption from information and telecommunication technology failures, power loss, floods, windstorms, fires, terrorism, intentional wrongdoing, human error and similar events. An unexpected increase in volume on our network and systems could cause them to malfunction, such as in periods of increased demand or unexpected circumstances that may reduce our ability to service our infrastructure, such as in a health crisis similar to the current COVID-19 pandemic. Our controls are dependent, not exclusively, on these technological systems and are also subject to the interruptions and failures. Unanticipated problems with our controls, or at our facilities, system failures, hardware or software failures, computer viruses or hacker attacks could affect the quality of our services and cause service interruptions. Any of these occurrences could result in reduced user traffic and reduced revenue and could harm our levels of customer satisfaction, our reputation and compliance with certain of our regulatory obligations.

Our availability indicators, repair performance and installation of new accesses/projects can be impacted by the effects of increased absenteeism in the field workforce and our experts teams in technology, or even by the imposition of lockdowns as a result of COVID-19 or any other health crisis that prevents or hinders the displacement and access of field maintenance teams to equipment stations.

Our supply chain for technological product inputs (like spare parts, transmission and commutation equipment, handsets and modems) may be impacted by any delay in the manufacturing process of vendors in their countries of origin, including as a result of new waves of COVID-19 or the ongoing military conflict between Russia and Ukraine.

Our operations and reputation could be materially negatively affected by cyber-security threats or our failure to comply with new data protection laws, mainly the Brazilian General Data Protection Law (Law No. 13,709/2018), or the LGPD, which came into effect on September 18, 2020, following the President of Brazil’s veto of article 4 of Provisional Measure No. 959/2020, which established that the LGPD would only come into effect on May 3, 2021. However, the administrative sanctions provisions of LGPD only became enforceable as of August 1, 2021, pursuant to Law No. 14,010/2020. Accordingly, cybersecurity incidents and data breach or leakage events may subject us to the following penalties: (1) warnings, with the imposition of a deadline for the adoption of corrective measures; (2) a one-time fine of up to 2% of gross sales of the company or a group of companies limited to a maximum amount of R$50,000,000 per violation; (3) a daily fine, up to a maximum amount of R$50,000,000 per violation; (4) public disclosure of the violation; (5) the restriction of access to the personal data to which the violation relates, until corrective measures are implemented; (6) deletion of the personal data to which the violation relates; (7) partial suspension of the databases to which the violation relates for up to 12 months, until corrective measures are implemented; (8) suspension of the personal data processing activities to which the violation relates for up to 12 months; and (9) partial or full prohibition on personal data processing activities. The postponement of the administrative sanctions does not prevent the competent authorities from overseeing activities or enacting additional rules to be complied with prior to such effectiveness date, nor does it prevent individual or collective lawsuits based on violation of data subject’s rights and subject to civil liability. Any proceeding or action and related damages could be harmful to our reputation, force us to incur significant expenses, divert the attention of our management, increase our costs of doing business or result in the imposition of financial penalties.

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In addition, Decree No. 10,474/2020 created the regulatory agency of the National Data Protection Authority, or ANPD. The ANPD must ensure the protection of personal data and will deal with cases regarding commercial and industrial secrets in Brazil.

ANPD is also responsible for developing guidelines for the Protection of Personal Data and Privacy National Policy and for inspecting and applying sanctions in the event of data breaches according to resolution cd/ANPD No. 1, of October 28, 2021. ANPD also fosters studies on national and international practices for the protection of personal data and privacy and also encourages the adoption of standards applicable to a variety of services and products seeking to ensure owners have control over their personal data, according to the activities of those involved. Moreover, ANPD can issue regulations and procedures to protect personal data and privacy, as well as responsible for assessing the impact of personal data protection in scenarios that may be deemed as a high risk to personal data protection principles. As a result of ANPD’s new regulations and procedures, we may be required to change our business practices and implement additional measures to adapt our personal data processing activities. This could adversely affect our business, financial condition, or results of operations. We cannot assure you that our LGPD compliance efforts will be deemed appropriate or sufficient by regulatory authorities or by courts.

The company is performing a deep-gap analysis in order to identify the main problems and, based on this analysis, intends to implement a master plan to achieve full compliance with the new LGPD requirements. However, deficiencies in the full adoption of data security measures, implementing personal data processing and retention requirements and reporting data measures within a narrow mandatory time frame could lead to disputes with data protection authorities, fines or harm to our reputation.

Sophisticated information and processing systems are vital to our growth and our ability to monitor costs, render monthly invoices, process customer orders, provide customer service and achieve operating efficiencies. We cannot assure that we will be able to successfully operate and upgrade our information and processing systems or that they will continue to perform as expected without any failure. A severe failure in our accounting, information and processing systems could impair our ability to collect payments from customers and respond satisfactorily to customer needs, which could adversely affect our business, financial condition and results of operations.

Our business is dependent on our ability to expand our services while maintaining the quality of the services provided and a positive customer experience.

Our business as a telecommunications services provider depends on our ability to maintain and expand our telecommunications services network. We believe that our expected growth will require, among other aspects:

· continuous development of our controls and operational and administrative systems;

· efficiently allocate our capital;

· increasing marketing activities;

· improving our understanding of customer wants and needs;

· continuous attention to service quality;

· a positive customer experience;

· attracting, training and retaining qualified management, technical, customer relations, and sales personnel; and

· increased network capacity through the new spectrum that we recently acquired and/or more investment in network assets such as 4G and 5G technology.

We believe that these requirements will place significant demand on our managerial, operational and financial resources. Failure to manage successfully our expected growth could reduce the quality of our services and result in

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an inadequate customer experience, with adverse effects on our business, financial condition and results of operations.

Our operations are also dependent upon our ability to maintain and protect our network. Damage to our network and backup systems could result in service delays or interruptions and limit our ability to provide customers with reliable service over our network. The occurrence of an event that damages our network may adversely affect our business, financial condition and results of operations.

We face various cyber-security risks that, if not adequately addressed, could have an adverse effect on our business.

We face various cyber-security risks that could result in business losses, including, but not limited to, contamination (whether intentional or accidental) of our networks and systems by third parties with whom we exchange data, equipment failures, unauthorized access to and loss of confidential customer, employee and/or proprietary data by persons inside or outside our organization. We are also exposed to cyber-attacks causing systems degradation or service unavailability, the penetration of our information technology systems and platforms by malicious third parties, and infiltration of malware (such as computer viruses) into our systems.

Cyber-attacks against companies have increased in frequency, scope and potential harm in recent years. Further, the perpetrators of cyber-attacks are not restricted to particular groups or persons. These attacks may be committed by company employees or third parties operating in any region, including jurisdictions where law enforcement measures to address such attacks are unavailable or ineffective. We may not be able to successfully protect our operational and information technology systems and platforms against such threats. There can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigating their effects. Similarly, there can be no assurance that we or our third-party providers and other contractors will be successful in protecting our customers’ personal data and other data that is stored on our and their systems. Further, as cyber-attacks continue to evolve, we may incur significant costs in the attempt to modify or enhance our protective measures or investigate or remediate any vulnerability.

The inability to operate our networks and systems as a result of cyber-attacks, even for a limited period of time, may result in significant expenses to us and/or a loss of market share to other communications providers. The costs associated with a major cyber-attack could include expensive incentives offered to existing customers and business partners to retain their business, increased expenditures on cyber-security measures and the use of alternate resources, lost revenues from business interruption and litigation. If we are unable to adequately address these cyber-security risks, or operating network and information systems could be compromised, which would have an adverse effect on our business, financial condition, reputation and results of operations. In order to mitigate such risks, we are currently adopting ISO 27001 standard best practices and expect to be certified in the future. As of the date of this annual report, such certification process is still ongoing. Additionally, due to the recent Russia-Ukraine

conflict, there have been publicized threats to increase hacking activity against the critical infrastructure of any

nation or organization that retaliates against Russia for its invasion of Ukraine. Any such increase in such attacks on

our third-party service providers or other systems could adversely affect our network systems or other operations.

We have measures in place that are designed to detect and respond to such cyber-attacks and data security incidents,

but there can be no assurance that our efforts will prevent or detect such cyber-attacks and data security incidents.

We depend on data centers operated by third parties and third-party cloud computing platforms, and any disruption in the operation of these facilities or platforms or access to the Internet would adversely affect our business.

Our business requires the ongoing availability and uninterrupted operation of internal and external systems and services. We have adopted new technology infrastructure solutions, which carries with it some risk to business continuity. With the adoption of cloud computing technology, key IT systems are being migrated to the public cloud. Despite cloud computing reducing some risks, such as delays in the supply of equipment by suppliers (like spare parts, servers, etc.), the adoption of cloud computing means that the control and responsibilities for the proper functioning of the systems are shared between ourselves and the third parties. In all cases the third parties will be responsible for the physical infrastructure, connectivity, energy supply, cooling and all the capabilities related to

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infrastructure availability. Depending of the cloud service type involved for any specific system (e.g. for IaaS, PaaS, SaaS), other capabilities will be the responsibility of the third party, according to the principles of the  Shared Responsibility Model defined by the Cloud Security Alliance, and incorporated into our contracts with the third party providers

These third-party providers may experience connectivity disruption, outages and other performance problems, which may be caused by a variety of factors, including infrastructure changes, human or software errors, viruses, security attacks, fraud, spikes in customer usage and denial of service issues. As such, our success also depends directly on the continuity of the provision of computing capacity and the availability of connectivity between the cloud computing provider’s datacenters, including the connectivity with our datacenters and internal networks. An intermittent failure or complete lack of connectivity or system availability, may cause interruption to our services, affecting our availability indicators as well as our revenue and reputation.

Having data hosted on a public cloud also poses a risk to our ability to comply with data protection principles or law (such as the LGPD). As such, our success depends on our ability to certify that cloud providers are adopting security best practices, as well as complying with the terms of data protection laws in accordance with our contractually agreed terms.

Certain debt agreements contain financial covenants and any default under such debt agreements may have a material adverse effect on our financial condition and cash flows.

Certain of our existing debt agreements contain restrictions and covenants and require the maintenance or satisfaction of specified financial ratios and tests. See “Item 5. Operating and Financial Review and Prospects.” The ability to meet these financial ratios and tests can be affected by events beyond our control, and we cannot assure that we will meet those tests. Failure to meet or satisfy any of these covenants, financial ratios or financial tests could result in an event of default under these agreements. As of December 31, 2021, we had approximately R$3,845 million in consolidated outstanding indebtedness, of which 46% was denominated in foreign currency (primarily U.S. dollars), for which we use derivative instruments to offset exposure to foreign currency. If we are unable to meet these debt service obligations, or comply with these debt covenants, we could be forced to restructure or refinance this indebtedness, seek additional equity capital or sell assets.

In June 2021, we announced to the market that we had raised R$1.6 billion by issuing infrastructure debentures linked to environmental and social commitments. The operation – qualified as a sustainability-linked debenture (SLD), according to the principles established by the International Capital Markets Association, – was considered the first of its kind in the telecommunications area in in Brazil. These debentures include terms requiring us to meet certain environmental and social commitments, as follows:

(i) establishing a 4G presence in 100% of Brazilian municipalities by December 2023;

(ii) increase by 80% or more the eco-efficiency in data traffic (bit/joule) by December 2025, compared to the base year of 2019.

Our ability to meet these financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those requirements. Failure to meet or satisfy any of these requirements could result in negative effects in terms of finance, compliance, brand reputation and stakeholder satisfaction

Due to the nature of our business we are exposed to numerous lawsuits, consumer claims and tax-related proceedings.

Our business exposes us to a variety of lawsuits and other proceedings brought by or on behalf of consumers in the ordinary course of business as a mobile telecommunications provider in Brazil. We are subject to a number of public civil actions and class actions that have been brought against mobile telecommunications providers in Brazil relating principally to network quality, the expiration of prepaid usage credits, minimum term clauses, subscription fees, quality of service and the use of land to install our network sites. These suits include claims contesting certain aspects of the fee structure of our prepaid plans, hybrid (monthly billed fixed price), or so-called control plans and postpaid plans, which are commonplace in the Brazilian telecommunications industry.

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In addition, federal, state and municipal tax authorities have questioned some tax procedures we have adopted, and have raised questions regarding the calculation of the basis for certain sector-specific contributions (FUST and FUNTTEL, as each are defined in “Item 4. Information on the Company—B. Business Overview—Taxes on Telecommunications Goods and Services”). As of December 31, 2021, we are subject to approximately 3,256 tax-related lawsuits and administrative proceedings with an aggregate value of approximately R$16,739 million classified as “probable loss” and “possible loss” by our legal advisors.

An adverse outcome in, or any settlement of, these or other lawsuits could result in losses and costs to us, with an adverse effect on our business practices and results of operations. For some of these lawsuits, we were not required to and have not established any provision on our statement of financial position or have established provisions only for part of the amounts in controversy, based on our judgments or opinions of our legal counsel as to the likelihood of winning these lawsuits. In addition, our senior management may be required to devote substantial time to these lawsuits, which they could otherwise devote to our business. See Note 24 to our financial statements.

Any modification or termination of our ability to use the “TIM” trade name may adversely affect our business and operating results.

Telecom Italia S.p.A., or Telecom Italia, as Licensor, and TIM S.A., TIM Participações, which merged into TIM S.A, and Instituto TIM as Licensees, entered into a trademark license agreement, or the Trademark License Agreement, where Telecom Italia granted the Licensees a non-exclusive and non-transferable license of 196 trademarks (including the TIM trademark) to: (i) promote and render Licensees’ services, including co-branded services; (ii) use the trademarks as domain names of websites owned by the Licensees, dedicated to the promotion and/or the rendering of the Licensees’ services; (iii) use the TIM trademark in events, campaigns, commercial partnerships, sponsorship projects and other activities in order to promote Licensees’ services; and (iv) use “TIM” as part of Licensees’ corporate names. The Trademark License Agreement is limited to Brazil and valid until December 31, 2023, unless terminated earlier. Telecom Italia, who owns the rights to the “TIM” trade name, may prevent us from using the TIM trademark by termination of the Trademark License Agreement. The loss of use of the trademark “TIM” may have a material adverse effect on our business and operating results.

We are subject to credit risk with respect to our customers.

Our operations depend to a significant extent on the ability of our customers to pay for our services. Under Anatel regulations, we are allowed to undertake certain measures to reduce customer defaults, such as restricting or limiting the services we provide to customers with a history of defaults. If we are unable to undertake measures to limit payment defaults by our subscribers or that allow us to accept new subscribers based on credit history, we will remain subject to outstanding uncollectible amounts, which could have an adverse effect on our results of operations. See “Item 5. Operating and Financial Review and Prospects.”

We may be subject to liability related to outsourcing certain functions to third-party service providers.

We may be exposed to contingent liabilities due to our outsourcing of certain functions to third-party service providers. Such potential liabilities may involve claims by third-party providers who claim that they are treated as direct employees as well as claims for secondary liability resulting from work place injury, wage parity and overtime pay complaints. Our financial condition and results of operation may be adversely affected in the event that a material portion of these liabilities are decided against us.

The Brazilian Supreme Court has declared the outsourcing of any company’s main activities as legal, which indicates a probable favorable outcome regarding the matter. However, it is worth to mention that, regardless of the decision in Supreme Court, we would be subsidiarily and jointly liable with the service provider in connection with any violation of labor obligations related to the outsourced workers.

If the contracting of third party services are considered to involve the main activities of the company, it may be characterized as a direct employment, which would significantly increase our costs and as a result we may be subject to administrative proceedings by the relevant labor authorities and may be required to pay fines to the third party service providers.

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We depend on key suppliers, certain inputs and contractual relationships with other telecommunications providers which are critical to our ability to provide telecommunications services to our customers.

We rely on various vendors to supply network equipment, mobile handsets and accessories necessary for our business. These suppliers may, among other things, delay delivery periods, increase their prices, limit the amounts they are willing or able to supply to us, or suffer disruptions in their own supply chains. If these suppliers are unable or unwilling to provide us with equipment or supplies on a regular basis, we could face difficulties in carrying out our operations, which could negatively affect our results of operations and limit our ability to execute our agreements. Further, in 2021 we have had to face the negative effects due to the COVID-19 pandemic, including increased prices and delayed delivery.

Geopolitical, sanitary, financial and sanctions aspects, among others, could cause an interruption of materials and services supply. Supplier exclusivity or dependence increases exposure to risk. Interruption can impact not only the acquisition of new materials and services, but also the maintenance of existing equipment and operations.

Termination and/or non-renewal of current agreements by suppliers or partners, such as SWAP (partnerships with Operators); Indefeasible Rights of Use (IRU); lease of circuits (e.g. EILD, IP Peering, IP Transit and Satellite bandwidth/capacity); co-sites deals with others telecommunications companies and private partners (e.g. Tower Co.); and rights of use with private companies and public authorities, as well as the interruption in the negotiation of biosites and/or sites destined to infrastructure services and rental area may have a material adverse effect on our business.

Furthermore, the constant changes in the telecommunications industry, such as growth of broadband, may result in a limited supply of equipment essential for the provision of services. The restrictions on the number of manufacturers imposed by the Brazilian government for certain inputs pose certain risks, including susceptibility to currency fluctuations and the imposition of customs or other duties for those inputs which are imported. Inputs produced domestically are available from a limited number of domestic suppliers, and accordingly we are highly dependent upon their ability to accurately forecast the domestic demand and manage inventory.

The need to hire many key suppliers requires complex deals, detailed and timely analysis of contractual documents and an integrated, end-to-end management process.

The potential positive impact of 5G networks on multiple industries, specifically the optimization of energy usage; cloud computing; ultrafast broadband; internet of things (IoT); innovation, including self-driving cars, transportation; and factory equipment. The necessary features for a company to benefit from the 5G network supply chain are software-based, and our supply chain is increasingly based on cloud computing and software.

We also rely on certain other telecommunications providers, through contractual agreements with us, to supply key infrastructure and other services, such as Industrial Exploration of Dedicated Lines (Exploração Industrial de Linhas Dedicadas), or EILD, interconnection and co-billing (see “Item 4. Information on the Company—B. Business Overview—Site-Sharing and Other Agreements”). Anatel permits such agreements between telecommunications providers in order to avoid unnecessary duplication of networks and infrastructure, and to lower costs and increase penetration of wireless services in Brazil.

Discussions regarding data safety of equipment provided by Chinese suppliers could have side effects across the global ICT sector, also significantly affecting our supply chain, infrastructure deployment and costs, and impacting the future of the industry as a whole.

In June 2016, one telecommunications provider that we maintain a contractual relationship with, Oi, filed for judicial reorganization (a form of bankruptcy protection under Brazilian law), acknowledging its inability to sustain its financial obligations. The judicial reorganization plan was approved at Oi’s general shareholders meeting in December 2017, after intense negotiations among credit holders and shareholders, and was judicially ratified in January 2018 subject to certain reservation regarding the terms of the judicial reorganization, mainly regarding Oi’s relationship with its creditors. In March 2018, through a joint withdrawal of proceedings, TIM and Oi settled their claims, which were generally related to infrastructure and interconnection, via a dedicated conflict resolution process at Anatel. For additional information regarding recent transactions with Oi, see “Item 4. Information on the

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Company—A. History and Development of the Company—Recent Developments—Acquisition of Oi Group’s UPI Mobile Business.”

Our operations could be suspended or interrupted as a result of natural or man-made disasters or other unexpected events.

Our operations may be suspended or interrupted for an indeterminate period in case of adverse events, such as a result of energy shortages, damages to our transmission bases, natural disasters, climate change or other environmental events or natural or man-made disasters, including fire, explosion, storms, geopolitical conflict (such as the invasion of Ukraine by Russia), civil unrest or health crises (such as the COVID-19 pandemic) or any other unexpected damage events. Such impacts may present disproportional geographic impacts, which may vary from impacts to a single address to an entire city or region. If we are unable to mitigate or prevent such damages in the event of a natural or man-made disaster and any other unexpected events, the suspension or interruption of our operations could have a material adverse effect on the continuity of our operations, our financial results and the compliance with regulations.

In order to avoid or reduce indeterminate periods of suspension or interruption of operations caused by damages to our transmission bases, natural disasters or any other unexpected events, we have implemented an internal policy aimed at a continuous mapping systemic vulnerabilities in order to improve the selective process of key projects, intended to expand the robustness of the technical network infrastructure and make it gradually more resilient.

We use demand forecasts to make investments, however such forecasts may ultimately be inaccurate due to economic volatility and result in lower revenues than expected.

We make certain investments, such as the procurement of materials and the development of our network infrastructure, based on our forecasts of the amount of demand that customers will have for our services at a later date. However, any major changes in the Brazilian economic scenario may affect this demand and therefore our forecasts may turn out to be inaccurate. As a result, it is possible that we may make larger investments based on demand forecasts than were necessary given actual demand at the relevant time, which may directly affect our cash flow. Unanticipated improvements in economic conditions may have the opposite effect and equally pose a risk.

The management of our cash and our financial investments are also subject to the country’s economic conditions. We may make financial allocations in which the results of operations are not as expected, generating lower profitability or costs.

Our governance and compliance processes may fail to prevent regulatory penalties and reputational harm.

We operate in a global environment, as we have agreements with companies all over the world. Our governance and compliance processes, which include the review of internal control over financial reporting, may not prevent future breaches of all applicable legal, accounting or corporate governance standards. We may be subject to breaches of our Code of Ethics, anti-corruption policies and business conduct protocols and to instances of fraudulent behavior, corrupt practices and dishonesty by our employees, contractors or other agents. Our failure to comply with applicable laws and other standards could subject us to fines, loss of operating licenses and reputational harm.

Improper use of our networks could adversely affect our costs and results of operations.

We may incur costs associated with the unauthorized and fraudulent use of our networks, including administrative and capital costs associated with detecting, monitoring and reducing the incidence of fraud. Fraud also affects interconnection costs and payments to other carriers for non-billable fraudulent roaming. Improper use of our network could also increase our selling expenses if we need to increase our provision for doubtful accounts to reflect amounts we do not believe we can collect for improperly made calls. Any increase in the improper use of our network in the future could materially adversely affect our costs and results of operations.

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We may be unable to implement our plans to expand and enhance our existing networks in Brazil in a timely manner or without unanticipated costs, which could hinder or prevent the successful implementation of our business plan and result in revenues and net income being less than expected.

Our ability to achieve our strategic objectives depends in large part on the successful, timely and cost-effective implementation of our plans to expand and enhance our networks in Brazil. Factors that could affect this implementation include:

· our ability to generate cash flow or to obtain future financing necessary to implement our projects;

· delays in the delivery of telecommunications equipment and broadband capacity by our vendors;

· the failure of the telecommunications equipment supplied by our vendors to comply with the expected capabilities;

· delays in obtaining licenses required to carry out construction works and other activities necessary to implement and update our network;

· delays resulting from the failure of third-party suppliers or contractors to meet their obligations in a timely and cost-effective manner; and

· higher than expected auction prices due to competition between bidders and/or to national policy.

Although we believe that our cost estimates and implementation schedule are reasonable, we cannot assure you that the actual costs or time required to complete the implementation of these projects will not substantially exceed our current estimates. Any significant cost overrun or delay could hinder or prevent the successful implementation of our business plan and result in revenues and net income being less than expected. We employ structured control tools and procedures in order to meet deadlines and avoid impacts on our business and results of operations.

Risks Relating to the Brazilian Telecommunications Industry

Anatel classified us as an economic group with significant market power in some markets and are now subject to increased regulation.

In July 2018, Anatel published Resolution No. 694/2018, or the “New PGMC”, revising the general plan for competition goals (Plano Geral de Metas de Competição) (“PGMC 2012”). Under the New PGMC, TIM has been classified as having significant market power in the following relevant markets: (i) mobile network; (ii) national roaming; and (iii) high capacity data transport.

Due to such classification, we are subject to increased regulation under the New PGMC, which could have an adverse effect on our business financial condition, results of operations and compliance with regulations. In the national roaming market, we must also offer roaming services at regulated rates to other mobile providers. The new PGMC is currently under review by Anatel and a new regulation is expected to come into force in the first half of 2023. See “Item 4. Information on the Company—B. Business Overview—Regulation of the Brazilian Telecommunications Industry—Significant Market Power”.

Our radio frequency (“RF”), authorizations for the 800 MHz, 900 MHz and 1,800 MHz bands that we use to provide PCS services started to expire in September 2007 and are renewable for one additional 15-year period, requiring payment at every two-year period equal to 2% of the prior year’s revenue net of taxes, by way of investment under the Basic and Alternative Service Plans, which are intended to increase telecommunications penetration throughout Brazil. Anatel has stated that the revenue on which the 2% payment is based should be calculated as including revenues derived from interconnection as well as additional facilities and conveniences. As a result, we are currently disputing these RF authorization renewal payments both administratively and judicially. Although there are administrative procedures still pending on analysis, Anatel has denied the Company’s appeals and issued Precedent No. 13, determining that revenues from interconnection as well as additional facilities and conveniences should be considered on the basis of the calculation of the price due to the renewal of the spectrum

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licenses. Judicially, the matter is also still under dispute. In December 2018, under Judgment No. 706 and No. 707, Anatel approved a new radiofrequency revenue segregation methodology to be applied. The application of this new methodology allows the segregation of significant market power revenues by the percentage of radiofrequency extended in relation to the total of existing radiofrequencies, both expressed in the amount of MHz.

We cannot assure that we will be able to fully comply with each of the applicable laws, regulations and authorizations or that we will be able to comply with future changes in the laws and regulations to which we are subject. These regulatory developments or our failure to comply with them could have a material adverse effect on our business, financial condition and results of operations.

As a telecommunications provider, we are subject to extensive legal and regulatory obligations in the performance of our activities which may limit our flexibility in responding to market conditions, competition and changes in our cost structure or with which we may be unable to comply.

Our business is subject to extensive government regulation, including any changes that may occur during the period of our authorization to provide telecommunication services. Anatel, which is the main telecommunications industry regulator in Brazil, regulates, among others: (i) industry policies and regulations; (ii) licensing; (iii) rates and tariffs for telecommunications services; (iv) competition; (v) telecommunications resource allocation; (vi) service standards; (vii) technical standards; (viii) quality standards; (ix) consumer rights; (x) interconnection and settlement arrangements; (xi) coverage obligations; and (xii) spectrum.

In addition to the rules set forth by Anatel, we are subject to compliance with various legal and regulatory obligations, including, but not limited to, obligations arising from the following: (i) PCS authorizations under which we operate our cellular telecommunications business; (ii) fixed authorizations (local, national long distance, international long distance and multimedia service) under which we operate our telecommunications business; (iii) limited private services authorization under which we operate a private network formed by point-to-point radio communication (radioenlaces); (iv) the Consumer Defense Code; (v) the General Telecommunications Law (amended by Law No. 13,879/2019); and (vi) the Data Protection Law (Law No. 13,709/2018, as amended).

We are also subject to applicable national and international anti-corruption laws. We believe that we are currently in material compliance with our obligations arising out of each of the above referenced laws, regulations and authorizations.

Brazil is a highly competitive mobile market, having four companies operating networks with national coverage, plus other regional players and mobile virtual network operator (“MVNOs”). Any potential deals involving such participants is likely to be carefully analyzed by CADE and Anatel, on a state-by-state basis. See “Item 4. Information on the Company—A. History and Development of the Company—Recent Developments—Acquisition of Oi Group’s UPI Mobile Business.

Through the 5G spectrum auction, Anatel auctioned licenses. In addition to bidders in the auction being required to offer a certain price, the condition of the auction requires the successor licensee to commit to certain minimum investments. There may be risks associated with being able to fulfill such commitments or for failing to comply with an investment commitment.

Over the last few years, Anatel has instituted certain administrative proceedings against us and other Brazilian telecommunications providers to investigate certain alleged nonconformities related to quality goals and other regulatory obligations. In response to the initiation of such Anatel proceedings, we, as well as other active telecommunications companies in the Brazilian market, opted to negotiate and enter into a Term of Conduct Adjustment (“TAC”). The TAC aims to remediate the underlying causes of the ongoing administrative proceedings by setting commitments to adjust conduct and an agreement with respect to general investments on future projects. The TAC was approved by Anatel on August 22, 2019, and on June 19, 2020, our Board of Directors approved the execution of the TAC by the Company. See “Item 4. Information on the Company—B. Business Overview—Regulation of the Brazilian Telecommunications Industry—PCS Regulation.”

We cannot assure that we will be able to fully comply with each of the applicable laws, regulations and authorizations or that we will be able to comply with future changes in the laws and regulations to which we are

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subject. Moreover, compliance with this extensive regulation, the conditions imposed by our authorization to provide telecommunication services and other governmental action may limit our flexibility in responding to market conditions, competition and changes in our cost structure. These regulatory developments or our failure to comply with them could have a material adverse effect on our business, financial condition and results of operations.

The Brazilian government under certain circumstances may terminate our authorizations or we may not receive renewals of our authorizations.

We operate our business under authorizations granted by the Brazilian government. As a result, we are obligated to maintain minimum quality and service standards, including targets for call completion rates, geographic coverage and voice accessibility, data accessibility, voice drop, data drop, data throughput, user complaint rates and completion rates to our call center. Our ability to satisfy these standards, as well as others, may be affected by factors beyond our control. We cannot assure that, going forward, we will be able to comply with all of the requirements imposed on us by Anatel or the Brazilian government. Our failure to comply with these requirements may result in the imposition of fines or other government actions, including, restrictions on our sales and, in an extreme situation, the termination of our authorizations in the event of material non-compliance.

Any partial or total revocation of our authorizations or failure to receive renewal of such authorizations when they expire would have a material adverse effect on our financial condition and results of operations.

These regulations may have an adverse effect on our financial results given the dynamics of our revenues and costs related to interconnection fees. In addition, Anatel may allow more favorable prices to operators without significant market power.

Actual or perceived health risks or other problems relating to mobile telecommunications technology could lead to litigation or decreased mobile communications usage, which could harm us and the mobile industry as a whole.

The effects of, and any damage caused by, exposure to electromagnetic fields has been and still is the subject of careful evaluation by the international scientific community, but until now there is no scientific evidence of harmful effects on health. We cannot rule out that exposure to electromagnetic fields or other emissions originating from wireless handsets will not be identified as a health risk in the future.

These concerns could have an adverse effect on the wireless communications industry and, possibly, expose wireless providers, including us, to litigation.

In addition, although Brazilian law already imposes strict limits in relation to transmission equipment, these concerns may cause regulators to impose greater restrictions on the construction of base station towers or other infrastructure, which may hinder the completion of network build-outs and the commercial availability of new services and may require additional investments. The expansion of our network may be affected by these perceived risks if we experience problems in finding new sites, which in turn may delay the expansion and may affect the quality of our services.

Anatel Resolution No. 700/2018 sets limits of emission and exposure for fields with frequencies between 8.3 kHz and 300 GHz, and Anatel Act No. 458/2019 and Law No. 11,934/2009 establish limits related to the magnetic and electromagnetic emissions recommended by the World Health Organization and require that operators have to maintain a record of the measurements of the levels of the magnetic and electromagnetic emissions of each transmitting station. Recently, Law No. 14,173/2021 came into force, which amended Law 11,934/2009 by revoking the obligation to share towers that are less than 500 meters apart from each other. Removing this obligation was considered essential for the deployment of 5G in Brazil, including to allow for the densification that is expected for the new technology.

Any of these or any other additional regulations could adversely affect our business, financial condition and results of operations. Government authorities could review the regulation of wireless handsets and base stations as a result of these health concerns, or wireless companies, including us, could be held liable for costs or damages associated with these concerns, which could have an adverse effect on our business, financial condition and results

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of operation. We cannot assure you that further medical research and studies will refute a link between the mobile technology in question and these health concerns.

Risks Relating to Brazil

Risks related to Brazilian economic and political conditions may negatively affect our business.

Political conditions in Brazil may affect the confidence of investors and the public in general, as well as the development of the economy. Political crises have affected and continue to affect the confidence of investors and the general public, historically resulting in economic deceleration and heightened volatility in the prices of securities offered by companies with significant operations in Brazil. The recent economic instability in Brazil has contributed to a decline in confidence in the Brazilian market, as well as to a deteriorating political environment.

Brazil’s most recent presidential elections took place in 2018 and the first year of Jair Bolsonaro’s term as president in 2019 was marked by discussions over the reforms and political instability, whereas the second year of his presidential term was marked by attempts to deal with the current COVID-19 pandemic and consequent economic and social crisis. In 2021, the administration faced a number of challenges as a consequence of COVID-19, including high inflation and implementing a vaccination campaign as well as the energy crisis.

Brazil’s next general elections will be held in October 2022. There are 1,655 public positions which are subject to this election (including the office of president, governors and legislators at the federal, state and local levels). In this context, Congress’ agenda is expected to be slow and more comprehensive tax and administrative reform measures are unlikely to advance, maintaining the present economic instability, which may negatively affect the telecommunications sector in Brazil.

The Brazilian government has exerted significant influence over the Brazilian economy and continues to do so. This involvement may have an adverse effect on our activities, our business and on the market prices of our shares and ADSs.

The Brazilian government has frequently intervened in the Brazilian economy and occasionally made drastic changes in economic policy. To influence the course of Brazil’s economy, control inflation and implement other policies, the Brazilian government has taken various measures, including the use of wage and price controls, currency devaluations, capital controls and limits on imports and freezing bank accounts. We have no control over, and cannot predict what measures or policies the Brazilian government may take or adopt in the future. Our business, financial condition, revenues, results of operations, prospects and the trading price of our securities may be adversely affected by changes in government policies and regulations, as well as other factors, such as: (i) fluctuating exchange rates; (ii) inflation; (iii) interest rates; (iv) fiscal and monetary policies; (v) changes in tax regimes; (vi) liquidity in domestic capital and credit markets; (vii) economic, political and social instability; (viii) reductions in salaries or income levels; (ix) rising unemployment rates; (x) tax policies (including those currently under consideration by the Brazilian Congress); (xi) exchange controls and restrictions on remittances abroad; and (xii) other political, diplomatic, social or economic developments in or affecting Brazil.

Uncertainty regarding changes by the Brazilian government to the policies or standards that affect these or other factors could contribute to economic uncertainty in Brazil and increase the volatility of the Brazilian capital market and of securities issued abroad by Brazilian companies.

Additionally, interruptions in the credit and other financial markets, and the deterioration of the Brazilian and/or global economic environment may, among other effects: (1) have a negative impact on demand, which may reduce sales, operating income and cash flow; (2) decrease consumption of our products; (3) restrict the availability of financing for our operations or investments, or for the refinancing of our debt in the future; (4) cause creditors to modify their credit risk policies and restrict our ability to negotiate any of the terms of our debt in the future; (5) cause the financial situation of our clients or suppliers to deteriorate; or (6) decrease the value of our investments.

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Changes in Brazilian tax laws may have an adverse impact on the taxes applicable to our business and over our prices.

Our business is substantially affected by the tax regime in Brazil on telecommunications goods and services, as disclosed in detail in “Item 4. Information on the Company—B. Business Overview—Taxes on Telecommunications Goods and Services.”

In recent years there have been several changes to Brazilian tax laws and their interpretation, which has created uncertainty for our business in how it calculates and complies with the relevant tax burdens. Further changes in tax regulations, such as a possible tax reform previously announced by the Federal Government, could impact our financial assets and liabilities as well as our pricing, which could have a material adverse effect on our business, financial condition and results of operations.

In September 2021, the Brazilian Federal Supreme Court (“STF”) ruled that the Corporate Income Tax (“IRPJ”) and the Social Contribution on Net Income (“CSLL”) are not levied on interest amounts received by taxpayers due to the application of the base SELIC interest rate applied to the refund of overpaid taxes. Currently, no temporal limitations on this granted right have been determined. However, the process has not yet been finalized in the STF.

In December 2021, the Supreme Court also ruled that telecommunications services must be taxed at the general ICMS rate provided for in each state's law. In the leading case, taxpayers required recognition of the unconstitutionality of the rate of 25% levied on the supply of communication services in the State of Santa Catarina where the general rate is 17%. The Supreme Court decided that communication services should be taxed on the base rate of 17% and softened the effects of this decision so that it is effective only in 2024.

At this time the impact of this reduction cannot be accurately measured due to the number of variables, such as customer base, future market and, price.

Recently a bill proposing changes in the Corporate Income Tax (“CIT”) for 2022 was presented by the Federal Government regarding: (i) IoE indeductibility; (ii) the taxation of dividends and (iii) in an effort to balance these new taxes, a reduction in the CIT rate (from 34% to 29%). The reduction in the CIT rate is not enough to neutralize the impacts of the end of the IoE deductibility and the taxation of dividends, which will increase the impact on our cash out by 23-26p.p. and generate a negative economic impact on net income of approximately R$185 million in 2022 and approximately R$156 million in 2023. Besides that, the minority shareholders will have a negative impact of 5 p.p. on their remuneration and the specialists say that the impact on TIM’s valuation could reach -10%. Finally, in addition to the changes aforementioned, the bill could interfere in the behavior of economic agents, especially in relation to possible mergers and acquisitions, and stimulate rent-looking at the expense of entrepreneurship, since investments in investment funds will have less taxation than dividends distributed by the companies to their shareholders.

There is a project, the Social Contribution on Operations with Goods and Services (“CBS”) bill, which intends to unify PIS and COFINS into a single contribution of 12% on gross revenue and with a broad credit basis. The bill’s text is under discussion and many sectors are arguing the relevant increase of tax burden. At the moment the text remains undefined and so there are no impacts for our tax bill. Such change in tax law could have a material adverse effect on our financial assets and liabilities if enacted.

Inflation, and government measures to curb inflation, may adversely affect the Brazilian economy and capital market, our business and operations and the market prices of our common shares or the ADSs.

In the recent past, Brazil has experienced high rates of inflation and the government’s measures taken in an attempt to curb inflation have had significant negative effects on the Brazilian economy. The COVID-19 pandemic has increased market volatility, enhanced existing risks and, despite the resulting contraction of economic activity, the Brazilian economy continued to suffer from high rates of inflation during 2021.

Uncertainty regarding certain future government fiscal measures which may be taken to reduce inflation could affect the confidence of investors and the market in general, and, consequently, affect our operating and financial results and increase volatility in the Brazilian capital markets.

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Exchange rate movements and interest rate fluctuation may have an adverse effect on our business and the market prices of our shares or the ADSs.

Appreciation of the real against the U.S. dollar may lead to a deterioration of the country’s current account and the balance of payments, as well as to a dampening of export-driven growth. Any such appreciation could reduce the competitiveness of Brazilian exports and adversely affect net sales and cash flows from exports. Devaluation of the real relative to the U.S. dollar could create additional inflationary pressures in Brazil by increasing the price of imported products, which may result in the adoption of deflationary government policies. The sharp depreciation of the real in relation to the U.S. dollar may generate inflation and governmental measures to fight possible inflationary outbreaks, including the increase in interest rates, which reduces the purchasing power of consumers and raises the cost in the credit market. Devaluations of the real would reduce the U.S. dollar value of distributions and dividends on our common shares and ADSs and may also reduce the market value of such securities. Any such macroeconomic effects could adversely affect our net operating revenues and our overall financial performance.

We acquire equipment and handsets from global suppliers, the prices of which are denominated in U.S. dollars. Depreciation of the real against the U.S. dollar may result in a relative increase in the price of our equipment and handsets. Thus, we are exposed to foreign exchange risk arising from our need to make substantial dollar-denominated expenditures, particularly for imported components, equipment and handsets, that we have limited capacity to hedge. See “Item 5. Operating and Financial Review and Prospects.”

At present, 46% of our current indebtedness is denominated in foreign currency (USD), 54% linked to inflation (IPCA) and all subject to cross currency swaps that are tied to Brazilian floating interest rates. Any increase in the interbank deposit certificate (certificado de depósito interbancário) (“CDI”), rate may have an adverse impact on our financial expenses and our results of operations. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”

The effects of the weak domestic economy could reduce purchases of our products and services and adversely affect our results of operations, cash flows and financial condition.

Although expectations for a strong global economy recovery, upon the lifting of the COVID-19 related restrictions due to the acceleration of vaccination campaigns worldwide, the expectations for domestic economic recovery are still low when compared to other countries. The recent economic instability in Brazil, the deterioration of the political environment and the ongoing COVID-19 pandemic have all contributed to a decline in market confidence in the Brazilian economy. Unfavorable macroeconomic conditions in Brazil are expected to continue throughout 2022 as uncertainty remains as to the duration and severity of the COVID-19 pandemic, the emergence of new variants of the virus, and the extent to which existing vaccines and acquired immunity may be effective and to economic effects of the pandemic which, combined with the continuing limitations to normality of business activities, have led to a slow recovery cycle. Brazil’s slow rate of economic growth, increases in interest rates, the unemployment rate or price levels generally may limit the availability of credit, income and purchasing power of our customers, thereby adversely affecting demand for our products and impacting our economic results.

The economy’s performance directly impacts our results of operations as a result of certain of our assets and liabilities being subject to inflation adjustment, and if inflation rises, disposable income of families may decrease in real terms, leading to lack of purchasing power among our customer base. In response to such tighter credit, negative financial news or declines in income or asset values, consumers and businesses may postpone spending, which could have a material adverse effect on the demand for our products and services. A loss of customers or a reduction in purchases by our current customers could have a material adverse effect on our financial condition, results of operations and cash flow and may negatively affect our ability to meet our growth targets.

We may be impacted by volatility in the global financial markets.

We are susceptible to swings in global economic conditions, typified most recently by difficult credit and liquidity conditions and disruptions leading to greater volatility, which is enhanced by continued tensions between the United States and other commercial partners, such as China. The global economy has largely recovered from the crisis of 2007, however markets remain subject to ongoing volatility factors including interest rate divergence, geopolitical events such as the consequences of Brexit and global growth expectations, and there is no assurance that

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similar conditions will not arise again. In the long term, as a consequence, global investor confidence may remain low and credit may remain relatively lacking. Hence, additional volatility in the global financial markets may occur.

The COVID-19 pandemic added has been a source of uncertainty to global economic activity. Authorities around the world have taken measures to try to contain the spread of the disease, since the virus has spread globally. Restrictions will likely remain in place for the unforeseeable future, suppressing economic and social activities, if the contagion rate does not subside. At the beginning of 2022, markets and the global economy have been further adversely affected by the ongoing military conflict between Russia and Ukraine and the related sanctions imposed on Russia by the United States and its allies. The materialization of these risks has affected global growth and may decrease investors’ interest in assets located in Brazil and in other countries in which we do business, which has adversely affected the market price of our securities, possibly making it more difficult for us to access capital markets and, as a result, to finance our operations in the future.

Developments and the perception of risk in other countries may adversely affect the Brazilian economy and market price of Brazilian issuers’ securities.

The market value of securities of Brazilian issuers is affected by economic and market conditions in other countries, including the United States, European countries, as well as in other Latin American and emerging market countries. Although economic conditions in Europe and the United States may differ significantly from economic conditions in Brazil, investors’ reactions to developments in these other countries may have an adverse effect on the market value of securities of Brazilian issuers. Additionally, crises in other emerging market countries may diminish investor interest in securities of Brazilian issuers, including our securities. This could adversely affect the market price of our securities, restrict our access to capital markets and compromise our ability to finance our operations in the future on favorable terms, or at all.

In the recent past, there was an increase in volatility in all Brazilian markets due to, among other factors, uncertainties about how monetary policy adjustments in the United States would affect the international financial markets, the increasing risk aversion to emerging market countries, and uncertainties regarding Brazilian macroeconomic and political conditions. These uncertainties adversely affected us and the market value of our securities.

In 2022, the military conflict between Russia and Ukraine is contributing to further increases in the prices of energy, oil and other commodities and to volatility in financial markets globally, as well as a new landscape in relation to international sanctions. It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term.

In addition, we continue to be exposed to disruptions and volatility in the global financial markets because of their effects on the financial and economic environment, particularly in Brazil, such as a slowdown in the economy, an increase in the unemployment rate, a decrease in the purchasing power of consumers and the lack of credit availability.

Disruption or volatility in the global financial markets could further increase negative effects on the financial and economic environment in Brazil, which could have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to our Common Shares and the ADSs

Our controlling shareholder has power over the direction of our business.

Telecom Italia, through its ownership of TIM Brasil Serviços e Participações S.A. (“TIM Brasil”), our controlling shareholder, has the ability to determine actions that require shareholder approval, including the election of a majority of our directors and, subject to Brazilian law, the payment of dividends and other distributions. Telecom Italia’s single largest shareholder is Vivendi, which is able to exercise significant influence over Telecom Italia. Telecom Italia may pursue acquisitions, asset sales, joint ventures or financing arrangements or may pursue other objectives that conflict with the interests of other shareholders and which could adversely affect our business, financial condition and results of operations.

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Holders of our ADSs are not entitled to attend shareholders’ meetings and may only vote through the depositary.

Under Brazilian law, only shareholders registered as such in our corporate books may attend shareholders’ meetings. All common shares underlying our ADSs are registered in the name of the depositary. A holder of ADSs, accordingly, is not entitled to attend shareholders’ meetings. Holders of our ADSs may exercise their limited voting rights with respect to our common shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. There are practical limitations upon the ability of ADS holders to exercise their voting rights due to the additional steps involved in communicating with ADS holders. For example, we are required to publish a notice of our shareholders’ general meetings in certain newspapers in Brazil. Holders of our shares can exercise their right to vote at a shareholders’ general meeting by attending the meeting in person or voting by proxy. By contrast, holders of our ADSs will receive notice of a shareholders’ general meeting by mail from the ADR depositary following our notice to the ADR depositary requesting the ADR depositary to do so. To exercise their voting rights, ADS holders must instruct the ADR depositary on a timely basis. This voting process will take longer for ADS holders than for direct holders of our shares.

We cannot assure you that holders will receive the voting materials in time to ensure that such holders can instruct the depositary to vote the shares underlying their respective ADSs. In addition, the depositary and its agents are not responsible for failing to carry out holder’s voting instructions or for the manner of carrying out your voting instructions. This means that holders may not be able to exercise their right to vote and may have no recourse if our shares held by such holders are not voted as requested.

Holders of our ADSs or common shares in the United States may not be entitled to participate in future preemptive rights offerings.

Under Brazilian law, if we issue new shares for cash as part of a capital increase, we generally must grant our shareholders the right to purchase a sufficient number of shares to maintain their existing ownership percentage. Rights to purchase shares in these circumstances are known as preemptive rights. We may not legally allow holders of our ADSs or common shares in the United States to exercise any preemptive rights in any future capital increase unless we file a registration statement with the SEC with respect to that future issuance of shares or the offering qualifies for an exemption from the registration requirements of the Securities Act. At the time of any future capital increase, we will evaluate the costs and potential liabilities associated with filing a registration statement with the SEC and any other factors that we consider important to determine whether to file such a registration statement. We cannot assure holders of our ADSs or common shares in the United States that we will file a registration statement with the SEC to allow them to participate in a preemptive rights offering. As a result, the equity interest of those holders in us may be diluted proportionately.

Cash dividends, interest on shareholders’ equity and other cash distributions, as well as judgments seeking to enforce our obligations in respect of our shares or ADSs in Brazil will be payable only in reais.

We pay any cash dividends, interest on shareholders’ equity and any other cash distributions with respect to our common shares in reais. Accordingly, exchange rate fluctuations affect the U.S. dollar amounts received by the holders of ADSs on conversion by the depositary of dividends and other distributions in Brazilian currency on our common shares represented by ADSs. Fluctuations in the exchange rate between Brazilian currency and the U.S. dollar affects the U.S. dollar equivalent price of our common shares on the Brazilian stock exchanges. In addition, exchange rate fluctuations may also affect our dollar equivalent results of operations. See “Item 5. Operating and Financial Review and Prospects.”

If proceedings are brought in the courts of Brazil seeking to enforce our obligations with respect to our shares or ADSs, we will not be required to discharge our obligations in a currency other than reais. Under Brazilian exchange control limitations, an obligation in Brazil to pay amounts denominated in a currency other than reais may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange may not afford non-Brazilian investors with full compensation for any claim arising out of or related to our obligations under our shares or the ADSs. See “—A. Selected Financial Data—Exchange Rates” for information regarding exchange rates for the Brazilian real.

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Holders of ADSs or common shares could be subject to Brazilian income tax on capital gains from sales of ADSs or common shares.

According to Article 26 of Law No. 10,833 of December 29, 2003, which came into force on February 1, 2004, capital gains realized on the disposition of assets located in Brazil by non-Brazilian residents, whether or not to other non-residents and whether made outside or within Brazil, are subject to taxation in Brazil. Since January 1, 2017, the rate of the income tax on capital gains accrued by non-Brazilian resident individuals may vary between 15% and 22.5% depending on the capital gain amount. Ultimately, a 25% rate may apply if the capital gain is realized by investors located at Low or Nil Tax Jurisdictions (i.e., a country that does not impose any income tax or that imposes tax at a maximum rate of less than 20% or 17%, depending if the country is aligned with the international standards of fiscal transparency). Although we believe that the ADSs will not fall within the definition of assets located in Brazil for the purposes of Law No. 10,833/2003, considering its general and unclear scope and the absence of any judicial guidance in respect thereof, we are unable to predict whether such interpretation will ultimately prevail in the Brazilian courts. See “Item 10. Additional Information—E. Taxation—Brazilian Tax Considerations.”

Gains realized by non-Brazilian holders on dispositions of common shares in Brazil or in transactions with Brazilian residents may be exempt from Brazilian income tax, or taxed at a rate that may vary between 15% and 25%, depending on the circumstances. Gains realized through transactions on Brazilian stock exchanges are exempt from the Brazilian income tax, provided that the transactions are carried out in accordance with the Brazilian National Monetary Council’s (Conselho Monetário Nacional), or CMN’s, Resolution CMN 4,373 (that replaced Resolution CMN 2,689) and the foreign investor is not located in Low or Nil Tax Jurisdictions. Gains realized through transactions with Brazilian residents or not executed on the Brazilian stock exchanges are subject to tax at a rate (1) that may vary between 15% and 22.5% depending on the capital gain amount if the investors are located in regular taxation jurisdictions, or (2) of 25% if the capital gain is realized by investors located in Low or Nil Tax Jurisdictions.

Please refer to “Item 10. Additional Information––E. Taxation––Brazilian Tax Considerations––Taxation of Gains.”

An exchange of ADSs for common shares risks loss of certain foreign currency remittance and Brazilian tax advantages.

The ADSs benefit from the certificate of foreign capital registration, which permits J.P. Morgan Chase Bank, N.A. (“J.P. Morgan”), as depositary, to convert dividends and other distributions with respect to common shares into foreign currency, and to remit the proceeds abroad. Holders of ADSs who exchange their ADSs for common shares will then be entitled to rely on the depositary’s certificate of foreign capital registration for five business days from the date of exchange. Thereafter, they will not be able to remit non-Brazilian currency abroad unless they obtain their own certificate of foreign capital registration, or unless they qualify under Resolution CMN 4,373, which entitles certain investors to buy and sell shares on Brazilian stock exchanges without obtaining separate certificates of registration.

If holders of ADSs do not qualify under Resolution CMN 4,373, they will generally be subject to less favorable tax treatment on distributions with respect to our common shares. There can be no assurance that the depositary’s certificate of registration or any certificate of foreign capital registration obtained by holders of ADSs will not be affected by future legislative or regulatory changes, or that additional Brazilian law restrictions applicable to their investment in the ADSs may not be imposed in the future.

Brazilian law allows for the Brazilian government to impose temporary restrictions, whenever there is a significant imbalance in Brazil’s balance of payments or a significant possibility that such imbalance will exist, on the remittance to foreign investors of the proceeds of their investments in Brazil, as well as on the conversion of the real into foreign currencies. The Brazilian government may, in the future, restrict companies from paying amounts denominated in foreign currency or require that any such payment be made in reais.

If similar restrictions are introduced in the future, they would likely have an adverse effect on the market price of our shares and ADSs. Such restrictions could hinder or prevent the holders of our shares or the custodian of our shares in Brazil, J.P. Morgan, from remitting dividends abroad.

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A more restrictive policy could also increase the cost of servicing, and thereby reduce our ability to pay, our foreign currency-denominated debt obligations and other liabilities. If we fail to make payments under any of these obligations, we will be in default under those obligations, which could reduce our liquidity as well as the market price of our common shares, shares and ADSs.

Item 4. Information on the Company

A.       History and Development of the Company

Basic Information

TIM S.A., formerly known as Intelig Telecomunicações Ltda., a publicly held company (sociedade anônima) organized under the laws of the Federative Republic of Brazil, incorporated in the Federative Republic of Brazil for an indefinite period on March 9, 1998.

Our headquarters are located at João Cabral de Melo Neto Avenue, 850 – South Tower – 12^th floor, 22775-055 Rio de Janeiro, Brazil and our telephone number is +55 (21) 4109-4167.

Our agent for service of process in the United States is Puglisi & Associates located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at http://sec.gov. Our web site address is http://www.tim.com.br. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report.

Historical Background

In July 1998, as part of the privatization of Telebrás, the Brazilian state-owned telecommunications monopoly, the Federal Government sold substantially all its shares of the 12 holding companies into which Telebrás had initially been broken up, including its shares of Tele Sudeste Celular Participações S.A. (“TSU”), and Tele Nordeste Celular Participações S.A. (“TND”). Following a series of acquisitions, corporate reorganizations and corporate name changes, TSU and TND merged to form TIM Participações in 2004.

We continued to expand and restructure our operations through a series of corporate reorganizations, mergers, acquisitions and name changes, and we are currently held, directly and indirectly, by Telecom Italia (which began operating in Brazil in 1998 as Telecom Italia Mobile) through its wholly owned subsidiary, TIM Brasil, formed in 2002 as the holding company of Telecom Italia’s operating companies in Brazil. In turn, the single largest shareholder of Telecom Italia is Vivendi, which is able to exercise significant influence over Telecom Italia. In 2019, Telecom Italia delisted all of its U.S. listed securities and deregistered from the SEC, having filed Form 15F on July 9, 2019. See “—C. Organizational Structure” for a description of our current corporate structure and Exhibit 8.1 attached hereto for a list of our significant subsidiaries as of the date of this annual report.

In 2009, the acquisition of Holdco Participações Ltda. (“Holdco”), holder at the time of 100% of Intelig’s capital, was approved and Intelig became a wholly owned subsidiary of TIM after this transaction. The acquisition of Intelig (known since September 2017 as TIM S.A.) brought material advantages through significant synergies with its network, such as its metropolitan optimal fiber network and its large backbone that allowed us to accelerate the development of our 3G network and generate significant operational cost savings.

In 2011, TIM Celular, which merged into the Company as a result of the Reorganization, entered into an agreement with Companhia Brasiliana de Energia and AES Elpa (the AES Group in Brazil) for the purchase of all of AES Elpa’s equity interests in Eletropaulo Telecomunicações and 98.3% of the interest of AES RJ, (“AES Atimus Acquisition”). In connection with the acquisition, Eletropaulo Telecomunicações changed its corporate name to TIM Fiber SP Ltda. (“TIM Fiber SP”), and AES RJ changed its corporate name to TIM Fiber RJ S.A. (“TIM Fiber RJ”). Both entities were collectively referred to as TIM Fiber. In accordance with the corporate reorganization of TIM Fiber, TIM Fiber RJ and TIM Fiber SP were merged into TIM Celular in 2012, which was the former entity that used to own and operate the fiber optic network in metropolitan São Paulo and Rio de Janeiro (and which, as

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discussed below, itself was merged into the Company in October 2018 as a result of the Reorganization). The purpose of this reorganization was to simplify our organizational structure and improve the administrative, operational and financial efficiency of the companies controlled by us.

In 2013, Instituto TIM was founded with the mission to create and strengthen resources and strategies for the democratization of science, technology and innovation that promote human development in Brazil. In order to accomplish this mission, the Institute works around four pillars: Education, Inclusion, Technological Applications and Work, encouraging the democratization of free technological solutions and the creation of innovative approaches to the teaching of science and mathematics in Brazil.

On July 25, 2017, TIM’s Board of Directors approved the corporate reorganization (the “Reorganization”), of its subsidiaries TIM Celular and Intelig. On September 6, 2017, as the first phase of the Reorganization, Intelig altered its articles of association to change the company from a limited liability company to an unlisted limited liability corporation, and to change its corporate name to TIM S.A.

As will be discussed in more detail below (see “—C. Organizational Structure”), in October 2018, the reorganization resulted in the merger of TIM Celular into the Company. This merger achieved its objective of capturing operating and financial synergies, through the implementation of a more efficient operating structure, as well as accounting and internal control systems.

In 2018, Instituto TIM was acknowledged by the Ministry of Justice in Brazil as a qualified Civil Society Organization of Public Interest (“OSCIP”), which reinforced the commitment to transparency in the activities of the Institute. This achievement also brings more credibility and confidence to expand the network of partners and institutions that wish to take part in the projects supported by the TIM Institute.

On July 29, 2020, the shareholders of TIM Participações (our former parent holding company) and the shareholders of the Company approved, by majority of votes, the merger of the first into the latter, pursuant to the terms of the Protocolo e Justificação de Incorporação. On July 29, 2020, the boards of directors of each of TIM Participações and the Company approved the execution of a Merger Agreement (protocolo de incorporação) with the Company. TIM Participações merged with and into the Company, previously a wholly owned subsidiary of our former parent holding company TIM Participações (the “Merger”), which became effective on September 28, 2020. Consequently, TIM Participações, our former parent holding company, was merged into the Company as a result of the Merger. The common shares of TIM Participações had been listed on the Novo Mercado segment of the B3 S.A. – Brasil, Bolsa, Balcão (the “B3”), since 2011. In order to be listed on the Novo Mercado, we are required to comply with heightened requirements relating to corporate governance and the disclosure of information to the market and we are not permitted to issue preferred shares, participation bonuses or any kind of shares with restricted voting rights. On September 28, 2020, as a result of the Merger, TIM Participações ceased to exist, and TIM continued as the surviving corporation in the Merger, with TIM succeeding to all rights and obligations of TIM Participações pursuant to Brazilian corporate law and TIM became the successor registrant under Rule 12g-3(a) under the Exchange Act. On September 28, 2020, the B3 approved the listing of the Company and the admission to trading of its shares on the Novo Mercado. On September 28, 2020, TIM filed a form 6-K pursuant to Rule 12g-3(a) promulgated under the Exchange Act to report this succession in accordance with Rule 12g-3(f) promulgated under the Exchange Act. Pursuant to Rule 12g-3(a) under the Exchange Act, TIM common shares and TIM ADSs, as common shares and ADSs of the successor issuer, were deemed registered under Section 12(b) of the Exchange Act. TIM Participações S.A.’s common shares and ADSs continued to be traded until October 13, when Company’s common shares and ADSs started to trade on the B3 and the NYSE, respectively. See “Item 9. The Offer and Listing—A. Offer and Listing Details.”

On March 10, 2020, we disclosed to the market that we, jointly with Telefônica Brasil S.A. (“VIVO”), expressed to Bank of America Merrill Lynch (“BofA”), Oi Group’s financial advisor, our interest in a potential joint acquisition of Oi Group’s UPI mobile business, in whole or in part, so that, in the event of the completion of the operation, each of the interested parties would receive a portion of that business.

 We believe that the transaction would have the potential to add +14.5 million clients, +7.2 thousand sites and towers, +49 MHz of spectrum to our operations, enabling us to close historical operational and structural gaps,

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generating benefits for our customers and shareholders, by accelerating our growth, increasing operational efficiency and quality of service.

On July 18, 2020, we submitted, together with VIVO and Claro S.A. (“CLARO”) a binding offer to Oi Group for the acquisition of the totality of the mobile assets operation of the Oi Group, or the UPI Mobile Business, as revised on July 27, 2020 and September 7, 2020. The latter was accepted by Oi Group on December 14, 2020.

On December 14, 2020, TIM along with CLARO and VIVO, was declared the winner of the competitive process of the sale of assets of the mobile telephony operation (Personal Mobile Service) of the Oi Group. In February 2022, the transaction received regulatory approval from CADE and Anatel. Closing of the transaction is expected to occur on April 20, 2022.

Pursuant to our offer, the total amount of the transaction is R$16.5 billion plus the value of the compensation offered to the Oi Group for certain take-or-pay data transmission capacity agreements, to be executed at the time of the closing of the transaction. Such agreements have a net present value corresponding to approximately R$819 million as of December 31, 2020. The R$16.5 billion amount includes R$15.7 billion related to the base price of the offer and R$756 million corresponds to transition services to be rendered for up to twelve months by Oi Group, of which TIM will be responsible for R$318 million. We expect to disburse R$7.3 billion, or 44% of the total base price and transition services. Concerning the capacity agreements, we expect to be responsible for payments of approximately R$476 million, or 58% of the net present value of the agreements.

Partnership with C6 Bank

On March 26, 2020 we entered into a commercial agreement with Banco C6 S.A. (“C6 Bank”), pursuant to which we have been granted, on February 1, 2021, the right to subscribe an indirect equity interest of approximately 1.4% in C6 Bank through the exercise of subscription bonuses, subject to certain agreed upon thresholds. By the end of 2021, we had been granted the right to subscribe for an indirect equity interest of approximately 4.08%.

However, certain elements of this partnership are currently being disputed and so we may not obtain all of the expected benefits of the partnership. We commenced an arbitration procedure No. 28/2021/SEC8 before the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce by TIM against Banco C6 S.A., Carbon Holding Financeira S.A. and Carbon Holding S.A., pertaining to the interpretation of certain contractual clauses of the contracts governing the partnership between the parties. As a potential result of this arbitration, the strategic partnership may be terminated.

TIM and Vivo new sharing agreement

In September 2020, the competent authorities (CADE and Anatel) approved the new sharing agreement established between TIM and VIVO, for: (i) sharing of the 2G network, allowing one operator to switch-off its 2G network, where both parts are currently present, and the remaining operator will provide “roaming like” services for the customers of both operators and (ii) establish new infrastructure sharing agreements for the 3G and 4G network (Single-Grid), directed to cities with fewer than 30,000 inhabitants, which in the future may be expanded to larger cities. We believe that carrying out this agreement will result in synergies and efficiencies that could help support us in continuing to provide innovative and standard-setting offerings and services, as well as synergies and efficiencies in the allocation of investments and operating costs.

In relation to our sharing of the 2G network, the renowned GWCN (Gateway Core Network) technical solution was approved and carried out during 2021, while quality KPIs were monitored. As a result of the sharing agreement, TIM switched-off its 2G network in five cities in the state of Espírito Santo and seven cities in the state of São Paulo; Vivo switched-off four cities in the state of Rio de Janeiro and eight cities in the state of São Paulo. All the switched-off cities had less than 30,000 inhabitants and were each already covered by access to 3G or 4G .

With respect to the single grid agreement, each party was able to increase its 3G and 4G coverage in more than 300 cities with a total of 422 shared sites, as at May 2021. The agreement remains in force and includes a detailed rollout that is expected to be concluded by 2023.

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TIM and Stellantis connected cars partnership

In October 2020, TIM and Fiat Chrysler Automóveis (FCA), now known as Stellantis, established a partnership to offer connectivity solutions embedded in vehicles of the Fiat, Jeep and RAM brands in Brazil from the first half of 2021. As part of the global strategy of developing ecosystems for connected services and to enhance the digital experience of customers, future Stellantis launches in the country will rely on eSIM, with the LTE coverage quality and TIM's IoT network. As a result, future Stellantis vehicle launches in Brazil will have access to native Wi-Fi onboard eSIM and the cars’ active and real-time communication with the user, the Stellantis and the dealer network. In addition to such features, this technology will focus on safety, allowing remote identification of possible vehicle failures with the possibility of more agile and accurate diagnoses.

During 2021, a Proof of Concept (“PoC”) was launched in the Stellantis factory in Goiana/PE using 5G connectivity to investigate the benefits of this technology, and enabling the use of new applications on a large scale, from the use case of artificial intelligence for the automated processing of images. The PoC is ongoing and will enter a new phase which will enable an Edge Cloud environment, achieving greater computing capacity, greater scalability, and allowing the application to have high capacity and greater sensitivity to latency.

Partnership with TIP and INATEL

Also in October 2020, TIM announced a partnership with TIP (Telecom Infra Project), for developing OpenRAN (Open Radio Access Network) technology by means of the Open Field Program. The initiative will be hosted by INATEL (Instituto Nacional de Telecomunicações) in the city of Santa Rita do Sapucaí, in the state of Minas Gerais, Brazil. The goal is to create an adequate environment (living lab) to test, validate and accelerate products and new functionalities of open and disaggregated technologies solutions for Radio Access Network, by performing network testing, product validation, feature analysis and recommendation based on friendly users’ usage and feedback. The program will last until 2022.

FiberCo Formation and Sale of Equity Interest

On December 10, 2020, our Board of Directors approved the formation of FiberCo Soluções de Infraestrutura Ltda. (“FiberCo”), in preparation for a possible future segregation of assets and provision of fiber infrastructure services. This process is one of the intermediate steps in the transformation of our broadband services, and it aims to create an open fiber infrastructure vehicle to allows us to attract a strategic partner as a shareholder of FiberCo. We expect FiberCo to operate in the wholesale market and to provide fiber connectivity services for last-mile and transport network, for all market operators, with the Company as an anchor customer. We expect FiberCo to allow us to achieve the expected growth in the Brazilian fiber market in the coming years, taking advantage of the open network approach and a focused operating model. This transaction aims to accelerate the growth of the residential broadband business and unlock additional value from our existing infrastructure. Accordingly, on March 3, 2021, we entered into an exclusivity agreement with IHS Brasil Participações Ltda. (“HIS”), a large and diversified provider of telecommunications infrastructure, to negotiate the terms and conditions for the acquisition of equity interest, by IHS, in FiberCo. The operation was approved by CADE in June 16, 2021 and by Anatel in November 11, 2021.

2021 Important Events

5G Auction

The 5G auction was held in November 2021. In the auction, we acquired 11 lots, with a total value offered of R$1.05 billion, in three frequency bands: 3.5 GHz, 2.3 GHz and 26 GHz. The acquired bands have a set of obligations that must be met with financial contributions or the construction of mobile and fixed network infrastructure. As a result, TIM guarantees the necessary spectrum capacity to follow its growth journey in the mobile telephony market nationwide, being prepared for its customers’ demands and to explore new applications and develop innovative solutions that demand high-speed connectivity and capacity.

The main commitments associated with each band are as follows:

· 2.3 GHz: 4G coverage in some municipalities and localities (South and Southeast Regions);

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· 3.5 GHz: 5G coverage in all municipalities with a population equal to or greater than 30,000 inhabitants + fiber backhaul obligations in 138 municipalities + additional contributions to a new entity (EAF) to carry out the following projects: clean-up 3.5 GHz, deployment of fiber-optic in Amazonia and building a private network for exclusive federal government use;

· 26 GHz: contributions to a new entity (EACE) to carry out connectivity schools projects.

Partnership between TIM and Cogna

On July 7, 2021, we informed our shareholders, the market in general and other stakeholders that, together with Anhanguera Educacional Participações S.A. (“AESAPAR”), a subsidiary of Cogna Educação S.A. (“Cogna”), jointly referred to as “Partners”, it completed the negotiations regarding a strategic partnership (“Partnership”) with the objective of developing offers combined with special benefits aimed at providing distance education through the Ampli platform.

The Partners highlighted the innovative nature of the Partnership, by joining a digital teaching platform developed in a mobile-first concept, with the largest 4G infrastructure in Brazil. This is a powerful combination that will expand and encourage access to university and free courses for all TIM customers. This approach provides great potential to generate value for both companies through customer base growth and revenue growth.

The Partnership fits into our customer platform strategy that we have been working on since 2020. This strategy seeks to monetize the assets that TIM holds as a mobile operator through strategic partnerships that generate value for our customers and for the company.

This decision does not create a joint venture and, therefore, TIM maintains the independence of its operations. Through a compensation mechanism based on objectives and depending on the results of the partnership, TIM will become a minority partner of AESAPAR in a new company to be established as a result of the separation of assets from the Ampli platform (“Ampli Co”). The establishment and operation of Ampli Co will be submitted by AESAPAR to the competent authorities, in particular to the Ministry of Education.

TIM's interest in Ampli Co may reach up to 30% of its capital and the subscription of shares must be approved in advance by the Brazilian Antitrust Enforcement Agency (CADE). In the defined plan, Ampli Co is expected to undertake an IPO.

Completion of the transaction between IHS and I-Systems

On November 16, 2021, after regulatory authorizations from Anatel and CADE IHS Fiber Brasil (“IHS"), acquired from us an equity interest in FiberCo Soluções de Infraestrutura S.A. (“FiberCo”), a company that was incorporated by TIM to segregate network assets and provide infrastructure services.

As a result of the transaction, IHS currently holds 51% of FiberCo’s share capital, with the remaining 49% remaining under the control of TIM.

FiberCo’s operations include approximately 15,000 km of fiber in a secondary network, covering approximately 6.4 million homes (homes passed), 3.5 million of which in FTTH (fiber to the home) and 3.4 million in FTTC (fiber to the curb), which constitute the initial base of assets transferred by TIM. The homes connected account for approximately 700,000 over which FiberCo will provide operation and maintenance services to TIM. Moreover, approximately 140 employees were transferred to FiberCo, as well as other assets and contracts, all exclusively related to the scope of its activities.

With the completion of the acquisition, FiberCo changed its corporate name to I-Systems, and began its journey as an infrastructure vehicle with the mission of deploying, operating and maintaining last-mile infrastructure for broadband access to be offered in the wholesale market, having TIM as an anchor customer.

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Capital Expenditures

Capital expenditures totaled R$4,382 million in 2021, up 12.6% as compared to 2020. This increase can mainly be explained by the projects undertaken in preparation of the integration of our infrastructure with Oi’s mobile assets. In 2021, our total capex, including participation in the 5G auction, was R$7,966 million. The actual amount and timing of our future capital expenditures may be affected by foreign exchange oscillations and other impacts from financial or economic crises. For a detailed breakdown of our capital expenditures in 2021, 2020 and 2019 and those currently in progress, as well as the total amount each year and method of financing, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Uses of Funds—Material Capital Expenditures” and “—Sources of Funds.”

On March 16, 2020, we released our Industrial Plan for 2020-2022, which demonstrates our transformation as a result of the execution of our previous Industrial Plans. These changes include, notably, network improvements and an improved customer experience, as recognized by independent third parties, and ongoing innovations in network evolution, including 5G trials, multiple-input multiple-output technology, or Massive-MIMO, repurposing frequency bands that have historically been allocated for 2G mobile services and that are being migrated to other frequencies (known as refarming), and the Vivo MoU (see Item 4. Information on the Company—B. Business Overview—Our Business). Through specific and disciplined investments in new technologies and processes, we seek to reach a position that allows us to act on new opportunities to sustain revenue growth, increase profitability, develop our infrastructure and expand cash flow generation. We focus on improvement of returns on investment as well as customer experience maximization, but we are also committed to our role in society by promoting environmental, social and governance initiatives that will result in a positive transformation for all stakeholders.

We expect that IT initiatives such as big data evolution, the rollout of “next best action,” or NBA, cognitive systems, and application and architecture review in a two-year time frame will advance our IT in a manner that will provide us with an enhanced view of our customers’ lifecycle and consumption patterns, as well as allowing for faster time-to-market, development of new capabilities, process automation, and increased efficiency. Our approach to investment in our network has a five-part focus, as follows: data growth, 5G ready, IoT, fixed broadband, and new initiatives. The benefits expected are network decommissioning savings, a convergent architecture, fixed wireless access improvement, network densification, innovative solutions and new IoT business opportunities.

The capital expenditure expected to support the Industrial Plan for 2021-2023 was approximately R$13.0 billion, considering TIM S.A. operation on a standalone approach, and R$13.5 billion considering the combination with the UPI Oi Mobile Assets for that three-year period. Some smart capital expenditure initiatives in development our infrastructure are disruptive business models for our infrastructure. With the use of new technologies, such as Massive-MIMO technology, and with network sharing agreements, it will be possible for us to reach locations that were not previously financially viable.

On February 23, 2022, we updated our strategic plan after a year of consistent improvements, which included the successful achievement of our short-term objectives outlined in our previous strategic plan for 2021-2023. We managed to implement our strategy to achieve these objectives despite a more pressured and unstable macroeconomic environment that frustrated projections made by the market in general. In this context, our focus on execution, with flexible decision making and appropriate prioritization, were crucial.

For the next three year period, our plan takes into account (i) the estimated effects of the acquisition of the assets of Oi Móvel SA, since the transaction received regulatory approval from the sector regulator (Anatel) and the competition regulator (CADE) (see material facts of January 31 and February 9, 2022); (ii) the effects of the beginning of the adoption of 5G technology and the obligations and commitments that we agreed to as part of our competitive bids in the 5G frequency auctions, (see material fact disclosed on November 5, 2021) in Brazil; and (iii) the change to a new coverage growth model for our residential broadband service after the segregation of our network assets and incorporation of I-Systems, (see material fact disclosed on November 16, 2021). Under this new set of assumptions, we also reaffirm our commitment to (i) the sustainable evolution of service revenue; (ii) the improvement of our operating cash generation, through strong EBITDA (iii) maintain an adequate capital allocation, characterized by the CAPEX allocated to network and IT infrastructure that improve our operational efficiency and customer experience; and (iv) the continuous expansion of cash flow as a combination of all of the above factors.

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Recent Developments

TIM elects new Chief Executive Officer (CEO)

On January 31, 2022, the Company’s Board of Directors announced Mr. Alberto Mario Griselli to replace Mr. Pietro Labriola in the positions of Chief Executive Officer (CEO) and Board member. Mr. Griselli, who held the position of Company’s Chief Revenue Officer (CRO) since July 2019, holds a degree in Electronic Engineering from La Sapienza University in Rome and an MBA in finance from Columbia University. With over 20 years of experience in the telecommunications industry, he has held relevant positions such as Vice-President for Latin America at TIM, a global provider of mobile engagement solutions for telecom operators, and Managing Director for Latin America at Value Partners, a management consulting firm.

Anatel grants prior consent to transfer control of Oi’s mobile telephony activities

On January 31, 2022, Anatel, unanimously granted its consent to the implementation of the corporate transaction referring to the full transfer of control of the three specific purpose entities (“Mobile Assets SPE” or “SPE”) , which correspond to the mobile telephony activities of Oi Móvel S.A. – Under Judicial Reorganization (“Oi Móvel”), for the companies TIM, Telefônica Brasil S.A. and Claro S.A. (“Transaction”).

The consent provides for certain conditions, in line with a transaction of this nature, which mainly aim to guarantee access by small providers to nationwide networks, maintain commitments linked to the transferred radio frequencies, establish the minimum parameters of the communication plan linked to the transaction and grant users certain rights in the migration phases.

CADE approves the acquisition of most of the Oi mobile assets by TIM

On February 9, 2022, CADE under the of Concentration Act 08700.000726/2021-08, approved the implementation of the full transfer of control of the three special purpose entities which correspond to the mobile telephony activities of Oi Móvel S.A. – Under Judicial Recovery, for the companies TIM, Telefônica Brasil S.A. and Claro S.A. (the “Buyers”).

The approval provides for a set of conditions, mostly behavioral, and which were recorded in a Concentration Control Agreement (the “CC Agreement”) between the Buyers and CADE. These conditions have a modular character and can be used by new entrants and smaller operators to reduce entry barriers and leverage the exploration of different business models, without affecting TIM’s main objective of strengthening its infrastructure and closing the capacity gap spectrum compared to its main competitors that the CC Agreement was designed to strike a balance between creating value and mitigating competition concerns for the industry.

B.       Business Overview

Market Characteristics

The telecommunications sector in Brazil is marked by strong competition and by the effective regulation of Anatel, whose mission is “to promote the development of the country’s telecommunications, in order to provide it with a modern and efficient telecommunications infrastructure, capable of providing the society with adequate, diversified and fair prices throughout the entire national territory.”

Throughout 2021, the telecommunications sector continued to suffer the impacts brought on by the global COVID-19 pandemic, as well as restrictions aimed at curbing the spread of the virus. However, despite these challenges, the sector maintained a trajectory of growth in terms of data consumption, and thus operators were required to adapt their networks and face the challenge of delivering an increasingly robust infrastructure in an environment which requires greater rationality in investments, including on projects such as the densification of sites, frequency refarming, and the aggregation of carriers on two or three frequencies. Furthermore, we continue to advance in sharing initiatives focused on 4G and network transport. This evolution of our network has allowed for a significant expansion of traffic on the 4G network, which provides our customers with a better usage experience, both in terms of performance – with higher download and upload speeds and lower latency – as well as in indoor coverage and greater penetration.

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Demand for the evolution of technology and investments in the sector has also continued. In particular, this can be seen in relation to the 5G auction, which was held in the last quarter of 2021 and in additional to a financial component established a series of special commitments undertaken by successful bidders related to the right-of-use of frequencies, which will likely force the sector to experience a new cycle of investments. The deployment of this new technology is expected to bring about significant technological advances, enabling the generation of new business models, encouraging an increasingly connected society, and paving the way for advances in research and development.

Lastly, 2021 proved to be a year in which the demand for fixed broadband consolidated. During the year, several smaller internet service providers launched their initial public offerings (IPOs) and strengthened their financial positions to continue growing. Fixed broadband remains a significant business opportunity in Brazil, as it still has low penetration outside major urban centers. The broadband market is also being influenced by the trend towards the separation of service providers and infrastructure providers. Instead of all service providers needing up front capital to invest in infrastructure, service providers are able to lease infrastructure from specialized infrastructure companies and thereby seek to accelerate their growth more easily without being limited by the need to build their own network infrastructure.

Mobile Market Developments

The following table shows the data of Brazilian mobile market during the periods presented.

	For the Year Ended December 31,
	2021	2020	2019
Brazilian wireless subscriber base (million)(1)	254.9	234.1	226.7
Prepaid lines (million)	118.9	114.7	116.8
Postpaid lines (million)	136.0	119.2	109.8
Estimated total penetration (%)(2)	103.7	97.2	96.9

(1) Source: Anatel.

(2) Based on information published by Anatel and IBGE/IPC Maps (December 2021).

The Brazilian mobile market reported growth of 1.2% year-on-year (“YoY”), reinforcing its continued positive evolution. During 2021, postpaid net additions reached 16.7 million users and surpassed a 4.1 million net addition in prepaid users. Since the end of 2020, the prepaid customer base is no longer the market’s largest component, shrinking even further relative to postpaid customers in the year ended 2021. It now constitutes only 47% of total subscriber base as of December 31, 2021, as compared to 49% as of December 31, 2020. The significant reduction in the overall number of prepaid users is mainly due to the acceleration in users consolidating multiple SIM cards to a single card, high penetration of mobile service and the rapid substitution of voice with data usage, resulting in a decrease in the so-called “community effect,” where consumers value a telecommunications system more as more users adopt it. The postpaid segment, however, experienced an increase of 14% during 2021, reaching 53% of total subscriber base as of December 31, 2021, as compared to 51% as of December 31, 2021, driven by operators’ efforts to monetize their customer base, offering more data, content and digital services, and the migration of customers from prepaid to control plans, and from entrance plans to postpaid plans.

Mobile Competitors

TIM is the brand name under which we market our mobile telecommunications services, offering 5G DSS, 4G, 3G and GSM technologies. Currently, our subsidiaries hold mobile licenses for each of the ten wireless areas of Brazil recognized by Anatel, making us a mobile operator in Brazil offering complete nationwide coverage. In two of our ten areas we are the Telebrás legacy provider. See “—A. History and Development of the Company—Historical Background.” Our network covers approximately 98 % of Brazil’s population based on Anatel’s coverage criteria.

In addition to TIM, as at the end of 2021 there were three other major participants in the Brazilian mobile market that offer nationwide coverage in all Anatel wireless areas: Vivo, Claro and Oi.

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With the closing of the transaction for the acquisition of Oi’s mobile assets by TIM, Vivo and Claro, the remaining major participants in the Brazilian mobile market that offer nationwide coverage in all Anatel wireless areas besides TIM will be Vivo, Claro.

The Brazilian mobile telecommunications industry is highly competitive. Any adverse effects on our results and market share from competitive pressures will depend on a variety of factors that cannot be precisely assessed and are beyond our control. Among such factors are our competitors’ size, experience, business strategies and capabilities, the prevailing market conditions and the applicable regulations.

Other Competition

We also compete with landline telephone service providers, of which the incumbent providers in Brazil (Oi, Vivo and Embratel Participações S.A. (owned by America Movil), as well as Algar Telecom, a regional incumbent), and some other relevant players (GVT, acquired by Vivo, and Net Serviços de Comunicação S.A., owned by America Movil), offer packages including voice (both fixed line and mobile), broadband and pay-TV services in bundled offers. Landline providers are, however, required to offer their services to unaffiliated mobile providers on the same basis they are offered to affiliated mobile providers. Our acquisition of Intelig (now known as TIM S.A.) and AES Atimus (later TIM Fiber, which was merged into TIM Celular in 2012, and TIM Celular was merged into the Company in 2018) broadened our participation in the fixed telecommunication sector.

In November, 2018, Anatel issued Resolution No. 703/2018, which established new maximum limits for the amount of spectrum bandwidth that a single telecommunications service provider of collective interest, as well as its affiliates, subsidiaries or controller company, when operating in the same municipality, may hold on a primary basis. This regulatory change increases the competitive environment of the sector and facilitates consolidation of operations among the main players in the market.

In recent years, in preparation of certain anticipated market events, the Brazilian telecom sector has experienced a series of broadband-centric capital markets and M&A activity, resulting in a mixture of organic growth and strategic acquisitions. The 3.5GHz rights that were acquired at auction by regional providers will open an opportunity for them to become mobile network operators. Additionally, the new neutral network, which is expected to be offered by Winity Telecom, using the 700 MHz frequency will be able to leverage mobile network capacity for ISPs. One of the main opportunities for ISPs in the mobile market will be for ISPs to leverage their current broadband customer base with bundle offers combining their existing broadband offering with mobile offerings that utilize the mobile neutral network.

The consequence of this has led to a growing number of strong market participants in the sector. Brazilian ISPs pursing IPOs aim to use the IPO proceeds to strengthen their regional presence across the country. In July 2021 alone, three of Brazil’s largest ISPs, Desktop, Unifique and Brisanet, staged their IPOs. Shares of the companies were listed on the B3 stock exchange in São Paulo. The wave of Brazilian ISP capital markets and M&A activity reinforces the companies' expansion plans, with regional providers continuing to add new acquisitions to their post-IPO portfolio by acquiring smaller ISPS to complement their existing footprint. Other groups are undertaking this same strategy, for example Grupo Vero, Grupo Conexão, Grupo EB Capital, and Grupo mhnet.

Our Business

We are a telecommunications company that offers mobile voice and data services, broadband Internet access, Value-Added Services, and other telecommunications services and products. For a breakdown of our total net operating revenue by category of activity, see—Item 5. Operating and Financial Review and Prospects—Results of Operations for the Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020.

TIM is recognized for its strong brand and for its reputation as an innovative and disruptive company capable of setting new consumption standards for the market. Our proactive approach allows the Company to be in a leading position in the transformation of the telecommunications business model. The change in consumer profiles and the emergence of new technologies foster a rupture in the telecommunications industry based on the consumption of digital data, content and services.

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The Company is characterized by its pioneering and innovative offerings, among a complete portfolio for individuals as well as corporate solutions for small, medium and large companies. Besides traditional voice and data services, TIM offers a fixed-line ultra-broadband service, TIM Live, WTTx technology through Ultrafibra service, and is starting to offer IoT solutions, with successful examples in agribusiness.

The Company also offers a variety of digital content and services in its portfolio of packages, increasing for its clients the day-to-day functionality of their mobile devices. The ability to manage a complete and varied portfolio gives TIM the possibility to offer customized packages to its customers and to provide offers bundling services, like voice and data, to customers in certain regions.

In 2021, TIM maintained a position as a competitive player in the postpaid segment, with “TIM Black” tariff plans, providing a better service usage experience and continuously innovating offerings, which have differentials like data rollover and international roaming (data package for use in the Americas). The biggest 2020 postpaid launch was the “new TIM Black Família”, with innovative flexible bundle for streaming subscription where the customer can choose between Netflix, HBO GO or YouTube Premium in their plan. We’ve also included a new data package for international roaming to use in the Americas, a better customer service with new channels available for customers such as voice message in WhatsApp and the option to schedule customer service in store, and a new app experience with an online store where customers can buy premium streaming services, like a “one-stop-shop”. We also made innovations in our portfolio of control and prepaid offerings. In the control segment, which tends to be a gateway to postpaid plans, we were the first to offer a new tariff plan, the TIM Social Networks Control plan (TIM Controle Redes Sociais), with unlimited access to social networks, unlimited calls to any operator, plus data and digital services packages. We believe we continue to be a valued leader in the prepaid plan segment and to offer innovative and complete packages, aiming to increase loyalty among our customer base.

In July , 2019, the Company and Telefônica Brasil also entered into a memorandum of understanding (the “Vivo MoU”), to start negotiations regarding: (i) sharing of a single-grid 2G network; (ii) establishment of new infrastructure sharing agreements for the 4G network in 700Mhz, directed to cities with fewer than 30,000 inhabitants, which in the future may be expanded to larger cities; (iii) other network sharing opportunities in other frequencies and technologies; and (iv) other opportunities in efficiency and cost reduction in operations and network maintenance. We believe that implementing the concepts set forth in the Vivo MoU will result in synergies and efficiencies that could help support us in continuing to provide innovative and standard-setting offerings and services, as well as synergies and efficiencies in the allocation of investments and operating costs.

In March 2020, the Company and C6 Bank concluded negotiations regarding a strategic partnership with the objective of developing bundle offers with special benefits for each of their respective customer bases, combining in an innovative manner digital banking and telecommunications services. The agreement also provides for the possibility of exploring sales and payment channel synergies, expanding the distribution of offers and optimizing costs. This agreement does not create a joint venture. In October 2021, TIM obtained the right to exercise the fourth tranche of its subscription bonus for indirect equity participation in C6’s capital stock, as a result of achieving the fourth level of the agreed targets. As a result, TIM has the right to acquire the equivalent to accumulated indirect equity participation in C6 Bank of approximately 4.08%.

In July 2021, the Company, jointly with Anhanguera Educacional, a subsidiary of Cogna Educação S.A., concluded negotiations regarding a strategic partnership. The objective of the partnership is to combine and develop bundle offers with benefits which aim to make distance education more accessible through the Ampli platform – a digital learning platform developed in a mobile-first concept, by bundling it with the largest 4G network infrastructure in Brazil. Our entry into the partnership is aligned with our customer platform strategy that we have been working on since 2020. This strategy seeks to monetize the assets that we hold as a mobile operator through strategic partnerships that create value for both our customers and our business. This agreement does not create a joint venture and, therefore, we maintain the independence of own operations. Through a compensation mechanism based on objectives and depending on the financial results of the partnership, we will become a minority shareholder of a new company incorporated as part of this strategic partnership. This equity interest could reach up to 30% of the new company’s capital. The subscription for any such capital will require prior approval of Brazil’s competition regulator, CADE.

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In line with our consumer strategy platform, TIM will continue to pursue opportunities in other fast growing segments to develop additional partnerships.

TIM seeks to follow the desire of its consumers, considering them at the center of the Company’s decision making, based on: (i) innovation, which is in the DNA of the Company and will continue as a priority, with new plans, offers, partnerships and technologies; (ii) quality, which is the basis for acquiring the customer’s loyalty and for the expansion of its life cycle; and in the (iii) user experience, which is the strategic pillar of convergence of all others, establishing a new relationship with customers and acting in a way that everyone receives the best experience, great services and a transparent relationship with the Company.

Competitive Strengths

We believe that our robust network infrastructure, our innovative approach, our brand recognition and our widespread sales network, position us well to capitalize on opportunities in the telecommunications industry in Brazil and meet the constantly changing demands of the mobile telecommunications market. We believe that our main strengths include:

High quality services

Since national coverage and quality had improved quite substantially over the last few years, Anatel also has shifted its focus. The prior focus was service quality from a broader, state-oriented perspective and now, Anatel is taking a local perspective, concentrating its efforts on smaller geographic areas like cities, especially those where service is still considered poor. In the final quarter of 2017, Anatel proposed the Quality of Telecommunications Services Regulation (Regulamento de Qualidade dos Serviços de Telecomunicações) (“RQUAL”), which, following public consultation No. 29/2017, was approved in December 2019 (Resolution No. 717/2019) and is expected to enter into force in 2022. RQUAL is based on responsive regulation and will apply to all telecommunication services (mobile, fixed, fixed broadband and payTV) on a municipal level and sets forth new obligations for service providers, such as a user compensation model and a mandatory ombudsman, and grants customers additional rights including the customer’s possibility of terminating their service agreement without penalty in case of poor service quality. For more information on the new quality regulation, see “—Regulation of the Brazilian Telecommunications Industry—Quality Management Regulation.”

Accordingly, TIM has also started tracking its quality indicators and focusing on service quality at the city level, in order to assure an even more rigorous review of the customer experience. Following the contribution period, TIM continues to monitor municipalities outside the Anatel threshold (“critical”) and has already started simulating the new indicators set forth in Resolution No. 717/2019.

The results of this local focus are demonstrated in the solid improvements of Anatel’s quality metrics over the last years. As a highlight, the Company has been able to maintain positive results in 3G/4G data-related indicators due to the rapid expansion of our coverage, in particular in 4G, where we are the leading telecommunications company by number of cities covered, according to the Anatel website (www.anatel.gov.br). Anatel’s latest release, which includes data up to the third quarter of 2019, indicates that TIM was the company with the lowest number of critical municipalities.

TIM also demonstrated a strong performance of its LTE technology in data usage, wide coverage and availability. The TIM 4G network received higher measurements, when viewed against other test of 4G networks, in the Brazilian market on the SpeedTest platform. These results are important given the strong demand by TIM customers for this technology in 2020. At the end of 2021, approximately 90% of TIM’s data traffic was carried out by the 4G network, up by 5 p.p. when compared to the previous year.

It is also worth mentioning that the results of digital transformation initiatives continue to expand and, during 2021, presented solid results. Given the impacts of the COVID-19 pandemic, society demanded even more network capacity and digital solutions. This demand meets the strategy TIM has adopted for several years to seek digital evolution and the constant network development, aiming to ensure innovative solutions, quality and availability of services, offering a superior customer experience and strengthening the Company’s positioning in the market. We believe that the digital transformation of our services must take place on several fronts, from the sale and activation

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of the line, to post-sale and the so-called “self-caring”, meaning the digital service portals that allow customers to manage profiles and subscriptions, billing, collection, and payment.

Even in a challenging year, our digital channels’ positive results and the excellence of services offered to our customers confirm the business decisions made during such period were appropriate, prove our capacity to adapt to adverse situations and, reinforce our purpose of “evolving together, with courage, transforming technology into freedom”.

Customer service is one particular area in which digitalization – in particular our Mobile App and interactive voice response (“IVR”), technology – has proven fundamental to improving the customer experience. In 2021, our digital customer interactions increased by 2.83% ( a decrease of 4.66 % in Mobile App and Website interactions partially set off by a decrease of 25.1% in IVR interactions). Additionally, the number of individual users of the “Meu TIM” application in 2021 grew 9.08%, while IVR retention increased by 0.3 percentage points. Also, digital sales in the postpaid segment increased by 9.7 % in the year ended December 31, 2021 as compared to the year ended December 31, 2020, while recharging by digital means continues to become a more relevant sales channel, with a 41,2 % increase in the year ended December 31, 2021 as compared to the year ended December 31, 2020.

We believe our ultra-broadband service is also viewed generally as a reference of quality in the sector, driven by our commitment to the customer experience. This service quality of TIM Live has demonstrated itself to be excellent, as recognized for 6 years in a row (2015 - 2021) by the sixth time by the widely circulated newspaper, “O Estado de São Paulo.”

We also seek a strong position in the high-value customer market as a content HUB by offering a variety of plans for individual and family usage, bundling voice and data packages, streaming and other content subscriptions, as well digital Value-Added Services (music, e-reading, video streaming, games), in order to provide a custom customer experience.

We are also better able to provide high quality services due to our strong relationship with our suppliers. We operate a system for information technology vendor management in order to improve the commitment of our suppliers. As a result of this approach, we benefit from enhancements like (i) better accountability of end-to-end vendors on our business processes; (ii) better contractual conditions and savings due to the increase of volumes per vendor; (iii) vendor consolidation and specialization in specific platforms/processes, creating the opportunity for long-term investments in such areas; and (iv) active contribution to transformation and simplification and (v) raising the best practices of Request for Quotation instead of Direct negotiating in order to gain more savings, also increasing the so called Global Deal among the Company and Telecom Italia with the scope to capture more synergies and quality of the furniture’s by global vendors.

These processes were organized and improved through detailed rules such as the Projects Review Board and Investments, and the Function Points Productivity Contractual Auditing. This allowed us to achieve an excellent level of information technology governance, exemplified by better business contribution of each investment due to shared objectives and goals. As a result, we improved our efficacy and efficiency.

Finally, we also continue to seek new internal data sources in order to better understand our users’ perspective and needs, including collecting and analyzing information from applications and investing in the modernization of traditional quality-assessment tools.

The Company understands that the above statistics reflect its commitment to solid infrastructure and its focus on the customer experience. However, the Company recognizes that there are some statistics and/or quality measures that use different methodologies that could present diverse results from those that are mentioned above.

Open Innovation Program

TIM’s Open Innovation Program has the objective to establish a network to exchange knowledge, best practices and business models within a collaborative group of enterprises, startups and academia in order to leverage the development of innovative products and services. The program focuses on learning and exploring new technologies in partnership with complementary business partners, in order to create sustainable and responsible solutions. The

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collaboration network is based on the concept of partnerships with startup, innovation hubs, academy and/or society, and is designed to bring together entrepreneurs, vendors, technology companies, providers and content developers, innovation centers and universities so that they can recognize in TIM a potential partner in the development of new products, services or business models based on TIM’s business strengths and technology.

A supporter of the open innovation concept for five years, TIM has been obtaining good results from such approach to business. After a unique year in 2019 for TIM’s Open Innovation program, when the company became a space for promoting and fostering a new technological wave in Brazil, TIM went further in 2020 and 2021, increasing its involvement with startups, establishing new partnerships with innovation hubs dedicated to healthtechs and agritechs. During 2019, TIM established 5G Living Labs with the aim to foster the development and use of 5G in a variety of contexts, to perform network testing and promote market readiness. The 5G Living Labs establish an environment for experimentation and co-creation in which end-users, researchers, companies and public institutions explore, design and jointly assess new and innovative products, services, solutions and business models, and provide important feedback for development and subsequent commercialization of products and services. In this occasion, four labs were launched with national and international partners across Brazil: one with the Federal University of Santa Catarina and CERTI Foundation, one with the National Telecommunication Institute (Inatel) in Santa Rita do Sapucai (State of Minas Gerais), one with the Federal University of Campina Grande and Virtus Institute and one in São Paulo within CUBO, the most prestigious startup hub in Latin America. These TIM 5G Living Labs focused on fostering 5G use in the following areas and business sectors: telemedicine, remote education, smartcity, security, intelligent home, game streaming, drones, industry 4.0, immersive technologies for education, health, industry and entertainment (actual reality and virtual reality) and smart agriculture using experimental 5G radiofrequencies.

In 2020, TIM, together with the Telecom Infra Project (TIP) and the National Telecommunication Institute (Inatel) started the Open Field Program, which aims to develop innovative and sustainable solutions for the expansion of the radio access network (RAN) infrastructure, creating an adequate environment to run tests, like a living laboratory, validating and accelerating products and new functionalities of open and disaggregated technologies solutions, such as Open RAN. The program has taken place since 2021.

In 2021, as part of our client platform strategy for start-ups, we actively pursued a number of fintechs, edutechs, insurtechs and healtechs, among other verticals in an effort to transform those startups into unicorns. This was based on our client platform strategy pursuant to which we seek partnerships with digital service companies where we believe we can accelerate their growth and create new business models, client journeys and marketing approaches. As part of this strategy, we started pilot projects to foster the development of an ecosystem of solutions and partners with the aim to approve devices and applications in partnership with academies, government agencies, communities and startups.

TIM, in alliance with Inatel – Brazil’s National Institute of Telecommunications, will develop use cases regarding internet-of-things (IoT) and smart cities based on IoT Mobile solutions with applications that could improve the quality of life of citizens, development of intelligent tools and enable new processes of public administration.

TIM in alliance with PUC/Rio - Pontifical Catholic University of Rio de Janeiro, will develop different use cases in relation to following verticals:

(i)       Health:

•       Patient monitoring, both remotely and in healthcare facilities: cost-effectiveness study of clinical outcomes among patients using the IoT solution and control groups

•       Monitoring of assets, supplies and resources in health facilities: cost-benefit assessments of using the IoT solutions.

(ii)       Rural:

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Efficient use of natural resources and materials, with an emphasis on meteorological and soil monitoring, in order to promote increased productivity as well as cost reduction.

•       Efficient use of machinery with an emphasis on machine performance management, with the aim of optimizing the use of equipment.

In 2021, with the aim of redefining smart cities in Brazil and exploring the full potential of 5G, TIM, Enel X Brazil and Leonardo Brazil joined forces to serve Smart, Safe and Resilient Cities. The companies agreed to offer and develop joint solutions for smart cities, combining experience in energy, telecommunications, technology, and cybersecurity tailored to Brazilian municipalities.

In 2021, TIM became a partner of Embrapa, the main agent of innovation and research in agribusiness in Brazil and the world, in the development of a new innovation agribusiness hub called Silo, located in Juiz de Fora (MG). The hub pursues innovative solutions through the combination of entrepreneurship, research and innovation. TIM will have a relevant role in the hub, enabling mobility and 5G.

In 2021, in relation to 5G, TIM, in partnership with AgTech Garage innovation hub, launched a call for startups that want to evolve or pivot their business plans in order to utilize 5G. The call was successful, having more than 45 startups registered, with eight finalists. Those startups had the opportunity to present their pitch to us, involving solutions for fire detection, irrigation, intelligent fertilization, robotics, image monitoring, pest control, among others. Among the finalists, four startups were selected to test and evolve their minimum viable product (MVP) together with Auros Robotics, Quickium and Umgrauemeio.

In 2021, driven by current market trends and the role of 5G enabling new business concepts, we established a partnership with Intel, which allows us to have first-hand access to Intel technology. The project focuses on offering 5G network services to benefit end consumers. The focus of the partnership is mainly on cloud gaming and the metaverse. This initiative is unprecedented in the Brazilian market, making us the first pioneer partner of Intel for cloud gaming over 5G.

In 2021, we again took part in the biggest hackathon in Latin America, Hacking.Rio. The challenges were based on the UN Sustainable Development Goals and we launched a challenge based on SDG 11 – “Sustainable Cities and Communities”, looking for products and services that can benefit mobility and help create, more modern and cleaner cities with green spaces.

In 2021, Stellantis, TIM and Accenture teamed up to launch the first standalone 5G pilot for the automotive industry in Brazil applied through a private network, which uses artificial intelligence and cloud computing.

In 2021, we were chosen as the telecommunications provider responsible for providing the 5G infrastructure and network, deploying the 5G SA (standalone) network core in the public cloud, constituting an integrated digital environment

A Strong brand with a new tagline.

During the 2020/2021 COVID-19 pandemic, telecommunications services were very important, as connectivity allowed people to find new ways of studying, working and finding entertainment, making the world even more digital. TIM translated this trend into its new brand tagline, “Imagine the possibilities”, which invites customers to see the future in a positive way and shows that TIM will be next to them in their new challenges, opening a world of opportunities. In addition, TIM presented a new spokesperson representing the current brand values - freedom, respect and courage - and highlighting diversity, a relevant pillar in the company’s strategy. To reinforce its brand strategy, TIM made a new reading of its purpose: “Evolve together with courage, transforming technology into freedom”, indicating that the company will continue to lead important market movements and act as a pioneer in customer services. Furthermore, to reinforce the brand image, a new campaign was launched to communicate TIM network quality, “TIM network. You can count on.”, that shows the evolution of 4G technologies, in which TIM has the largest coverage in the country since 2015, in addition to highlighting the 4.5G and the new 5G DSS. Finally, in order to help reinforce our brand association with music, in December 2021 we announced our sponsorship of

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certain music events in 2022.. This included a sponsorship of the 2022 Brazilian edition of the Rock in Rio festival and TIM Music Verão (free concerts on the beaches of Rio de Janeiro).

Advanced Technology and Innovation Center

In 2017, we set up TIM Lab, a multifunctional test bed environment for evaluation of innovative technologies, products and services, assessing their functional efficiency and performance requirements, and development of new models and solutions. This endeavor brings engineers, researchers and technicians together to ensure effective assessment, and serves as an open space for new opportunities, leading innovation for the Brazilian telecommunications market and acting as a national reference for R&D activities.

TIM Lab performs a strategic role in supporting service assessment and innovation activities. These projects support TIM’s network evolution and tackle certain important business and market needs, including the evaluation of new generation networks, future Internet applications, projects with positive social and environmental impacts and open innovation initiatives.

In this sense, TIM has also joined the Telecom Infra Project (“TIP”), an initiative founded by Facebook and other companies to create a new approach for building and deploying telecommunication network infrastructure, with TIM Lab as the first TIP Community Lab in Latin America. In addition, since 2017 TIM Lab has also participated as one of the GSMA Mobile IoT Open Labs since 2017, a community where companies developing solutions over cellular low power wide area networks can work with experts on their projects.

Among the technologies assessed and approved at the TIM Lab environment are certain extremely important technologies to support the network evolution, including 700MHz LTE, IP multimedia networks (voice over LTE, video over LTE, WiFi calling services, completely laid out functional blocks, and enabled by an IP multimedia subsystem platform), network functions virtualization (“NFV”), 4G RAN sharing, NB-IoT, Defense Wavelength Division Multiplexing, transport network and power saving features and solutions. In 2019, TIM launched its nationwide 4G NB-IoT network in 700MHz, covering over 3,200 cities. In 2020, TIM ran laboratory tests and live trials with 4G advanced features combined with 5G (multiple antennas plus carrier aggregation and dynamic spectrum sharing). The first 5G NSA compatible devices were homologated and commercialized in 2020, allowing the users to make use of the technology in the available live clusters. Open-RAN solutions were also evaluated in laboratory environment with the objective to assess the maturity of 4G and 5G disaggregated solutions for future field trials. Other advanced technologies, such as edge computing, disaggregated transponders and transport network optimization and automation solutions were also evaluated in TIM Lab in 2020.

TIM evaluated 5G standalone architecture and solutions in 2021 (known as 5G SA), for commercial deployment in 2022. Also in 2021, TIM developed proofs of concept (PoCs) making use of different technologies associated with 5G SA, such as artificial intelligence for the automated processing of images (using 5G as mean of connectivity), and cloud software for hosting 5G core network elements.

Strong commitment with ESG pillars and the only Brazilian telecommunications company listed on the Novo Mercado for over 10 years

Since TIM Participações’s listing on the Novo Mercado in July 2011, we are the only company in the Brazilian telecommunications sector listed on this segment of the B3 for over 10 years. As part of our listing on the Novo Mercado, we are required to comply with heightened requirements relating to corporate governance and the disclosure of information to the market. As part of our strong commitment to these principles, we made our financial results meetings available by teleconference, smartphones and tablets, in addition to computers. We believe that the listing on the Novo Mercado provides greater liquidity and value for our shares and allows us greater access to international markets, promotes the strengthening of our corporate image and increases confidence in us, in addition to reaffirming the long-term commitment of Telecom Italia and its subsidiaries (the “Telecom Italia Group”), in Brazil. We believe listing on the Novo Mercado also aligns the interests among our controlling and minority shareholders with respect to voting rights, tag along rights and dividend policy.

In addition, we belong to a select group of companies comprising the portfolio of the Corporate Governance Index and the B3 Tag Along Stock Index, comprised of companies that have committed to adopt better co-sale

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protection to minority shareholders, have actively traded in 30% of the trading sessions and do not constitute a penny stock. In December 2021, despite methodology changes made by B3 to enhance the index rigidity, we were listed for the fourteenth consecutive year as part of the portfolio of the Corporate Sustainability Index of the B3, an index comprised of companies that have a strong commitment to sustainability and social responsibility. In 2021, we also remained one of the constituents of the S&P B3 Brazil ESG Index. In January 2022, we were selected to remain in the portfolio of the Carbon Efficient Index, or ICO2, of the B3, with the commitment to measure, disclose and monitor its greenhouse gases, or GHG, emissions. We increased, by 24%, our S&P ESG Score, which is based on our response to the Corporate Sustainability Assessment (CSA). We believe that our improvement in ESG performance was one of the highest in the international telecommunications industry. The constant pursuit of best environmental, social and governance practices also ensures our presence in several international indexes and ratings, such as FTSE4GOOD Emerging Markets, FTSE4GOOD Latin America, MSCI AWCI ESG Leaders, MSCI Emerging Markets ESG Leaders, Refinitiv D&I Index, among others. In 2022, the organization responsible for the Dow Jones Sustainability Index (DJSI) was considered one of the busiest companies in the world. The company was awarded its DJSI22 for the performance evolution in its submission process of 24.2%.

TIM is the first Brazilian operator to be part of the 2021 Refinitiv Diversity & Inclusion Index, which measures the performance of more than 11,000 companies - equivalent to 80% of the global market - based on diversity, inclusion and career development initiatives. Ranked 19th in the global ranking, TIM leads the list of companies in the telecommunications sector worldwide and is also the benchmark in Brazil, considering all sectors.

As a signatory to the Global Compact since 2008 and UN Women since 2021, TIM promotes projects related to the Sustainable Development Goals (“SDG”) and recognizes the rights to data privacy, safe internet, access to information and freedom of expression as essential and unnegotiable as part of its efforts to respect Human Rights.

As part of its commitment to society in addressing climate change, TIM conducts periodic mapping of the sources of emissions in its activities. The Company is able to do so by preparing annually a GHG inventory in accordance with the guidelines of the GHG Protocol (which sets the global standard for how to measure, manage, and report greenhouse gas emissions) and is working with TIM in Italy to establish goals aligned with the Science Based Targets Initiative (SBTi), since TIM Group joined the initiative in July 2021 with the challenge of keeping global warming limited to 1.5°C, as established in the Paris Agreement. The SBTi aims to promote the best reduction and offsetting GHG emissions in line with climate science. Since 2010 TIM reports its greenhouse gases (GHG) emissions by means of the Carbon Disclosure Project (“CDP”) – the largest database of primary corporate climate change information in the world – and publishes its GHG emissions inventory in accordance with the Brazil GHG Protocol Program. In 2021 the CDP questionnaire was integrated by B3 as a crucial part of the methodology for the selection of the constituents of the Corporate Sustainability Index and our CDP Score improved from B- to B. In 2020, the ICDPR70 was launched, an exclusive Index that includes companies publicly committed to reducing their carbon footprint, tracked by companies' scores on the CDP questionnaire and classifying those with the best level of awareness of climate change. TIM has been included on this index. Another highlight in 2021 was the recognition as seventh place in the ranking of the consultancy Resulting, an office specialized in ESG integration, research and education for planning and risk analysis.

We also identify opportunities to improve our levels of excellence in our Environmental Management System (EMS), covering all our operations, based on our Environmental Policy. This includes basic commitments such as protecting the environment, customer service to the legal requirements and norms of the organization and the continuous improvement of performance in processes and controls, having obtained the ISO14001 environmental certification for Network Management and Operation in the states of Rio de Janeiro, São Paulo and Espírito Santo.

For 14 years TIM has published its Sustainability Report presenting the main financial and non-financial results, in accordance with the Global Reporting Initiative (“GRI”) Standards methodology. As of 2021, we will refer to this publication as the ESG Report and reinforce our commitment to transparency and accountability to our stakeholders, organizing the report into three pillars: Environmental, Social and Governance. In the 2021 ESG Report, we also started to consider reporting the SASB - Sustainability Accounting Standards Board. The Report has an independent third-party limited assurance since 2009.

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Our main policies - such as the Corporate Social Responsibility, Human Rights, Environmental, Climate Change, Supplier Relations, Risk Management, Anti-corruption and Safety & Occupational Health Policies - are publicly available to the consultation of our stakeholders.

Founded in 2013, Instituto TIM has a mission to democratize access to science, technology and innovation, in order to promote human development in Brazil. More than 700,000 people from all Brazilian states and the Federal District have been benefited by the education and inclusion projects of Instituto TIM, some of which were internationally awarded (i.e. Governarte Awards – BID 2015). More on Instituto TIM’s actions on the website https://institutotim.org.br/.

In 2021, we included long-term ESG commitments in our 2021-2023 Strategic Plan. Based on the ambitions assumed in the last Industrial Plan (2020-2022), we included new objectives related to a portfolio of initiatives that are part of our business strategy, contributing to a coherent interrelated structure between ESG aspects, business operations and organizational accountability. For the TIM Group, the business role is increasingly tied to the responsible management of aspects that go beyond financial targets and aim to generate positive value for society in the long term.

Among the established goals, our environmental pillar is to become a carbon-neutral company by 2030. In addition, we have undertaken to achieve by 2025 90% of energy consumption being from renewable sources, to increase by 80% the energy efficiency in data traffic (against the base year of 2019), to reduce by 70% indirect emissions and to recycle at least 95% of our solid waste. From a social perspective, the main commitments are for our workforce to be comprised of 40% of black people, our leadership positions to be comprised 35% of women, to take 4G connectivity to all Brazilian cities, and to keep our level of employee engagement of at least 80% until 2023. The Company obtained the ISO 37001 (anti-bribery management systems) and aims to obtain, until 2022, the ISO 27001 (information security management), both are important aspects of our Corporate Governance pillar, which also has as goals, by 2022, to keep TIM on the Novo Mercado, Pró-Ética and ISE-B3, and the ISO 14001 and ISO 9001 certifications. Our ESG plan is annually updated together with strategic plan.

Highly qualified and experienced executives and controlling shareholder support.

We have a team of highly qualified executives, widely recognized in the industry and possessing extensive experience in telecommunications markets in Europe and emerging countries. Our executive compensation policy seeks to align the interests of our executives with those of our shareholders, through variable compensation plans and share based incentives that reward good performance and the accomplishment of certain goals, as well as provide for improved executive retention.

Our controlling shareholder’s support in our operations is further demonstrated through the sharing of know-how and best practices and development of new solutions for networking, marketing and finance, which are rapidly rolled out under a “plug & play” strategy, under which network innovations may be developed by our parent company first in other regions and then implemented with us.

Strong financial position

With consistent financial results in recent years, and solid earnings before financial income (expenses) (including foreign exchange variations), income tax and social contribution, depreciation and amortization costs and expenses and share of loss of an associate (“Adjusted EBITDA”), according to our internal analysis, we believe that we have a strong cash flow generation, a solid financial position and a low relative Net Debt to Adjusted EBITDA ratio. In this scenario, we understand that we are in a strong position to take a significant role in potential future consolidations in the market and/or to have a competitive position in important frequency auctions in the years to come.

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Our Strategy

Our Strategic Plan

We expect our updated strategic plan to allow us to consolidate the TIM brand through 2024, in a consistent approach with our prior plan (2021-2023). Our new plan is focused on our main stakeholders and on providing building blocks for our future growth by combining evolution and transformation to develop our strategic pillars.

We believe that, during the next years, some relevant trends, such as mobile market consolidation, wave of asset separation, acceleration in digital consumption, 5G, such as the Internet of things, or IoT, and the machine-to-machine market, or M2M, technology, will have structural implications on the business model of telecommunication operators in Brazil, including the uncertain pace of the country’s economic recovery.

After a long and intense journey of development and transformation, we are now paving the way to become the Next Generation Telco by strengthening our core and accelerating growth beyond connectivity, closing the gap on the core (e.g. spectrum, CX) and becoming the best telco in Brazil.

In order to strengthen our core in the provision of mobile services, our plan is build and retain our customer base with an ever improving service quality and value proposition, while in relation to our provision of fixed services our plan is to attract and retain customers by improving operations and expanding our coverage.

In order to accelerate growth beyond connectivity our plan is scale up partnerships leveraging base and key assets to expand new businesses and exploit new business opportunities through separate entities (spin-offs).

Our forward-looking strategy is focused on the three strategic key priorities:

· From the bottom to the top in the core to become the best mobile operator in Brazil and promote a step change in broadband business: (a) capture value from the Oi acquisition through the integration of its customer base, network and spectrum; (b) become the best network by reducing the spectrum gap, maintain coverage leadership and develop a value driven approach for 5G; (c) evolve to become an operator with the best customer experience and perception; (d) become a hub of services and content across plans, and generate additional value from our customer base; (e) revamp our prepaid segment value proposition and performances; and (f) capture the ultrabroadband market by enhancing our value proposition and increasing our footprint;

· Accelerating growth beyond connectivity to evolve our customer platform strategy to the next level and create a portfolio of operating companies: (a) scale up participation in new businesses expanding the portfolio of strategic partnerships (b) foster the 5G opportunities by launching an investment vehicle to create new “connectivity-enabled” unicorns; (c) de-layer our asset base and unlock additional value creation opportunities; (d) increase our B2B/IOT verticals growth and become a full vertical orchestrator; and (e) accelerate our value capture from mobile advertising and data driven partnerships; and

· Building the organization of the future to continue our path to excellence and continue strengthening ESG proposition: (a) enhance our talent and company capabilities, to ensure a winning “organizational backbone” (strategic reskilling/upskilling and employee engagement and experience); (b) boost company productivity and efficiency through new operating models, BPOs, and digital transformation; and (c) integrate ESG drivers into our strategic initiatives, including: climate change, diversity & inclusion and Governance.

In our view, the COVID-19 pandemic increased demand for connectivity and the telecommunications sector benefited from this context. As a result, we believe we can be considered a more resilient company, not only due to data consumption growth, but because we have been honing our market vision and execution capacity to create long-term value.

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Protecting the value of our prepaid customer base and aiming at the growing postpaid segment, shifting focus from absolute market share to revenue share, and strengthening our existing customer base.

Up until 2020, the Brazilian mobile telecommunications market was facing an overall reduction in the number of prepaid customers. However, in 2021, the prepaid base increased, which may be a consequence of the socio-economic changes in population or particular incentives in our competitors’ offerings. It is not yet possible for us to confirm whether this indicates a trend reversal or just a brief pullback. We maintained our strategy to be chosen as the single SIM provider for the prepaid consumer market by providing offers that are attractive and valuable to customers while maintaining our reputation for quality and innovation. For the prepaid consumer market, our key priority is to offer simplification to improve customer experience with continued evolution of digital channels, while for the postpaid consumer market, our plan is to grow based on a “Mobile Challenger” approach pushing migration from prepaid, leveraging the benefits of 4G coverage leadership and establishing a customer long-term relationship driven by loyalty initiatives. To support this strategy, we also implemented new offers, new handset strategy and initiatives in our sales channel model because of the pandemic. We improved the digital channel and created a drive thru and delivery sales models experience.

Since the beginning of the pandemic, in order to contain the negative impact of the crisis, numerous actions were taken, highlighting the encouragement to recharge by means of digital channels and the digitalization of Control customers who paid their bills in physical channels, reducing bad debt.

In the business to business market, we intend to leverage consumer offers and channels in order to gain market share in the small and medium business, or SMB, segment, as well as to launch a new mobile offering focused on micro and small businesses. We are also pursuing the development of targeted markets such as the Internet of things, or IoT, and the machine-to-machine market, or M2M, beyond simple connectivity, and evaluating business opportunities for the application, using the 5G network, of mobile application and fixed wireless access. Moreover, we are repositioning our sales channel strategy in order to increase not only efficiency but also sales productivity. Our growth strategy is mainly focused on addressing the potential for mobile Internet in the Brazilian market, particularly increasing mobile Internet penetration and data traffic. We believe mobile operators are in a strong position to address the demand for broadband in Brazil, with the ability to provide flexible price plans affordable to the majority of the Brazilian population. The lack of fixed infrastructure is still an issue for accessibility to fixed broadband, especially in suburban areas, making mobile coverage more suitable for such customers without broadband access. In addition to providing affordability and coverage advantages, mobile operators appeal to the new cultural demand for Internet connectivity at all times and in all places.

In addition, our strategy also involves positioning TIM as a partner of our existing customer base, by increasing their loyalty by offering exclusive products to existing customers, focusing on Value-Added Services in our offers, and by differentiation in our products and services. Value-Added Services represent an important part of the TIM strategy, as it is already a relevant market and has high growth rates with the potential to increase revenue streams. Such services are generally launched through a partnership with an established OTT player. We believe the foregoing strategies will allow us to strengthen customer loyalty without requiring us to incur higher costs, as increased traffic within our own network does not significantly increase our operational costs. We are also investing in new channels, to bring new customers to the company and to enhance each customer’s experience. We are constantly seeking new customers through new marketing efforts and promotional initiatives. Another important growth factor is expected to come from our digital strategy evolution, with an increased role in the growing M2M and IoT ecosystem, exploring new revenues opportunities including being more than just a connectivity provider, offering a platform (analytics, big data, mobile advertising, etc.) and a content offer aggregation to support mobile and fixed service revenue growth. Capitalizing on fixed-mobile substitution in voice and traditional services.

We seek to capitalize on the existing opportunity of fixed-mobile substitution in voice and data traffic and encourage the use of mobile devices, rather than landlines, for long distance communication and Internet. We believe that the main advantage of our product offerings is that our customers are able to use our growing mobile network.

In the voice market, this strategy has been successful in part due to the limited service offerings of other long distance carriers in Brazil and the acceleration of fixed-mobile substitution. We have become a market leader in long-distance telecommunications, based on our market share. Fixed-mobile substitution is still evident in Brazilian

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market, as fixed telephony operators have experienced declining revenues. Since we are primarily a mobile operator with robust network infrastructure, the impact of any reduction in the fixed telephony market does not have a material impact on our performance, and we therefore encourage the acceleration of fixed-mobile substitution, which in turn increases demand for our services.

As already mentioned, TIM is also targeting the residential broadband market through its 4G mobile broadband network, using fixed wireless access technology, connecting homes to the Internet by using a router that connects to our 4G mobile network. We believe such product can be suitable especially for areas with poor fixed broadband infrastructure as our 4G coverage is growing rapidly. We are also evaluating the use of the 5G network to provide fixed wireless access solutions.

Providing Internet access to everyone.

We intend to provide universal Internet access to an increasing number of individuals, offering our prepaid and postpaid customers competitive data usage plans through wireless handsets or other data devices (e.g., tablets, wearables, etc.). Our focus on increased data usage among our customers is also influenced by our ability to effectively manage our handset and accessories sales, with a focus on entry level 5G smartphone models that will be ready for the deployment of our 5G network, providing quality Internet access. This approach is allowing us to offer our services at a highly competitive price, offer convenient payment methods, meet market demand and allow for opportunities for innovation. The result of this strategy can be seen in the increase in our number of data users and in smartphone penetration, especially in 5G. Leading mobile Internet growth in our sector is a key pillar of our strategy, since we see this as the most important market in terms of growth and size in the foreseeable future. Our marketing efforts have also been designed to stimulate Internet usage and leverage our 4G and 5G networks by providing for suitable and affordable postpaid and prepaid Internet plans.

Construction of a unique infrastructure network in the Brazilian market and improving our network

We are committed to developing a robust network infrastructure capable of serving our customer base and anticipating new trends and technologies in the industry. The development of this infrastructure requires both organic (planning and infrastructure development projects for the existing network) and inorganic (acquisitions) investments. As part of our strategy to focus our investments in infrastructure, TIM Participações acquired Intelig (now known as TIM S.A.) in December 2009, in order to establish TIM’s own fiber optic network and develop automation projects. TIM Participações also acquired the company formerly known as AES Atimus (later TIM Fiber, which was merged into TIM Celular in 2012, and TIM Celular was merged into the Company in 2018) in 2011 to strengthen and expand our fiber optic network. With the acquisition of Oi’s mobile operations, TIM will improve its market position, capturing higher gains of scale, synergies and optimizing investments. TIM should incorporate approximately 7,200 mobile access sites, which corresponds to 49% of the total sites of Oi’s mobile assets unit.

Besides improving our core infrastructure, TIM has been rolling out an aggressive plan for 4G coverage, which has placed TIM as the undisputed leader in 4G coverage in Brazil, achieving more than 4,715 cities with 4G technology at the end of 2021, considerably ahead of its competitors. This positions TIM as having the best overage and the best mobile broadband technology. We were elected the telco with the best “video and video calling experience” and with the most available 4G coverage by OpenSignal, in partnership with Anatel. We have also reinforced our commitment to cover 100% of the country with its 4G network by 2023. Moreover, we have also been strategically expanding the 700 MHz frequency, which now covers 3,975 cities, and the 4.5G coverage to 1,712 cities by the end of December. In order to improve our network coverage in an efficient way, we have expanded our “Single Grid Coverage” (a network agreement with Vivo reaching more than 353 cities implemented by TIM and 363 by Vivo, already with consolidation tests in 21 cities) and the Sky Coverage project (924 sites connected via satellite). We have also undertaken investments in network modernization, including more than 1,600 sites with M-MIMO (Massive Multiple-Input Multiple-Output) in 2021.

Expansion into new businesses and continued strength in recently expanded sectors.

TIM Live offers high quality ultra-broadband, with high-speed data connection. Despite limited access to new markets, FTTH (fiber to the home) network coverage continued to grow, prioritizing the consolidation of already

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active clusters. We ended 2021 with growth of 29.0% YoY of total homes passed (HPs) with fiber, operating in 28 cities and 7 administrative regions of the Federal District, and with an ARPU increasing by 3.7% when compared to 2020.

TIM Live ended 2021 with 685,000 connections, adding approximately 40,000 lines in the past 12 months, up 6.1% YoY, maintaining its growth trajectory, with the FTTH base as the main lever. Higher value plans, with speed above 100 Mpbs, continue to gain more relevance, reaching a 62% share of the total base in the quarter ended December 31, 2021. We plan to continue expanding TIM Live's services with the coverage rollout model transition from building to renting, with I-Systems acting as one of the infrastructure vehicles with the mission of deploying, operating and maintaining last-mile infrastructure for broadband access, in a strategy of changing capex to opex with positive free cash flow impact.

Since 2020, TIM has been developing an innovative customer platform strategy that aims to monetize our customer base. Commercial partnerships with direct compensation for sales of advertising and data intelligence yielded revenues of approximately R$36 million in 2021. Meanwhile, strategic partnerships like our partnership with C6 ended the fourth quarter of 2021 with a record number of active accounts, helping us to reach an equity interest of 4.08%. In terms of revenues, the partnership generated more than R$83 million for TIM in 2021. Similar to our partnership with C6, we also established another strategic partnership with Cogna, for distance learning through the Ampli platform, reaching over 50,000 users enrolled in undergraduate courses and open courses in 2021.

Sales and Marketing Strategy

Our recent sales and marketing strategy has been characterized by:

· a focus on improving our positioning towards high value consumers, by offering a variety of plans bundling voice, data packages, and certain free access to applications, as well digital Value-Added Services (music, e-reading, video streaming). The approach for this segment is driven by the strategy of adding value for the customer base and providing users with a custom experience;

· strengthening of our strategy in respect of the migration of customers away from the prepaid segment, by focusing on recurrent offers instead of daily offers and therefore boosting consumption;

· a continuous evolution of our postpaid plans, within which we are pursuing a number of strategies, including: (i) a review of our offers in order to stimulate the sales of postpaid plans, with discounts in services and handsets, according to the commitment of the customers; (ii) add value, including Value-Added Services as part of our plans, without extra charges; (iii) creating new markets for postpaid plans, according to our customers’ usage profile; (iv) creating new opportunities for transitioning the higher spending prepaid and TIM Controle customers to postpaid; and (v) creating customizable plans for streaming subscription by the postpaid customers;

· an effort to maintain our position as an innovator by relaunching TIM Black Família, as the first mobile plan in Brazil with flexible bundle for streaming subscription where the customer can choose between Netflix, HBO GO or YouTube Premium in their plan. The portfolio also includes the following on all family plans: large data packages to share with up to six lines, data rollover, international roaming (including data package for use in the American continent, seven days of unlimited WhatsApp and 30 minutes of voice) and a new app experience with many new functionalities, such as Internet control and self-care provisioning, which allows the owner of the contract to share Internet with the other lines through the app. In addition, the TIM Black portfolio has benefits like data rollover and international roaming (data package for use in the American continent);

· a monetization process in respect of our postpaid customer base, leveraging ARPU, via a “more for more” strategy and end-to-end product offerings which result in higher revenue generation;

· a restructuring of our SMB segment, targeting the growth of the overall sales force in order to boost mobile sales. This strategy will continue in order to meet customer needs and achieve alignment with industry demands;

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· at the end of 2021, we changed our organizational structure to bring together under a single team all areas related to the strategy and development of digital sales operations, including ecommerce and other remote channels such as omnichannel, marketplace, live commerce and telesales, in the consumer and small and medium-sized companies segments. The new team will be responsible for strengthening and boosting the development and management of this sales channel.

Digitalization and innovation by means of a partnership with C6 Bank, a digital bank, that adds more value to postpaid customers, bringing exclusive benefits such as credit card with free annual fees, exclusive investment portfolio, no tax to open an account, subscription of a premium delivery app included “RappiPrime”, and also expanding our telecom benefits with internet bonuses, internet to use in international roaming, international long distance calls and the possibility to buy smartphones with better payment options with C6 Bank credit cards.

A new partnership with Ampli, an educational group in Brazil, that is intended to offer greater value to our postpaid customers by bringing exclusive benefits to TIM Black and TIM Controle. Ampli is a fully digital educational platform created by Kroton and developed to be used primarily on smartphones. TIM and Ampli offer exclusive benefits to customers, such as: six free months on courses, discounts on graduation courses from R$149.99 to R$99.99 and zero rating on navigation.

Mobile Service Rates and Plans

In Brazil, as in most of Latin America, mobile telecommunications service is offered on a “calling party pays” basis, under which the customer generally pays only for outgoing calls. Additional charges apply when a customer receives or places calls while outside the customer’s “registration area,” which are the areas into which we divide our coverage areas.

Under our current authorizations, we are allowed to set prices for our service plans, provided that such amounts do not exceed a specified inflation adjusted cap. Anatel must ratify our basic and other service plans, but its focus is on compliance with the relevant regulatory rules rather than the prices charged. See “—Regulation of the Brazilian Telecommunications Industry—Wholesale Rates Regulation.” We charge different rates for our services, which vary according to the customer’s service plan. Per minute prices decrease as customers commit to purchasing more minutes per month. Prices can also vary depending on the type of call (for example, calls from other operators on fixed lines or calls outside the network for mobile calls) or the location of the parties on a call.

Anatel regulations require mobile telecommunications providers to offer service to all individuals regardless of income level. We recommend service plans that are suitable to each potential customer’s needs and credit history, such as our prepaid service plans described below. If a customer fails to make timely payment, services can be interrupted. See “—Billing and Collection.”

We offer mobile services under a variety of rate plans to meet the needs of different customer classification, including our corporate customers. The rate plans are either postpaid, where the customer is billed monthly for the previous month, or prepaid, where the customer pays in advance for a specified volume of use over a specified period.

Our postpaid plans include the following charges:

· monthly subscription charges, which usually include a bundle of minutes, data and digital contents, that are included in the monthly service charge;

· usage charges, for usage in excess of the specified number of minutes included in the monthly subscription charge; and

· additional charges, including charges for Value-Added Services and data services.

Certain plans include the cost of national roaming and long distance in the price per minute so that all calls within Brazil cost the same amount per minute. Some postpaid plans are designed for high- and moderate- usage subscribers, who are typically willing to pay higher monthly fees in exchange for minutes included in the monthly

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service charge while other plans are designed to satisfy the more limited needs of low-usage postpaid subscribers. We also offer customized services to our corporate clients, which may include local call rates between employees wherever located in Brazil.

We offer a single prepaid plan with promotional offerings, which does not include monthly charges. Prepaid customers can purchase a prepaid credits plan that may be used for calls, data and additional services, based on the specific customer’s needs. We have agreements with large national retail store chains, in addition to partnerships with regional retail store chains, to offer recharging online. Customers can also recharge straight from their mobile handsets using credit cards.

Consumer Plans

In 2021, we continued to improve our positioning towards high value consumers, offering a variety of plans bundling voice, data packages and free access to certain applications, as well digital Value-Added Services (music, e-reading, video streaming). The approach to this segment is driven by the strategy of adding value for the customer base and ensuring users a premium custom experience.

Within the consumer business, our main plans include:

Prepaid Plans

· TIM Pré TOP: Offerings launched during 2020 were built to provide a full experience with simplicity, by adapting consumption according to balance and recharge; boosting benefits (unlimited network calls, unlimited calls for other carries using code 41, adaptable data packages and SMS). In addition, due to the more aggressive competition scenario, we have become more competitive, giving more benefits to customers with a high recharge value and expanding the monthly R$20.00 offer to more area codes.

· TIM Beta: With an exclusive feel, this plan focused on young and digital customers that can only enter by invitation send by existing members or participating in a journey and accomplishing tasks to conquer their own invite. Currently, TIM BETA is only offered as a monthly subscription that includes Deezer Premium and exclusive data packages for YouTube, Netflix, TikTok and Instagram.

Postpaid Plans

In the higher value postpaid segment, we have maintained our position in the market as an innovator and disruptor with our new TIM Black Família and TIM Black plans, discussed above, improving our portfolio by offering large shared data packages with monthly video streaming subscriptions, such as Netflix, HBO GO or YouTube Premium already included in the fee.

TIM Black Família plans start at R$199.99 for an entry level plan with unlimited off-network calls, 30 GB shared data package (for one main line and one dependent), and unlimited data for OTT applications such as WhatsApp, Facebook, Instagram and others. The main offer is set at R$319.99 (for one main line and three dependents) with unlimited off-network calls, 100 GB shared data package, Netflix, HBO GO or YouTube Premium monthly fee included, and unlimited data for OTT applications such as WhatsApp, Facebook, Instagram, data rollover, international roaming (including data package for use in the American continent, seven days of unlimited WhatsApp and 30 minutes of voice) and others.

TIM Black plans start at R$109.99 for an entry level plan with unlimited off-network calls, 15 GB data package (for one main line), and unlimited data for OTT applications, such as WhatsApp, Facebook, Instagram and others. The main offer is set at R$149.99 (for one main line) with unlimited off-network calls, 25 GB data package, data rollover and international roaming (data package for use in the American continent) and other benefits like unlimited data for OTT applications and Value-Added Services such as music, e-books and magazines.

Control Plans

Our Control plans are a hybrid between our prepaid and postpaid plans, with fixed price billed to the customer on a monthly basis, either via credit card or digital account. Once customers of Control plans have reached the limit

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of their data plan, the data transmission is no longer available and the user has two options: (i) to repurchase a data package or upgrade to higher tariff plan or (ii) to wait for the next data period to commence, which varies by plan, at which point his data availability and usage limit are renewed in full. Postpaid customers can also purchase a data package to navigate in full speed but the usage is not blocked when he reaches the limit of his data package.

TIM Controle plans start at R$44.99 with unlimited on-network calls and 25 minutes of off-network local calls and 2.5 GB Internet. The main offer in the TIM Controle portfolio (which has a commercial focus) is set at R$64.99 with unlimited calls, 4.0 GB Internet and unlimited data for OTT applications.

Corporate Plans

TIM commenced an ambitious endeavor in 2018 to bridge the connectivity gap in Brazilian rural areas in partnership with the agricultural industry. As a leader in 4G coverage, TIM already had agribusiness customers, but sought to enable the digitalization of the industry and to offer innovative solutions in order to increase its productivity with automation, control and new technologies. We joined major companies within the sector to create ConectarAGRO, a customer-focused initiative to expand connectivity to all rural areas of Brazil, increasing productivity and transforming the lives of those who live in these regions. The initiative has reached its 2019 goal of 5 million connected hectares and expects to progress further in 2020.

In 2021, we continued to improve our positioning towards the large companies as potential clients, offering a variety of corporate solutions for mobile or fixed services (both voice and data), as well as Value-Added Services and mobile-to-mobile services. The approach for these top clients are driven by customized solutions and a premium customer service focus. In the SMB segment, we have positioned our core offering targeting the “prosumer” market, or those individuals who both consume and produce a product. “TIM Black Empresas” has become the brand for the SMB portfolio, delivering unlimited voice calls and a variety of data packages, consistent with its strategy of providing “lots of minutes and lots of Internet, across all operators and anywhere in Brazil.” In addition to mobile connectivity, relevant Value-Added Services have been added to the main “TIM Black Empresas” offer in order to empower our business customers during their progress towards digital transformation, such as: cloud storage and backup, a website and online store builder, sales/field force automation and productivity apps. Those complimentary services were built based on revenue sharing agreements through strong partnerships with UOL, Fs, Datamob, Prouser and Deezer, that supports our aim to become our customers’ business partner rather than a pure connectivity provider.

We maintain a prominent position in the area of Internet of Things (known as IoT), especially in the AGRO segment, where since 2018 we have started an ambitious effort to fill the connectivity gap throughout rural Brazil in partnership with the agricultural sector. In 2020, in addition to consolidating its leadership in AGRO, we managed to evolve with projects in other verticals with action and cooperation with the ecosystem. Our strategy that has connectivity as the central point, our strongest attribute, but with complete solutions together with our partners in order to give more value to our customers and, at the same time, generate more revenue and loyalty.

Value-Added Services

We are constantly seeking to increase value to our customers through innovative offers and products, and 2021 was no exception. We offer, directly or through agreements entered into with third parties, Value-Added Services in varied categories, such as education, music, reading, games, videos and social networks.

Our most strategic Value-Added Services launched in 2021 was the partnership with Mulheres Positivas, a service relating to gender equality, in which the service offered hundreds of free professional and specialized courses and job opportunities for all of our client base.

We also continue the improvement of our portfolio through additional services provided by new strategic partners.

In 2022, we intend to continue to expand our partnerships with OTT’s and reinforce our strategy of giving our customers the best experience with Value-Added Services.

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Financial and Other Services

In 2021, we continued to develop this business as well as the insurance services we relaunched in 2018 with a new portfolio of services, which allow us to take a broader approach to this market. For 2022, our primary focus is the launch of 5G and its associated services.

Digital Channels

In 2021, we continued to develop our digital channels as well as the insurance services we relaunched in 2018 with a new portfolio of services, which allow us to take a broader approach to this market. We launched new digital customer service channels, which aims to maximize convenience for our customers. We also started using a new tool called DialMyApp that shows a visual interactive voice response (known as IVR) on the customer's cell phone everytime the customer calls the contact center from an Android device. This is intended to enable our customers to resolve their issues directly on their smartphone without needing to go through the traditional phone service. We achieved first place in customer engagement on this platform among all Brazilian telcos. We also started customer service through RCS, a Google platform that allows easy interaction with our customers, with user-friendly visual elements, in addition to a more interesting cost composition. Once again, we were the first Telco to launch this service in Brazil.

Customer Service

In order to serve our customer base, almost 52 million customers, we aligned the insourced/outsourced ratio of our internally managed customer service operations to our outsourced customer service operation to the best practices of Brazilian telecommunications business. We operate through 20 customer care centers, two of our own and 18 outsourced, comprising around 12,997 customer service representatives (of which 3,542 are the purpose of offering dedicated to provide the best options in terms of offers and services to our multi-customer base). Our high value customer service and core or critical processes are maintained within our internal customer care centers.

As of December 31, 2021, we had more than 12.8 thousand points of sales through premium shops and dealers (exclusive or multi-brand) and consolidated partnerships with large retail chains. This figure includes 158 of our own stores. In addition to these retail stores, our customers have access to prepaid phone services through supermarkets, newsstands, and other small retailers, totaling more than 212 thousand points of sale throughout Brazil.

In December 2021, we launched our first concept store using a new format, which is intended to start the beginning of a new experience in our customer journey. The official opening of the concept store is scheduled for early 2022, and throughout the year, other concept stores following this new format are also planned. The new format will have several spaces where it will be possible to try smartphones and accessories already with 5G technology, as well as equipment for connecting homes using TIM Live fixed ultra-broadband. Consumers themselves will be able to carry out basic activities from consulting with our sales representatives, printing, paying invoices, purchasing plans and services, and even discussing with our tech experts tips for operating their devices, apps, and more.

For the corporate market, TIM has more than 397 third-party business partners and 101 employees focused on serving small- and medium-size companies and a direct sales force team of 86 employees focused on large companies.

Throughout 2020 and 2021, an important aspect of our customer service was digital customer service such as our mobile application Meu TIM and the Company’s website. The digital channels are also gaining relevance in customer self-caring, top up of prepaid customers and upselling of services. In addition to being a better customer experience due to the quick response it provides, digital channels also allow TIM to reduce costs such as customer service operations and sales commissions. During 2021, we continued to implement new features in our digital channels, increasing our ability to promptly resolve challenging issues that may arise for our customers.

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In 2021, we worked to keep our “Customer Experience” foundational pillar as a focus (see “—Our Strategy”), creating initiatives that sought to put the customer as the center of decision-making. The approach used to promote this cultural transformation was guided by the relationship between customer and employee.

We have evaluated and taken action to improve the experience and professional development of our employees, with educational projects to promote engagement and insight, focused not only on technical, functional or soft skills competences, but also on the new capabilities required to reach industrial and business goals. These efforts strengthened the bonds between an employee’s business functions and the products and services they deliver to the customer. The impact was noticeable in our Organizational Climate Survey, a study performed by consulting company Mercer, considering several companies across the country, in which our employees’ performance in respect of “Quality and Customer Focus” attained by 1pp (86%), from 2020 to 2021. Compared to the other telecom companies that also use this survey, TIM is 10pp (84)% above average regarding this indicator. The business area responsible for supporting these initiatives was divided in three sections: Design, Execution and Monitoring.

The Design area created a policy with “Customer Experience” guidelines. This document defined expected behaviors and patterns in communication and interactions with customers, outlined a monitoring model, as well as refactored the products and services development cycles, to better cover all elements of Customer Experience.

The Execution area sought to solve legacy issues, with many of them concluded, which represented the efforts in the Customer Experience governance plan. These actions were grouped on four strategic pillars:

· Customer Centric: being customer oriented, understanding their needs, the relationship and the value proposition they expect when interacting with the Company;

· User Experience: understand the perceptions and reactions of our customers, including their emotions, beliefs, preferences, physical and psychological responses, as well their behaviors before, during and after they use our products, offers and services;

· Customer Monitoring: making use of tools and techniques such as big data and predictive analytics to extract value from customer information, and to identify opportunities in revenue increase, reduced costs and improved quality;

· Crew Experience: With the understanding that our employees are key to create great customer experiences, empower our employees so that it is clear we are a consumer oriented organization;

In addition, we continued to use the so-called “Net Promoter Score” as a fundamental key performance indicator to measure customer experience with our call center. There is an ongoing project to expand this survey to other of our customer service channels.

We have also sought to maximize customer satisfaction through improvements in our processes and systems, including customer journey mapping, where employees are invited to assume the customer perspective using empathy maps and design thinking tools. The goal of using these methods is to reduce customer effort, increase customer success and to ensure positive emotions towards TIM. We also work in teams to resolve critical issues and implement improvements in processes and systems.

We also enhanced our interactive voice response channels to include more customer oriented services.

We completed the migration of prepaid and postpaid consumer back office services (front end was implemented in 2015) to the Siebel customer relationship management, or CRM, platform. The migration to the Siebel system from legacy systems for corporate clients is still ongoing.

Lines of Revenue

Our revenues from mobile and fixed services includes: (i) monthly subscription charges, (ii) network usage charges for local mobile calls, (iii) roaming fees, (iv) interconnection charges, (v) national and international long distance calls, (vi) Value-Added Services, and (vii) co-billing. Additionally, we have revenues from sales of products (mobile handsets and accessories) and other customer platforms revenues.

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Monthly Subscription Charges

We receive a monthly subscription fee under our postpaid mobile plans, which varies based on the usage limits under the relevant plan.

Network Usage Charges

We divide our coverage areas into certain areas defined as “home registration areas.” Calls within the same home registration area are considered local calls. Each of our customers is registered as a user of one of our home registration areas.

As determined by Anatel (Act No. 987/2020), our usage rate categories for local mobile services on a prepaid or postpaid basis are as follows:

Region of the PGA	Values starting in February 25, 2020	Values starting in February 25, 2021	Values starting in February 25, 2022	Values starting in February 25, 2023
I	R$ 0.01338	R$ 0.01380	R$ 0.01422	R$ 0.01468
II	R$ 0.01503	R$ 0.01527	R$ 0.01550	R$ 0.01578
III	R$ 0.02687	R$ 0.02814	R$ 0.02947	R$ 0.03082

· VC1 (local rate). The VC1 rate is our base rate per minute and applies to mobile/fixed or mobile/mobile calls made by a customer located in the customer’s home registration area to a person registered in the same home registration area.

· VU-M. VU-M, also known as an interconnection rate or mobile termination rate, is the fee another telecommunications service provider pays us for the use of our network by such provider’s customers, in this case for local calls. See “—Interconnection Charges.”

Usage charges are for minutes in excess of those included as part of the monthly subscription charge under the relevant postpaid plan.

Roaming Fees

We receive revenue pursuant to roaming agreements we have entered into with other mobile telecommunications service providers. When a call is made from within our coverage area by a client of another mobile service provider, that service provider is charged a roaming fee for the service used, be it voice, text messaging or data, at our applicable rates. Similarly, when one of our clients makes a mobile call when that customer is outside our coverage area using the network of another service provider, we must pay the charges associated with that call to the mobile service provider in whose coverage area the call originates at the applicable rate of such mobile service provider.

Automatic national roaming permits our customers to use their mobile telephones on the networks of other mobile service providers while traveling or “roaming” in the limited areas of Brazil not covered by our network, complementing our current mobile coverage. Similarly, we provide mobile telecommunications service to customers of other mobile service providers when those customers place or receive calls while in our network. Mobile service providers which are party to roaming agreements must provide service to roaming customers on the same basis that such providers provide service to their own clients. All such providers carry out a monthly reconciliation of roaming charges. Our roaming agreements have a one-year term and automatically renew for additional one-year terms, which are regulated and previously approved by Anatel.

Interconnection Charges

We receive interconnection revenues for any calls originating from another service provider’s network, mobile or fixed line, which is received by any mobile customer, of ours or of another provider’s, while using our network. We charge the service provider from whose network the call originates an interconnection fee for every minute our network is used in connection with the call. On the other hand, we must pay the fees for other telecommunications companies, when our users place a call to phones connected to other network operators.

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We have entered into interconnection agreements with most the telecommunications service providers operating in Brazil, which include provisions specifying the number of interconnection points, the method by which signals must be received and transmitted, and the costs and fees for interconnection services. The interconnection among the networks of providers of telecommunications services of collective interest is mandatory and the interconnection agreements must be submitted to Anatel for approval. Nevertheless, even in the absence of ratification by Anatel, the parties to these interconnection agreements are obligated to offer interconnection services to each other.

The interconnection fees we were permitted to charge other mobile telecommunications providers, and which other mobile telecommunications providers charge us, have in the past been adjusted by inflation. Transition rules were defined and applied until July 2014, as set forth in Resolution No. 639/2014. Anatel effectively issued the rule for the definition of reference rates for entities with significant market power, based on a cost model, for VU-M, as well as maximum rates for the termination of calls on TU-RL. Since the issuance of Resolution No. 639/2014, interconnection fees have been decreasing based on a specific glide path, until 2019. Starting in 2020, Anatel has determined that VU-M values will rise slightly again. See “—Regulation of the Brazilian Telecommunications Industry—Interconnection Regulation.”

Long Distance

Telecommunications customers in Brazil are able to select long distance carriers on a per-call basis under the carrier code selection, or the CSP, introduced in July 2003, by punching in a two-digit code prior to dialing long distance. This regulation also increased the size of home registration areas, calls within which are local calls and, as a result, reduced the number of home registration areas.

For mobile customers, we offer long distance services throughout Brazil. This service allows our mobile customers the option of continuing to use our service for long distance calls, which we believe strengthens our respective relationship and loyalty, and enhances the perception of our brand as a comprehensive mobile telecommunications service. Mobile customers of other service providers can also choose to use our long distance service.

Under this structure, a customer is charged the VC1 rates directly by us only for calls made by and completed to a number registered within that customer’s home registration area. Long distance calls, however, are charged to a customer by the chosen long distance carrier. When our customer chooses other long distance carriers, in turn, the other carrier pays us a VU-M fee for any use of our network for a long distance call.

VU-M is the fee another telecommunications service provider pays to us for the use of our network by such provider’s customers, in this case for long distance calls. See “—Interconnection Charges.”

Co-Billing Services

Co-billing occurs when we bill our customers on behalf of another long distance service provider for services rendered to our customer by that carrier. Beginning July 2003, we started providing co-billing services to other telecommunication service providers operating in Brazil. The rates of such services are negotiated under the supervision of Anatel.

Sales of Product

We offer a diverse portfolio of handset models from several manufacturers for sale through our dealer network, which includes our own stores, exclusive franchises and authorized dealers. We are focused on offering an array of handsets, including essential and smartphones devices with enhanced functionality for Value-Added Services, while practicing a policy of increasing 4G smartphone penetration. Our mobile handsets can be used in conjunction with either our prepaid or postpaid service plans.

Billing and Collection

Our company-wide, integrated billing and collection systems are provided by a third-party vendors. These systems have four main functions: (i) customer registration, (ii) customer information management, (iii) accounts receivable management and (iv) billing and collection.

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These billing systems give us significant flexibility in developing service plans and billing options.

Certain aspects of billing customers in Brazil are regulated by Anatel. For mobile and fixed telephones, currently if a customer’s payment is more than 15 days overdue, we can suspend the customer’s ability to make outgoing calls if preceded by a notification. If the payment is 45 days overdue, we can suspend the customer’s ability to receive incoming calls, also if preceded by a notification. For residential broadband, currently if a customer’s payment is more than 15 days overdue, we can reduce the speed of the customer’s broadband access and if the payment is 45 days overdue, we can suspend the customer’s broadband access. After 90 days from the customer’s payment due date, we generally discontinue service entirely, with a notification to the customer. Discontinuation of service is sometimes delayed, however, between 120 and 180 days after the due date for valued customers. The rules of suspension and discontinuation of fixed and residential broadband service are the same as those applied for the mobile service.

In March 2014, Anatel approved a single regulation for the telecommunications sector, with general rules for customer service, billing, and service offers, which are applicable to fixed, mobile, broadband and cable TV customers.

In order to avoid delinquency and discontinuation of service, however, we have invested in CRM models to identify customers with a higher propensity to early delinquency and also reinforced credit history checks for our customers prior to service activation. Although we continue to have one of the lowest delinquency rates in the segment, we noticed an increase in bad debt as a consequence of the expansion of the postpaid base of customers and the challenging economic environment.

During 2020, after the implementation of improved operational controls and collection strategies and even considering the pandemic environment, we accomplished a significant bad debt reduction.

In 2020, we expanded our capillarity of collection methods, being the only telecommunication company to offer the possibility of paying with the Instant Payment System from the Central Bank (PIX) to the entire customer base, which allows us the immediate recognition of payment and also the immediate release of the defaulting customer.

Pursuant to Anatel regulations, we and other telephone service providers periodically reconcile the interconnection and roaming charges owed among them and settle on a net basis. See “—Lines of Revenue—Interconnection Charges” and “—Lines of Revenue—Roaming Fees.” Seasonality

We have experienced a trend of generating a significantly higher number of new clients and product sales in the fourth quarter of each year as compared to the other three fiscal quarters. A number of factors contribute to this trend, including the increased use of retail distribution in which sales volume increases significantly during the year-end holiday shopping season, the timing of new product and service announcements and introductions, and aggressive marketing and promotions in the fourth quarter of each year.

Regional Overview

We provide 4G coverage in 4,715 cities to 98% of the urban population of Brazil, making our 4G network the most extensive in the country. We continued our infrastructure evolution and expanded our 4.5G coverage to 1,712 cities by the end of December 2021. Our 3G coverage reaches 4,022 municipalities and 94% of the urban population.

The following table shows information regarding Brazilian mobile telecommunications, at the dates indicated.

	As of or For the Year Ended December 31,
	2021	2020	2019
Brazilian population (millions)(1)	213.3	211.8	210.1
Estimated total penetration (%)(2)(3)	103.7	97.2	96.9
Brazilian wireless subscriber base (millions)	254.7	234.1	226.7
National percentage subscriber growth (%)	1.2	3.3	(1.1)

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(1) According to the last information disclosed by IBGE (July 2021).

(2) Percentage of the total population of Brazil using mobile services, equating one mobile line to one subscriber (December 2021).

(3) Based on information published by Anatel and IBGE/IPC Maps (December 2021).

Our Network

Our wireless networks use 4G, 3G and 2G technologies and cover approximately 98% of the urban Brazilian population. In order to move toward 4G services, in October 2012, we acquired additional bandwidth in the 2,530-2,540 MHz and 2,650-2,660 MHz sub-bands, with national coverage, and the 450 MHz band in Espírito Santo, Paraná, Rio de Janeiro and Santa Catarina states.

Between 2007 and 2014, we acquired new RF authorizations used for 3G and 4G mobile telephone services at the 2100 MHz, 2500 MHz and 700 MHz bands. In September 2014, we invested approximately R$2.85 billion to acquire bandwidth in the 700 MHz range, which aligned with our strategy of expanding our broadband and 4G service across Brazil. We began providing our services in the 700MHz range in 2016. See “—Regulation of the Brazilian Telecommunications Industry—Frequencies and Spectrum Background”. In December 2015, Anatel auctioned left over radio frequencies in the 1,800 MHz, 1,900 MHz and 2,500 MHz bands. We submitted bids for the left over lots of the 2,500 MHz band, in the 2,500-2,510 MHz and 2,620-2,630 MHz sub-bands – known as P-Band, which had originally been auctioned in 2012. This particular P-Band spectrum provides for 4G mobile services. We acquired the lots for Recife, in the state of Pernambuco (Region AR 81), and Curitiba, in the state of Paraná (Region AR 41), based on our bids which totaled R$57.5 million. The corresponding authorization terms were signed in July 2016. During 2017, several municipalities throughout Brazil had their analog TV signals switched-off, freeing up the bandwidths in those regions for 4G mobile services. In 2018, the analog TV switch-off schedule was completed in regions where it is necessary to clean up the 700 MHz spectrum for the LTE. Therefore, by September 2019, all municipalities were able to receive TIM’s expanded 4G coverage through the 700 MHz band. Throughout 2020 and 2021, the entity created to ensure the spectrum cleanup, called the Entity for Administration of TV and RTV Channel Relocation and Digitalization Process, or EAD, is expected to fulfill the remaining auction obligations, concluding the relocations of broadcasters and the provision of interference solutions in order to complete the switch-off process and to make the spectrum fully available to mobile operators. In November 2021, we invested approximately R$1.1 billion to acquire the 2.3 GHz, 3.5 GHz and 26 GHz spectrum bands, aligned with our strategy of deploying 5G technology, with the expectation to launch 5G coverage in 2022. See “—Regulation of the Brazilian Telecommunications Industry—Frequencies and Spectrum Background” and “—Regulation of the Brazilian Telecommunications Industry—Authorizations and Concessions.” In connection with the conclusion of the Reorganization whereby TIM Celular was merged into the Company, see “—Item 4. Information on the Company—C. Organizational Structure,” the Company holds all of the authorizations previously issued in the name of other companies controlled, directly or indirectly, by TIM Participações

RF authorizations are generally valid for a period of 15 years and renewable for 15 more, and our current authorizations will start expiring in September 2022 (for details on spectrum licenses and expiration dates see “—Regulation of the Brazilian Telecommunications Industry—Frequencies and Spectrum Background”). In the case of authorizations that cannot be renewed, current telecommunications law sets forth that the spectrum is returned to the Federal Government under Anatel’s management. This is why reviewing the General Telecommunications Law has meaningful impact for the sector, as the proposed updated law allows for subsequent and unlimited renewals of radio frequency authorizations of up to 20 years each, generating an environment possibly more conducive to long-term investments.

We consider the purchase of any frequency made available by Anatel for the provision of mobile services as a priority, since having available frequency is core to our business. In 2021, we made R$3,052 in investments, primarily in capacity and coverage 4G, mainly using M-MIMO antennas, core functions virtualization, expansion and capacity enhancement of our optical transport networks, infrastructure resilience, quality maintenance and enabling of fiber-to-the-site and the mobile broadband MBB programs

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These investments allowed us to reach, by the end of 2021, the milestone of 4,715 cities with 4G coverage, or 97.6% of the country’s urban population. We are thus the leader in 4G coverage in Brazil among mobile telecommunications providers, both by number of cities served and percentage of population covered.

On July 22, 2020, the Company obtained the approval of the Anatel and, on June 3, 2020, obtained the approval of the CADE for the execution of two onerous transfer contracts aimed at sharing 2G, 3G and 4G mobile network infrastructure, reinforcing the evolution process of the Brazilian telecommunications market in terms of network infrastructure sharing. For details see “—Site-sharing agreements.”

Our wireless network has both centralized and distributed functions, and includes mainly transmission equipment, consisting primarily of more than 58 thousand eNodeBs in our 4G network, more than 20 thousand NodeBs for the 3G layer and more than 15 thousand BTSs for 2G network as of December 2021, considering site-sharing, hardware equipment and software installation and upgrades. The network is connected primarily by IP radio links and/or optical fiber transmission systems distributed nationwide.

Another priority is developing our national network. In December 2021, we continued to increase the quantity of sites connected by optical fiber, reaching more than 8,000 of sites connected by optical fiber. The results are consistent with Anatel’s network quality requirements, and with TIM retaining its solid performance in 2021. Since national coverage and quality of service has improved substantially over the last few years, Anatel has shifted its focus in recent years. Anatel is now concentrating its efforts on smaller geographic areas, particularly in those areas where service is still considered poor.

The AES Atimus Acquisition and consequent creation of TIM Fiber (which was merged into TIM Celular in 2012, and TIM Celular was merged into the Company in 2018) has improved our optical fiber (or fiber optic) network presence in more than 31 cities including the metropolitan regions of Rio de Janeiro, São Paulo, Salvador, Goiânia, Recife, Manaus, Belo Horizonte and Distrito Federal. Our optical fiber network has capacity to offer high quality ultra-broadband service, available through our TIM Live service. and increase basic infrastructure to be applied in our fixed and mobile operations.

Our fixed broadband infrastructure is highlighted by the following characteristics:

· an extensive wide covered area network covering more than 4.2 million homes passed served by 533 GPON areas, which are network elements that provides broadband connections to the end user;

· active Base of 726 thousand accesses in the cities mentioned above considering fiber and copper connections.

Our switching exchanges and intelligent network platforms enable us to offer flexible, high quality voice service at extremely competitive prices. Our satellite network covers distant areas of the country and is being expanded and renewed to provide high private service.

As a general matter, telecommunications operators’ networks have tended to be designed, deployed and managed according to a vertical architecture model referred to as “end-to-end,” where the hardware and software are proprietary and dedicated to each network function. With the growing demand for differentiated services, the need for physical space, energy and speed have become critical and, consequently, companies’ capital expenditure and operating costs have tended to increase.

Such network architecture based on monolithic network elements requires a long time for development and deployment, impacting directly the time-to-market for launching new products or services and, consequently, reducing the generation of new revenues.

NFV is the new architectural paradigm that aims to address the infrastructural network transformation as a key step in the evolution of the implementation of new systems and network infrastructure, as it adopts the concept of consolidating standardized commercial off-the-shelf hardware elements that are available in virtual environments for shared use across various applications, accelerating the ability to deliver services, reducing costs and improving customer satisfaction. TIM aims to capitalize on the proposed benefits from such technology.

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TIM understands that the NFV and the sharing of resources and equipment is the way to establish an economically more efficient structure, by reducing investment and/or operational costs while also reducing the time-to-market for launching new offers (an increasingly relevant factor in a competitive scenario).

By the end of 2021, we have deployed 14 new virtualized Core Network Datacenters (DCC) located in Rio de Janeiro (2), São Paulo (2), Fortaleza (2), Salvador, Brasília (2), Belo Horizonte (2), Belém and Curitiba (2), in addition to 19 new virtualized Edge Network Datacenters (DCE) located in Campinas, Porto Alegre, Natal, João Pessoa, Florianópolis, Blumenau, Maringá, Londrina, São Luis, Goiânia, Foz do Iguaçu, Santos, São José dos Campos, Uberlândia, Varginha, Feira de Santana, Teresina, Manaus and Ponta Grossa. Most of our core network functions are already running in a virtualized fashion by means of these network datacenters. The migration of additional network functions to a virtualized datacenter will be based on a roadmap of virtual network functions, or VNFs, respecting the maturity of each network function.

Similar to the movement of IT Systems to Public Cloud Infrastructure, Network Functions have also been planned to be migrated to the cloud, respecting their particularities regarding high availability and performance. In order to guarantee this movement, NFV Architecture had an important role for the evolution of these NFs from a Virtual environment (VNF) to a Cloud environment (CNF). As result of this journey, TIM intends to move Network workloads to a hybrid cloud (On-Premise and Public Cloud) throughout the next 3 years. TIM understands that Cloud Infrastructure is a second step (just after NFV) to establish an economically more efficient infrastructure, not only for reducing investment/costs, but also for speeding up project deployments and reducing time-to-market of new offers.

Based on the efficiency and on the robustness of the technologies used in the NFV and IP networks, in virtualizing its core network, TIM is also optimizing capital expenditures.

Therefore, our commitment to solid infrastructure and quality improvement allow the Company to develop projects such as: (i) unification of the functions of an Intelligent Network core signaling network and network data base through Unified Data Consolidation and (ii) the evolution of security platforms such as Session Border Controller that accomplishes IP interconnection in with other operators. We expect from these and other projects to be able to reduce our operating expenditures by decreasing leased lines and infrastructure sharing, simplifying maintenance processes and architecture/topology, increasing resilience even in conditions of disaster recovery and improving the customer experience by increasing the speed in which calls are set up and data is transmitted and improve the amount of time needed to make customers profiles available in our data base.

In 2011, TIM implemented a Policy and Charging Control (“PCC”), platform in accordance with the standards of the 3rd Generation Partnership Project, or 3GPP. This PCC made it possible for us to develop a brand new means to control fair use, as we are now able to reduce a given subscriber’s speed, block usage and offer additional data packets to maintain maximum speeds after the subscriber’s existing data packet is depleted. Since then, several innovative data offers have been launched that promote the usage of data, social media and streaming. This PCC platform is now evolving to an NFV model, which brings modernization and high scalability to support the increasing demand of mobile data and reduces the time-to-market when launching new data offers.

In 2014, TIM started to change our Mobile Packet Core platform to a Unified Packet Core based on the most advanced 3GPP Evolved Packet Core standards, providing a coordinated seamless mobility management in a HetNet access environment (full multiple-access nodes for 2G/3G/4G/Femto/WiFi) in order to support the huge increase in data demand in the Brazilian telecommunications market, as discussed elsewhere throughout this annual report on Form 20-F. The Evolved Packet Core platform is also evolving to an NFV model, based on 3GPP’s Control and User Plane Separation of EPC nodes. This enables flexible network deployment and operation, by distributed or centralized deployment and the independent scaling between control plane and user plane functions.

In 2017, TIM started to implement our Voice over LTE/4G, or VoLTE, platform following 3GPP standards, providing better voice quality and 4G service continuity, avoiding the need to resort to 2G/3G during voice calls. The VoLTE platform is also evolving to an NFV model, based on 3GPP’s nodes.

In 2018, TIM implemented a new security system to access its new and legacy platforms, called “Secure Password.” It uses a secure shell, or SSH, security protocol, monitors attempts of non-standard access and generates

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related warnings (IAM-Identity Access Management). This process involves password encryption and a logical safe that only grants recovery to authorized users while also granting and recording accesses through video and text devices. More specifically, it features: (i) password authentication with a maximum validity of 90 days; (ii) authorization through a login administration interface; and (iii) audit (logs) generated by the system, allowing the traceability of user actions from the beginning to the end of each operation. The system also sends logs to a centralized system as a historical database. Additionally, TIM has a plan to mitigate network risk on a macro scale that prioritizes the critical network infrastructure based on a risk map, or the Network Resilience Plan. The Network Resilience Plan allows the Company to focus on the main issues, and these in turn become the basis for crafting short-, medium- and long-term mitigation measures in order to enhance the robustness of the network.

Sources and Availability of Raw Materials

Our business and results of operations are not significantly affected by the availability and prices of raw materials.

Site-Sharing and Other Agreements

Site-Sharing Agreements

With the objective of avoiding unnecessary duplication of networks and infrastructure, Anatel allows telecommunications service providers to use other providers’ networks (long distance, backhaul and spectrum frequencies, among others) as secondary support in providing telecommunications services, with a focus on reducing costs and increasing the penetration of mobile services in Brazil. Therefore, we have allowed other telecommunications service providers in our region to use our infrastructure, and we have used other providers’ infrastructure, pursuant to site-sharing agreements with such operators.

Based on such Anatel policy, in November 2012, TIM Celular (which has been merged into the Company in connection with the Reorganization) formalized with Oi an agreement for the reciprocal assignment of their LTE networks (4G technology) in certain cities, which was approved by Anatel and CADE, which is the Brazilian antitrust agency and has the mission to ensure free competition in the market, not only by investigating and ultimately deciding on the competitive matter, but also by disseminating a free competition culture.

In April 2014, TIM Celular (now TIM S.A.) and Oi entered into a new agreement to negotiate the joint construction, implementation and reciprocal assignment of parts of their respective GSM (2G) and UMTS (3G) network infrastructures in cities with less than 30,000 inhabitants, which was also approved by Anatel and CADE.

In July 2015, TIM Celular (now TIM S.A.), Oi and Vivo entered into an agreement for the reciprocal assignment of LTE network media (4G), similar to the agreement between TIM Celular (now TIM S.A.) and Oi in 2012, but also covering frequencies sharing. As with the prior sharing agreements, Anatel and CADE approved the agreement between the parties.

Also in 2015, TIM Celular (now TIM S.A.), Vivo, Claro and Oi filed with CADE a Term of Commitment with the objective of negotiating the joint contracting of one or more companies to carry out the construction, installation and provision of infrastructure in indoor environments (such as shopping malls) in several locations in Brazil, which was approved without restriction by CADE.

In November 2015, the Company, thorough TIM Celular and Intelig, both merged into the Company, and Vivo filed an agreement to share UMTS network (3G) under a multiple operation core network, RAN sharing model which includes frequency sharing in certain cities based on their rural coverage obligations, which was also approved without restrictions.

In March 2018, due to the mediation process between TIM and Oi, a new RAN sharing agreement was executed, which changed the sharing modality described in the 2012 agreement (technological evolution from the multi-operator radio access network to the multi-operator care network) and included part of the 1,800 MHz radio frequency bands. CADE and Anatel approved the operation without any restrictions.

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On July 23, 2019, the Company and Telefônica Brasil entered into a memorandum of understanding, or the Vivo MoU, to start negotiations regarding: (i) sharing of single-grid 2G network; (ii) establishment of new infrastructure sharing agreements for the 4G network in 700Mhz, directed to cities with fewer than 30,000 inhabitants, which in the future may be expanded to larger cities; (iii) other network sharing opportunities in other frequencies and technologies; and (iv) other opportunities in efficiency and cost reduction in operations and network maintenance. We and Telefônica Brasil believe that the potential developments from the concepts set forth in the Vivo MoU would result in improved services at both carriers, as well as synergies and efficiencies in the allocation of investments and operating costs.

On December 19, 2019, pursuant to the Vivo MoU with Telefônica Brasil, two new sharing agreements have been entered into regarding: (i) the creation of a unique network in 2G technology; and (ii) a single-grid agreement that will result in an expansion of 3G and 4G networks and a network consolidation in small cities (with less than 30,000 inhabitants). Both agreements were approved without restrictions by CADE and Anatel in 2020, reinforcing the evolution of the Brazilian telecommunications market in terms of network infrastructure sharing.

Our Operational Contractual Obligations

For more information on our material contractual obligations, see “Item 10. Additional Information—C. Material Contracts.”

Interconnection and Other Agreements

We have entered into interconnection agreements with most of the telecommunications service providers operating in Brazil. The terms of our interconnection agreements include provisions specifying the number of interconnection points, the method by which signals must be received and transmitted, and the costs and fees for interconnection services. Interconnection agreements must be submitted for Anatel’s approval. Nevertheless, even in the absence of ratification by Anatel, the parties to these interconnection agreements are obligated to offer interconnection services to each other. See “—Interconnection Regulation.”

Roaming Agreements

We have entered into roaming agreements for automatic roaming services with other mobile operators outside our regions. Automatic roaming allows our customers to use their mobile telephones on the networks of other mobile operators while traveling abroad or out of TIM coverage areas in Brazil. Similarly, we provide mobile services for customers of other mobile operators when those customers place or receive calls while visiting Brazilian cities with TIM coverage. We provide services for the clients visiting our network on the same infra-structure basis provided to our own clients. All of the mobile operators party to these agreements must carry out a monthly reconciliation of roaming charges with its roaming partners.

National Roaming Agreements

In 2017, Anatel required TIM, Claro, Oi and Vivo to guarantee the provision of mobile services (voice, SMS and data) in all cities with less than 30,000 inhabitants through roaming agreements. Over time, we have been building our own network in cities where we depended on roaming coverage from other operators. Currently, only 1,090 cities do not have their own network and depend on roaming services, with the goal of ending this dependence by early 2023.

International Roaming Agreements

We have international roaming agreements available in 210 different countries with 4,249 international operators that encompass 585 individual (PMNs) networks. These agreements include at a minimum voice service, and may be enhanced based on the technology available on the visiting network and can include voice, SMS and data (2G, 3G and 4G). Our international roaming agreements have steadily expanded in recent years. By the end of 2021, we expanded our 4G data coverage to 25 new networks, meaning now we offer 4G roaming in 95 countries, covering the main travel destinations for Brazilians.

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In November 2018, Brazil entered into a free trade agreement with Chile, which resulted in the end of international roaming charges between the two countries. In October 13, 2021 the Legislative Decree No. 03/2021, which approved the free trade with Chile, was sanctioned by the President of the Senate. With the approval, the agreement came into force on January 25, 2022 and the end of roaming charges is expected by January 25, 2023. The agreement signed in July 2019 with other Mercosur countries to eliminate international roaming charges are still pending Brazilian Congress approval and will only be valid after two or more countries have ratified the agreement before the secretariat of Mercosur.

Fraud Detection and Prevention

“Subscription fraud,” which consists of using identification documents or data personal information of another individual to obtain mobile services, is the main fraud relating to mobile, fixed and long distance service. We are focused on implementing prevention measures in our points of sales to avoid such subscription fraud. Examples of prevention measures include digital authentication for our sales front-end system, a strong training program, maintaining a blacklist of offenders to prevent fraud, analysis of the documentation presented and monitoring and identification of point of sale. We also work to detect and prevent fraud by frequently improving and updating our traffic behavior monitoring and subscriber data.

Our security operations management develops programs and strategies to mitigate fraud risks through macro business processes such as:

Network: Actions aimed to combat theft, robbery or damage of equipment and network infrastructure by the application of physical and electronic protections, such as equipment tracking, installation of protective security equipment, virtual and physical surveillance and intelligence analysis.

Investigations of Specific Incidents: These anti-fraud efforts are focused on the reduction of illicit activities. The program consolidates and analyzes all the facts related to known incidents in order to identify circumstances in which the Company’s services may be being used to perpetuate noncompliance with laws, codes and other policies such as extortion, pedophilia, aggression, theft, drug trafficking and harassment.

Personal Security: These efforts focus on the combined use of organizational, technical and human resources aimed at preserving the physical, intellectual and emotional integrity of the human resources of the group, ensuring compliance with the precepts pointed out in the security operations mission and focused on the foreign public on a visit to Brazil.

Commercial Security: These efforts seek to mitigate the losses resulting from theft and robbery of smartphones, among them the deployment of safes in the stores for the storage of high value devices in all stores, prioritizing street-front stores.

Security in Logistics: These efforts are directed to combat loss due to theft or theft of merchandise whether in transportation or storage.

Security Compliance: Active monitoring of the emergence of new legislation related to customer data security and related internal compliance efforts.

Taxes on Telecommunications Goods and Services

The telecommunications goods and services offered are subject to a variety of federal, state and local taxes (in addition to taxes on income), the most significant of which are ICMS, ISS, COFINS, PIS, FUST, FUNTTEL, FISTEL, CONDECINE and Corporate Income Tax and Social Contribution on Net Income, which are described below.

· ICMS. The principal tax applicable to goods and telecommunication services is a state value-added tax (Imposto sobre Operações Relativas à Circulação de Mercadorias e sobre Prestações de Serviços de Transporte Interestadual, Intermunicipal e de Comunicação) (“ICMS”), which the Brazilian states levy at varying rates on certain revenues arising out of the sale of goods and services, including certain telecommunications services. The ICMS tax rate for domestic telecommunications services is levied at

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rates between 25% and 35%. The ICMS tax rate levied on the sale of mobile handsets and other products such as modem and SIM cards averages between 17% and 20%. With respect to the sale of mobile handsets, among other goods, ICMS may be charged in a different tax regime, under which another taxpayer in the distribution chain of the goods (such as, for example, the manufacturer of the goods) is required to anticipate and pay ICMS amounts that would otherwise be due in other steps of the distribution chain. There is also an exception for certain handsets whose manufacturers are granted certain local tax benefits, thereby reducing the rate to as low as 7%.

· ISS. Since January 2018, the tax incidence over certain (but not all) Value-Added Services has increased with the inclusion of those receivables within the ISS basis of calculation due to Law No. 157/2016, which is a municipality tax with rates varying from 2% to 5%.

· COFINS. COFINS is a social contribution levied on gross revenues. Since 2000, companies began to pay COFINS tax on their bills at a rate of 3%. In December 2003, through Law No. 10,833, COFINS legislation was further amended, becoming a non-cumulative tax, raising the rate to 7.6% for most transactions. However, telecommunications services revenues, among others, continued subject to a cumulative basis at a rate of 3%. In 2015, Decree No. 8,426 came into effect, which restored COFINS on financial revenues at a rate of 4%, except for some types of financial revenues (for example, revenues from foreign exchange variations of exportation of goods and services, revenues resulting from foreign exchange fluctuations of obligations undertaken by the company, including loans and financing and revenues related to hedging transactions on stock exchange values, and revenues from commodities and futures exchanges or over-the-counter transactions and related to the operational activities of the Company).

· PIS. PIS is another social contribution levied at the rate of 0.65%, on gross revenues from telecommunications service activities. In 2002, Law No. 10,637 was enacted, making such contribution non-cumulative and increasing the rate to 1.65% on gross revenues, except in relation to telecommunications services, for which the method continued on a cumulative basis at a rate of 0.65%. In 2015, Decree No. 8,426 came into effect, which restored PIS on financial revenues at a rate of 0.65%, except for some types of financial revenues (for example, revenues from foreign exchange variations of exportation of goods and services, revenues resulting from foreign exchange fluctuations of obligations undertaken by the company, including loans and financing and revenues related to hedging transactions on stock exchange values, and revenues from commodities and futures exchanges or over-the-counter transactions and related to the operational activities of the Company).

· FUST. In 2000, the Brazilian government created the Fundo de Universalização dos Serviços de Telecomunicações (“FUST”), a fund that is supported by a tax applicable to all telecommunications services. The purpose of the FUST is to stimulate the expansion, use and improvement of the quality of telecommunications networks and services, to reduce regional inequalities and to stimulate the use and development of new connectivity technologies in order to promote economic and social development. FUST tax is imposed at a 1% rate, levied on gross operating revenues, net of discounts, ICMS, PIS and COFINS, and the cost may not be passed on to clients. Telecommunication companies can draw from the FUST to meet the universal service targets required by Anatel.

In 2005, Anatel enacted Ordinance No. 7/05 requiring that FUST should be paid on revenues arising from interconnection charges since its effectiveness. A notice was issued deciding that we must adjust values on the FUST calculation basis in order to include interconnection revenues received from other telecommunications companies. A writ of mandamus was filed against Anatel to avoid the terms of Ordinance No. 7/05. The first level decision was issued in our favor. Such decision was challenged by Anatel and the Appeal judgement confirmed the first level decision. Anatel appealed to High Courts in order to reverse the Appeal decision.

In December 2020, Law No. 14,109 (later modified by Law No. 14,173/2021) was approved with the purpose of stimulating the use of FUST to expand and improve the quality of telecommunications services, reducing regional inequalities and stimulating the use of new technologies to promote economic and social development. In the case of using FUST’s resources, the law requires the connection of all public schools by 2024 with broadband internet access. The law also provided a 50% reduction in the payment of the

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mandatory annual contribution of telecommunications operators to the Fund when they execute programs, projects, plans, activities, initiatives, and actions approved by the Fund's Management Council through the use of their own resources. This requirement remains in force until December 2016, but it may be further renewed.

In the first quarter of 2022, the Federal Government signed Decree 11,004/2022, which regulates the use of FUST and establishes directions for the use of resources by the Management Board, which should be instituted in the first half of 2022.

· FUNTTEL. In 2000, the Brazilian government created the Fundo para Desenvolvimento Tecnológico das Telecomunicações (“FUNTTEL”), a fund that is supported by, among other sources of income, a contribution tax applicable to all telecommunications companies. FUNTTEL is a fund managed by BNDES and FINEP, government research and development agencies. The purpose of FUNTTEL is to promote the development of telecommunications technology in Brazil and to improve competition in the industry by financing research and development in the area of telecommunications technology. FUNTTEL tax is imposed at a rate of 0.5% on gross operating revenues, net of discount, ICMS, PIS and COFINS, and it cost may not be passed on to clients.

· FISTEL. Fundo de Fiscalização das Telecomunicações (“FISTEL”), is a fund supported by among other sources a tax applicable to telecommunications services, which was established in 1966 to provide financial resources to the Brazilian government for its regulation and inspection of the sector. Such tax consists of: (1) an installation inspection fee assessed on telecommunications stations upon the issuance of their authorization certificates, as well as every time a new mobile number is activated, and (2) an annual operations inspection fee that is based on the number of authorized stations in operation, as well as the total basis of mobile numbers at the end of the previous calendar year. The amount of the installation inspection fee is a fixed value, depending on the kind of equipment installed in the authorized telecommunication station.

Effective in 2001, the installation and inspection fee is assessed based on net activations of mobile numbers (that is, the number of new mobile activations reduced by the number of cancelled subscriptions), as well as based on the net additions of radio base stations. The operations inspection fee equals 33% of the total amount of installation inspection fees that would have been paid with respect to existing equipment. The public funds raised from this installation fee are appropriated to either the Brazilian Communication Company (“EBC”), or the Brazilian National Cinema Agency (Agência Nacional do Cinema) (“ANCINE”), in order to benefit Brazilian cinema industry. Also, Anatel charges the installation inspection fee when there is an extension of the term of validity of the right to use radio frequencies associated with the operation of the personal mobile service. The Company understands that such collection is unjustified and is challenging this rate in court.

In December 2020, Law No. 14,108 was sanctioned and exempts FISTEL for 5 (five) years from the base stations and equipment that integrate the machine to machine (M2M) ecosystems and, also, extinguishes the prior licensing. The definition and regulation of M2M communication systems shall be established by Anatel. The Brazilian government also laid out in the budget law for 2021 a tax exemption forecast of FISTEL value. Additionally, in June 2021, Law No. 14,173 was approved, lowering the FISTEL fees on VSATs from R$201.12 to R$26.83.

· Corporate Income Tax and Social Contribution on Net Income. Income tax expense is a combination of two different types of taxes, the corporate income tax, or IRPJ, and the social contribution tax on net income, or CSLL. The corporate income tax is payable at the rate of 15% plus an additional rate of 10% (levied on the part of taxable profits that exceed R$0.02 million per month or R$0.24 million per year). The social contribution tax is currently assessed at a rate of 9% of adjusted net income.

The rules for deductibility of goodwill were maintained for transactions which occurred prior to the end of 2017. The tax treatment by TIM Celular (now TIM S.A.) of the goodwill arising from the purchase of the companies AES Atimus SP and RJ was not impacted by the new rules.

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Regarding dividends, Law No. 12,973 ensured the full and unconditional exemption on payment or credit of profits or dividends earned between 2008 and 2013, previously paid or not. Uncertainty remained, however, in relation to exemption on profits and dividends generated in the calendar year 2014, if higher than the taxable income in the same period in the case of companies that do not opt for early adoption of the new post-RTT tax regime that year. According to the Federal tax authorities the exception is not applicable to the excess amount, or in other words, to the profits and dividends paid in excess of the taxable income.

Dividends are not subject to withholding income tax when paid. However, as the payment of dividends is not tax deductible for the company that is distributing them, there is an alternative regime for stockholder compensation called “interest on equity,” which allows companies to deduct any interest paid to stockholders from net profits for tax purposes.

These distributions may be paid in cash. The interest is calculated in accordance with daily pro rata variation of the Brazilian government’s long-term interest rate (“TJLP”), as determined by the Central Bank from time to time, and cannot exceed the greater of: (1) 50% of the net income (before taxes and already considering the deduction of the own interest amount attributable to stockholders) related to the period in respect of which the payment is made; or (2) 50% of the sum retained profits and profits reserves as of the date of the beginning of the period in respect of which the payment is made.

Any payment of interest to stockholders is subject to withholding income tax at the rate of 15% (or 12.5% for some jurisdictions, as provided in certain Double Taxation Treaties), or 25% in the case of a stockholder domiciled in a Low or Nil Tax Jurisdiction. These payments may be qualified, at their net value, as part of any mandatory dividend. As described herein, we and our subsidiaries paid interest on equity in 2021. Please refer to ““Item 5. — Operating and Financial Review and Prospects” —Dividend  Distribution —Interest on Equity” for detailed information.

Tax losses carried forward are available for offset during any year up to 30.0% of annual taxable income. No time limit is currently imposed on the application of net operating losses on a given tax year to offset future taxable income within the same tax year, nevertheless there is no monetary restatement.

Companies are taxed based on their worldwide income rather than on income produced solely in Brazil. As a result, profits, capital gains and other income obtained abroad by Brazilian entities are added to their net profits for tax purposes. Therefore, profits, capital gains and other income obtained by foreign branches or income obtained from subsidiaries or foreign corporations controlled by a Brazilian entity are computed in the calculation of an entity’s profits, in proportion to its participation in such foreign companies’ capital.

In the end of 2017, the Brazilian Federal Revenue Office (“RFB”), issued Normative Instruction No. 1,771/2017 in order to determine the tax treatment due to the accounting CPC 47 – Customer Contract Revenue, which tax treatment went into effect in 2018.

Income tax and social contribution were regulated by Decree 580/2018 and Normative Instruction RFB No. 1,700/2017 in addition to other federal laws and decrees. In December 2018, this decree was revoked and replaced by Decree No. 9,580, which consolidates the main provisions related to income tax and social contribution. As of the date hereof, no relevant impacts to the Company were identified with regard to such changes.

Regulation of the Brazilian Telecommunications Industry

General

The telecommunications sector is regulated by Anatel, which was established by law and is administratively independent and financially autonomous from the Ministry of Communication (Ministério das Comunicações). Anatel is responsible for reviewing and amending all administrative regulation regarding services, completion and customer’s rights related to telecommunications, issuing formal authorizations and performing inspections, as set forth in the General Telecommunications Law and the Regulamento da Agência Nacional de Telecomunicações, or the Anatel Decree.

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Despite liberalization, which occurred in 1997, the Brazilian telecommunications market still faces persistent dominant positions held by fixed incumbent operators. In particular, broadband access is currently offered by operators over their own infrastructure and the respective regulatory framework is not always based on effective implementation of the wholesale access obligations.

In 1998, a presidential decree approved the first General Plan for Universalization Goals (Plano Geral de Metas de Universalização) (“PGMU I”), obligations binding on the landline telephony services (Serviço Telefônico Móvel Comutado) (“STFC”), applicable only for fixed incumbents. PGMU is reviewed every 5 years, and the last universalization plan, formulated by the government, was published in January, 2021 considering that fixed telephony concession will end in 2025. The PGMU V, replaces the 4G targets established in PGMU IV for construction of a backhaul in the municipalities that do not have a fiber optic connection. A presidential decree issued on June 30, 2011, established a bidding process for 4G RFs, an important landmark for the telecommunications sector. The bid occurred in 2012 and, in order to guarantee full rural service by 2018, Anatel linked the 4G blocks in the 2,500 MHz band to the 450MHz band in specific geographic regions of Brazil. As a result, the four winning operators of the 4G blocks in the 2,500 MHz band linked to the 450MHz band are subject to coverage commitments in rural areas. Such presidential decree also resulted in two new regulations to measure mobile and fixed broadband quality standards.

Another important set of rules is the Decree No. 9,612/2018, or the Connectivity Plan, which established a series of guidelines for execution of terms of conduct adjustment, onerous granting of spectrum authorization and regulatory acts in general which includes: (i) expansion of high capacity telecommunications transport networks; (ii) increased coverage of mobile broadband access networks; and (iii) broadening the coverage of fixed broadband access network in areas with no available internet access by means of this type of infrastructure. It also establishes that the network implemented from the commitments will be subject to sharing from its entry into operation, except when there is appropriate competition in the respective relevant market. As well as Decree No. 10,480/2020 that regulates the Antennas Law (Law No. 13,116/2015) with the objective of stimulating the development of the telecommunications network infrastructure.

Federal Government

In 2021 there were some important ordinances published, namely: (i) Ministry of Communications Decree No. 2,447/2021, which approved TIM’s issuance of up to R$5,753 billion in debentures. (ii) Ministry of Communications Decree No. 2,556, which set priorities and goals for the establishment of investments determined by Anatel. (iii) Decree No. 10,748, which established the Federal Network for the Management of Cyber Incidents, regulating the National Information Security Policy, which aims to improve and coordinate the bodies and entities of the federal public administration in the prevention, treatment and response to cyber incidents. (iv) Decree No. 10,887, which provided for the organization of the National Consumer Defense System, with the objective of guaranteeing greater protection to consumer relations, increasing legal certainty, and making the administrative process more efficient. (v) Data Protection Authority Decree No. 15, which established the Governance Committee, responsible for establishing institutional strategies and strategic guidelines related to public governance.

Also, there were some relevant decrees involving 5G. They were: (i) Decree No. 10,799 which updated Decree No. 9,612/2018 (telecom public policies), allowing the Government’s network to be built by other entities, not only Telebras. (ii) Decree No. 10,800 established the Amazon Integrated and Sustainable Program (PAIS). One of its objectives is to expand telecom networks to the Amazon region, in addition to creating a management committee to monitor them, among other provisions. (iii) Ministry of Communications Decree No. 1,924/21 about 5G guidelines, mainly about network security; obligation to provide an exclusive government network; backhaul for agribusiness; coverage of federal highways aligned with the Ministry of Infrastructure, among others.

Anatel

Over the years, Anatel has published several Resolutions that apply obligations to the telecommunications sector, among which we can highlight:

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(i) In November 2012, Anatel enacted PGMC 2012, whose goal is to encourage competition by creating interconnection obligations and the sharing of infrastructure already installed by other operators. PGMC 2012 was amended by Resolution No. 694/2018, the New PGMC;

(ii) In March 2014, by means of Resolution No. 632/2014, Anatel approved the adoption of a single regulation for the telecommunications sector (Regulamento Geral de Direitos do Consumidor de Serviços de Telecomunicações);

(iii) Resolution No. 671/2016, which approved the Regulation on the Use of the Radio frequency Spectrum and modified the Regulation on the Collection of Public Price for the Right of Use of Radio frequencies and the Regulation on the Imposition of Administrative Sanctions;

(iv) Resolution No. 693/2018 approved the new General Interconnection Regulation and revoked the “General Interconnection Regulatory Framework” set forth by Anatel in 2005;

(v) Resolution No. 695/2018 approved the new Public Price for the Right to Use of Radio Frequencies, or PPDUR, setting forth a two-part price calculation basis, one for renovation of radio frequencies and the other for license acquisition;

(vi) Resolution No. 719/2020: this Resolution approved the General License Regulation;

(vii) Resolution No. 720/2020: this Resolution approved the General Authorizations Regulation General;

(viii) Resolution No. 735/2020: this Resolution amended the Regulation on the Exploitation of SMP through the Virtual Network, the General Portability Regulation and the General Regulation on Consumer Rights to reduce the barriers to IoT expansion in Brazil;

(ix) Resolution No. 738/2020: this Resolution amended the Telecommunications Service Regulation to include provisions on confidentiality, fraud prevention and actions to support public security;

(x) Resolution No. 739/2020: this Resolution approved the Regulation on the Use of Telecommunications Services in Disasters, Emergency Situations and State of Public Disaster;

(xi) Resolution No. 740/2020: this Resolution approved the Cybersecurity Regulation applied to the telecommunications services;

Resolutions published in 2021

(i) Resolution No. 741/2021: this Resolution approved the Regulation for Adaptation of STFC Concessions for Authorizations;

(ii) Resolution No. 742/2021: this Resolution approved the Regulation on Conditions of Use of the 3.5 GHz Radio Frequency Band, as well as approved the Regulation on Conditions of Use of the Radio Frequency Band from 24.25 GHz to 27.90 GHz;

(iii) Resolution No. 743/2021: this Resolution changes the Personal Mobile Service General Authorization Plan – PGA SMP;

(iv) Resolution No. 744/2021: this Resolution approved the Regulation of continuity of STFC in the public regime;

(v) Resolution No. 746/2021: this Resolution approved the Regulatory Inspection process;

(vi) Resolution No. 748/2021: this Resolution approved the General Satellite Exploration Regulation.

Main Public Consultations held in 2021

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(i) Public Consultation No. 2: Revision of Act 4800 on the technical and operational requirements of RF bands above 2 GHz for fixed service;

(ii) Public Consultation No. 5: Preparation of the Technical and Operational Requirements Act for the 26 GHz frequency band;

(iii) Public Consultation No. 13: Call for subsidies for the project to reassess rates and contributions applicable to telecommunications sector;

(iv) Public Consultation No. 22: Consults the existence of fiber optic backhaul in locations that are not the headquarters of municipalities eligible for the backhaul obligation established in Decree 10.610/2021 - PGMU V;

(v) Public Consultation No. 23: Regulation of the 4,800-4,990 MHz band;

(vi) Public Consultation No. 29: Proposal for an Act on technical and operational requirements for spectrum sharing between ground stations associated with the SMP, SCM, STFC or SLP and ground stations operating in the 3.5 GHz frequency band;

(vii) Public Consultation No. 41: Review of the Operating Procedure for Assignment of Numbering Resources;

(viii) Public Consultation No. 45: Proposal to change the collection of sectoral data related to Personal Mobile Service accesses – SMP;

(ix) Public Consultation No. 52: Review of the regulations for the use of radio frequencies associated with the provision of STFC, SCM and SMP;

(x) Public Consultation No. 55: Call for subsidies for the development of new bottom-up cost model for fixed and mobile telecommunications networks;

(xi) Public Consultation No. 59: Review of Anatel's Internal Regulations;

(xii) Public Consultation No. 61: Review of the Regulation for the execution and monitoring of the Term of Commitment for Adjustment of Conduct;

(xiii) Public Consultation No. 64: Call for Subsidies for the revision of PGMC.

Telecommunications Self-regulation System

In March 2020, telecommunication operators signed the Telecommunications Self-Regulation System, or SART, which proposes to establish common rules and procedures that must be followed by all participating companies, in relation to the most material topics in the relationship between providers and customers, such as telemarketing (approved in September 2019), offers (approved in March, 2020), billing (approved in February, 2021) and attendance (approved in March, 2020).

Review of the Current Regulatory Model for the Provision of Telecommunications Services

In 2019, PLC 79/2016 was approved and converted into Law No. 13,879. The Law entered into force on October 4, establishing a new regulatory framework for the telecommunications sector in Brazil, the major regulatory change in 20 years

The new telecommunications framework allows the fixed telephone concessionaires to adapt their agreements from a concession regime to an authorization regime. This change of concession to authorization must be requested

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by the concessionaire and it should be approved by the Anatel. In return, concessionaires must, among other conditions, make investment commitments to expand fixed broadband services, in areas without adequate competition for these services in order to minimize gaps and inequalities between Brazilian areas. Additionally, it also changes the rules on authorization of radiofrequency uses, establishing subsequent renewals and allows Radiofrequency trading among players (spectrum secondary market).

In June 2020, the Federal Government published Decree No. 10,402/2020 which regulates Law No 13,879/2019 and provides for the adaptation of the concession instrument to authorization of telecommunications service and on the extension and transfer of radiofrequency authorization, grants of telecommunications service and satellite exploration rights.

Decree No. 10,402/2020 establishes that the partial or full transfer of the authorization to use radio frequencies between telecommunications service providers will be carried out against payment by Anatel and must be preceded by Anatel’s consent, in addition to enabling the maintenance of obligations associated to radiofrequencies (serving the public interest), the application of restrictions of a competitive nature when necessary/convenient and the analysis of tax regularity of the company to which the authorization is being transferred. It also confirmed that the current authorizations are covered by the new rule for successive renewals.

Authorizations and Concessions

With the privatization of the Telebrás system and pursuant to the Minimum Law (Lei Mínima), Band A and Band B service providers were granted concessions under Cellular Mobile Service (Serviço Móvel Celular), or SMC, regulations. Each concession was a specific grant of authority to supply mobile telecommunications services in a defined geographical area, subject to certain requirements contained in the applicable list of obligations attached to each concession.

Our predecessors were granted SMC concessions and in December 2002, such SMC concessions were converted into PCS authorizations, with an option to renew the authorizations for an additional 15 years. We acquired PCS authorizations in conjunction with auctions of bandwidth by Anatel in 2001, and subsequently acquired additional authorizations and operations under the PCS regulations as well.

In connection with the conclusion of the Reorganization whereby TIM Celular was merged into the Company (see “Item 4. Information on the Company—C. Organizational Structure”). The Company holds all of the authorizations previously issued in the name of other companies controlled, directly or indirectly, by TIM Participações.

Obligations of Telecommunications Companies

In 2011, Anatel published Resolution No. 575/11 regarding the review of the regulation on the management of quality of service – PCS. The new regulation established new quality goals, evaluation criteria, data collection and quality monitoring of service providers – PCS. The Anatel regulation aims to create a comprehensive model of quality management of the PCS providers providing preventive and proactive on the part of Anatel, through the incorporation of indicators and benchmarks that allow the systematic evaluation of the quality of service in all its dimensions. Anatel also published Resolution No. 574/11 in 2011, which set broadband quality measurement standards.

In March 2014, by means of Resolution No. 632/2014, Anatel approved the adoption of a single regulation for the telecommunications sector, the RGC, with general rules for customer service, billing, and service offers, which are applicable to fixed, mobile, broadband and cable TV customers. In 2018, Anatel held a subsidies grant, which is an opinion-gathering tool similar to, but at the preparation stage of a public consultation, aiming to improve the RGC in respect of the digitalization of processing and customer services, as well as billing and contracting services. A public consultation is expected in 2020. . In December 2020, Anatel enacted Public Consultation 77 in order to review Resolution 632/2014. The new RGC is expected to be approval in the first half of 2022.

In December 2019, Anatel approved RQUAL, which is expected to enter into force in 2022. See “—Quality Management Regulation.”

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PCS Regulation

In September 2000, Anatel promulgated regulations regarding PCS wireless telecommunications services that are significantly different from the ones applicable to mobile companies operating under Band A and Band B.

According to rules issued by Anatel, renewal of a concession to provide mobile telecommunications services, as well as permission from Anatel to transfer control of cellular companies, are conditioned on agreement by such cellular service provider to operate under the PCS rules. TIM Sul, TIM Nordeste and TIM Maxitel converted their cellular concessions into PCS authorizations in December 2002, and later transferred them to TIM Sul, TIM Nordeste and TIM Maxitel, which are now TIM S.A. (following the Reorganization and various intercompany mergers discussed herein) subject to obligations under the PCS regulations. See “—Authorizations and Concessions.”

In recent years, Anatel initiated certain administrative proceedings against TIM Celular (now TIM S.A.) for noncompliance with certain quality standards and noncompliance with its rules and authorization terms. We have been fined by Anatel in some proceedings and are still discussing the penalty imposed in appeals before the agency. As a result of these proceedings, Anatel applied some fines that did not cause a material adverse effect on our business. In 2019, the total amount of these fines was R$708.1 million. However, only R$32.3 million was classified as “probable loss” by our legal advisors. The significant amount related to fines classified as “possible loss” is a result of ongoing litigation.

On August 22, 2019, Anatel’s board of officers unanimously approved the execution of a TAC with TIM S.A. The agreement covers fines imposed against us in the total amount of R$639 million. The commitment we assumed, as also approved by our board of directors on June 19, 2020, foresees actions to develop our services from three different perspectives: (i) customer experience, quality and infrastructure, through initiatives to improve the licensing process of base stations, efficient use of resources, (ii) evolution of digital service channels, decreasing complaint rates and user repair demands, and (iii) reinforcement of transportation and access networks. In addition, the agreement also includes the commitment to bring mobile broadband through the 4G network to 350 cities with less than 30 thousand inhabitants thus reaching over 3.4 million people and the application of Internal Controls Management to ensure compliance with the closed proposal and the commitment to not impose inspection obstructions. As released to the market in June 16, 2020, and previously approved by Anatel on August 22, 2019, the TAC provided the implementation of the new infrastructure in three years, with our assurance that these areas will be shared with other providers

We continue to do our best to fully comply with our obligations under the PCS regime or with future changes in the regulations to which we are subject. See “—Obligations of Telecommunications Companies,” “Item 3. Key Information—D. Risk Factors—Risks Relating to our Business” and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.”

Significant Market Power

In November 2012, Anatel published a new competition framework known as the PGMC 2012. Also in November 2012, Anatel published a series of regulations identifying groups with significant market power in the following relevant markets as defined by the PGMC 2012: (i) wholesale offer of fixed access infrastructure for data transmission through copper or coaxial cable in rates equal or higher than 10 Mbps (Act No. 6,617, of November 8, 2012); (ii) wholesale offer of fixed infrastructure for local and long distance transportation for data transmission in rates equal or higher than 34 Mbps (Act No. 6,619, of November 8, 2012); (iii) passive infrastructure for transport and access networks (Act No. 6,620, of November 8, 2012); (iv) mobile network termination (Act No. 6,621, of November 8, 2012); and (v) national roaming (Act No. 6,622, of November 8, 2012).On December 5, 2016, Anatel published public consultations on (i) the revision of PGMC 2012’s relevant markets and remedies, and (ii) the proposal of a specific Regulation for the Approval of Reference Offers, for public comment until March 22, 2017.

In July 2018, Anatel published the New PGMC, which revised PGMC 2012 and created new markets: (i) mobile network; and (ii) national roaming; and (iii) high capacity data transport. According to the New PGMC proposal, cities in Brazil will be classified by levels of competition (1 – competitive, 2 – moderately competitive, 3 – less competitive, 4 – non-competitive), and asymmetric measures will be applied according to the market

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competition. In addition, also based on the proposal submitted to public consultation, wholesale relevant markets will be defined as follows:

PGMC 2012	New PGMC
Wholesale mobile call termination	Wholesale mobile interconnection
National roaming	National roaming
Full unbundling and bistream, or, wholesale fixed network infrastructure access less than 10 Mbps	Wholesale fixed network infrastructure access
Leased lines, interconnection class V, interlinking, or, wholesale fixed network infrastructure transport less than 34 Mbps	Leased lines
Ducts, trenches and towers, or passive infrastructure	* towers regulated by law
–	Wholesale fixed interconnection
–	High capacity data transport

Under the New PGMC, TIM has been classified as having significant market power in the following markets: (i) mobile network termination (otherwise referred to as the mobile network termination market); (ii) national roaming; and (iii) high capacity data transport (five municipalities). The measures applied to an significant market power operator in those markets include: (i) the application of mobile termination rates on a glide path based on a price cap system and the partial application of the Bill & Keep system (at a 50% threshold (i.e., not a significant market power operator pays only if the terminated traffic on the significant market power operator network is more than 50% of the total traffic exchanged) and only until the next revision of the New PGMC in 2021) and (ii) an obligation to offer the service of national roaming service to operators not having significant market power.

Due to such classification, we are subject to increased regulation under the New PGMC, which could have an adverse effect on our business, financial condition and results of operations. Specifically, because we have been classified as having significant market power in the mobile network termination market, the rates charged by mobile service providers to other mobile service providers to terminate calls on their mobile networks, or VU-M, are regulated. On July 4, 2014, Anatel approved, by means of Resolution No. 639/2014, a rule for the definition of maximum reference rates for entities with significant market power, based on a cost model, for VU-M, TU-RL, and EILD. Pursuant to Anatel’s rule, reference rates will decline based on a glide path until the cost modeling known as BU-LRIC is applied (in 2019, for VU-M and TU-RL; and in 2020, for EILD). On July 7, 2014, Anatel published the corresponding Acts Nos. 6,210/2014, 6,211/2014 and 6,212/2014, which determined the specific reference rates effective as of February 2016. On December 19, 2018, Anatel published the corresponding Acts Nos. 9,918/2018, 9,919/2018 and 9,920/2018, which determined the specific reference rates effective as of February 2020. Before coming into force, Anatel started revising these acts and, on February 24, 2020, published the new Acts Nos. 986/2020 and 987/2020.

Because of our classification as having significant market power in the national roaming market, we must also offer roaming services to other mobile providers without significant market power at the rates approved by Anatel. We are also required to provide access to our high capacity data transport network due to our classification as having significant market power in that market.

For additional detail, see “—Lines of Revenue—Network Usage Charges,” “—Lines of Revenue—Roaming Fees,” “—Lines of Revenue —Interconnection Charges” and “—Lines of Revenue—Long Distance” above.

Interconnection Regulation

Telecommunication operators must publish a public interconnection offer on both economic and technical conditions and are subject to the “General Interconnection Regulatory Framework” issued by Anatel in 2005.

In October 2011, Anatel established a mechanism for reducing fixed-to-mobile call rates, that results on a glide path to the reduction of mobile interconnection rates (VU-M) from 2012 to 2018, in accordance with Resolution No. 600/2012.

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In addition to the VU-M reduction, Anatel established a bill and keep, or B&K, rule between significant market power and non-significant market power PCSs. From January 2013 until February 2015, the B&K was 80%/20%. On February 12, 2015, Anatel approved, by means of Resolution No. 649/2015, the following new B&K percentages, amending the percentages established by Resolution 600: 75%/25%, from 2015 until 2016; 65%/35%, from 2016 until 2017; 55%/45%, from 2017 until 2018; and 50%/50%, from 2018 until 2019, which was the object of a judicial suit (ongoing), in order to suspend its effects. In July 2015, we filed a lawsuit seeking to annul Resolution No. 649/2015 and maintain the percentages originally established by Resolution No. 600/2012, which currently remains pending a final decision. However, as discussed above, the New PGMC in 2021 set the partial Bill & Keep threshold to 50% (i.e., a non-significant market power operator pays only if the terminated traffic on the significant market power operator network is more than 50% of the total traffic exchanged) and will be applied until the next revision of the New PGMC scheduled for 2022. In addition, Anatel determined the end of the existing additional 20% on the value of mobile termination rate paid by significant market power operators to non-significant market power operators.

Related to fixed interconnection, Anatel revised the criteria for pricing the use of fixed networks in May 2012. According to such regulation, after January 1, 2014, a full B&K regime (in which no payments are due for the traffic termination) was implemented for local STFC operators dealing with other local STFC operators. Currently, therefore, no payments are due for the use of a local STFC operator’s network by other local STFC operator. With respect to interconnection of STFC operators with long distance and mobile operators, we understand that, in 2012, when Anatel issued PGMC 2012, the asymmetrical measure that permitted STFC operators without significant market power to charge a TU-RL 20% higher than the TU-RL charged by STFC operator, with significant market power was revoked. In September 2016, we filed a lawsuit on this subject, which is still pending a final decision.

On July 4, 2014, Anatel approved, by means of Resolution No. 639/2014, a rule for the definition of maximum reference rates for entities with significant market power, based on a cost model, for VU-M and TU-RL, and for EILD. On July 7, 2014, Anatel published the corresponding Acts No. 6,210/2014, 6,211/2014 and 6,212/2014, which determined the specific reference rates effective as of February 2016.

On February 24, 2017, considering the glide path provided in Act No. 6,211, VU-M rates were again reduced, depending on the region, to the level of approximately R$0.05, in 2018, it was also reduced to levels of R$0.03, in 2019, it was reduced to levels of R$0.01 and, in 2020, it was reduced to levels of R$0.03. In December 2020, Anatel published Acts setting forth mobile termination rate which will be valid from 2020 until 2023.

Wholesale Rates Regulation

Under our PCS authorizations, we are allowed to set prices for our service plans, subject to approval by Anatel, provided that such amounts do not exceed a specified inflation adjusted cap. Anatel currently uses the telecommunication services index (Índice de Serviços de Telecomunicações), or IST, a specific price inflation index that it developed, in evaluating prices and determining the relevant cap for prices charged in the telecommunications industry. As mentioned above, on July 4, 2014, Anatel approved the calculation of VU-M, TU-RL and EILD reference rates based on a cost model. We expect that the adjustment of our prices will follow the market trend, and that the adjustment will be below the annual inflation rate based on the IST.

Number Portability

In March 2007, Anatel issued a new regulation regarding number portability in Brazil for fixed telephony and PCS providers. Portability is limited to migration between providers of the same telecommunications services. For PCS providers, portability can take place when a customer changes its services provider within the same Registration Area as well as when a customer changes the service plan of the same area. Anatel finished the nationwide NP implementation schedule in March 2009.

Value-Added Services and Internet Regulation

Value-Added Services are not considered under Brazilian telecommunications regulations to be telecommunications services, but rather an activity that adds features to a telecommunications service. Regulations require all telecommunications service providers to grant network access to any party interested in providing Value-

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Added Services, on a non-discriminatory basis, unless technically impossible. Telecommunications service providers also are allowed to render Value-Added Services through their own networks. Internet connection, when offered to users on a single basis, by parties other than telecommunications service providers, is considered by Brazilian legislation to be a value-added service, and its providers are not considered to be telecommunications companies. Current regulations allow us or any other interested party to offer Internet connection through our network. In such case, Internet connection would be deemed as a portion of the telecommunications service that enables users to navigate the Internet.

In April 2014, the Brazilian President passed Law No. 12,965/2014, known as the Legal Framework for the Use of the Internet (Marco Civil da Internet), or the Internet Framework, which establishes the principles, guarantees, rights and duties for the use of the Internet in Brazil. Key topics covered in the Internet Framework are: net neutrality; collection, use and storage of personal data; confidentiality of communications; freedom of expression and the treatment of illegal, immoral or offensive contents.

The Presidential Decree No. 8,711/2016 was enacted by the Brazilian President on May 11, 2016 and provided additional detail on the Internet Framework in three main aspects: (i) clarification of the scope and implementation of the net neutrality rules, (ii) implementation of the rights and obligations related to privacy and data protection regarding Brazilian Internet users, and (iii) governance of the Internet Framework, including authorities entitled to enforce the legislations. See “—Review of the Current Regulatory Model for the Provision of Telecommunications Services.”

Privacy and Data Protection

On August 14, 2018, the Brazilian President passed the LGPD. This new law is closer to the European Union General Data Protection Regulation, or GDPR, including significant extraterritorial application and considerable fines of up to 2% of a company’s global turnover of the previous financial year. The LGPD came into effect on September 18, 2020. However, the administrative sanctions provisions of LGPD only became enforceable as of August 1, 2021, pursuant to Law No. 14,010/2020. Cybersecurity incidents and data breach or leakage events may subject us to the following penalties: (1) warnings, with the imposition of a deadline for the adoption of corrective measures; (2) a one-time fine of up to 2% of gross sales of the company or a group of companies or a maximum amount of R$50,000,000 per violation; (3) a daily fine, up to a maximum amount of R$50,000,000 per violation; (4) public disclosure of the violation; (5) the restriction of access to the personal data to which the violation relates, until corrective measures are implemented; (6) deletion of the personal data to which the violation relates; (7) partial suspension of the databases to which the violation relates for up to 12 months, until corrective measures are implemented; (8) suspension of the personal data processing activities to which the violation relates for up to 12 months; and (9) partial or full prohibition on personal data processing activities. The postponement of the administrative sanctions did not prevent the competent authorities to begin supervision procedures and enactment of additional rules to be complied with prior to such effectiveness date, nor did it prevent individual or collective lawsuits based on violation of data subject’s rights and subject to civil liability.

We have set up a team tasked with adapting our processes and technologies to ensure compliance with the LGPD requirements. Notably, we have, among other developments, created a specific clause for the protection of personal data in our contracts with suppliers and business partners, developed training for all employees and customized training for top leadership on the topic of data protection, and created an Executive Data Protection Committee, led by the CEO.

Frequencies and Spectrum Background

In connection with the PCS authorization auctions in 2001 and 2002, Anatel divided the Brazilian territory into three separate regions, each of which is equal to the regions applicable to the public regime fixed-line telephone service providers. PCS services could only be provided under Bands C, D and E at that time with initially 1800 MHz band and afterwards also the 900 MHz band. We acquired the D band in regions II and III and the E band in region I, completing our national coverage when considering TIM Sul, TIM Nordeste and Maxitel coverage (each ultimately merged into the Company). On March 2016, the authorizations for the D and E bands were renewed.

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In December 2007, we acquired new authorizations for the 1,800 MHz frequency in São Paulo and Rio de Janeiro in order to improve our RF capacity in these regions. Within the same auction, Claro and Vivo acquired authorizations to provide PCS services in regions where we had historically provided services but where Claro and Vivo previously did not, using 1,800 MHz and 1,900 MHz bands. This resulted in increased competition in these regions. In the same auction, Oi received authorization to provide PCS services in the state of São Paulo using 1,800 MHz (band M in the whole state and band E in the state’s countryside).

In December 2007, we acquired 3G frequencies sub-bands (1,900–2,100 MHz), with national coverage; these authorizations were granted in April 2008 and are valid until 2023. Oi, Claro, Vivo and Algar Telecom also acquired 3G frequencies sub-bands in the same auction carried out by Anatel. All the authorization winners were subject to coverage and/or expansion commitments, divided by Municipality among the winners, in unserved areas.

In December 2010, Anatel auctioned an empty 3G band of radio spectrum consisting of (10+10) MHz in 2.1 GHz in the whole country (the “H Band” Auction), and other left over frequencies in the 900 MHz and 1800 MHz bands that had not been assigned in previous auctions. In this auction: TIM, Vivo, Claro and Nextel (actual America Movil) acquired blocks of frequencies.

In December 2011, Anatel auctioned 16 blocks in the 1,800 MHz band, which were sold to Claro, Oi, CTBC and TIM. As a result of our participation in the auction, we expanded our 2G coverage and increased our presence in the northern and central-western regions of Brazil, including the states of Paraná, Espírito Santo, Rio Grande do Sul, Santa Catarina and Minas Gerais.

In 2012, Anatel established a bidding process in order to comply with Presidential Decree No. 7.512 of June 2011, which set April 2012 as the deadline to auction the 2.5 GHz band, in order to introduce 4G technology in Brazil. Anatel modeled the auction with two national blocks of (20+20) MHz (W and Z) and two national blocks of (10+10) MHz (V1 and V2). In order to guarantee full rural service by 2018, Anatel linked the 4G blocks to the 450MHz band in specific geographic regions of Brazil.

We participated in the auction as a group bidding in the name of TIM and Intelig (now known as TIM S.A.). We did not bid for the W block (Amazonas as a rural area), which we viewed as having a high premium if compared to the X block (67%). We successfully acquired the V1 block, which in our view held the best capital expenditure/operating expenditure profile associated with rural services in its selected regions (the States of Rio de Janeiro, Espírito Santo, Santa Catarina, and Paraná). The joint bid allowed us to take advantage of the flexibility of the auction rules. These bands brought heavy coverage obligations as its short-range characteristics demands large investments.

In November 2013, Anatel approved the dedication of a single band, of the 700MHz spectrum, exclusively to mobile services and in September 2014, Anatel concluded the 700 MHz spectrum auction that granted to TIM, Vivo, Claro and Algar the operation of the 700 MHz frequency for the 4G mobile technology, to be added to the current LTE service in the 2.5 GHz RF. We bid on Block 2 of that auction, for national coverage of the 700 MHz band, and won the same with a bid of R$1,947 million (a 1% premium over the minimum price of R$1,927 million).

The auction also required the winning bidders to proportionally reimburse the broadcasters for the cleanup of the spectrum previously held and used by them. We spent R$1,199 million in order to create in March 2015 the EAD with the other winning bidders, to ensure the spectrum cleanup. The price allocated to the cleanup of the spectrum related to unsold blocks was shared proportionately among the winning bidders who bought the other blocks. To offset such additional cost to the winning bidders, the price of the 700 MHz spectrum was discounted using Anatel’s WACC methodology. As of September 2019, all Brazilian municipalities are able to receive TIM’s expanded 4G coverage through the 700 MHz band. Nevertheless, Anatel must still certify that there has been compliance with spectrum cleaning targets.

In December 2015, Anatel auctioned remaining radio frequencies in the 1,800 MHz, 1,900 MHz and 2,500 MHz bands. We submitted bids for the left over lots of the 2,500 MHz band, which had originally been auctioned in 2012. This particular band spectrum provides for 4G mobile services. We were the first ranked bidder in the lots for Recife, in the state of Pernambuco, and Curitiba, in the state of Paraná, based on our bids which totaled R$57.5 million. The corresponding authorization terms were executed by Anatel in July 2016.

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In November 2021, TIM acquired 11 lots in the 5G Auction, with a total value offered of R$1.05 billion, in three frequency bands 3.5 GHz, 2.3 GHz and 26 GHz. The acquired bands have a set of obligations that must be met with financial contributions or the construction of mobile and fixed network infrastructure.

Currently, according to Decree 10,402/2020, which regulates Law 13,879/2019, it is possible to renew licenses for successive periods. However, some conditions are being discussed with Anatel, such as value and term of renewal.

The actual scenario of frequencies granted to us by Anatel is presented on the table below: 

Frequencies
UF	450 MHz	700 MHz	800 MHz	900 MHz	1800 MHz	Additional 1800 MHz	1900 MHz (3G)
Acre	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Alagoas	-	December 2029	December 2023*	December 2023*	December 2023*	-	April 2023
Amapá	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Amazonas	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Bahia	-	December 2029	August 2027*	August 2027*	August 2027*	-	April 2023
Ceará	-	December 2029	November 2023*	November 2023*	November 2023*	-	April 2023
Distrito Federal	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Espírito Santo	October 2027	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Goiás	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Maranhão	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Mato Grosso	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Mato Grosso do Sul	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Minas Gerais ***	-	December 2029	April 2028*	April 2028*	April 2028*	April 2023	April 2023
Pará	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Paraíba	-	December 2029	December 2023*	December 2023*	December 2023*	-	April 2023
Paraná	October 2027	December 2029	September 2022* and March 2031* for the cities of Londrina and Tamarana	September 2022* and March 2031* for the cities of Londrina and Tamarana	September 2022* and March 2031* for the cities of Londrina and Tamarana	April 2023	April 2023
Pernanbumco	-	December 2029	May 2024*	May 2024*	May 2024*	-	April 2023
Piauí	-	December 2029	March 2024*	March 2024*	March 2024*	-	April 2023
Rio de Janeiro	October 2027	December 2029	March 2031*	March 2031*	March 2031*	-	April 2023
Rio Grande do Norte	-	December 2029	December 2023*	December 2023*	December 2023*	-	April 2023
Rio Grande do Sul	-	December 2029	March 2031* and April 2024* city of Pelotas and its surrounding region	March 2031* and April 2024* city of Pelotas and its surrounding region	March 2031* and April 2024* city of Pelotas and its surrounding region	April 2023	April 2023
Rondônia	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Roraima	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023
Santa Catarina	October 2027	December 2029	September 2023*	September 2023*	September 2023*	April 2023	April 2023
São Paulo	-	December 2029	March 2031*	March 2031*	March 2031*	Interior – April 2023	April 2023
Sergipe	-	December 2029	August 2027*	August 2027*	August 2027*	-	April 2023
Tocantins	-	December 2029	March 2031*	March 2031*	March 2031*	April 2023	April 2023

Frequencies
UF	2100 MHz (3G)	2300 MHz	2500 MHz V1 Band (4G)	2500 MHz P Band** (4G)	3500 MHz (5G)	26 GHz (5G)	Additional 26 GHz (5G)	Additional 26 GHz (5G)
Acre	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Alagoas	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Amapá	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Amazonas	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Bahia	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Ceará	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Distrito Federal	April 2023	-	October 2027	February 2024*	December 2041	December 2031	-	-
Espírito Santo	April 2023	December 2041	October 2027	-	December 2041	December 2031	December 2031	December 2041
Goiás	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Maranhão	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Mato Grosso	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Mato Grosso do Sul	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Minas Gerais ***	April 2023	December 2041	October 2027	February 2030*	December 2041	December 2031	December 2031	December 2041
Pará	April 2023	-	October 2027	February 2024*	December 2041	December 2031	-	-
Paraíba	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Paraná	April 2023	December 2041	October 2027	July 2031 (city of Curitiba and Metropolitan Region) and February 2024* AR 41, except Curitiba and Metropolitan Region	December 2041	December 2031	December 2031	December 2041
Pernanbumco	April 2023	-	October 2027	July 2031 (city of Recife)	December 2041	December 2031	-	-
Piauí	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Rio de Janeiro	April 2023	December 2041	October 2027	February 2024*	December 2041	December 2031	December 2031	December 2041
Rio Grande do Norte	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Rio Grande do Sul	April 2023	December 2041	October 2027	-	December 2041	December 2031	December 2031	December 2041
Rondônia	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Roraima	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Santa Catarina	April 2023	December 2041	October 2027	-	December 2041	December 2031	December 2031	December 2041
São Paulo	April 2023	-	October 2027	-	December 2041	December 2031	December 2031 (except sector 33)	December 2041 (except sector 33)
Sergipe	April 2023	-	October 2027	-	December 2041	December 2031	-	-
Tocantins	April 2023	-	October 2027	-	December 2041	December 2031	-	-

* Terms already renewed for 15 years.

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** Only covers complementary areas in the specified states. The Radio frequency Blocks of the Municipalities of the National Code 92, which were part of Lot 208, were returned.

*** Except for the cities in sector 3 of PGO for 3G and excess radio frequency.

Industrial Exploration of Dedicated Lines

In December 2010, Anatel approved a public hearing that considered alterations of the EILD, which established mechanisms for the operation of transmissions circuits up to 34 Mbps to increase transparency between operators and concessionaires. In May 2012, Anatel approved the new EILD regulations (Regulação de Exploração Industrial de Linha Dedicada), or REILD, detailing mechanisms to optimize the operating structure for transmission loop contracts in order to increase contract price transparency and affording equal treatment to independent service providers from concessionaire groups. The REILD specifically sets out more effective rules on project definition including Standard EILD or Special EILD, in addition to contract and delivery terms, and specifies EILD delivery dispute resolution procedures. Concurrently, in May 2012, Anatel approved new EILD reference prices, a step towards value fixation in controversies between service providers.

Considering that EILD is also a market subject to the asymmetric regulation defined by Anatel in the PGMC 2012, operators classified by Anatel as pertaining to group with significant market power in the EILD market, such as Oi, were required to submit reference prices and offers for Anatel’s approval, as well as to only offer EILD through a specific system designed for the PGMC 2012. In September 2013, Anatel ratification, for the first time, reference prices and offers of the operators with significant market power in the EILD market. At least every six months new reference prices and offers must be submitted for Anatel’s approval. We are not currently classified as having significant market power in the EILD market.

Nevertheless, the TIM network is still growing and, with its backbone now reaching the North region of Brazil by using optical fiber technologies and not only via satellite, this has allowed TIM to strengthen and expand the services offered in that region, particularly in the states of Pará, Amapá and the city of Manaus, the capital of the state of Amazonas and a very important industrial zone.

The greatest benefits of the use of the optical fiber technology are the higher network stability and assurance, greater voice and data traffic capacity and the higher transmission rates that we can now provide to our customers, all of which are essential features to support the increasing telecommunication services demands in the region. In addition to these perspectives, we contribute to reduce social disparities, offering the same technology to our customers, as well as content residing locally in our data centers, making no difference to the technical architecture built in a big metropolitan centers.

We have started discussions to apply the EILD reference rates based on cost model to the existing agreements we have with operators with significant market power in the EILD market. As part of the strategy of reducing operating expenses and as consequence of the expansion of our optic network infrastructure we are gradually deactivating leased lines such as EILD. The agreements for network sharing between the national operators is also a key factor to the reducing of leased lines. The number of leased circuits has considerably decreased along the last year. New lines are hired only in the cases where leasing is demonstrated to be the most cost effective solution.

Migration of the Mobile Networks with Analog Technology

In February 2011, Anatel approved Resolution No. 562/11, which modified a provision of the regulation on conditions of use of RF, determining that, after a period of 360 days from the publication, the use of analog technology in RF sub bands of 800 MHz would no longer be allowed.

In relation to the use of such RF, we no longer have subscribers of analog technology. However, our analog networks were still used by STFC concessionaires to provide services to subscribers in rural areas of the country, through a service called RuralCel.

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In December 2016, Anatel approved Resolution No. 672/16, which prohibited the use of analog technology in the radio frequency sub bands of 800 MHz, 900 MHz, 1,800 MHz, 1,900 MHz and 2,100 MHz. We shut down our RuralCel service in 2017, and consequently turned off the related radio base stations, as attested to by Oi and recognized by Anatel in Decision-making No. 6/2017.

Quality Management Regulation

In October 2011, Anatel published PCS and SCM quality management regulations to establish quality parameters which were to have been met by the mobile telephone and Internet connection operators in up to 12 months. Most quality parameters established relating to the quality of the networks, both mobile and fixed, became effective in October and November 2012.

In response to the need to better quantify the financial impacts, Oi submitted a request for cancellation together with a request for review to Anatel for the presentation of technical surveys of the economic impacts of the new regulations. The aforementioned request was submitted to public hearing by Anatel, which resulted in a series of divergent opinions regarding the quality measures by the different operations that are being analyzed by Anatel.

With regard to STFC, in December 2012, Anatel approved the Quality Management Regulation for STFC service providers, which aims to create a new quality management model available, such as the Quality for PCS and SCM.

In February 2013, Anatel published the STFC quality management regulations to establish quality parameters that must be met by fixed-line operators within 120 days. All established parameters took effective in June 2013.

In December 2019, Anatel approved the new Telecommunication Services Quality Regulation, (“RQUAL”) based on a reactive regulation. In this new model, quality is measured on the basis of three main indicators – a Service Quality Index, a Perceived Quality Index and a User Complaints Index – and operators are classified into five categories (A to E). Based on this regulation, Anatel will be able to take measures according to specific cases, such as consumer compensation, the adoption of an action plan or the adoption of precautionary measures to ensure quality standard improvements.

At the end of November 2021, after a joint work by Anatel, operators and the Quality Assurance Support Authority to define the objectives, criteria and reference values of indicators, , Anatel’s Board of Directors formalized the reference documents that anchor this regulation (the Operational Manual and the Reference Values) and stipulated that these documents would come into effect on March 1, 2022. Anatel also disclosed the official indexes, and the quality seal (inducing competition for quality) at the beginning of 2023, considering the results of the new monitored indicators in the second semester of 2022. Until then, Anatel will continue to monitor the old indicators that maintain similarity to the new ones established in the new RQUAL. Meanwhile, adjustments in criteria and reference values can be done by Anatel.

Anatel Administrative Proceedings

Under the terms of its PCS authorization, TIM Celular (now TIM S.A.) implemented mobile personal telecommunications coverage for the assigned area. Under such term of authorization, TIM Celular (now TIM S.A.) is required to operate in accordance with the quality standards established by Anatel. If it fails to meet the minimum quality standards required, TIM Celular (now TIM S.A.) is subject to Obligation Non-Compliance Determination Procedures, or PADO, and applicable penalties. Anatel has brought administrative proceedings against the TIM Group, which are currently pending for (1) noncompliance with certain quality service indicators (the quality management regulation, or RGQ, and/or RQUAL); and (2) default of certain other obligations assumed under the Terms of Authorization and pertinent regulations. In its defense before Anatel, the TIM Group attributed the lack of compliance to items beyond its control and not related to its activities and actions. We cannot predict the outcome of these proceedings at this time, but have accrued the amount in our balance sheet as a provision for all those cases in which we estimate our loss to be probable.

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Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act. Section 13(r) requires an issuer to disclose in its annual or quarterly reports filed with the SEC whether the issuer or any of its affiliates has knowingly engaged in certain activities, transactions or dealings with the Government of Iran, relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction during the period covered by the annual or quarterly report. Disclosure is required even when the activities were conducted outside the United States by non-U.S. entities and even when such activities were conducted in compliance with applicable law.

We are also required to disclose our affiliates’ activities relating to Iran and Syria. The Company has entered into Roaming Agreements for the provision of telecommunication services with mobile telephone network, or MTN, from Iran and Syriatel from Syria.

In accordance with our Code of Ethics, we seek to comply with all applicable laws. The Code of Ethics is available on our website: https://ri.tim.com.br/

Company’s activities relating to Iran, Syria, Cuba and North Korea

The Company is not, to its knowledge, engaged in any activities, transactions or dealings with the Government of North Korea, Iran, Syria and Cuba, or the Designated Countries.

The activities, transactions or dealings TIM had in the year ended December 31, 2021 in its knowledge, related in any way to Designated Countries are roaming agreements for the provision of telecommunication services, which allow our mobile customers to use their mobile devices on a network outside their home network, or Roaming Agreements. In our view, the amounts related to these operations, detailed below, are immaterial in our business. The Company does not have any agreement with providers from North Korea.

Roaming Agreements with the following local mobile phone operators:

· MTN Irancell, in Iran;

· MCI Iran Telecom, in Iran;

· Etecsa (also known as Cubacel), in Cuba; and

· Syriatel Mobile Telecom SA and MTN Syria, in Syria.

The impact on our consolidated income statement arising from Roaming Agreements with networks of the Designated Countries is detailed as follows:

	Year ended December 31, 2021
	Revenues	Charges
	(thousands of reais)
North Korea	—	—
Iran	0,4	0,4
Cuba	0,3	7,9
Syria	0,3	9,4
Total	1,1	17,7

Telecom Italia activities relating to Designated Countries

The information in this section is based solely on information provided to us by our parent Telecom Italia for purposes of complying with our obligations under Section 13(r) of the Exchange Act.

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Telecom Italia informs us that the activities, transactions or dealings it and its consolidated subsidiaries had in the year ended December 31, 2021 that, to its knowledge, relate to Designated Countries are (1) Roaming Agreements, (2) international telecommunications services agreements with international carriers, which cover delivery of traffic, or International Carrier Agreements, and (3) commercial sale and other agreements, or Commercial Sale and Other Agreements.

Telecom Italia informs us that the only activities that it and its consolidated subsidiaries had in the year ended December 31, 2021 that, to its knowledge, relate in any way to the Designated Countries are:

Roaming Agreements

Its Roaming Agreements are with the following local mobile phone operators:

· North Korea: none;

· Iran: TCI, KFZO-TKC (former Payam Kish), Gostaresh Ertebatat Taliya PJS (former Taliya), Rightel Communication, Irancell (MTN), Mobile Company of Iran (MCI), Telecommunication Company of Iran, and Telecommunication Infrastructure CO;

· Cuba: ETECSA, ETEC-Empresa de Telecomunicacione, and Cuba Cell.

· Syria: MTN Syria (former Spacetel Syria and former Areeba), Syrian Telecommunication, and Syriatel Mobile Telecom SA (Syriatel).

	Year ended December 31, 2021
	Revenues	Charges	Receivables	Payables
	(thousands of euros)
North Korea	—	—	—	—
Iran	2	7	555	385
Cuba	2	76	0	46
Syria	1	3	52	117
Total	5	86	607	548

The amounts of revenues, charges, receivables and payables are considered de minimis by Telecom Italia’s compared to its consolidated revenues, operating expenses, trade receivables and trade payables, respectively.

International Carrier Agreements

Telecom Italia’s subsidiary Telecom Italia Sparkle S.p.A., or TI Sparkle, directly and through its subsidiaries, has agreements with ETEC-Empresa de Telecomunicacione in Cuba, and Syrian Telecommunication in Syria.

The purpose of these International Carrier Agreements is to allow the uninterrupted exchange of international traffic. Consequently, Telecom Italia intend to continue maintaining these agreements.

	Year ended December 31, 2021
	Revenues	Charges	Receivables	Payables
	(thousands of euros)
North Korea	—	—	—	—
Iran	—	—	—	—
Cuba	947	3,888	134	578
Syria	1	419	13,006	13,901
Total	948	4,307	13,140	14,479

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The amounts of revenues, charges, receivables and payables are considered de minimis by Telecom Italia’s compared to its consolidated revenues, operating expenses, trade receivables and trade payables, respectively.

Commercial Sale and Other Agreements

TI Sparkle provides institutional access to Internet to Syria by means of Seabone IP ports and data transmission capacity through international cable systems located outside the Syrian territory. TI Sparkle also offers Internet Access services to Iran and Cuba through its international IP backbone system Seabone.

	Year ended December 31, 2021
	Revenues	Charges	Receivables	Payables
	(thousands of euros)
North Korea	—	—	—	—
Iran	947	281	947	191
Cuba	3,094	—	292	—
Syria	194	—	3,393	—
Total	4,235	281	4,632	191

The amounts of revenues, charges, receivables and payables are considered de minimis by Telecom Italia’s compared to its consolidated revenues, operating expenses, trade receivables and trade payables, respectively.

C.       Organizational Structure

We are part of the Telecom Italia Group, which is engaged in the communications sector and, particularly, the fixed and mobile national and international telecommunications sector. The operating segments of the Telecom Italia Group are organized according to the respective geographical location of the telecommunications business (Domestic—Italy and Brazil). We are currently held, directly and indirectly, by Telecom Italia, which as of December 31, 2021 held 66.59% of our shares. In turn, the single largest shareholder of Telecom Italia is Vivendi, which holds, directly, a stake of approximately 23.7% of ordinary share capital. In 2019, Telecom Italia delisted all its U.S. listed securities and deregistered from the SEC, having filed Form 15F on July 9, 2019. Substantially all assets previously held by TIM Participações consisted of the shares of the Company (known, until its corporate name change in September 2017, as Intelig, and into which TIM Celular was merged in October 2018 in connection with the Reorganization, as set forth in more detail below) (incorporated in the Federative Republic of Brazil and headquarters located in the State of Rio de Janeiro).

On July 25, 2017, the TIM Participações S.A.’s Board of Directors approved the Reorganization, under which TIM Celular was to be merged into the Company. In connection with the Reorganization, Intelig was transformed by corporate act into a closely held joint stock company and its corporate name was changed to TIM S.A. On October 31, 2018, the Reorganization was concluded and the merger of TIM Celular into the Company was completed, transferring all of TIM Celular’s operations to TIM S.A., and with the Company succeeding to all of TIM Celular’s assets, rights and liabilities. The Reorganization had the objective of capturing operational and financial synergies, through the implementation of a more efficient process structure, as well as accounting and internal control systems. This final step of the Reorganization resulted in efficiencies including: (i) tax efficiencies related to the termination of intercompany transactions; (ii) the creation of one company with combined services (fixed and mobile services) potentially resulting in a more efficient and swift response to the market’s needs, through the development of new services and integrated offers, and enabling a better strategic positioning and competitiveness as well as a better customer experience; (iii) optimization of resources and systems; and (iv) the recording by TIM Participações of an approximately R$952 million tax credit. The minutes of the Reorganization were filed with and approved by the Board of Trade of the State of São Paulo (Junta Comercial do Estado de São Paulo, or “JUCESP”), in December 2018.

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On July 29, 2020, our board of directors and the board of directors of TIM Participações approved the Merger of TIM Participações into the Company, which became effective on September 28, 2020. The Merger was part of a reorganization of TIM’s corporate group. The business carried out by TIM following the Merger was the same as the business previously carried out by TIM Participações prior to the Merger. Upon the consummation of this transaction and the approval of the listing of Company’s common shares and ADSs on B3 and NYSE, respectively, TIM Participações S.A.’s shareholders received one share of the Company in exchange for each share of TIM Participações that they held, in accordance with the terms of the Merger Agreement.

On November 16, 2021, IHS acquired a 51% equity interest from us in FiberCo. As a result of the transaction, FiberCo ceased to be our wholly owned subsidiary. We now hold 49% of FiberCo’s share capital and IHS holds the remaining 51%. With the completion of the acquisition, FiberCo changed its corporate name to I-Systems. For more details on this transaction, see “Item 4. Information on the Company—A. History and Development of the Company—2021 Important Events—Completion of the transaction between IHS and I-System."

The following chart illustrates our current ownership structure:

D.       Property, Plant and Equipment

Our principal properties consist of radio frequencies, transmission equipment, switching exchanges and gateway equipment, which connect calls to and from customers and enables data traffic connections, and radio base stations, which comprise certain signal transmission and reception equipment covering a defined area. At our radio base station, we have also installed antennas and certain equipment to connect these antennas with our switching equipment. As of December 31, 2021, we had more than 58 thousand eNodeB, more than 20 thousand NodeB, more than 15 thousand BTS and more than 112 thousand kilometers in fiber optic networks. We generally lease or buy the sites where our mobile telecommunications network equipment is installed. Over the course of financial year 2021, we had leased approximately 77,105 square meters of real property, all of which was available for office space. We also lease approximately 29,001 square meters of stores operated by us. There are no material encumbrances that may affect our utilization of our property or equipment. All of our property and equipment is owned or leased domestically; we do not own or lease any property or equipment outside Brazil.

TIM’s strategic plan for the 2022-2024 period, or the Industrial Plan 2022-2024, forecasts Company’s capital expenditures of R$14.0 billion, considering the combination with the UPI Oi Mobile Assets.

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Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

A.       Operating Results

The following discussion of the Company’s financial condition and operating results should be read in conjunction with the Company’s audited financial statements as of December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021 included in this annual report that have been prepared in accordance with IFRS, issued by IASB, as well as with the information presented under “Item 3. Key Information—A. Selected Financial Data.”

Brazilian Political and Economic Overview

Similar to 2020, 2021 continued to be significantly impacted by the COVID-19 pandemic Following the commencement of wide scale vaccination globally in late 2020, and with the advance of vaccination in Brazil throughout 2021, combined with the consequent easing of mobility restrictions, Brazil’s gross domestic product (GDP) grew by 4.5%, slightly offsetting the contraction of 4.1% in 2020. The trade balance closed 2021 with a surplus of U.S.$61 billion, representing a growth of 21.1% compared to 2020. Of note was the 38.2% increase in imports that more than offset the 34% increase in exports. Inflation, measured by the IPCA, reached 10.06%, its highest annual rate since 2016, exceeding the midpoint of the target set by Central Bank, which was 3.75% for the year. The performance is explained by the impacts of the growth of foods and beverages prices, driven by the strong demand for these products, the rise of dollar and the prices of commodities in the international market. The SELIC, or basic interest rate, It was lowered progressively to 2.00% on August 5, 2020 before increasing again and reaching 11.75% as of the date of this annual report. This movement is explained by stimulus measures being undertaken to prompt an economic recovery following lock-down measures implemented by the government in response to the COVID-19 pandemic and a temporary high inflation impact expectation. The Brazilian government and Central Bank have taken and will likely continue to take actions to change or adjust economic policies as a reaction to turmoil in the financial markets and increased volatility caused by the COVID-19 outbreak.

See “Item 3. Key Information—D. Risk Factors—Risks Relating to Brazil—We may be impacted by volatility in the global financial markets”.

In regard to foreign exchange, the Brazilian real depreciated 7.4% compared to the U.S. dollar in 2021. During the year, the exchange rate fluctuated due to uncertainties caused by the increased fiscal risk resulting from the sharp spike in public spending resulting from the pandemic and the stagnation of tax and administrative reforms. During the first part of 2022, the real appreciated as compared to the U.S. dollar. As of April 13, 2022, the exchange rate for U.S. dollars as reported by the Central Bank was R$4.68 per U.S.$1.00, due to the expectations regarding the impact of overall market declines and continued volatility arising from the COVID-19 pandemic, among other factors.

Impact of Inflation on Our Results of Operations

Inflation directly impacts our results of operations as certain of our assets and liabilities are subject to monetary adjustments by reference to indexes that measure or that are impacted by inflation such as IPCA, IGPM, TJLP, and SELIC. In 2021, the net impact of inflation adjustments was a loss of R$39 million, compared to a loss of R$44 million in 2020. The net loss in 2021 can be explained by losses arising from inflation adjustments on loans, which was partially offset by gains arising from restatements of taxes. Our net loss in 2020 can be explained by losses arising from provisions for aggregate contingent amount of outstanding civil, labor and tax claims pending against us, which was partially offset by gains arising from restatements of taxes.

Sale and leaseback

A sale and leaseback transaction is one where the group sells an asset and immediately reacquires the use of the same asset by entering into a lease agreement with the buyer. The accounting treatment of the sale and leaseback transaction depends upon the substance of this transaction (by applying the principles of lease classification) and whether or not the sale was made at the asset’s fair value.

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For financial sale and leaseback, the total gain is deferred and amortized over the lease term. For operational sale and leaseback, generally the assets are sold at fair value, and consequently, the gain or loss from the sale is immediately recognized in the income statement.

At the beginning of the lease term, the Company recognizes finance leases as assets and liabilities on its balance sheet at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the beginning of the lease.

The discount rate used in a sale and leaseback transaction is determined based on observable market transactions where the lessee would have to pay on a similar lease or borrowing arrangement contract or loan. As mentioned in Note 16 to our financial statements, discount rates applied by management in the transactions carried out during the year were decisive for the calculation of the portion of the gain recorded through profit and loss, as well as the portion of deferred gain and amortized over the lease term.

On January 1, 2019, the Company adopted IFRS 16 / CPC 06 (R2), a new accounting standard issued in July 2014, came into force. The standard requires that lessees recognize the assets and liabilities arising from lease agreements (“rent”; leases), except for short-term contracts, that is 12 months or less, or contracts in which the underlying asset is of low value. In this sense, the first-time adoption of this standard resulted in the recognition of a right of use assets and correspondent lease liability of R$5,256 million as of January 1, 2019.

Critical Accounting Policies

Critical accounting policies are those that are important to the presentation of our financial condition and results of operations and require management’s most subjective, complex judgments, often requiring management to make estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the possible future resolution of the uncertainties increases, those judgments become more complex.

Accounting estimates and judgments are continuously reassessed. They are based on the Company’s historical experience and other factors, such as expectations of future events, considering the circumstances presented as at the base date of the financial statements.

By definition, the accounting estimates resulting from such assumptions rarely equal the actual outcome. The estimates and assumptions that present significant risk with probability to cause relevant adjustments in the book values of assets and liabilities for the next fiscal years are shown below. We also describe our significant accounting policies, including the ones discussed below, in Note 2 to our financial statements.

Impairment loss on non-financial assets and investments in associated companies

Impairment losses occur when book value of an asset or cash generating unit exceeds its recoverable value, which is the highest of fair value less selling costs and value in use. Calculation of fair value less selling costs is based on information available on similar assets’ selling transactions or market prices less additional costs to dispose of the asset. The calculation of value in use is based on the discounted cash flow model.

Any reorganization activities with which the Company is not committed to on the reporting date of the presentation of financial statements or significant future investments that could improve the asset base of the cash generating unit under test are excluded for impairment testing purposes.

The main non-financial assets for which this assessment was made are goodwill recorded by the Company (see Notes 3(a) and 14 to our financial statements) and its tangible and intangible assets.

Net investments in associated companies are valued after applying the equity method to determine whether there is any objective evidence of impairment. The recoverable amount of an investment in an associated company must be determined for each investment, unless the associated company does not generate cash inflows on an ongoing basis that are largely independent of those generated by the entity’s other assets. The investment in an associated company was valued as described in Note 13 to our financial statements).

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Income Tax and Social Contribution (Current and Deferred)

Income tax and social contribution (current and deferred) are calculated according to interpretations of current legislation and IAS 12. This process typically involves complex estimates to determine taxable income and temporary differences. In particular, the deferred assets on tax losses, negative basis of social contribution and temporary differences is recognized in proportion to the probability that future taxable income is available and can be used. The measurement of the recoverability of deferred income tax on tax losses, negative basis of social contribution and temporary differences takes the history of taxable income into account, as well as the estimate of future taxable income (see Note 3(b) to our financial statements).

Provision for Legal and Administrative Proceedings

The legal and administrative proceedings are analyzed by management along with our legal advisors (internal and external). The Company considers factors in its analysis such as hierarchy of laws, precedents available, recent court judgments, their relevance in the legal system and payment history. These assessments involve management’s judgment (see Note 3(c) to our financial statements).

Fair Value of Derivatives and Other Financial Instruments

The financial instruments presented in the balance sheet at fair value are measured using valuation techniques that consider observable data or observable data derived from market (see Notes 3 and 37 to our financial statements).

Unbilled Revenues

Since some cut-off dates for billing occur at intermediate dates throughout each month, as at the end of each month there are revenues earned by the Company, but not actually invoiced to its customers. These unbilled revenues are recorded based on estimates that take into consideration historical consumption data, number of days elapsed since the last billing date, among others (see Notes 3 and 27 to our financial statements).

Leases

The Company has a significant number of lease contracts in which it acts a lessee (note 16), and with the adoption of the accounting standard IFRS 16, certain judgments were exercised by Company’s management in measuring lease liabilities and right-of-use assets, such as: (i) estimate of the lease term, considering non-cancellable period and the period covered by options to extend the contract term, when the exercise depends only from the Company, and this exercise is reasonably certain; and (ii) using certain assumptions to calculate the discount rate.

The Company is not able to readily determine the interest rate implicit on the lease and, therefore, considers its incremental rate on loans to measure lease liabilities. Incremental rate on the lessee’s loan is the interest rate that the lessee would have to pay when borrowing, for a similar term and with a similar guarantee, the resources necessary to obtain the asset with a value similar to the right of use asset in a similar economic environment. The Company estimates the incremental rate using observable data (such as market interest rates) when available and considers aspects that are specific to the Company (such as the cost of debt) in this estimate.

Results of Operations

The following discussion should be read in conjunction with “Item 4. Information on the Company” and “Item 3. Key Information.” As set forth in greater detail below, our financial condition and results of operations are significantly affected by Brazilian telecommunications regulation, including the regulation of rates. See “Item 4. Information on the Company—B. Business Overview—Regulation of the Brazilian Telecommunications Industry—Wholesale Rates Regulation.” Our financial condition and results of operations have also been, and are expected to continue to be, affected by the political and economic environment in Brazil. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Brazil.”

The following table shows certain components of our statement of income for each year in the three-year period ended December 31, 2021, as well as the percentage change from year to year.

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	Year ended December 31,			Percentage change
	2021	2020	2019	2021 - 2020	2020 - 2019
	(in thousands of reais)
Revenue	18,058,027	17,267,812	17,377,194	4.6	(0.6)
Cost of services provided and goods sold	(8,443,023)	(7,996,615)	(7,433,731)	5.6	7.6
Gross income	9,615,004	9,271,197	9,943,463	3.7	(6.8)
Operating income (expenses):
Selling expenses	(4,621,788)	(4,443,027)	(4,986,289)	4.0	(10.9)
General and administrative expenses	(1,723,384)	(1,673,290)	(1,717,859)	3.0	(2.6)
Other income (expenses), net	497,771	(351,854)	1,275,542	N.A.	N.A.
Share of loss of an associate	(11,572)	–	–	N.A.	N.A.
Operating income (expenses)	(5,858,973)	(6,468,171)	(5,428,606)	(9.4)	19.1
Profit before financial income and  expenses	3,756,031	2,803,026	4,514,857	34.0	(37.9)
Financial income (expenses):
Financial income	1,091,748	438,598	1,430,171	148.9	(69.3)
Financial expenses	(1,745,213)	(1,242,255)	(1,408,053)	40.5	(11.8)
Foreign exchange variations	659	(6,965)	(908)	N.A.	N.A.
Financial income (expenses)	(652,806)	(810,622)	21,210	N.A.	N.A.
Profit before income tax and social contribution	3,103,225	1,992,404	4,536,067	55.8	(56.1)
Income tax and social contribution	(146,051)	(164,150)	(913,940)	N.A.	N.A.
Profit for the year	2,957,174	1,828,254	3,622,127	61.7	(49.5)

Results of Operations for the Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

Revenues

Our revenues consisted of:

· Mobile and Fixed Services: (i) local and long distance voice, (ii) data and content (Value-Added Services), (iii) interconnection, and (iv) other services.

· Goods Sold: telephones, mini-modems, tablets and other equipment .

The composition of our operating revenues by category of service is presented in Note 27 to our financial statements and discussed below.

Our revenue for the year ended December 31, 2021 was R$18,058 million, an increase of 4.6% as compared to the year ended December 31, 2020. Mobile service revenue increased 4.7% for the year ended December 31, 2021 as compared to the year ended December 31, 2020, from R$15,610 million in the year ended December 31, 2020 to R$16,349 million in the year ended December 31, 2021. Landline service revenue increased by 8.8%, to R$1,147 million for the year ended December 31, 2021 from R$1,054 million for the year ended December 31, 2020. This performance was driven by: (i) Mobile Postpaid performance; (ii) Customer Platform Revenue; and (iii) TIM Live growth.

Our management understands that a breakdown of revenue, net of discounts and PIS and COFINS taxes, can be helpful in an analysis of our revenue dynamics. The details of our revenue, net of discounts and PIS and COFINS taxes, are presented below:

	Year ended December 31,		Percentage change
	2021	2020	2021 – 2020
	(in millions of reais)
Total revenue	18,058	17,268	4.6
Service revenue	17,497	16,665	5.0

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	Year ended December 31,		Percentage change
	2021	2020	2021 – 2020
	(in millions of reais)
Service revenue – mobile	16,349	15,610	4.7
Client generated	14,843	14,351	3.4
Interconnection	533	528	0.9
Others	853	731	16.7
Service revenue – landline	1,147	1,054	8.8
Goods sold	561	603	(7.0)

Service Revenue

Service revenue for the year ended December 31, 2021 was R$17,497 million, an increase of 5.0% compared to R$16,665 million in the year ended December 31, 2020. Revenue from mobile services, or MSR, increased 4.7% to R$16,349 million for the year ended December 31, 2021, from R$15,610 million for the year ended December 31, 2020, reflecting the Company’s strategy to monetize its customer base through two pillars: (i) offer differentiation; and (ii) migration of the customer base to higher-value plans.

As disclosed above, client generated revenues, or CGR, increased by 3.4%, from R$14,351 million for the year ended December 31, 2020 to R$14,843 million for the year ended December 31, 2021. This was driven by the same factors that impacted MSR.

Interconnection revenue increased 0.9%, to R$533 million for the year ended December 31, 2021 from R$528 million for the year ended December 31, 2020. The result was impacted by a higher rate of Mobile Termination Revenue, or MTR, of 7.2% YoY, and an decrease in incoming traffic by 9.9% YoY. After successive cuts to MTR, the foreseen Anatel’s increase was applied in February 2021. The incidence of MTR represents 2.5% of service revenues in the year.

Others revenue increased 16.7% YoY, to R$853 million for the year ended December 31, 2021 from R$731 million for the year ended December 31, 2020 the higher revenue from network sharing. It should be noted that the capacity exchange and sharing are key for the Company’s strategy to expand the fiber optic transport infrastructure (backbone and backhaul), allocating resources (Capex and Opex) more efficiently.

Mobile ARPU was R$26.4 for the year ended December 31, 2021, an increase of 5.9% as compared to the year ended December 31, 2020. The result reflects the Company’s strategy to monetize its customer base through two pillars: (i) offer differentiation; and (ii) migration of the customer base to higher-value plans. The segments’ ARPU, which excludes other mobile revenues and Customer Platform, increased by 2.5% YoY in prepaid (R$12.9) and by 1.7% YoY in postpaid (ex-M2M) (R$46.4). We understand this is a relevant profitability metric that allows comparability with other peers in the telecommunication sector, calculated by dividing mobile services revenues by the average monthly customer base.

Service revenue – landline increased 8.8% to R$1,147 million for the year ended December 31, 2021 from R$1,054 million the year ended December 31, 2020, mainly due to the growth in TIM Live by 14.7% YoY.

Revenue from goods sold decreased 7.0%, from R$603 million for the year ended December 31, 2020 to R$561 million for the year ended December 31, 2021, reflecting a more challenging macroeconomic scenario in the year and supply issues on some equipment during the third quarter.

Cost of services provided and goods sold and Operating Expenses

Cost of services provided and goods sold and operating expenses (comprise of selling, general and administrative expenses) decreased 4.8% for the year ended December 31, 2021 as compared to the year ended December 31, 2020.

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The following table shows the components of costs of services provided, goods sold and operating expenses (comprised of selling, general and administrative expenses) for each of the years indicated.

Statement of Income Data: Operating Costs and Expenses

	Year ended December 31,		Percentage change
	2021	2020	2021 – 2020
	(in millions of reais)
Personnel	(1,126)	(1,012)	11.3
Third-party services	(2,992)	(2,870)	4.3
Interconnection and means of connection	(1,840)	(1,673)	10.0
Depreciation and amortization	(5,692)	(5,527)	3.0
Taxes, fees and contributions	(842)	(814)	3.4
Rent and insurance	(492)	(440)	11.8
Cost of goods sold	(731)	(756)	(3.3)
Publicity and advertising	(460)	(377)	22.0
Expected credit losses of trade accounts receivable	(545)	(553)	(1.4)
Others	(68)	(91)	(25.3)
Total	(14,788)	(14,113)	4.8

Personnel

Personnel costs and expenses increased by 11.3% in the year ended December 31, 2021 as compared to the year ended December 31, 2020, to R$1,126 million from R$1,012 million, respectively. This increase can be explained by (i) inflation as compared to the previous year, which increased wages and benefits since most of our employees’ wage and salary increases are generally tied to inflation rates. In 2021, we also had a bigger salary allowance than last year, in order to re-adjust employees’ salaries by the accumulated inflation rate; (ii) a lower number of average employees (a decrease of 2.6% in the year ended December 31, 2021 as compared to the year ended December 31, 2020); (iii) a non-recurring cost resulting from the COVID-19 pandemic, by which the Brazilian government approved some temporary laws for maintaining jobs, which reduced some of our labor costs, such as social charges, salaries and some benefits for the most economically impacted areas (at TIM, these measures were applied basically for people who worked at stores and those who were classified as COVID-19 at-risk groups and couldn’t work from home) in the year ended December 31, 2020.

Third-Party Services

Third-party services costs and expenses increased 4.3%, to R$2,992 million in the year ended December 31, 2021 as compared to R$2,870 million in the year ended December 31, 2020, mainly due to the increase in prepaid sales and the related commissioning expenses, as well as reduced expenses related to physical billing, given the advance in the digitalization of this process.

Interconnection and Means of Connection

Our costs for interconnection and means of connection increased 10.0%, to R$1,840 million in the year ended December 31, 2021 as compared to R$1,673 million in the year ended December 31, 2020. This performance was boosted mainly due to a higher mobile termination rate (MTR) at the beginning of the year.

Depreciation and Amortization

Depreciation and amortization costs and expenses increased 3.0% in the year ended December 31, 2021 as compared to the year ended December 31, 2020, to R$5,692 million from R$5,527 million, respectively. This increase is mostly explained by an increase in Depreciation of 4G Transmission Equipment and right of use, related to a larger Fixed Asset base from lease agreements.

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Taxes, Fees and Contributions

Taxes, fees and contributions costs and expenses increased 3.4% in the year ended December 31, 2021, to R$842 million from R$814 million in the year ended December 31, 2020. For further information, see “Item 4. Information on the Company—B. Business Overview—Taxes on Telecommunications Goods and Services.”

Rent and Insurance

Rent and insurance costs and expenses increased 11.8% to R$492 million in the year ended December 31, 2021 from R$440 million in the year ended December 31, 2020. This increase is mainly related to the impact from the trademark license agreement (which is classified as a rent contract under IFRS) entered into in the year ended December 31, 2020 regarding the right to use the “TIM” brand.

Costs of Goods Sold

Our cost of goods sold decreased 3.3%, from R$756 million in the year ended December 31, 2020 to R$731 million in the year ended December 31, 2021. This decrease reflects the efficiency on cost control execution, despite the country’s higher inflation

Publicity and Advertising

Publicity and advertising expenses increased 22.0% in the year ended December 31, 2021 as compared to the year ended December 31, 2020, to R$460 million from R$377 million, respectively, mainly affected by the return of more frequent advertising campaigns and higher expenses with sales commissions.

Expected credit losses of trade accounts receivable

Expected credit losses of trade accounts receivable, decreased 1.4%, to R$544 million in the year ended December 31, 2021 as compared to R$553 million the year ended December 31, 2020, reflecting the continuous efforts to enhance customer acquisition through more robust credit models and policies, as well as higher efficiency in collection and recovery.

Others

Other costs and expenses decreased 25.3% in the year ended December 31, 2021, as compared to the year ended December 31, 2020. For the year ended December 31, 2021, those other costs amounted to R$68 million, compared to R$91 million for the year ended December 31, 2020.

Other Income (Expenses), Net

Other income (expenses), net, changed to an income of R$498 million in the year ended December 31, 2021 from an expense of R$352 million in the year ended December 31, 2020. This change was mainly due to the gain from the sale of 51% of our equity interest in I-Systems (formerly FiberCo) to IHS, in the amount of R$2,709 million, which is composed of the (secondary) cash paid to TIM S.A. and the fair value of the minority interest of 49% that remained with TIM S.A.

Profit for the year

The following table shows our net income, as well as the percentage change, for each of the periods indicated:

	Year ended December 31,		Percentage change
	2021	2020	2021 – 2020
	(in millions of reais)
Profit before financial income (expenses) and income taxes	3,756	2,803	34
Financial income (expenses)	(653)	(811)	19
Income tax and social contribution	(146)	(164)	11

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	Year ended December 31,		Percentage change
	2021	2020	2021 – 2020
	(in millions of reais)
Profit for the year	2,957	1,828	62

Financial Income (Expenses)

In the year ended December 31, 2021, financial expenses was R$653 million, as compared to the R$811 million in the year ended December 31, 2020, this decrease is mainly explained by a lower volume of interest on financing, that exceeded the lower revenue from interest on financial investments. The last two accounts have declined on an annual comparison as a result of a lower SELIC rate.

Income and Social Tax Contribution

Income tax and social contribution expenses totaled R$146 million in the year ended December 31, 2021, compared to an expense of R$164 million in the year ended December 31, 2020. In 2021, although it was recognized a R$509 million expense of IRPJ and CSLL due to the sale of 51% of FiberCo's share capital in favor of IHS, TIM also registered (i) R$535 million of IRPJ and CSLL credits related to the STF decision that the IRPJ and CSLL are not levied on SELIC interest on the refund of overpaid taxes; and (ii) a positive impact of R$87 million arising from the write-off of assets and reversal of the provision for income tax and social contribution, set up in 2009, due to the partial success in an administrative proceeding related to the merger of the company TIM Nordeste by TIM Celular. Therefore, despite our earnings before income and social contribution taxes was higher than previous year, Income and Social Contribution taxes expenses was lower than 2020. Important to mention that due to FiberCo transaction it was also recognized a positive impact of R$336 million of deferred taxes on goodwill. Nonetheless, such amount was registered as a reduction of the transaction cost, above EBITDA, not as an income and social contribution expense.

Profit for the Year

As a consequence of the explanations above, our profit for the year ended December 31, 2021 was R$2,957 million, representing an increase of 61.7% from our profit of R$1,828 million for the year ended December 31, 2020.

Results of Operations for the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

Revenues

Our revenues consisted of:

· Mobile and Landline: (i) local and long distance voice, (ii) data and content (Value-Added Services), (iii) interconnection, and (iv) other services.

· Goods sold: sale of handsets and accessories.

The composition of our operating revenues by category of service is presented in Note 27 to our financial statements and discussed below.

Our revenue for the year ended December 31, 2020 was R$17,268 million, a decrease of 0.6% as compared to the year ended December 31, 2019. Net mobile service revenue decreased 0.2% for the year ended December 31, 2020 as compared to the year ended December 31, 2019, from R$15,648 million in the year ended December 31, 2019 to R$15,610 million in the year ended December 31, 2020. Net landline service revenue increased by 11.1%, to R$1,054 million for the year ended December 31, 2020 from R$949 million for the year ended December 31, 2019, mainly explained by the results from the strong performance of TIM Live, which more than offset the decline in revenues from other fixed segments (such as corporate and wholesale).

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Our management understands that a breakdown of revenue, net of discounts and PIS and COFINS taxes, can be helpful in an analysis of our revenue dynamics. The details of our revenue, net of discounts and PIS and COFINS taxes, are presented below:

	Year ended December 31,		Percentage change
	2020	2019	2020 – 2019
	(in millions of reais)
Total revenue	17,268	17,377	(0.6)
Service revenue	16,665	16,597	0.4
Service revenue – mobile	15,610	15,648	(0.2)
Client generated	14,351	14,372	(0.1)
Interconnection	528	477	10.6
Others	731	799	(8.5)
Service revenue – landline	1,054	949	11.1
Goods sold	603	780	(22.7)

Service Revenue

Service revenue for the year ended December 31, 2020 was R$16,665 million, an increase of 0.4% compared to R$16,597 million in the year ended December 31, 2019. Revenue from mobile services, or MSR, decreased 0.2% to R$15,610 million for the year ended December 31, 2020, from R$15,648.2 million for the year ended December 31, 2019, mostly influenced by the impacts of the COVID-19 pandemic, mostly to the prepaid segment, with a reduction in rechargers in the segment, in addition to reduced commercial activities in postpaid, an effect of the economic fallout of the COVID-19 pandemic.

As mentioned above, client generated revenues, or CGR, decreased by 0.1%, from R$14,372 million for the year ended December 31, 2019 to R$14,351 million for the year ended December 31, 2020. This was driven by the same factors that impacted MSR.

Interconnection revenue grew 10.7%, for the year ended December 31, 2020, with R$528 million as compared to R$477 million for the year ended December 31, 2019. The result was impacted by a higher rate of Mobile Termination Revenue, or MTR, of 10.2% YoY, and an increase in incoming traffic by 12.1% YoY. After successive cuts to MTR, the foreseen Anatel’s increase was applied in February 2020. The incidence of MTR represents 2.6% of service revenues in the year.

Other Mobile Revenues ended 2020 down by 8.5% YoY, at R$731 million. From the last quarter of 2020, this line began to be positively impacted by R$14.5 million of revenues from the commercial agreement with C6 Bank (as per Note 27 to TIM S.A.’s Financial Statements). This decrease is explained by the reduction of fees on other mobile service revenues. It should be noted that the performance of this line is still impacted mainly by revenues from network sharing and swap agreements, in line with the Company's strategy to expand the fiber optic transport infrastructure (backbone and backhaul) with higher efficiency in asset allocation (Capex and Opex).

Monthly ARPU was R$24.9 for the year ended December 31, 2020, an increase of 4.9% as compared to the year ended December 31, 2019. The main explanation the maintenance of the company's successful efforts to monetize its customer base through migrations to higher value prepaid and postpaid plans. The segments’ ARPU, which excludes other mobile revenues, increased by 4.9% YoY in prepaid (R$12.6) and by 3.4% YoY in postpaid (ex-M2M) (R$45.6). We understand this is a relevant profitability metric that allows comparability with other peers in the telecommunication sector, calculated by dividing mobile services revenues by the average monthly customer base.

Landline service revenue increased 11.1% to R$1,054 million for the year ended December 31, 2020 as compared to R$949 million the year ended December 31, 2019, mainly due to the growth in TIM Live by 27.9%, which was offset by the decrease in revenues from the fixed segment by 7%.

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Goods Sold

Revenue from the sale of goods decreased 22.7%, from R$780 million for the year ended December 31, 2019 to R$603 million for the year ended December 31, 2020, reflecting the closing of most of the Company’s physical stores, its main handset sales channel, from March to June, due to the social distancing measures adopted to fight the spread of the new coronavirus pandemic.

Costs and Operating Expenses

Costs and operating expenses decreased 0.2% for the year ended December 31, 2020 as compared to the year ended December 31, 2019.

The following table shows the components of costs and operating expenses for each of the years indicated.

Statement of Operations Data: Operating Costs and Expenses

	Year ended December 31,		Percentage change
	2020	2019	2020 – 2019
	(in millions of reais)
Personnel	(1,012)	(1,071)	(5.5)
Third-party services	(2,870)	(3,124)	(8.1)
Interconnection and means of connection	(1,673)	(1,420)	17.8
Depreciation and amortization	(5,527)	(5,129)	7.8
Taxes, fees and contributions	(814)	(832)	(2.1)
Rent and insurance	(440)	(434)	1.4
Cost of goods sold	(756)	(932)	(18.9)
Publicity and advertising	(377)	(355)	6.2
Losses on doubtful accounts	(553)	(748)	(26.1)
Others	(91)	(95)	(3.6)
Total operating expenses	(14,113)	(14,138)	(0.2)

Personnel

Personnel costs decreased by 5.5% in the year ended December 31, 2020 as compared to the year ended December 31, 2019, to R$1,012 million from R$1,071 million, respectively. This decrease can be explained by lower commercial personnel expenses due to the closing of physical stores in the second quarter of 2020 and, negatively, by organic elements such as inflation on wages and benefits in the first and third quarter of 2020.

Third-Party Services

Third-party services costs decreased 8.1%, to R$2,870 million in the year ended December 31, 2020 as compared to R$3,124 million in the year ended December 31, 2019, mainly due to the decrease in prepaid sales and the related commissioning expenses for such prepaid segment, as well as reduced expenses related to physical billing, given the advance in the digitalization of this process.

Interconnection and Means of Connection

Our costs for interconnection and means of connection increased 17.8%, to R$1,673 million in the year ended December 31, 2020 as compared to R$1,420 million in the year ended December 31, 2019. This performance was boosted by a higher mobile termination rate as from February 2020 and increased Network costs, due to the increase of rental and infrastructure sharing and maintenance expenses.

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Depreciation and Amortization

Depreciation and amortization expenses increased by 7.8 % in the year ended December 31, 2020 as compared to the year ended December 31, 2019, to R$5,527 million from R$5,129 million, respectively. This increase is mostly explained by an increase in Depreciation of 4G Transmission Equipment and Right of Use, related to a larger Fixed Asset base from lease agreements.

Taxes, Fees and Contributions

Taxes, fees and contributions costs decreased by 2.1 % in the year ended December 31, 2020, to R$814 million from R$832 million in the year ended December 31, 2019, mainly impacted by the decrease in FISTEL expenses. For further information, see “Item 4. Information on the Company—B. Business Overview—Taxes on Telecommunications Goods and Services.”

Rent and Insurance

Rent and insurance costs increased 1.4 % to R$440 million in the year ended December 31, 2020 from R$434 million in the year ended December 31, 2019. This low variation is related to the impact from the trademark license agreement (which is classified as a rent contract under IFRS) entered into in the year ended December 31, 2020 regarding the right to use the “TIM” brand. On December 10, 2020, our board of directors approved the renewal of such trademark license agreement.

Costs of Goods Sold

Our cost of goods sold decreased by 18.9%, from R$932 million in the year ended December 31, 2019 to R$756 million in the year ended December 31, 2020. This decrease is mainly related to the closing of most of the Company’s physical stores, the main handset sales channel, from March to June, arising from the social distancing measures to fight the new coronavirus pandemic.

Publicity and Advertising

Publicity and advertising costs increased 6.2% in the year ended December 31, 2020 as compared to the year ended December 31, 2019, to R$377 million from R$355 million, respectively, reflecting another year marked by the structural trends, with efficiency gains from process digitalization and increased penetration of digital channels more than offsetting increased marketing expenses related to more exposure in the media.

Losses on Doubtful Accounts

Losses on doubtful accounts, decreased 26.1%, to R$553 million in the year ended December 31, 2020 as compared to R$748 million the year ended December 31, 2019, reflecting the continuous efforts to enhance customer acquisition through more robust credit models and policies, as well as higher efficiency in collection and recovery.

Others

Other costs decreased by 3.6% in the year ended December 31, 2020, as compared to the year ended December 31, 2019. For the year ended December 31, 2020, those other costs amounted to R$91 million, compared to R$95 million for the year ended December 31, 2019.

Other Income (Expenses), Net

Other expenses, net, increased to R$351 million in expenses in the year ended December 31, 2020 from R$1,275 million in income in the year ended December 31, 2019. This was explained by a reduction on other operating revenues, due to lower revenues from late payment fines (the company stopped collecting fines of this nature when the pandemic began and resumed collection in August) and lower revenue from suppliers’ credits.

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Operating Income to Net Income

The following table shows our net income, as well as the percentage change, for each of the periods indicated:

	Year ended December 31,		Percentage change
	2020	2019	2020 – 2019
	(in millions of reais)
Operating income	2,803	4,515	(37.9)
Financial income (expenses)	(811)	21	N.A.
Income and social contribution taxes	(164)	(914)	(82.0)
Net income for the year	1,828	3,622	(49.5)

Financial Income (Expenses)

In the year ended December 31, 2020, financial expenses was R$811 million, as compared to the R$21 million in financial income in the year ended December 31, 2019, explained by a lower revenue from monetary correction on PIS and COFINS credits, a lower volume of PIS and COFINS over Interest on Equity distributions (due to the merger of TIM Participações into TIM S.A.) and a lower volume of interest on financing, that exceeded the lower revenue from interest on financial investments. The last two accounts have declined on an annual comparison as a result of a lower SELIC rate.

Income and Social Contribution Taxes

Income tax and social contribution expenses totaled R$164 million in the year ended December 31, 2020, compared to an expense of R$914 million in the year ended December 31, 2019. In 2019, income and social contribution taxes were impacted by the effect of PIS/COFINS credits due to the exclusion of ICMS from the calculation basis of PIS/COFINS, which increased earnings before income and social contribution taxes by R$3,024 million. In 2020, there was no such exclusion, so our earnings before income and social contribution taxes was lower than previous year.

Net Income for the Year

As a consequence of the explanations above, our net income in the year ended December 31, 2020 was R$1,828 million, representing a decrease of 49.5% from a net income of R$3,622 million in the year ended December 31, 2019. This drop is explained by tax credits accounted for in 2019 as previously discussed, and also to the impacts of the COVID-19 pandemic on our operations results.

B.       Liquidity and Capital Resources

In April 2021 we entered into two new transactions with the objective of strengthening our cash position renewing debts that would expire in 2021 and beginning of 2022 totaling R$1,072 million – R$500 million with Banco BNP Paribas and R$572 million with the Bank of The Nova Scotia, with an average cost of CDI + 1.06%. In June 2021, the Company made the second issue of debentures, carried out pursuant to CVM Instruction No. 476, in the amount of R$1,600 million with cdi+0.95% per year post hedge cost and 7-year term. The issue is a sustainability-linked title, framed in law 12.4131 and aims to finance the Company capex from 2020 to 2023. In November 2021, we disbursed the FINAME line with BNDES in the amount of R$390 million, with cost of 97% of the CDI post hedge and a 10 years term. We also entered into a credit agreement with Banco do Nordeste do Brasil S.A. as lender and TIM S.A., as borrower, in the principal amount of R$752 million, secured by a bank guarantee and receivables. The agreement has a total term of eight years, with three years of grace period and five years of amortization period, to subsidize our capital expenditures plan for three years (2020-2022) in the northeastern region of Brazil.

On the second quarter of 2020, due to global macroeconomic uncertainty regarding COVID-19 and its possible impacts, TIM S.A. entered in two new transactions with the objective to reinforce its cash position. The new loans were closed with The Bank of Nova Scotia in the amount of R$574 million and with BNP Paribas in the amount of R$426 million. The loans were disbursed on April 22, 2020 and on May 22, 2020 with a maturity of one year and

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one and a half year, respectively. Both transactions were denominated in U.S. dollars and closed with a post hedge cost of 155% CDI. The Bank of Nova Scotia loan matured in April 2021 and was fully repaid.

The main source of our liquidity for net working capital and investment is operating cash flow, complemented by short-term credit lines with local and international banks and long-term financing with national and international development agencies.

The cost of our debts has been increasing in terms of CDI, due to macroeconomic changes in Brazil, in particular the hike of the Brazil’s base interest rate.

As of December 31, 2021, we have sufficient working capital and other undrawn financing facilities to service our operating activities and ongoing investments.

Sources of Funds

Cash from operations

Our cash flows from operating activities was R$10,078 million in the year ended December 31, 2021 compared to R$8,674 million in the year ended December 31, 2020, an increase of 16.2% mainly explained by the initiatives related to cost and expense reduction. It is important to note that in the first quarter of 2020, the FISTEL payment was postponed (about R$509 million) – usually due in March – to August 31, 2020. In the third quarter of 2020, the Company paid nearly R$300 million related to taxes in connection with Condecine and CFRP, negatively impacting Change in Working Capital and Cash Flow for such quarter. The remaining FISTEL amount is still suspended, without a defined payment date. Therefore, the main reasons for the improvement in Change in Working Capital (excluding the previously mentioned non-cash effects related to PIS and COFINS credits), in addition to the suspension of FISTEL payment, relates to an amount substantially less negative in Accounts Receivable, due to a significant improvement in the collection line in 2020, in addition to lower disbursements with legal and administrative proceedings.

We had other significant variations in our operational assets and liabilities, which affected our cash from operations. The main variations of assets and liabilities were:

Positives

· Suppliers increased R$153.4 million in the year ended December 31, 2021, compared to a decrease of R$819.0 million in the year ended December 31, 2020.

· Taxes, charges and contributions payable increased R$366.6 million in the year ended December 31, 2021, compared to a decrease of R$320.7 million in the year ended December 31, 2020.

Negatives

· Authorizations payable decreased R$8.6 million in the year ended December 31, 2021, compared to R$10.9 million in the year ended December 31, 2020.

· Prepaid expenses decreased R$135.0 million in the year ended December 31, 2021, compared to an increase of R$20.9 million in the year ended December 31, 2020.

· Trade accounts receivable increased R$583.3 million in the year ended December 31, 2021, compared to R$390.1 million in the year ended December 31, 2020.

Financial Contracts

We and our subsidiaries are party to the financial contracts described below, each to be used for purposes of the development of our business, generally, unless otherwise expressly provided herein. With respect to loans denominated in currencies other than reais, we enter into currency swaps to hedge against exchange rate fluctuations. In the case of loans linked to the IPCA we enter into rate swaps to hedge against inflation variations.

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As set forth below and as each agreement is described further in the following paragraph, in 2021, the Company obtained new loans totaling R$2.7 billion. The Company requested disbursement of only R$390 million of the available credit agreements and there were no other disbursements of existing credit agreements made in previous years.

The terms of our long-term debt contain cross-default clauses, restrictions on our ability to merge with another entity, restrictions on our ability to prematurely redeem or repay such debt and restrictions on sales and exchanges of assets. They also contain various financial ratio covenants. We are currently not, and do not expect to be, in breach of any covenant of our debt instruments, which breach would be construed an event of default under their terms.

As mentioned above, our principal financing agreements are:

· Loan Agreement, dated as of December 23, 2015, between Finnish Export Credit as lender, KfW IPEX as facility agent, TIM Celular (which has been merged into the Company in connection with the Reorganization), as borrower and TIM Participações as guarantor, in the principal amount of U.S.$150 million. The new Loan Agreement is divided in three tranches of up to U.S.$50 million to be disbursed in 2016, 2017 and 2018. On April 20, 2016, the first tranche of U.S.$45 million was disbursed and it has an average cost of 79% of the CDI after hedging. The second tranche of U.S.$48 million was disbursed on April 20, 2017 and it has an average cost of 81.5% after hedging and the third tranche of U.S.$40 million was disbursed on September 17, 2018 and it has an average cost of 92.59% after hedging. On August 24, 2018, we requested the partial cancellation of U.S.$5.1 million (or U.S.$11.1 million if considered the regular reductions of total amount thereunder). As of December 31, 2021, the total outstanding amount under this credit agreement, converted from U.S. dollars and including accrued interest, was R$278.2 million and there will be no more disbursements. The agreements mature on January 2, 2024, December 31, 2024 and December 30, 2025, respectively.

· Credit Agreement, dated March 20, 2019, between Agência Especial de Financiamento Industrial S.A., or FINAME, an entity within the BNDES system, as lender and TIM S.A. as borrower, in the principal amount of R$390 million for exclusive use in the acquisition of new machines, equipment, industrial systems, components and automation and computing goods of national manufacture, accredited by the Computerized Supplier Accreditation (Credenciamento de Fornecedor Informatizado), or CFI, of the BNDES system. The new agreement replaces one of the sub-credits (Credit Line B) of the existing 2018 BNDES Facility with better interest rate and maturity conditions: a fixed interest rate up to 1.44% plus the TLP and maturity up to 10 years. There were no additional costs to sign this loan and was fully disbursed on November 21. As of December 31, 2021, the total outstanding amount under this credit agreement was R$396.3 million.

· Credit Agreement, dated as of January 31, 2020, between Banco do Nordeste do Brasil S.A. as lender and TIM S.A., as borrower, in the principal amount of R$752.5 million, secured by a bank guarantee and receivables. The agreement has a total term of eight years, with three years of grace period and five years of amortization period, with the use of proceeds for our capital expenditures plan for the next three years (2020-2022) in the northeastern region of Brazil pursuant to certain standard FINAME requirements, as described in the agreement. The credit line is divided in two tranches: (i) a R$325 million tranche at IPCA plus 1.44% per year or IPCA plus 1.22%, considering a 15% compliance bonus; and (ii) a R$427 million tranche at IPCA plus 1.76% per year or IPCA plus 1.48%, considering a 15% compliance bonus. Disbursement in tranches is anticipated to occur in 2022.

· Credit Agreement, dated as of May 22, 2020, between BNP Paribas, as lender and TIM S.A., as borrower, in the principal amount of R$426 million denominated in U.S. dollars and a term of one and a half year, bearing a cost of 155.0% of the CDI after hedging. The Credit Agreement provides for the issuance of a promissory note by TIM S.A. in an amount in reais equivalent to U.S.$76 million and, in connection with the required hedging, the execution of a Swap Agreement, dated as of May 22, 2020, between BNP Paribas, as lender, and TIM S.A., as borrower. Disbursement occurred on June 15, 2020. As of December 31, 2021, the total outstanding amount under this credit agreement was R$428.8 million.

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· Credit Agreement, dated as of April 1, 2021, between BNP Paribas as lender and TIM S.A. as borrower, with cost post hedge of CDI + 1.07% per year, with a principal amount of U.S.$87.7 million and term of 2.8 years. Disbursement occurred on April 8, 2021. As of December 31, 2021, the total outstanding amount under this credit agreement was R$515.2 million.

· Credit Agreement, dated as of April 1, 2021, between The Bank of Nova Scotia as lender and TIM S.A. as borrower, with cost post hedge of CDI + 1.05% per year, with a principal amount of U.S.$100 million and term of 3 years. Disbursement occurred in April 22, 2021. As of December 31, 2021, the total outstanding amount under this credit agreement was R$559.7 million.

· Deed of Indenture for the Issuance of Simple Unsubordinated Debentures, with Additional Personal Guarantee, Not Convertible into Shares, in a Single Series, for Public Placement with Limited Efforts of the Second Issuance of TIM S.A. (“Instrumento Particular de Escritura de Emissão de Debêntures Simples, da Espécie Quirografária com Garantia Adicional Fidejussória, não Conversíveis em Ações, em Série Única, para Distribuição Pública com Esforços Restritos da Segunda Emissão da Tim S.A.”), dated as of June 15, 2021, between TIM S.A., as issuer, Pentágono Distribuidora de Títulos e Valores Mobiliários S.A., as fiduciary agent. The total amount of the issuance was R$1,600,000,000 through the issuance of 1,600,000 debentures each with a nominal value of R$1,000 on the issuance date and in a single series. The debentures are non-convertible and unsubordinated with an additional personal guarantee. For all legal purposes, the issuance date is June 15, 2021 and the term of the debentures is of 7 years as from the issuance date, or June 16, 2028 and cost post hedge of CDI + 0,95% per year. As of December 31, 2021, the total outstanding amount under this credit agreement was R$1,667 billion. This issue is a sustainability-linked title, framed in Brazilian law 12.4131 and aims to finance the Company capex 2020-23.

See Note 20 to our financial statements for a further description of such financing agreements.

The following financial contracts were disclosed in our annual report filed on Form 20-F with the Securities and Exchange Commission on April 30, 2021, all of which have since matured and been repaid or have been prepaid by the Company:

· Credit Agreement, dated January 31, 2020, between The Bank of Nova Scotia, TIM S.A. as borrower and TIM Participações as guarantor, in the principal amount of U.S.$87.5 million and a term of 1.5 years, bearing a cost of 108.70% of the CDI after hedging. The Credit Agreement provides for the issuance of a promissory note by TIM S.A. in an amount in reais equivalent to U.S.$87.5 million and, in connection with the required hedging, the execution of a Swap Agreement, dated as of January 31, 2020, between Scotiabank Brasil S.A. Banco Múltiplo, as lender, and TIM S.A., as borrower, and TIM Participações, as guarantor. Disbursement of the entire principal amount occurred on February 18, 2020.

· Loan Agreement, dated February 7, 2020, between Bank of America Merrill Lynch and TIM S.A. as borrower, in the principal amount of €89.5 million and a term of 1.5 years, bearing a cost of 108.05% of the CDI after hedging. The Loan Agreement provides for the issuance of a promissory note by TIM S.A. in an amount in reais equivalent to €89.5 million and, in connection with the required hedging, the execution of a Swap Agreement, dated as of January 31, 2020 (with an effective date of February 18, 2020), between Bank of America Merrill Lynch Banco Múltiplo S.A., as lender, and TIM S.A., as borrower. Disbursement of the entire principal amount occurred on February 18, 2020.

There are no material restrictions on the ability of our subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances.

Uses of Funds

Our principal uses of funds during the three-year period ended December 31, 2021, were payment of dividends to our shareholders and loan repayments.

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Material Capital Expenditures

Our capital expenditures in 2021, 2020 and 2019 related primarily to: (i) developing our fiber optic network, (ii) deployment and expansion of the capacity of our 3G and 4G networks, (iii) expanding network capacity, geographic coverage and digitalization, (iv) maintenance of our networks and IT systems, (v) of equipment purchases relating to our migration to PCS operations, and (vi) developing new operational and information technology systems.

The following table contains a breakdown of our investments in long-lived assets for the years ended December 31, 2021, 2020 and 2019:

Capital Expenditures Categories

	Year ended December 31,
	2021	2020	2019
	(in millions of reais)
Network	3,052	2,739.6	2,823.7
Information technology	724	828.4	775.0
Licenses	223	32.1	(82.1)
Other	323	291.1	336.4
Total capital expenditures	4,382	3,891.3	3,853.0

In 2021, Total Capex, including the 4G & 5G auction impacts of R$3,585, was R$7,966 million. See “Item 4. Information on the Company—A. History and Development of the Company—Capital Expenditures.”

Dividends

Our dividends are calculated in accordance with our By-laws and Brazilian corporate law. Under our By-laws, we are required to distribute an aggregate amount equal to at least 25% of our adjusted net income to our shareholders, either as dividends or as tax-deductible interest on shareholders’ equity, each year ended December 31, provided that there are funds available for distribution.

For the purposes of the Brazilian corporate law and in accordance with our By-laws, “adjusted net income” is the amount equal to the net profit adjusted to reflect allocations to or from: (1) the legal reserve, and (2) a contingency reserve for probable losses, if applicable.

The following table contains a breakdown of the dividends and interest on shareholders’ equity paid (net of income taxes) by us to our shareholders during the years ended December 31, 2021, 2020 and 2019:

Dividend Distribution

	Year ended December 31,
	2021	2020	2019
	(in millions of reais)
Dividends	—	—	—
Interest on shareholders’ equity (net of withholding tax)	1,047.5	920.5	846.1
Total distributions	1,047.5	920.5	846.1

On March 29, 2022, our shareholders voted to approve the distribution of R$1,047.5 million as interest on shareholders’ equity surpassing the minimum required by Brazilian Law, with respect to our 2021 results. The amounts indicated in the table above for 2020 and 2019 were approved at the annual general meeting in 2021 and 2020, respectively. The amount of withholding taxes was R$142 million. The amounts paid were R$487 million in 2021 and R$560 million in 2022.

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Funding and Treasury Policies

The Company maintains a general policy of continually monitoring its financial position and treasury activities in order to ensure solid fiscal control. In accordance with our funding and treasury policy, we will continue to monitor the market in order to take advantage of suitable instruments to finance our industrial Plan. We expect future financing to balance maturity, cost and TIM’s payment capacity.

Leverage

Management tracks the ratio of Net Debt to Adjusted EBITDA, which we refer to as the financial leverage index, in order to monitor the sustainability of our debt levels and our ability to take on additional debt. The ratio is a common credit analysis metric in the telecommunications industry and shows approximately how many years it would take to pay back our indebtedness, assuming no new debt is taken on, Adjusted EBITDA remains constant and all cash and cash equivalents may be used to repay debt. In addition, we believe that the ability to take on additional debt is a critical factor affecting success, as indebtedness may be required to make investments necessary to grow the Company’s business. We believe that our current financial leverage index, Net Debt to Adjusted EBITDA, reflects conservative leverage levels and the ability to incur additional debt if needed for extraordinary investment. Investors should be cautious in comparing our financial leverage index to that of other companies that report a similar ratio of debt to Adjusted EBITDA because Adjusted EBITDA in particular may be calculated differently from company to company, leading to financial leverage indexes that are not comparable. Accordingly, any such comparison may be misleading.

The following table sets forth our financial leverage index for the reported periods:

	2021	2020	2019
	(in millions of reais)
Total borrowing and derivatives (Notes 20 and 37)	3,398	1,879	1,987
Leasing – Liabilities (Note 16)	9,064	8,379	7,781
Leasing – Assets (Note 16)	(243)	(162)	(156)
Less: Cash and cash equivalents (Note 4)	(5,229)	(2,575)	(2,285)
FIC (Investment Fund) (Note 5)	(4,568)	(2,070)	(654)
Net debt (non-GAAP) (unaudited)	2,422	5,450	6,672
Adjusted EBITDA (non-GAAP) (unaudited) 1	8,677	8,333	9,645
Financial leverage index (non-GAAP) (unaudited)	0,28	0.65	0.69

¹ Recognized a non-recurring gain totaling R$782.2 million in the 3 month period ending December 31, 2021, from the sale of the control over the investment in the company I-Systems. As a result, the Adjusted EBITDA of December 31, 2021 is not comparable to the same of December 31, 2020 and 2019.

A reconciliation of our net income to Adjusted EBITDA, as well as a further explanation of the calculation of our financial leverage index, is also presented in Note 37 to our financial statements.

We believe that using Adjusted EBITDA as a non-GAAP measure is useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to TIM’s competitors. Adjusted EBITDA is calculated by adding back financial income (expenses) (including foreign exchange variations), income tax and social contribution, depreciation and amortization costs and expenses and share of loss of an associate to profit for the year.

Tabular Disclosure of Contractual Obligations

The following is a summary of our contractual obligations as of December 31, 2021:

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	Payments Due by Period as of December 31, 2021
	Less than 1 year	1-3 years	4-5 years	More than 5 years	Total
	(in millions of reais)
Total borrowings (post-hedge)(1)	538	1,267	196	1,396	3,398
Leases – IFRS 16(2)	1,174	2,193	1,284	2,384	7,035
Leasing (previous IAS 17 finance leases)	66	145	188	1,386	1,785
Total(3)	1,778	3,606	2,584	5,167	13,135

(1) Considering the balances related to derivative financial instruments as of December 31, 2021.

(2) Leases in which the Company, as the lessee, substantially holds all of the risks and benefits of ownership, are classified as financial leases, which are capitalized at the beginning of the lease at the lower of the fair value of the leased item and the present value of the payments provided for in the agreement. Interest related to the leases is taken to income as financial costs over the term of the contract.

(3) Other than as set forth herein (see, for example, “Item 4. Information on the Company—B. Business Overview—Our Business”), we have no capital lease obligations, unconditional purchase obligations, or other long-term liabilities reflected on our balance sheet of our primary financial statements. Interest is not included in long-term debt since it is subject to variable interest.

Contingent Pension Liabilities

Until December 1999, we participated in a multi-employer defined benefit plan, or the Telebrás Pension Plan, that covered the employees of the Telebrás System who retired before the breakup of Telebrás in May 1998 as well as those who continued working for the operating companies after May 1998. We are contingently liable, jointly and severally, with the other New Holding Companies, for the unfunded obligations of the Telebrás Pension Plan with respect to all such employees who retired before January 30, 2000. In December 1999, we changed to a defined benefit plan, or the PBS Plan, that covers only those former employees of Telebrás who continued to be employed by us after December 1999.

In November 2002, we created a separate defined contribution plan, or the TIMPREV Pension Plan. Migration to this plan was optional for employees linked to the PBS Plan. Migration to the TIMPREV Pension Plan extinguishes the migrating participant’s rights under the PBS Plan.

SISTEL and TIMPREV

The Company and TIM Celular (which has been merged into TIM S.A. in connection with the Reorganization) have sponsored a private defined benefit pension plan for a group of Telebrás system’s former employees, which is managed by Fundação Sistel de Seguridade Social – SISTEL, as a consequence of the legal provisions applicable to the privatization process of these companies in July 1998.

Given that in 1999 and 2000 the sponsors of the pension plans managed by SISTEL had already negotiated conditions for the creation of individual pension plans for each sponsoring company and the maintenance of joint liability only in relation to the participants already assisted on January 31, 2000, the Company and its subsidiaries, like other companies created as a result of the former Telebrás system, created in 2002 the TIMPREV Pension Plan, a defined contribution pension plan meeting the most modern social security standards adopted by private companies, and enabling migration to this plan of the employee groups linked to SISTEL.

On November 13, 2002, the Brazilian Secretariat for Supplementary Pension Plans, through official ruling CGAJ/SPC No. 1917, approved the statutes of the new pension plan, or hereafter the Statutes of the TIMPREV Benefits Plan, as a defined contribution plan, which provide for new conditions for granting and maintaining benefits, as well as the rights and obligations of the Plan Managing Entity, the sponsoring companies, participants and the beneficiaries thereof.

Under this new plan, the sponsor’s regular contribution will correspond to 100% of a participant’s basic contribution, and TIMPREV’s managing entity will ensure the benefits listed below, under the terms and conditions

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agreed upon, with no obligation to grant any other benefits, even if the government-sponsored social security entity starts granting them:

· Normal retirement pension;

· Early retirement pension;

· Disability pension;

· Deferred proportional benefit; and

· Death benefit.

However, as not all of the Company’s and its subsidiaries’ employees have migrated to TIMPREV, the pension and health care plans deriving from the TELEBRÁS system listed below remain in force:

PBS: defined benefits plan of SISTEL, which includes active employees who participated in the plans sponsored by the companies of the former TELEBRÁS system;

PBS Assistidos: a multi-sponsored pension plan for inactive employees;

Convênio de Administração: for managing pension payments to retirees and pensioners of the predecessors of the subsidiary companies; and

PAMEC/Apólice de Ativos: health care plan for pensioners of the predecessors of the subsidiary companies.

As happened with the Termo de Relação Contratual Atípica (“TRCA Plan”), the Company, until December 31, 2010, had understood that it was responsible for liabilities of PAMEC participants (health care plan) related to the Company and its subsidiaries. Based on a new understanding of its internal and external lawyers, the Company has changed its position. As a result, the liabilities previously recorded were written off.

In accordance with the rules established by NPC-26 (IAS 19 – Employee Benefits) issued by the Institute of Independent Auditors of Brazil – IBRACON, and approved by CVM Resolution No. 371, the plans having a surplus are not recorded by the Company, as it is impossible to recover these amounts. Furthermore, the amounts of contributions will not be reduced for future sponsors.

On January 29, 2007 and April 9, 2007, through the Brazilian Secretariat for Supplementary Pension Plans- SPC, the Ministry of Social Security approved the transfer of the management of the PBS–Tele CelularSul, TIM PrevSul, PBT–TIM, Convênio de Administração, PBS–Telenordeste Celular and TIM PrevNordeste benefit plans (according to SPC/DETEC/CGAT Communications Nos. 169, 167, 168, 912, 171 and 170, respectively) from SISTEL to HSBC – Fundo de Pensão.

The PBS Assistidos plan continues to be managed by SISTEL. The only exception is Plano PAMEC, which was extinguished, with the Company remaining responsible for coverage of the respective benefit, which is now called PAMEC/Apólice de Ativos.

In addition to the plans coming from the TELEBRÁS system, there is also the plan administered by the CESP foundation resulting from the incorporation of AES Atimus.

AES Telecom: Supplementary pension and pension plan's installment, administered by the CESP Foundation, which is the responsibility of the company, with a view to the acquisition of Eletropaulo Telecomunicações Ltda. (“AES Atimus”), succeeded by TIM Fiber SP LTDA, later incorporated into TIM Celular which was incorporated by the Company.

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Medical care plan Fiber: Provision for maintenance of health plan as post-employment benefit to former employees of AES Atimus (as established in Law No. 9,656/98, articles 30 and 31), which was acquired and incorporated by TIM Celular and which was subsequently incorporated by the Company.

In 2021, contributions to the pension plans mentioned above totaled R$1.2 million, compared to R$1.3 million in 2020).

C.       Research and Development

Research and Development

We do not independently develop new telecommunications hardware and depend upon the manufacturers of telecommunications products for the development of new hardware.

Patents and Licenses

We hold no material intellectual property assets. Telecom Italia owns the rights to the “TIM” trade name, which is currently licensed to us. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business—Any modification or termination of our ability to use the “TIM” trade name may adversely affect our business and operating results”.

D.       Trend Information

COVID-19

The COVID-19 pandemic continued to have a significant impact throughout the 2021 financial year, and imposed tremendous challenges on society, public health and the economy. Amid increased vaccination, the emergence of new variants of the virus, escalating inflation, and rising interest rates, our business proved to be resilient in delivering solid results by late 2021.

In our view, the COVID-19 pandemic increased demand for connectivity and the telecommunications sector has taken advantage of it. As a result, we believe we can be considered a more resilient company, not only due to data consumption growth, but because we have been honing our market vision and execution capacity to create long-term value.

The extent to which the COVID-19 impacts our operations and our results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and growth of the outbreak, new variants, new information, which may emerge concerning the severity of COVID-19 and the actions to contain the pandemic or treat its impact, among others. See “Risk Factors—Risk Relating to Our Business—We face various risks related to health epidemics and other outbreaks, which may have material adverse effects on our business, financial condition, results of operations and cash flows.”

We are continuing to respond to this global crisis through comprehensive measures to protect our employees while fulfilling our vital role in providing telecommunications services to our customers. Above all else, we are committed to the safety and well-being of our employees and are doing whatever possible to ensure that our facilities and operations continue to operate as much as possible within the restrictive measures currently in place. At the same time, we and our employees remain committed to meeting the needs of customers and the communities in which we operate.

Customer Base and Market Share

In the year ended December 31, 2021, our subscriber base increased 1.2% to 52.6 million customers, compared to 51.4 million customers in 2020, reinforcing the positive expansion of the base in the last quarter.

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With respect to the composition of our customer base, the postpaid segment accounted for 43.9% of our total subscriber base in the year ended December 31, 2021, compared to 42.4% from a year ago, due to (i) customers’ migration from prepaid to postpaid (mainly via our Control plans), (ii) number portability (migration from one to another operator) and (iii) the stabilization of the churn rate. The prepaid segment represents 56.1% of our customer base at the end of 2021, compared to 57.6% in 2020, due to the disconnection of approximately 403,000 lines in the year, which reflected the deterioration of the economy.

Although no assurances can be given as to the size of our subscriber base and market share in the future, we intend to focus on maintaining and improving our strong position in the mobile and fixed telecommunications market in Brazil. Our strategies for doing so are outlined in more detail in “Item 4. Information on the Company—B. Business Overview—Our Strategy.”

Trends in Sales and Prices

We managed to maintain a good level of annual growth in service revenue and we will continue to monetize our customer base using the strategy of “more for more” and focus on the development of all of our business lines.

Among the initiatives put into place in 2021 that supported this performance, the following stand out the most; (i) the ongoing evolution of the volume-to-value approach, with continuous growth in ARPU, reduction in churn, and recovery of customer additions; (ii) the revival of the “Music” theme as part of our offer launches and a new brand positioning; (iii) the sound execution in our operation and broadband; (iv) the continuous advancement of our network and IT infrastructure; (v) the incessant pursuit of cost efficiency and investment efficiency; and (vi) the ongoing evolution of our customer platform strategy, materialized by yet another partnership forged in the distance-education segment, with the Ampli platform.

Under our PCS authorizations, we are allowed to set prices for our service plans, subject to approval by Anatel, provided that such amounts do not exceed a specified inflation adjusted cap. We expect that the adjustment of our prices will follow the market trend. The rates for our service plans, as well as a description of the main features of such plans, are set out in “Item 4. Information on the Company—B. Business Overview—Mobile Service Rates and Plans.”

Monthly Average Revenue Per User (“ARPU”)

TIM’s monthly ARPU was R$26.4 in the year ended December 31, 2021, an increase of 5.9% when compared to a monthly ARPU of R$24.9 for the year ended December 31, 2020. The result reflects the Company’s strategy to monetize its customer base through two pillars: (i) offer differentiation; and (ii) migration of the customer base to higher-value plans. The segments’ ARPU, which excludes other mobile revenues and Customer Platform, increased by 2.5% YoY in prepaid (R$12.9) and by 1.7% YoY in postpaid (ex-M2M) (R$46.4). We understand this is a relevant profitability metric that allows comparability with other peers in the telecommunication sector, calculated by dividing mobile services revenues by the average monthly customer base

Competitive Environment

Brazil’s mobile telecommunications market is in a mature stage and is subject to a competitive landscape that will be affected by both the 5G auction and the sale of Oi's mobile assets to Telefônica (Vivo), TIM and Claro.

Through the 5G spectrum auction, in addition to the major market participants (Vivo, Claro and TIM) and established regional players (Algar Telecom and Sercomtel), new entrants secured licenses, which will boost investments, coverage and competition. There is also the 700MHz band of the spectrum and the remaining of the 2014 bid, that can still be leveraged to contribute to network capacity for all providers, especially for new entrants, since the winner of this auction (Winity Telecom) already made clear its intention to use its capacity to provide a neutral network.

On December 14, 2020, TIM along with CLARO and VIVO, was declared the winner of the competitive process of the sale of assets of the mobile telephony operation (Personal Mobile Service) of the Oi Group. In February 2022, the transaction received regulatory approval from CADE and Anatel. Closing of the transaction is expected to occur on April 20, 2022.

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In 2021, amid this competitive landscape, our subscriber acquisition costs, or SAC, (which are comprised of a subsidy, commissions and total advertising expenses) amounted to approximately R$58.92 per gross add for the year ended December 31, 2021, compared to approximately R$45.73 per gross add in the year ended December 31, 2020. The increase of almost 29% year over year is due to higher commission expenses from positive net additions in the Postpaid segment and the migration of customers to higher-value segments, and advertising expenses (primarily in 1H21). The SAC to ARPU ratio, which indicates the return per client, grew year over year, reaching 2.3 months in 2021 from 1.7 month in 4Q20.

TIM, in alignment with its values of acting as an engine of growth and for the development of differentiated and quality services at fair and competitive prices, joined forces with other operators to purchase such Oi’s operations. With this strategy, TIM is looking for a more balanced and healthy competitive market; improving the quality and experience of service for its and Oi’s customers; obtaining synergies by improving asset utilization; optimizing its portfolio; strengthening its technological innovation and ensuring profitability for its shareholders

In addition to competition from other traditional mobile telecommunications service providers, the level of competition from landline service providers has increased, and it is possible it will continue to increase due to an aggressive attempt to attract subscribers away from mobile service based on price and package offers that bundle multiple applications such as voice services (mobile and fixed), broadband and other services. Technological changes in the telecommunications field, such as the rapid development of 4G (LTE) and its derivations (Advanced LTE and others) after the consolidation of 3G in recent years, the increasing use of number portability and in the next few years, the development of the fifth generation are expected to introduce additional sources of competition.

In order to provide mobile telecommunications services over additional bandwidth frequencies to accommodate these emerging technologies, Anatel auctioned licenses on November 4, 2021 after some delays. Blocks were auctioned across four frequency bands: 700MHz, 2.3 GHz, 3.5GHz and 26GHz over a 20-year period. Not all of this capacity will be used for 5G. The spectrum to be auctioned at 700 MHz is the remainder of 2014 bid. Around 85% of the range of spectrum blocks offered were sold. The Brazilian government raised around R$47 billion in its 5G spectrum auction, making it one of the largest auction of assets in the country’s history in all sectors. The total raised includes the prices for the right to use licenses, and investment commitments tied to each band as well as the premium paid. The telecommunications regulator Anatel has stipulated that 5G should be deployed across Brazilian state capitals by July 31, 2022.

E.       Critical Accounting Estimates

Our financial statements are presented in IFRS as issued by the IASB. For summary information about critical judgments, assumptions and estimation uncertainties in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements, see “—Operating Results—Critical Accounting Policies” and note 3 to our audited financial statements for the fiscal years ended December 31, 2021, 2020 and 2019, included elsewhere in this annual report.

Item 6. Directors, Senior Management and Employees

A.       Directors and Senior Management

Board of Directors

We are administered by a Board of Directors (Conselho de Administração) and a Board of Statutory Officers (Diretoria), which are overseen by a Fiscal Council (Conselho Fiscal) and a Statutory Audit Committee (Comitê de Auditoria Estatutário). The Board of Directors is composed of five to nineteen members, each serving for a two-year term with the possibility of re-election.

Directors’ duties and responsibilities are determined by Brazilian law, our By-laws (Estatuto Social) and our Disclosure and Corporate Governance Policy (Política de Divulgação/Negociação e Diferenças de Governança Corporativa da NYSE), as determined by CVM Instruction 358/2002. All decisions taken by our Board of Directors are recorded in the board’s minute books. The Board of Directors shall meet regularly at least six (6) and up to twelve (12) times per year, and whenever called for a special meeting by its Chairman, by any two Directors or by

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the Company’s Chief Executive Officer. The chairman of the Board of Directors may also invite, at his discretion, any of our key employees to the Board of Directors’ meetings, in order to discuss any relevant corporate matter. The Board of Directors has three special advisory committees: the Compensation Committee (Comitê de Remuneração), the Control and Risks Committee (Comitê de Controle e Riscos) and the Environmental, Social & Governance Committee (“Comitê de Environmental, Social & Governance”), all composed only of members of the Board of Directors. The Statutory Audit Committee also reports to the Board of Directors and is composed of independent members of the Board of Directors.

Members of our Board of Directors are required to comply with, and have agreed to comply with, our Disclosure and Corporate Governance Policy, our Code of Ethics and certain other Brazilian law regulations including the “Regulamento de Listagem do Novo Mercado da B3 S.A. – Brasil, Bolsa, Balcão.”

The following are the current members of the Board of Directors and their respective titles, whose terms of office will be valid until the annual shareholders’ meeting to be held in 2023:

Name	Title	Date of Birth	Date Appointed
Nicandro Durante	Chairman	September 13, 1956	March 30, 2021
Claudio Giovanni Ezio Ongaro	Director	July 11, 1968	December 15,2021
Alberto Mario Griselli	Director	April 24, 1969	January 31, 2022
Herculano Aníbal Alves	Director	February 27, 1953	March 30, 2021
Elisabetta Paola Romano	Director	April 1, 1963	March 30, 2021
Gesner José de Oliveira Filho	Director	May 17, 1956	March 30, 2021
Agostino Nuzzolo	Director	April 12, 1968	March 30, 2021
Flavia Maria Bittencourt	Director	January 15, 1970	March 30, 2021
Sabrina Di Bartolomeo	Director	October 16, 1971	March 30, 2021
Michele Valensise	Director	April 3, 1952	March 30, 2021

Mrs. Flavia Maria Bittencourt, Mr. Herculano Alves, Mr. Gesner Filho and Mr. Nicandro Durante are qualified as independent directors according to Brazilian independence standards. They were re-elected at the annual shareholders’ meeting held in 2021.

Set forth below are brief biographical descriptions of the members of our Board of Directors:

Nicandro Durante. Mr. Durante is a Brazilian and Italian citizen, born in September 1956, with a bachelor’s degree in Business Administration issued by Pontifical Catholic University (Pontifícia Universidade Católica), Brazil. With almost forty years of experience in the tobacco industry, since 2011 Mr. Durante has served as Chief Executive Officer at British American Tobacco, where he has held several top management positions during the past decades, including Corporate Chief Financial Officer, Regional Director, Executive Director, Chief Operating Officer. Mr. Durante is non-executive Director and Senior Independent Director at Reckitt Benckiser, a leading company in the health and care industry, and Chairman of TIM S.A.’s Board of Directors, Compensation Committee and Environmental, Social & Governance Committee.

Claudio Giovanni Ezio Ongaro. Mr. Ongaro is an Italian citizen, born in Milan, Italy, with a University Degree in Electronic Engineering awarded in 1993 by Politecnico di Milano, Milan Italy. Mr. Ongaro carried out his career in the telecommunications sector, holding managerial roles both in Italy and abroad, mainly in the United Kingdom, South America, Greece and the Middle East. In particular, he began his career in 1995 in Omnitel Pronto Italia by participating in the founding of the Company with roles of increasing responsibility within the network. After an experience in the infrastructure services market, in 2003 he worked in Cable & Wireless as Group Technical Director of Mobile and, subsequently, as Senior Director of Strategy. In 2007 he joined the Orascom Group, initially in the wireless broadband field and later in the subsidiary Wind Hellas as Chief Strategy Officer and Chief of Fixed Business. From 2010 he worked in Wind Telecomunicazioni as Head of Strategy and M&A and subsequently, following the merger with H3G in 2016, in WindTre as CEO Office Director, responsible for coordinating the company's main strategic projects. He joined TIM Group in 2019. On December 2021, he was appointed Chief Strategy & Business Development Officer at TIM S.p.A., whilst maintaining his previous responsibility as Head of Wholesale Market

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Alberto Mario Griselli. Mr. Griselli holds a degree in Electronic Engineering from La Sapienza University in Rome and an MBA in finance from Columbia University. With more than 20-years’ experience in the telecom sector, he held relevant positions such as Vice President for LatAm at TIM, a global provider of mobile engagement solutions for telecommunication operators, and Managing Director for Brazil at Value Partners, a management consulting firm. Across his professional career, Mr. Griselli worked in most of the aspects critical to companies’ performance, with projects ranging from strategic planning to customer segmentation, value proposition definition, offer design, pricing and promotions, go-to-market approach and customer experience. Mr. Griselli took office as Chief Revenue Officer of TIM Participações and TIM S.A. on July 30, 2019 and Chief Executive Officer of TIM S.A. on January 31, 2022.

Herculano Aníbal Alves. Mr. Alves has developed his professional career in the financial market and has acted as an executive in companies of the Bradesco Group, ABN AMRO Bank, Unibanco and Banco Bozzano Simonsen. He is currently a member of the Fiscal Councils of Cielo, Grendene, and of the Financial and Risks Committee of Marfrig. He is also a Board member of TIM S.A. and of its advisory committees, namely, the Statutory Audit Committee (as Financial Expert) and the Control and Risks Committee. He holds a bachelor’s degree in Economics from PUCSP and a master’s degree from the School of Business Administration of São Paulo at Fundação Getulio Vargas (EAESP/FGV), with an extension course at Kellogg. His academic training also includes executive education in Risk, Compliance and Governance by the Risk University of KPMG.

Elisabetta Paola Romano. Ms. Romano is an Italian citizen, born in Milan, Italy, with a Master in Computer Science issued by the University of Salerno – Fisciano (Italy) in 1987. She has over 30 years of experience in the industry of telecommunications, information technology and media, in the United States and Europe. Before being appointed, on July 1, 2018, Chief Technology Officer, at Telecom Italia S.p.A., Ms. Romano developed her career at Ericsson Group, where she worked from 1998 through 2018, holding various top management positions. She was honored as one of the 2017 Top 50 Women in Technology by the National Diversity Council. From November 2019 to August 2020 Ms. Romano has been Chief Innovation & Partnership Officer in TIM S.p.A. Since July 2020 she is currently Chief Executive Officer of Telecom Italia Sparkle S.p.a.. She was a board member of TIM Participações from March 2019 to August 2020. Since August 2020 Ms. Romano has been a member of TIM S.A.’s Board of Directors.

Gesner José de Oliveira Filho. Mr. Oliveira is a partner of GO Associados and Professor of Economics at Getulio Vargas Foundation. He has been certified as a Member of the Audit Committee (CCoAud and IBGC) by the Brazilian Institute of Corporate Governance obtained on December 10, 2020. His expertise includes public and private entities. At present, he is a member of TIM S.A.’s Board of Directors and of its advisory committees, namely, the Statutory Audit Committee, as its Coordinator, and of the Control and Risks Committee and of the Environmental, Social & Governance Committee. He is also a member of the Board of Directors of Braskem and of its Audit Committee. and Estre Ambiental, as well as a member of the Self-Regulation Council of FEBRABAN. His past experience in Boards included being a member of the Board of Usiminas, Sabesp, CESP, Nossa Caixa and Varig. In addition, Mr. Gesner is a member of the Board of Administration of CIEE, a nonprofit institution. His previous positions include being the CEO of Sabesp – Companhia de Saneamento Básico do Estado de São Paulo (2007-11), one of the largest water companies in the world; President of CADE, the federal antitrust authority (1996-2000); Deputy Secretary for Economic Policy (1993-95) and Secretary for Economic Monitoring (1995), both at the Ministry of Finance. He received his PhD in Economics from the University of California (Berkeley), his Master’s degree from the University of Campinas and Bachelor’s degree from the University of São Paulo. He has worked as a private consultant since the 1990s and published several books and articles in national and international journals. His work has focused on competition policy, macroeconomics and infrastructure which are related with his experience at CADE, Ministry of Finance and Sabesp, respectively.

Agostino Nuzzolo. Mr. Nuzzolo is an Italian citizen, born in Caserta, Italy, with degrees in Law, Economics and in Sciences of Economic and Financial Security. From 1986 to 2006, Mr. Nuzzolo served at Guardia di Finanza. From 2006 to 2016, Mr. Nuzzolo served as Group General Counsel, as Head of Fiscal Affairs, as Director of Fiscal and Legal Affairs and Compliance at Italcementi Group. From 2016 to January 2017, Mr. Nuzzolo served as General Counsel, as Chief Operating Officer and as Secretary of the Board of Directors at Italmobiliare S.P.A. Mr. Nuzzolo is currently a Professor of Tax Law at University ROMA TRE in Rome and he is the author of several books and academic articles of taxation and fiscal governance. He has been serving as General Counsel and as Head of Legal and Tax at Telecom Italia S.P.A. (the Italian incumbent) since January 2017 and has been serving as

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Secretary of the Board of Directors at Telecom Italia S.P.A. since May 2017. He also served as Interim Director of Human Resources and Organizational Development at Telecom Italia S.p.A. from December 2017 to March 2018. He has been a board member of Telecom Italia Sparkle S.P.A. and a board member of Flash Fiber S.r.L. since March 2019, and a board member of Inwit S.P.A., since April 2017. He was a board member of TIM Participações and of its advisory committees, namely, the Compensation Committee and the Control and Risks Committee from April 2018 to August 2020. Since 2020 he is a member of the Board of Directors and of the Control and Risks Committee of TIM S.A.

Flavia Maria Bittencourt. Mrs. Bittencourt holds a B.S. degree in Chemical Engineering from UFRJ, an Executive MBA from Fundação Dom Cabral and other certificates from London Business School and INSEAD. Mrs. Bittencourt has a vast professional experience in different roles and industries, such as 8 years in Banking, 10 years in Telecom, and 3 years in Private Equity. Starting in 2013, she was the CEO for Sephora Latin America, and, since May 2019, she is the CEO of Adidas Brazil. Until 2019, she was an independent board member of Marisa Lojas S.A. Mrs. Bittencourt was an independent member of TIM Participações S.A.’s Board of Directors and Statutory Audit Committee from July 2019 to August 2020. Since 2020 she has been an independent member of TIM S.A.’s Board of Directors and Statutory Audit Committee

Sabrina Di Bartolomeo. Ms. Di Bartolomeo is an Italian citizen, born in Turin, Italy, holding a Master of Science in Economics issued by University of Turin. Ms. Di Bartolomeo began her career as Auditor at Arthur Andersen in 1996, mainly focusing on large clients in the telecommunications and automotive fields, then specializing in global capital markets, supporting the Chicago team in providing services to Italian companies listed in U.S. stock exchanges. From 2002 to 2006, she held leadership roles in the Fiat Group until becoming CAO of the Fiat Powertrain Technologies Group. She was Group Finance Director at Wind Telecom Group between 2006 and 2012, and CFO and Executive Director of Sigma Tau Group (pharmaceutics) between 2012 and 2015, holding also several Executive Director positions in both groups. Subsequently, she was a Partner of a Private Equity Fund, then a Salaried Partner at PwC in the field of Business Restructuring and Turnaround Management, supporting large groups in a state of crisis in the preparation of the industrial and financial restructuring plans and in Distressed M&A. In 2019, she joined Telecom Italia S.p.A. (the Italian TLC incumbent), where she is currently VP of Group Planning & Control. She has been a board member of INWIT S.P.A. since March 2020. She has been a board member of TIM Brasil Serv. e Part. S.A.’s since January 2020. From February to August 2020 Ms. Di Bartolomeo was a member of TIM Participações S.A.’s Board of Directors and of the Control and Risks Committee. Since 2020 Ms. Di Bartolomeo has been a member of TIM S.A.’s Board of Directors, of the Control and Risks Committee and of the Environmental, Social & Governance Committee.

Michele Valensise. Mr. Valensise, Italian citizen, born in Polistena, Italy, with a degree in Law by University of Rome – La Sapienza. After various assignments at the Italian Ministry of Foreign Affairs and abroad (Brazil, Germany, Lebanon, European Union), he was appointed Head of the Press Service, Spokesman and Chief of Staff of the Minister of Foreign Affairs. He was assigned as Italian Ambassador to Sarajevo, Brasilia and Berlin. From 2012 to 2016 he was Secretary-General of the Farnesina. He has been Vice Chairman of Astaldi S.p.A., leading company of the infrastructure sector, until July 2020. Currently he is member of the Board of Directors of Astaldi S.p.A. Since 2017 he is Chairman of the German-Italian Centre for the European Dialogue (Villa Vigoni) holding a close relationship with Germany. He is an editorialist of the Italian newspaper “La Stampa” and of “Huffington Post”. From May 2018 to March 2021 he was member of the Board of Directors and member of the Nomination and Remuneration Committee and of the Control and Risk Committee of Telecom Italia S.p.A and he is currently member of the Board of Directors and of the Control and Risks Committee and Compensation Committee of TIM S.A.

Board of Statutory Officers

Pursuant to our By-laws, our Board of Statutory Officers (the members of which we also refer to as our Statutory Officers) is comprised of at least three and no more than twelve members, who may or may not be shareholders. The title of the members of our Board of Statutory Officers shall be as follows: (1) Chief Executive Officer (Diretor Presidente), (2) Chief Financial Officer (Diretor Financeiro), (3) Investor Relations Officer (Diretor de Relações com Investidores), (4) Business Support Officer, (5) Regulatory and Institutional Affairs Officer, (6) Legal Officer (Diretor Jurídico), (7) Chief Technology Information Officer; and (8) Chief Revenue

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Officer. Each member of our Board of Statutory Officers, who serve two-year terms of office (with re-election permitted) may be elected or dismissed by our Board of Directors at any time and with no cause.

The following are the current members of the Board of Statutory Officers and their respective titles, whose terms of office will remain valid for two years from the date of appointment.

Name	Title	Date of Birth	Date Appointed
Alberto Mario Griselli	Chief Executive Officer (Diretor Presidente) and Chief Revenue Officer	April 24, 1969	January 31, 2022
Camille Loyo Faria	Chief Financial Officer and Investor Relations Officer (Diretor Financeiro and Diretor de Relações com Investidores)	July 19, 1973	December, 15, 2021
Bruno Mutzenbecher Gentil	Business Support Officer	January 20, 1969	December, 15, 2021
Mario Girasole	Regulatory and Institutional Affairs Officer	June 8, 1968	December, 15, 2021
Jaques Horn	Legal Officer (Diretor Jurídico)	March 15, 1964	December, 15, 2021
Leonardo de Carvalho Capdeville	Chief Technology Information Officer	September 19, 1969	December, 15, 2021
Maria Antonietta Russo	Human Resources & Organization Officer	September 19, 1972	December, 15, 2021

Brief biographical descriptions of our statutory officers are set forth below.

Alberto Mario Griselli. See “—Board of Directors.”

Camille Loyo Faria. Ms. Faria holds a degree in Chemical Engineering from PUC-RJ, an MBA in Finance from Ibmec-RJ and a Master's in Industrial Engineering from PUC-RJ. Ms. Faria held the positions of CFO and IRO at Oi S.A., having previously worked in the Investment Banking area of Bank of America Merrill Lynch, Bradesco BBI and Morgan Stanley, as Managing Director responsible for the Energy, Technology/Media/ Telecom and Industries. Ms. Faria also held executive roles in the telecommunications and infrastructure sectors, having held the positions of CEO at Multiner, CFO at Terna Participações and Strategy Leader at Embratel and at the Telecom Italia group in Brazil and Latin America.

Bruno Mutzenbecher Gentil. Mr. Gentil holds a degree in Business Administration and has been the Business Supply Officer (former Purchasing & Supply Chain Officer) at TIM Participações since February 2018. From 2016 to 2017, Mr. Gentil served as Executive Vice President of Corporate Resources at Telefônica Brasil S.A., where he also held the position of Executive Vice President of Strategy and Consolidation between 2015 and 2016. Previously, from 2013 to 2015, Mr. Gentil served as Executive Vice-President of Finance at GVT - Global Village Telecom S.A., where he also held the position Vice President of Controller in the period from 2006 to 2013.

Mario Girasole. Mr. Girasole has a Laurea Magistralis in Economics from University LUISS (Rome). He also has an LL.M. in International Business Law (London), Master in Competition Policy, in International Commerce and Contemporary Economic History, and executive education at London Business School (Finance), Harvard School of Government, Columbia Business School (Advanced Management Program) and INSEAD (International Directors Programme and Advanced Corporate Finance). He is also PhD candidate in Economics at University of Perugia. He joined TIM in 1997, for the regulatory and pricing area, in Rome. From 2000 to 2003, he headed, in Brussels, the TIM Group relations with the institutions of the European Union, and was appointed to the position of Deputy-Chairman of the European Mobile Sector (GSM Europe). Starting from 2004, he was Head of Public and Regulatory Affairs at Telecom Italia America Latina and at TIM Brasil. During this period, he was appointed also as Director of Entel Bolivia and Alternate Director of TIM Participações Mr. Girasole is the Regulatory and Institutional Affairs Officer of the Company since January 2009. Since 2012, he runs also the Press Relations and the ESG departments, and since 2014 he is Chairman of TIM Institute and since 2017 he is CEO of the holding TIM

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Brasil Serviços e Participações. He has been acting as member of the Boards and Councils of national and international entities, including Conexis, GSM Latin America, Italo-Brazilian Chamber of Commerce and the Brazilian Institute for Competition Studies (Instituto Brasileiro de Estudos da Concorrência), or IBRAC. Mr. Girasole was awarded as Knight (2014) and Officer (2018) of the Order of the Star of Italy by the President of the Italian Republic “for promoting friendly relations and co-operation with other countries and ties with Italy.” In Brazil, he was awarded the Peacemaker Medal and the Medal of the Army by the Ministry of Defense (2018).

Jaques Horn. Mr. Horn graduated in Law (LL.B.) at Candido Mendes University, and obtained specializations at Harvard and at the Academy of International and American Law. He has been Chief Legal Officer at TIM since July 2010 and Secretary of the Company’s Board of Directors since 2012. He worked at Tetra Pak from 2007 to 2010, as Legal Director, where he was responsible for the Central and South America and the Caribbean region. He also worked at Shell, from 1994 to 2007, as Legal Corporate Manager at the holding company and Legal Director at the subsidiary companies. Mr. Horn worked as Legal Counsel at Companhia Atlantic de Petróleo (ARCO Petroleum Co.) from 1990 to 1994, as a Lawyer at Franco, Bhering, Barbosa & Novaes Law Firm for one year, and as a Tax Senior Consultant at Arthur Andersen for almost four years.

Leonardo de Carvalho Capdeville. Mr. Capdeville holds a degree from Instituto Nacional de Telecomunicações – INATEL, in Electronic Engineering, specializing in Telecommunications. He also holds an MBA from Fundação Getúlio Vargas in Rio de Janeiro, Brazil. Mr. Capdeville also attended the International Program of Management Development at IEDE – Institute for Executive Development in Madrid, Spain and to the Disruptive Innovation Program by the Harvard Business School. Currently, he is Chief Technology Information Officer of the Company, elected on February 12, 2015, and Chief Technology Information Officer of TIM S.A. elected on February 3, 2017, and a member of the Trustee Council of the Telecommunications Research and Development Center (Centro de Pesquisa e Desenvolvimento de Telecomunicações), or CpQD. Prior to that, Mr. Capdeville was responsible for the Network, IT departments at the Company. From 1998 to 2014, Mr. Capdeville was a Network Director at Telefônica Brasil (under the brand name Vivo). Mr. Capdeville also worked at Promon Eletrônica Ltda., or Promon, from 1991 to 1995 and then from 1996 to 1998. While at Promon, he held the position of engineer responsible for implementing the mobile telephony in the State of Espírito Santo, Brazil, and performed other activities related to network projects. From February 1995 to October 1996, Mr. Capdeville worked at Gerenciamento e Assessoria de Serviços S/C Ltda., as coordinator of the implementation of the team and of the data communication area.

Maria Antonietta Russo. Ms. Russo is Italian, graduated in labor psychology and organization, management and human resources at Sapienza Università di Roma, and holds a master degree in labor psychology and organization, management and human resources from the Scuola Romana di Psicologia del Lavoro e dell´Organizzazione. Ms. Russo has served in several executive positions at TIM, including the regional head of human resources from 2018 to 2019, head of people’s development and education from 2016 to 2018 and people’s development and new capacities senior officer from 2014 to 2016 at TIM Italia.

There are no family relationships among any of our directors and statutory officers, nor any arrangement or understanding with major shareholders, customers or suppliers pursuant to which any director or executive officer was selected.

Statutory Audit Committee

The current composition of the Statutory Audit Committee consists of three members, elected by our controlling shareholder. None of the members were elected by the minority shareholders.

The following are the current members of our Statutory Audit Committee:

Name	Date of Birth	Date Appointed
Flavia Maria Bittencourt	January 15, 1970	March 31, 2021
Gesner José de Oliveira Filho	May 17, 1956	March 31, 2021
Herculano Aníbal Alves(*)	February 27, 1953	March 31, 2021

^(*) Audit committee financial expert.

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The Statutory Audit Committee was created and its first members appointed at the TIM Participações S.A.’s shareholders’ meeting held on December 12, 2013, in accordance with Rule 10A-3 under Section 301 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, and CVM Instruction 509/2011. The Statutory Audit Committee’s internal regulations were approved at TIM Participações S.A.’s the Board of Directors meeting held on December 23, 2013. After the merger of TIM Participações S.A. into the Company, the Statutory Audit Committee was created and approved by the Company at its shareholders’ meeting held on July 29, 2020.

The Statutory Audit Committee is composed of at least three (3) and at the most five (5) members, all elected by the Board of Directors, who serve two-year terms of office, matching the terms of the members of the Board of Directors. Re-election is permitted up to, for a maximum period of 10 years. Members of the Statutory Audit Committee may be dismissed by our Board of Directors at any time and without cause.

The Statutory Audit Committee’s general duties and responsibilities under Brazilian corporate law, our By-laws and its internal rules, include: (i) issuing its opinion on the hiring and dismissal of the independent auditor responsible for the audit services on the financial statements, as well as any other services, whether or not they are audit services; (ii) analyzing the annual work plan, discussing the result of the activities performed, the revisions made and assessing the performance of the independent auditors; (iii) supervising the activities of the independent auditors with the purposes of assessing their independence, the quality and the adequacy of the services provided to the Company, including, to the extent allowed by the legislation, assisting in the solution of any divergences between the management and the independent auditors with respect to the presentation of the financial statements; (iv) supervising the activities performed by the internal audit, analyzing, for such purpose, the annual work plan, discussing the result of the activities performed, the revisions made and assessing the performance of the internal auditors; (v) supervising and analyzing the effectiveness, quality and integrity of the internal control mechanisms, in order to, among other things, monitor compliance with provisions related to: (i) presentation of the financial statements, including the quarterly financial information and other interim statements; and (ii) the information and measurements disclosed based on adjusted accounting data and on non-accounting data, which add elements that are not provided for in the structure of the usual reports of the financial statements; (vi) to have tools for receiving and treatment of information about non-compliance with legal and regulatory provisions applicable to the Company, in addition to internal regulations and codes, including provision for specific procedures to protect the provider and confidentiality of information; (vii) analyzing whistleblower reports, anonymous or otherwise, related to any accounting, internal controls or audit matters, received by the Company, as well as suggesting the measures that may be taken; (viii) examining, assessing and issuing its opinion, previously, on whether the agreements to be executed between the Company or its controlled companies, on one side, and the controlling shareholder or its controlled companies, affiliated or under the same control or the controlling companies of the latter, or parties related to the Company, on the other side, comply with the standards normally adopted in the market in transactions of the same nature between independent parts, based on the material submitted by the Company's management, and the Statutory Audit Committee may request additional clarifications or opinions of independent third parties, whenever it deems necessary; (ix) preparing summarized annual report, to be presented together with the financial statements, containing the description of: (a) its activities, the results and conclusions reached and the recommendations made; and (b) any situations in which there are significant divergences among the Company's management, the independent auditors and the Statutory Audit Committee with respect to the Company's financial statements; (x) assessing and monitoring the risk exposures of the Company, being authorized to request detailed information on policies and procedures related to: (a) the compensation of the management; (b) the use of the Company's assets; and (c) the expenses incurred on behalf of the Company; (xi) evaluating, monitoring and recommending to the Management the correction or improvement of the Company's internal policies, including the policy of transactions with related parties; and (xii) evaluating the quarterly information, interim statements and financial statements.

Fiscal Council

The current composition of the Fiscal Council consists of three members elected by our controlling shareholder. The following are the current members of our Fiscal Council, whose terms of office will be valid until the annual shareholders’ meeting held in 2022:

Name	Date of Birth	Date Appointed
Walmir Kesseli	August 28, 1959	March 29, 2022
Anna Maria Cerentini Gouvêa Guimarães	September 19, 1956	March 29, 2022

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Name	Date of Birth	Date Appointed
Elias de Matos Brito	July 28, 1965	March 29, 2022

Under Brazilian corporate law, our By-laws and the internal rules of the Fiscal Council, the Fiscal Council’s general duties and responsibilities include monitoring the actions of management and verifying its compliance with legal duties and appropriate statutes; providing opinions regarding management’s annual report, business plans and budgets; and performing reviews of, and opinions regarding our financial statements. All members serve independently from the Company in their capacities on the Fiscal Council.

Other Committees

We have other non-statutory committees including a Compensation Committee a Control and Risks Committee and an Environmental, Social & Governance Committee.

Compensation Committee

The Compensation Committee was established by the TIM Participações S.A.’s Board of Directors on September 30, 2008 and, after the merger into the Company, by its shareholders’ meeting on July 29, 2020 to: (1) prepare proposals for our Board of Directors regarding allotment of the overall annual remuneration approved by general shareholders’ meeting; (2) provide our Board of Directors with proposals concerning the remuneration of our statutory officers; (3) evaluate the compensation criteria of Company’s statutory officers; and (4) monitor the performance of the decisions taken by management and the Company’s policies relating to senior executive compensation; and (5) analyze other matters concerning the compensation of the Company’s members, as delegated by the Board of Directors.

The members of our Compensation Committee are appointed and dismissed by our Board of Directors. The Compensation Committee shall be composed of at least three (3) and at the most five (5) members, all elected by the Board of Directors.

The following are the current members of our Compensation Committee:

Name	Date of Birth	Date Appointed
Nicandro Durante	September 13, 1956	March 31, 2021
Claudio Ongaro	July 11, 1968	December 15, 2021
Michele Valensise	April 3, 1952	March 31, 2021

Control and Risks Committee

The Control and Risks Committee was established by the TIM Participações S.A.’s Board of Directors on September 30, 2008 and, after the merger into the Company, by its shareholders’ meeting on July 29, 2020, tasked with the following responsibilities: (a) recommending internal control measures to be adopted by the Board of Directors establishing the specific authority of the Board of Statutory Officers and the limits of such specific authority, subject to the provisions of the By-laws, as well as deciding on the assignment of new functions to the Directors; (b) monitoring the Company’s compliance with our corporate governance policy and periodically updating the same; (c) without prejudice to the competence of the Board of Directors, recommending procedures for better supervision of the management of the Directors; (d) acknowledging the internal audit work plan reviewed by the Company’s Statutory Audit Committee in accordance with the Company’s By-laws; (e) approving the compliance department’s work plan and monitoring compliance with the same; (f) reviewing and evaluating periodic reports issued in accordance with the internal control and risk management system by the internal audit department and the compliance department and, in connection with the same, requesting that the internal audit department review specific operational areas or that the compliance department develop new procedures; (g) requesting information from the Board of Statutory Officers regarding specific processes or issues of the Company and/or its subsidiaries, whenever it deems appropriate; (h) supervising and monitoring issues related to the social responsibility of the Company, aiming at the sustainable development of the Company and/or its subsidiaries, and monitoring the Company’s compliance with the principles established in our Code of Ethics and Conduct; and (i)

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analyzing any other matters related to the internal control of the Company as are delegated by the Board of Directors.

The members of our Control and Risks Committee are appointed and dismissed by our Board of Directors. The Control and Risks Committee shall be composed of at least three (3) and at the most five (5) members, all elected by the Board of Directors. The following are the current members of the Control and Risks committee:

Name	Date of Birth	Date Appointed
Herculano Aníbal Alves	February 27, 1953	March 31, 2021
Gesner José de Oliveira Filho	May 17, 1956	March 31, 2021
Agostino Nuzzolo	April 12, 1968	March 31, 2021
Michele Valensise	April 3, 1952	March 31, 2021
Sabrina Di Bartolomeo	October 16, 1971	March 31, 2021

Environmental, Social & Governance Committee

The Environmental, Social & Governance Committee was established by the Company’s Board of Directors on December 10, 2020 to: (a) evaluate the plan and general strategy of the Company’s ESG plan (“ESG Plan”) that will consolidate the ESG action plans, projects, proposals and initiatives, and how they may be organized and integrated into the internal processes and organizational structures for implementation of the ESG Plan by the Company, in line with the best practices of the market and the legislation in force; (b) review the goals and indicators panel of the Company’s ESG Plan, and recommend its approval by the Board of Directors; (c) To follow up and routinely monitor the execution of the ESG Plan and its indicators; (d) In the course of the monitoring described in item (c) above, inform the Board of Directors and the Statutory Audit Committee (“CAE”) and the Control and Risks Committee (“CCR”), as the case may be, of situations involving ESG topics and approaches with potential impact on the Company’s image, reputation and equity; (e) request to the Company’s management, through its Chief Executive Officer, for any risk analysis or opportunities in the ESG area, whenever deemed necessary and appropriate for the effort of preventive performance or for the proper management of environmental, social and governance issues; (f) recommend to the Board of Directors the approval of corporative norms and procedures related to ESG issues, as well as the adoption of actions for their disclosure and for monitoring their compliance; (g) review the ESG reports, institutional communications and initiatives with public repercussion regarding the environmental, social and governance issues, and to recommend and suggest changes and possible improvements to the Board of Directors; (h) recommend adherence or continuity in national or international “Protocols”, “Principles”, “Agreements”, “Pacts”, “Initiatives” and “Treaties”, directly or indirectly related to ESG; (i) recommend to the Board of Directors, whenever deemed necessary, development or improvement programs to the management’s members, executives or employees, in order to provide training and disseminate knowledge in the ESG area; and (j) recommend the adoption of actions to strengthen the ESG culture in the Company.

The members of our Environmental, Social & Governance Committee are appointed and dismissed by our Board of Directors. The Environmental, Social & Governance Committee shall be composed of at least three (3) and at the most five (5) members, all elected by the Board of Directors.

The members of our Environmental, Social & Governance Committee are appointed and dismissed by our Board of Directors. The Environmental, Social & Governance Committee shall be composed of at least three (3) and at the most five (5) members, all elected by the Board of Directors.

The following are the current members of our Environmental, Social & Governance Committee:

Name	Date of Birth	Date Appointed
Nicandro Durante	September 13, 1956	March 31, 2021
Claudio Ongaro	July 11, 1968	December 15, 2021
Alberto Mario Griselli	April 24, 1969	February 1, 2022
Sabrina Di Bartolomeo	October 16, 1971	March 31, 2021
Gesner José de Oliveira Filho	May 17, 1956	March 31, 2021

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B.       Compensation

At our annual shareholders’ meeting held on March 29, 2022, our shareholders voted on the aggregate amount of approximately R$77 million to our statutory officers, approximately for a total annual compensation of R$3 million to our committees’ members, approximately R$0.6 million to our fiscal council’s members and approximately  R$4.9 million as compensation to our Board of Directors during 2022. The statutory officers’ and directors’ compensation is composed of fixed remuneration, benefits, bonuses, short-term incentives and participation in long-term incentive plans. Accordingly, we did not set aside or accrue any amounts to provide pension, retirement or similar benefits to our officers and directors during 2022. The aggregate compensation to our statutory officers in the year ended December 31, 2021, including fixed remuneration, benefits, bonuses, short-term incentive and long term incentive plans, was approximately R$47.2 million considering INSS (approximately R$43.6 million without INSS).

Our statutory officers and other managers of the Company are eligible to receive a short-term incentive (Management by Objectives, or MBO) bonuses. The general criteria for the MBO bonus are approved by our Board of Directors and provide that eligible statutory officers and other managers may receive an amount calculated based on the organizational roles and certain pre-established performance targets.

Some key officers are also eligible to participate in a long-term incentive plan. The general criteria for the 2019 program are approved by our Board of Directors and provide that eligible participants may receive shares in part through the achievement of long term strategic goals (or so-called performance shares) and in part by remaining employed with the Company until the completion of the vesting period (or so-called restricted shares).

For the year ended on December 31, 2021, each member of our Board of Directors received annual compensation an average of R$1.0 million considering INSS (R$0.9 million without INSS) and each member of our Fiscal Council received annual compensation of R$0.2 million considering INSS (R$0.2 million without INSS), paid pro rata according to each member’s time of service on such body.

C.       Board practices

See “—A. Directors and Senior Management” and “—B. Compensation.”

D.       Our Employees

On December 31, 2021, we had 9,337 full-time employees. We do not employ a significant number of temporary employees. The following tables show a breakdown of our employees as of December 31, 2021, 2020 and 2019.

	As of December 31,
	2021	2020	2019
Network & Information Technology	2,191	2,358	2,374
Sales and marketing	3,550	3,665	3,363
Customer care	2,075	1,887	2,286
Support and other	1,521	1,511	1,677
Total number of employees	9,337	9,421	9,700

All employees are represented by state unions affiliated with the following federations: National Federation of Telecommunications Workers, Interstate Federation of Telecommunications Services Researchers and Workers, and the FREE Federation. We annually negotiate a new collective agreement and profit sharing program with the above mentioned federations and unions. Management believes that our relationships with our workforce are satisfactory. We have not experienced a work stoppage in our operations.

Employee Benefit Pension Plans

The Company and its subsidiaries have defined benefit and defined contribution plans in place.

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In general, defined benefit plans establish a specific retirement benefit amount that an employee will receive upon retirement, usually dependent on one or more factors such as age, length of service and compensation. The defined benefit obligation, recognized in the balance sheet, is calculated annually by independent actuaries. The present value of defined benefit obligation is determined by discounting estimated future cash outflows, using interest rates consistent with market yields, which are denominated in the currency in which benefits will be paid and which have maturities close to those of the respective pension plan liabilities. The actuarial gains and losses resulting from changes in actuarial assumptions are recorded within shareholders’ equity as other comprehensive income, as incurred.

Regarding defined contribution plans, the value of the complementary benefit is established only at the time of granting, based on the accumulated balance resulting from the contributions to the plan and the profitability of the investments during the contributory phase. We make contributions to pension insurance plans public or private on a mandatory, contractual or voluntary. The contributions are recognized as employee benefit expense when due.

Due to corporate reorganizations, the Company assumed responsibility for the pension plans of all of its subsidiaries.

The oldest pension plans, closed to new members, are managed by Icatu Fundo Multipatrocinado. Funcesp, currently Vivest, manages a defined benefit pension plan of AES Atimus, incorporated in 2011, later called TIM Fiber and now TIM S.A. The Icatu Fundo Multipatrocinado, a pension fund management company in Brazil, manages since 2013 (after a two-year evaluation process of multiemployer pension fund management companies) five different plans: (i) Defined Benefit Plan – PBS Tele Celular Sul; (ii) Defined Benefit Plan – PBS Tele Nordeste Celular; (iii) Defined Contribution Plan – TIMPREV Nordeste; (iv) Defined Contribution Plan – TIMPREV Sul; and (v) Defined Contribution Plan – Intelig Gente.

For new employees, we now offer the supplementary defined contribution plan managed by Itaú Vida e Previdência S.A.

Share-Based Compensation Plan

We operate share-based compensation plans, which in our previous plan consisted of share based incentives and which in our new plan consists of performance shares and/or restricted shares, under which we receive the services of certain employees in consideration for equity granted. The fair value of the employee’s services is recognized as an expense, with a compensating entry to capital reserves, and are determined by reference to the fair value of the options granted. Non-market-related vesting conditions are included in the assumptions underlying the number of option/shares which will vest. The total expense amount is recognized during the period over which the rights vest, when specific vesting conditions should be fulfilled. On the balance sheet date, the entity reviews its estimates regarding the number of options/shares which will vest, based on the non-market-related vesting conditions. It recognizes the effect of this review of initial estimates, if any, in the income statement, with a corresponding adjustment to the capital reserve.

Amounts paid to employees, net of any directly attributable transaction costs, are credited to capital reserve and share issuance premium reserve, if applicable, when options are exercised or shares are granted.

E.       Share Ownership

As of December 31, 2021, our board members, fiscal council members and statutory officers, owned, in the aggregate, 789,950 common shares, which represented 0.01% of our common shares outstanding. Accordingly, each of our directors or statutory officers beneficially owns less than one percent of outstanding common shares.

Some key officers are also eligible to participate in a long-term incentive plan (share based incentives plans) for which compensation is based on performance targets for our share price, as further described in “—B. Compensation” and “—D. Our Employees—Share-Based Compensation Plan.”

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Item 7. Major Shareholders and Related Party Transactions

A.       Major Shareholders

The following table sets forth information relating to the ownership of common shares by TIM Brasil and our officers and directors, as of December 31, 2021. We are not aware of any other shareholder that beneficially owns more than 5% of our common shares.

Name of owner	Common Shares Owned	Percentage of Outstanding Common Shares
TIM Brasil Serviços e Participações S.A.	1,611,969,946	66.59%
All our officers and directors as a group*	789,950	0.01%
Total	1,612,343,413	66.60%

* Represents less than 1%.

Since TIM Brasil owns 66.59% of our outstanding common shares, it has the ability to control the election of our Board of Directors and to determine the direction of our strategic and corporate policies. The common shares held by TIM Brasil have the same voting rights as the common shares held by other holders and TIM Brasil has no special voting rights beyond those ordinarily accompanying the ownership of our common shares.

As of December 31, 2021, there were 137,133,585 common shares represented by ADSs. As of such date, the number of common shares represented by ADSs represented 5.7% of our total capital.

TIM Brasil is a wholly owned Brazilian subsidiary of Telecom Italia Finance, which in turn is a wholly owned Dutch subsidiary of Telecom Italia. Telecom Italia is a corporation organized under the laws of the Republic of Italy. In turn, the single largest shareholder of Telecom Italia is Vivendi, which is able to exercise significant influence over Telecom Italia. See “Item 4. Information on the Company—C. Organizational Structure.”

Telecom Italia and its subsidiaries (the “Telecom Italia Group”), operate mainly in Europe, the Mediterranean Basin and South America. The Telecom Italia Group is engaged principally in the communications sector and, particularly, the fixed and mobile national and international telecommunications sector. The group is focused currently on digitalization and accordingly is investing in the development of its ultra-broadband network and new technologies.

Significant Changes in Percentage Ownership of Principal Shareholders

None.

Shareholders’ Agreements

None.

B.       Related Party Transactions

As of December 31, 2021, we did not owe to our affiliates any amounts arising out of outstanding inter-company loans. We had assets and liabilities in amounts of R$121,235 thousand and R$148,953 thousand, respectively, as of December 31, 2021 with companies of the Telecom Italia Group. See Note 35 to our financial statements

Guarantees of Obligations of our Subsidiaries

For more information on our guarantees of obligations of our subsidiaries, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Sources of Funds—Financial Contracts.”

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Agreement between Telecom Italia and TIM S.A.

At the annual and extraordinary shareholders’ meeting held on March 29, 2022, TIM S.A.’s shareholders voted on an extension of the Cooperation and Support Agreement, originally executed on May 3, 2007 with Telecom Italia, for an additional 12-month period until April 30, 2023. The purpose of this agreement was to enable TIM and its subsidiaries, to benefit from Telecom Italia’s internationally recognized expertise, built throughout years of operation in more mature and developed markets. The cooperation and support activities to be performed by the parties will be focused on adding value to our operations through:

· Benefiting from Telecom Italia’s experience and industrial capacity as one of the major players in the European market;

· Applying the systems/services/processes/best practices that were largely used in the Italian market and may be easily customized for the Brazilian market through limited investments and mitigated implementation risks; or

· An increase in efficacy by adopting in-house solutions that have been widely tested and used.

The extended term of the agreement provides for a total price cap of €7.9 million. The price cap represents the maximum consideration to be paid by TIM operating companies for all the services and support rendered by Telecom Italia during 2022 and 2023 under the agreement.

C.       Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information

A.       Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements.”

Legal Proceedings

The Company are subject to judicial and administrative proceedings, including civil, criminal, labor, tax and regulatory claims covering a wide range of matters that arise in the ordinary course of business. We adopted a policy of analyzing each such proceeding and making a judgment as to whether a loss is probable, possible or remote. We make accruals for legal proceedings that we are party to when we determine that losses are probable and can be reasonably estimated. For civil (non-consumer), labor, tax and regulatory proceedings where risk of loss has been classified as possible, there is no provision made and these proceedings are not expected to have a material adverse effect on our business or financial condition. Our judgment is always based on the opinion of our legal advisers. Accrual balances are adjusted to account for changes in circumstances for ongoing matters and the establishment of additional accruals for new matters. While we believe that the current level of accruals is adequate, changes in the future could impact these determinations.

In this annual report on Form 20-F, we disclose in detail those legal proceedings which we and our legal advisors have determined to be material, along with overall summaries and the aggregate value of our legal proceedings where risk of loss is probable. See Note 24 to our financial statements.

Consumer Lawsuits

As of December 31, 2021, our subsidiaries are party to consumer lawsuits at the judicial and administrative levels where an amounting to R$150,881 thousand (R$139,429 thousand as of December 31, 2020) was provisioned. These lawsuits generally relate to questions regarding alleged improper billing, contract cancellation, quality of services and undue restriction.

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PROCON and Other Consumer Actions

TIM is involved in judicial and administrative proceedings brought by the Brazilian Consumer Protection Agency (which is composed, among other entities, by Procons – Fundação de Proteção e Defesa do Consumidor), , and various state public prosecutor’s offices wherein the amount of R$116,985 thousand as of December 31, 2021 (R$51,713 thousand as of December 31, 2020) was provisioned. These proceedings arise from consumer complaints related to alleged: (i) failures in the provision of network services; (ii) bundling arrangements for product and services; (iii) issues related to quality care;); (iv) contractual violations; (v) misleading advertising.

Former Trade Partners

TIM is a defendant in lawsuits filed by certain former commercial partners for alleged breach of contract. The amount involved in such lawsuits is R$20,708 thousand as of December 31, 2021 (R$18,634 thousand as of December 31, 2020).

Most materially, TIM is the defendant in lawsuit filed by Carlo Spyer Pompeu, a former commercial partner, who claimed for supposed due and unpaid commissions related to the TBP (TIM Business Partner) contract held between the parties. The sale representative also claimed financial compensations according to Law No. 4,886/1965. TIM was convicted to pay such contractual and legal expenses. The Claimant started the enforcement phase, in which the parties are discussing an amount of R$5,010 thousand as of December 31, 2022. Also, TIM is the defendant in a lawsuit filed by Botafogo Comércio e Importação Ltda. in which the Company was convicted to pay consequential damages, lost profits and moral damages. In the meantime, TIM Celular (now TIM S.A.) filed an action to reverse the judgment, in which the Court rendered a decision to partially uphold TIM’s claims, in order to modify the methodology of calculation of damages, lost profits and moral damages. The calculations of such damages, prepared by a retained expert witness, amounted to approximately R$4,901 thousand as of December 31, 2021. Currently, TIM is waiting for a decision to be handed down in respect of Botafogo Comércio e Importação Ltda.’s appeal before the Superior Court (STJ).

TIM no longer considers these proceedings to be material and will not be providing updates on these proceedings in future annual reports on Form 20-F.

Social, Environmental, and Infrastructure

As of December 31, 2021, our subsidiaries are party to lawsuits with various actors arising from issues of environmental licensing and installation/operation licensing, actions directed at network infrastructure and environmental issues. The company has provisioned in connection with such lawsuits an amount of R$356 thousand as of December 31, 2021 (R$610 thousand as of December 31, 2020).

Other

We are also party to other civil claims brought by several third parties mentioned above, in respect of, among others: (i) renewal of lease agreements; (ii) equity subscription of shares; (iii) compensation claims; (iv) alleged breach of contract; and (v) debt actions. The amounts involved in such civil claims where R$15,589 thousand as of December 31, 2021 (R$33,682 thousand as of December 31, 2020).

Most importantly, TIM is the defendant in lawsuit filed by Orolix Desenvolvimento de Software Ltda, a former Intelig service provider, who claimed for supposed due and unpaid commissions related to contract held between the parties. The total amount claimed by the counterparty is an amount of R$9,740 thousand, as of December 31, 2021. An expert report was issued by the Court’s nominee expert, pointing out an amount of R$835 thousand as of July 3, 2020. Currently, TIM is waiting a first instance decision.

Additionally, TIM S.A. (formerly Intelig) was involved in a lawsuit filed by a creditor of Editora JB, Gazeta Mercantil and Problem Solver Consultoria Ltda. The judge in that case ordered a seizure of TIM S.A.’s bank account in the historical amount of R$3,373 thousand as of December 31, 2021, based on the reasoning that Editora JB and Gazeta Mercantil are part of the same economic group as the Company.

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The Company filed an interlocutory appeal, which was not granted. After that, the Company filed a request for amendment, which was also rejected. The Company filed an appeal to the Superior Court (Superior Tribunal de Justiça), which also was denied. Following that decision, the seizure of TIM’s bank accounts became final. In parallel, the National Treasury Attorney’s Office (Procuradoria-Geral da Fazenda Nacional) filed a motion claiming the funds seized from TIM’s bank accounts should be used to pay tax debts Editora JB and Gazeta have with the federal government instead of Problem Solver’s credit. Since then, Problem Solver, the National Treasury and other creditors of Editora JB and Gazeta have been litigating (without TIM being involved) to decide who is entitled to receive the funds seized from TIM’s bank accounts. The relevant amount is still maintained in an escrow account (judicial deposit) until the pending disputes between creditors are resolved.

TIM no longer considers these proceedings to be material and will not be providing updates on these proceedings in future annual reports on Form 20-F.

Labor Claims

A significant percentage of our labor claims relate to either claims filed by former employees of service providers who, in accordance with Brazilian labor legislation, have filed claims against us on the grounds that we are responsible for labor-related obligations not satisfied by the service provider companies. There were 1,314 labor claims filed against the Company and its subsidiaries as of December 31, 2021, (1,873 as of December 31, 2020), most of which relate to employment claims filed by employees as well as claims that involve former employees of service providers. The amount involved in such labor claims where the risk of loss is considered probable is R$192,132 thousand as of December 31, 2021 (R$213,026 thousand as of December 31, 2020).

There are a series of labor claims, brought by former Gazeta Mercantil employees who have filed claims requesting the inclusion of Holdco (the former controlling shareholder of Intelig) or TIM Participações as defendants, claiming damages from Holdco and TIM Participações Plaintiffs who have filed the claims were employees of Gazeta Mercantil, without any employment ties to Holdco or TIM Participações. However, prior to the merger with TIM Participações, Holdco belonged to the Docas economic group, of which Gazeta Mercantil is part.

Social Security Claims

TIM S.A. received a Tax Notification referring to alleged irregularity in the payment of social security contributions in connection with the payment of profit sharing, in the probable amount of R$11,862 thousand as of December 31, 2021 (R$9,487 thousand as of December 31, 2020). There is also a Tax Assessment Notice in the amount of R$85,720 thousand of December 31, 2021 (R$22,829 thousand as of December 31, 2020) for social security contributions that were allegedly due in connection with the following: (1) hiring bonuses (2) non-adjusted bonuses (3) payments to self-employed persons, and (4) sales incentives.

Tax Claims

Federal Taxes

The total federal tax claims not including regulatory taxes (FUST/FUNTTEL/FISTEL and other) assessed against the Company with a possible risk of loss is equal to R$3,077,862 thousand as of December 31, 2021 (R$4,319,464 thousand as of December 31, 2020).

The amounts relating to federal taxes not including regulatory taxes (FUST/FUNTTEL/FISTEL and other) where the risk of loss is considered probable is R$127,183 thousand as of December 31, 2021 (R$108,358 thousand as of December 31, 2020).

The most relevant claims assessed are:

· Tax carryforward losses and Social Contribution on Profits (Contribuição Social sobre o Lucro Líquido) (“CSLL”), negative basis compensation disallowance; challenge to the goodwill expenses deduction; disallowance of withholding tax compensation due to an alleged lack of documental support; lack of payment of tax carryforward loss/CSLL due on a monthly estimate basis; fine for failure to present digital files; failure to comply with requirements and procedures related to regional tax incentives from

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Superintendence for the Development of the Northeast (Superintendência de Desenvolvimento do Nordeste) (“Sudene”). The amount in controversy, classified as a possible contingency, is R$1,467,409 thousand as of December 31, 2021 (R$2,715,670 thousand as of December 31, 2020).

· Alleged improper credits that resulted in tax carryforward losses and CSLL negative basis compensation disallowance. The amount in controversy, classified as a possible contingency, is R$231,810 thousand as of December 31, 2021 (R$193,181 thousand as of December 31, 2020).

· Social contribution on net income on exchange variation resulting from swap operations accounted for on a cash basis. The amount in controversy, classified as a possible contingency, is R$69,124 thousand as of December 31, 2021 (R$67,572 thousand as of December 31, 2020).

· Withholding tax collection on income of residents abroad, including those remitted as international roaming and payment to unidentified beneficiaries, as well as the payment of CIDE on royalties remittances abroad, including international roaming The amount in controversy, classified as a possible contingency, is R$268,170 thousand as of December 31, 2021 (R$259,088 thousand as of December 31, 2020).

· Alleged failure to calculate and collect corporate income tax, PIS/COFINS and social contribution on profits due to total or partial disregard, by the Brazilian Internal Revenue Service (Receita Federal do Brasil), of the compensations proceeded and from tax carryforward loss negative balance calculated on previous years. The amount in controversy, classified as a possible contingency, is R$410,662 thousand as of December 31, 2021 (R$399,691 thousand as of December 31, 2020).

State Taxes

The total state tax claims assessed against the Company where the risk of loss is considered possible is equal to R$8,804,724 thousand as of December 31, 2021 (R$8,586,718 thousand as of December 31, 2020). The amounts relating to state tax disputes where the risk of loss is considered probable is R$145,436 thousand as of December 31, 2021 (R$135,891 thousand as of December 31, 2020).

The most relevant claims assessed are:

· Alleged incorrect deduction of unconditional discounts offered to customers in the ICMS basis of calculation, as well as penalties for alleged noncompliance with an accessory obligation. The amount in controversy, classified as a possible contingency, is R$1,140,553 thousand as of December 31, 2021 R$1,128,741 thousand as of December 31, 2020).

· Use of tax benefit (Program for the Economic, Integrated and Sustainable Development of the Federal District – PRO-DF) granted by the state tax authority, which was later declared unconstitutional by the STF. Additionally, the Company was assessed due to alleged undue credit of ICMS resulting from interstate purchase of goods with tax benefit granted in the state of origin. The amount in controversy, classified as a possible contingency, is R$356,251 thousand as of December 31, 2021 (R$492,935 as of December 31, 2020).

· ICMS credits reversal and credits arising from the acquisition of fixed assets. The amount in controversy, classified as a possible contingency, is R$654,011 thousand as of December 31, 2021 (R$608,316 as of December 31, 2020).

· ICMS credit entries and debt reversals, identification and documentation support of amounts and information included in clients’ bills, such as the tax rate and credits granted, as well as credits arising from ICMS substitution or nontaxable operations. The amount in controversy, classified as a possible contingency, is R$3,449,439 thousand as of December 31, 2021 (R$3,356,501 as of December 31, 2020).

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· Appropriation of ICMS credits originated from operational energy consumption and acquisition. The amount in controversy, classified as a possible contingency, is R$138,242 thousand as of December 31, 2021 (R$134,494 thousand as of December 31, 2020).

· Alleged conflict between the information filed in the accessory obligations and the tax collection as well as the charge of specific penalty for noncompliance with those obligations. The amount in controversy, classified as a possible contingency, is R$727,057 thousand as of December 31, 2021 (R$698,673 thousand as of December 31, 2020).

· Alleged non-payment of ICMS due to the loss of reversed debits related to prepaid service, as well as alleged undue ICMS credit on goods alleged to have benefited from reduction in the calculation basis. The amount in controversy, classified as a possible contingency, is R$547,575 thousand as of December 31, 2021 (R$249,271 thousand as of December 31, 2020).

· ICMS credits entries regarding the tax treatment of handsets loan operations. The amount in controversy, classified as a possible contingency, is R$116,700 thousand as of December 31, 2021 (R$197,521 thousand as of December 31, 2020).

· Charge of ICMS related to subscription services excluded from taxation due to its classification as non-telecommunication services. The amount in controversy, classified as a possible contingency, is R$286,519 thousand as of December 31, 2021 (R$260,447 thousand as of December 31, 2020).

Municipal Taxes

The total municipal tax claims assessed against the Company with a possible risk of loss is equal to R$1,234.618 thousand as of December 31, 2021 (R$740,813 thousand as of December 31, 2020). The amounts relating to municipal taxes where the risk of loss is considered probable is R$7,626 thousand as of December 31, 2021 (R$5,633 thousand as of December 31, 2020).

The most relevant claims assessed are:

· Charge of ISS tax and penalties due to the supposed lack of collection over the Company’s revenue accounts. The amount in controversy, classified as a possible contingency, is R$618,343 thousand as of December 31, 2021 (R$150,023 thousand as of December 31, 2020).

· Alleged lack of ISS collection regarding services import or services performed in other municipalities. The amount in controversy, classified as a possible contingency, is R$399,141 thousand as of December 31, 2021 (R$385,536 thousand as of December 31, 2020).

· Constitutionality of the collection of the Inspection Fee for Operation (Taxa de Fiscalização de Funcionamento – TFF) by municipal authorities of different locations. The amount in controversy, classified as a possible contingency, is R$137,944 thousand as of December 31, 2021 (R$126,159 thousand as of December 31, 2020).

FUST and FUNTTEL

The total amount assessed against the Company with a possible risk of loss is equal to R$3,266.381 thousand as of December 31, 2021 (R$3,014,977 thousand as of December 31, 2020).

The amounts relating to FUST and FUNTTEL tax claims where the risk of loss is considered probable is R$75,562 thousand as of December 31, 2021 (R$73,789 thousand as of December 31, 2020).

The main discussion involves the collection of FUST and FUNTTEL followed by a discussion of the issuance by Anatel of Ordinance No. 07/2005, specifically aiming at the collection of these contributions on interconnection revenues earned by telecommunications services providers from the date upon which Law No. 9,998/2000 came into force.

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Material Proceedings with Adverse Director, Management or Affiliate

None.

Dividend Policy

Under our By-laws and our Results Allocation Policy, we are required to distribute an aggregate amount equal to at least 25% of our adjusted net income to our shareholders, either as dividends or as tax-deductible interest on shareholders’ equity. We may also make additional distributions to the extent of available distributable profits and reserves. The Company is also subject to mandatory distribution requirements and, to the extent of distributable profits and reserves, is accordingly required to pay dividends to us. All of the aforementioned distributions may be made as dividends or as tax-deductible interest on shareholders’ equity.

Brazilian corporations may make payments to shareholders characterized as interest on shareholders’ equity (juros sobre capital próprio) as an alternative form of making dividend distributions to the shareholders, according to Law No. 9,249/1995. The rate of interest may not be higher than the Federal Government’s long-term interest rate as determined by BNDES from time to time. Dividends are not subject to withholding income tax when paid. On the other hand, interest on shareholders’ equity paid to shareholders is deductible from the corporation’s net income for tax purposes, but the distributions are subject to withholding tax.

For the purposes of Brazilian corporate law, and in accordance with our By-laws, adjusted net income is an amount equal to net profit adjusted to reflect allocations to and from:

· the legal reserve; and

· contingency reserves.

We are required to maintain a legal reserve to which we must allocate 5% of net income for each fiscal year until the amount for such reserve equals 20% of our capital. However, we are not required to make any allocations to our legal reserve in respect of any fiscal year in which our legal reserve, together with our other capital reserves, exceeds 30% of our capital. Losses, if any, may be charged against the legal reserve.

Brazilian corporate law also provides for two discretionary allocations of net income that are subject to approval by the shareholders at the annual meeting. First, a percentage of net income may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years. Any amount so allocated in a prior year must be either reversed in the fiscal year in which the loss was anticipated if such loss does not in fact occur, or written off in the event that the anticipated loss occurs. Second, if the mandatory distributable amount exceeds the sum of realized net income in a given year, such excess may be allocated to unrealized revenue reserve. Under Brazilian corporate law, realized net income is defined as the amount of net income that exceeds the net positive result of equity adjustments and profits or revenues from operations with financial results after the end of the next succeeding fiscal year.

Under Brazilian corporate law, any company may, as a term in its By-laws, create a discretionary reserve that authorizes the allocation of a percentage of a company’s net income to the discretionary reserve and must also indicate the purpose, criteria for allocation and a maximum amount of the reserve. The Company’s By-laws authorize the allocation of the net income balance not allocated to the payment of the mandatory minimum dividend to a supplementary reserve for the expansion of corporate business, not to exceed 80% of the capital.

We may also allocate a portion of our net income for discretionary appropriations for plant expansion and other capital investment projects, the amount of which would be based on a capital budget previously presented by our management and approved by shareholders. Under Brazilian corporate law, capital budgets covering more than one year must be reviewed at each annual shareholders’ meeting. After completion of the relevant capital projects, we may retain the appropriation until the shareholders vote to transfer all or a portion of the reserve to capital realized.

The amounts available for distribution may be further increased by a decrease in the contingency reserve for anticipated losses anticipated in prior years but not realized. The amounts available for distribution are determined on the basis of financial statements prepared in accordance with IFRS.

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The legal reserve is subject to approval by the shareholders voting at the annual meeting and may be transferred to capital but is not available for the payment of dividends in subsequent years. Our calculation of net income and allocations to reserves for any fiscal year are determined on the basis of financial statements prepared in accordance with CVM rules and Brazilian corporate law.

Under Brazilian corporate law, a company is permitted to suspend the mandatory dividend in respect of common shares not entitled to a fixed or minimum dividend if:

· its management (board of directors and board of statutory officers) and fiscal council report to the shareholders’ meeting that the distribution would be incompatible with the financial circumstances of that company; and

· the shareholders ratify this conclusion at the shareholders’ meeting.

In this case,

· the management must forward to CVM within five days of the shareholders’ meeting an explanation justifying the information transmitted at the meeting; and

· the profits which were not distributed are to be recorded as a special reserve and, if not absorbed by losses in subsequent fiscal years, are to be paid as dividends as soon as the financial situation permits.

For the purposes of Brazilian corporate law, 25% of the net income after income tax and social contribution for such fiscal year, net of any accumulated losses from prior fiscal years and any amounts allocated to warrants and employees’ and management’s participation in a company’s profits, shall be distributed as dividends.

Payment of Dividends

We are required by law and by our By-laws to hold an annual shareholders’ meeting by April 30 of each year, at which, among other things, an annual dividend may be declared by decision of our shareholders on the recommendation of our statutory officers, as approved by our Board of Directors. The payment of annual dividends is based on the financial statements prepared for the fiscal year ending December 31. Under Brazilian corporate law, dividends are required to be paid within 60 days following the date the dividend is declared to shareholders of record on such declaration date, unless a shareholders’ resolution sets forth another date of payment, which in any event shall occur prior to the end of the fiscal year in which such dividend was declared.

A shareholder has a three-year period from the dividend payment date to claim dividends in respect of its shares, after which we have no liability for such payment. Because our shares are issued in book-entry form, dividends with respect to any share are credited to the account holding such share. We are not required to adjust the amount of paid-in capital for inflation. Annual dividends may be paid to shareholders on a pro rata basis according to the date when the subscription price is paid to us.

B.       Significant Changes

None.

Item 9. The Offer and Listing

A.       Offer and Listing Details

Our common shares are listed on the Novo Mercado segment of the B3, under the symbol “TIMS3,” and our ADSs are listed on the NYSE, under the symbol “TIMB” as a result of the consummation of the Merger and the approval of the listing of our shares on the Novo Mercado segment of the B3 and our succession as successor issuer to TIM Participações under Rule 12g-3(a) promulgated under the Exchange Act. Prior to October 2020, the common shares of TIM Participações S.A. were listed under the symbol “TIMP3” and its ADSs listed on the NYSE under the symbol “TSU.” The table below sets forth, for the indicated periods, the high and low closing prices of our ADSs on the NYSE, in U.S. dollars, and our common shares on the B3, in reais. On December 31, 2021, the last reported

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sales price of our common shares on the B3 was R$13.07 and on December 31, 2021, the last reported sales price of our ADSs on the NYSE was U.S.$11.57. As of December 31, 2021, the U.S. dollar-real exchange rate was R$5.58 per U.S.$1.00.

	NYSE		B3
	High	Low	High	Low
	(in U.S.$ per ADS)		(in reais per common share)
Year ended
December 31, 2017	19.43	12.30	13.10	7.73
December 31, 2018	22.93	14.06	15.95	10.63
December 31, 2019	19.16	12.48	15.57	10.20
December 31, 2020	14.04	13.86	15.05	14.61
December 31, 2021	11.69	11.52	13.07	12.73
Year ended December 31, 2020
First quarter	12.26	11.46	12.74	11.87
Second quarter	12.59	12.15	13.74	13.26
Third quarter	11.36	11.12	12.82	12.57
Fourth quarter	14.04	13.86	15.05	14.61
Year ended December 31, 2021
First quarter	10.91	10.64	12.44	12.10
Second quarter	11.32	11.11	11.38	11.18
Third quarter	10.61	10.36	11.58	11.37
Fourth quarter	11.69	11.52	13.07	12.73
Month ended
October 31, 2021	9.81	9.59	11.06	10.89
November 30, 2021	12.10	11.74	13.59	13.30
December 31, 2021	11.69	11.52	13.07	12.73
January 31, 2022	12.50	12.01	13.32	12.85
February 29, 2022	13.15	12.91	13.53	12.99
March 31, 2022	14.58	14.35	13.86	13.63
April 2021 (through April 5, 2022)	15.44	14.93	14.31	13.98

At an extraordinary shareholders meeting held on August 31, 2020 our shareholder approved, among other things: (1) the Merger, in accordance with the Merger Agreement, executed on July 29, 2020, upon which the shareholders of TIM Participações became entitled to receive 2,420,447,019 new common shares issued by the Company, applying, as substitution ratio the attribution of one common share issued by the Company for one common share issued by TIM Participações; (2) the Company’s adherence to the Novo Mercado listing at B3, and (3) amendments to our By-laws. See “Item 4. Information on the Company—A. History and Development of the Company—2020 Important Events—Recent Developments—Merger of TIM Participações S.A.”

In order to join the Novo Mercado, we entered into a Novo Mercado Participation Agreement with the B3. Through this agreement, which became effective on September 28, 2020, we are required to comply with heightened requirements relating to corporate governance and the disclosure of information to the market. Additionally, as of such date, our shares started trading on the Novo Mercado segment of the B3. Pursuant to the Novo Mercado Regulations, we are not permitted to issue preferred shares, participation bonuses or any kind of shares with restricted voting rights.

At an extraordinary shareholders meeting held on June 22, 2011, TIM Participações S.A.’s shareholders approved, among other things: (1) the conversion of all of TIM Participações S.A.’s preferred shares into common shares, at a ratio of 0.8406 common shares for each preferred share; (2) TIM Participações S.A.’s adherence to the Novo Mercado rules and the transfer of trading of the shares issued by it to the Novo Mercado, and (3) amendments to TIM Participações S.A.’s By-laws.

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In order to join the Novo Mercado, TIM Participações entered into a Novo Mercado Participation Agreement with the B3. Through this agreement, which became effective on July 27, 2011, TIM Participações was required to comply with heightened requirements relating to corporate governance and the disclosure of information to the market. Additionally, as of such date, TIM Participações S.A.’s shares started trading on the Novo Mercado segment of the B3. Pursuant to the Novo Mercado Regulations, TIM Participações was not permitted to issue preferred shares, participation bonuses or any kind of shares with restricted voting rights.

Prior to August 2, 2011 TIM had common shares and preferred shares listed on the B3 under the symbols “TCSL3” and “TCSL4,” respectively. Our ADSs listed on the NYSE each represented 10 preferred shares. As part of our migration to the Novo Mercado listing segment of the B3, our preferred shares ceased to trade on August 2, 2011. On August 4, 2011, our ADSs representing preferred shares ceased to trade on the NYSE. From August 3, 2011, we only had common shares traded on the Novo Mercado listing segment of the B3, by using the symbol “TIMP3” and as from August 5, 2011, our ADSs representing five common shares instead of ten preferred shares commenced trading on the NYSE.

Starting on October 13, 2020, TIM common shares began trading on the B3 under the symbol “TIMS3”. Starting on October 16, 2020 our ADSs began trading on the regular basis on the NYSE, each representing five common shares, under the symbol “TIMB”.

B.       Plan of Distribution

Not applicable.

C.       Markets

Our common shares are listed on the Novo Mercado segment of the B3 under the symbol “TIMS3” and our ADSs are listed on the NYSE, under the symbol “TIMB.” For additional detail, see “—A. Offer and Listing Details.”

Trading on the Brazilian Stock Exchanges

B3 S.A. – Brasil, Bolsa, Balcão

The B3 is the only Brazilian Stock Exchange on which equity and debt securities issued by Brazilian companies are traded.

Trading on the B3 is conducted every business day, from 10:00 a.m. to 5:00 p.m., on an electronic trading system called “PUMA.” Trading is also conducted between 6:00 p.m. and 7:30 p.m., or between 7:00 p.m. and 8:30 p.m. during daylight savings time in Brazil, in an after-market system. The “after-market” trading is the scheduled after the close of principal trading sessions, when investors may send purchase and sell orders and make trades through the home broker system. This after-market trading is subject to regulatory limits on price volatility of securities traded by investors operating on the Internet.

When shareholders trade shares or units on the B3, the trade is settled in three business days after the trade date, without adjustments to the purchase price. The seller is ordinarily required to deliver the shares or units to the exchange on the second business day following the trade date. Delivery of and payment for shares or units are made through the facilities of Central Depositária of B3 clearing house.

In order to maintain control over the fluctuation of the B3 index, B3 has adopted a “circuit breaker” system pursuant to which trading sessions may be suspended for a period of 30 minutes or one hour whenever the B3 index falls below 10% or 15%, respectively, in relation to the closing index levels of the previous trading session. The B3 also implemented a 15% limit, up or down, on price fluctuations in shares traded on the spot market. The minimum and maximum price is based on a reference price for each asset, which will be the previous session’s closing quote, when considering the asset at the beginning of the day before the first trade, or the price of the day’s first trade. The asset’s reference price will be altered during the session if there is an auction sparked by the intraday limit being breached. In this case the reference price will become whatever results from the auction.

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Although the Brazilian equity market is Latin America’s largest in terms of market capitalization, it is smaller and less liquid than the major U.S. and European securities markets. Moreover, the B3 is less liquid than the NYSE and other major exchanges in the world. Although any of the outstanding shares of a listed company may trade on a Brazilian stock exchange, in most cases fewer than half of the listed shares are actually available for trading by the public, the remainder being held by small groups of controlling persons, governmental entities or one principal shareholder. Trading on Brazilian stock exchanges by non-residents of Brazil is subject to registration procedures.

Trading on Brazilian stock exchanges by a holder not deemed to be domiciled in Brazil, for Brazilian tax and regulatory purposes (a “non-Brazilian holder”), is subject to certain limitations under Brazilian foreign investment legislation. With limited exceptions, non-Brazilian holders may only trade on Brazilian stock exchanges in accordance with the requirements of Resolution CMN 4,373 (that replaced Resolution CMN 2,689). Resolution CMN 4,373 (that replaced Resolution CMN 2,689) requires that securities held by non-Brazilian holders be maintained in the custody of, or in deposit accounts with, financial institutions and be registered with a clearinghouse duly authorized by the Central Bank and the CVM. In addition, Resolution CMN 4,373 (that replaced Resolution CMN 2,689) requires non-Brazilian holders to restrict their securities trading to transactions on Brazilian stock exchanges or qualified over-the-counter markets. With limited exceptions, non-Brazilian holders may not transfer the ownership of investments made under Resolution CMN 4,373 (that replaced Resolution CMN 2,689) to other non-Brazilian holders through a private transaction. See “Item 10. Additional Information—E. Taxation—Brazilian Tax Considerations” for a description of certain tax benefits extended to non-Brazilian holders who qualify under Resolution CMN 4,373 (that replaced Resolution CMN 2,689).

Differentiated Levels of Corporate Governance and the Novo Mercado

In order to increase the transparency of the Brazilian capital markets and protect minority shareholders’ rights, the B3 has implemented certain new initiatives, including:

· a classification system referred to as “Differentiated Levels of Corporate Governance” applicable to the companies already listed on the B3; and

· a new separate listing segment for qualifying issuers referred to as the Novo Mercado.

The Differentiated Levels of Corporate Governance, Basic Levels, Level 1 and Level 2, are applicable to listed companies that voluntarily comply with special disclosure and corporate governance practices established by the B3. The companies may be classified into different levels, depending on their degree of adherence to the B3’s practices of disclosure and corporate governance.

The Novo Mercado is a separate listing segment for the trading of shares issued by companies that voluntarily adopt certain additional corporate governance practices and disclosure requirements which are more demanding than those required by the current law in Brazil. Companies may qualify to have their shares traded in the Novo Mercado, if, in addition to complying with the Level 2 corporate governance practices referred to above, their capital stock consists only of voting common shares.

Below we highlight some of corporate governance practices required by the Novo Mercado listing segment of the B3, as amended after a restricted hearings with the listed companies held in June 2017. These are fully implemented by the Company:

· only common shares, with voting rights;

· 100% tag along, with the same conditions for all shareholders in transfer of control;

· establishment and maintenance of Internal Audit Department, Compliance Department and Audit Committee (statutory or non-statutory);

· public offer required in case of delisting from Novo Mercado;

· at least two or 20% of board members must be independent (whichever is greater);

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· listed companies’ commitment to maintain a free float of at least 25% or 15%, in case of an average daily trading volume above R$25 million;

· structuring and release of the evaluation process of the board of directors, its committees and the executive board;

· elaboration and release of the following policies (i) compensation; (ii) appointment of members of the board of directors, its advisory committees and statutory board; (iii) risk management; (iv) transaction with related parties; and (v) securities trading, with minimum content (except for the remuneration policy); and

· simultaneous release, in English and Portuguese, of material facts, information on earnings and press releases of results.

On May 20, 2011, the Board of Directors of TIM Participações recommended to the extraordinary general shareholders’ meeting of the Company its migration to the Novo Mercado listing segment of the B3 (at that time, the BM & FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros), which took place on June 22, 2011. With this migration TIM moved to the highest level of corporate governance.

On August 31, 2020, the Extraordinary Shareholders’ Meeting of TIM Participações, Company’s sole and controlling shareholder before the consummation of the Merger, approved the Company’s migration to the Novo Mercado listing segment of the B3, which took place on September 28, 2020. As a result, we continue to be listed on the Novo Mercado, the highest level of corporate governance.

B3 Market Arbitration Panel

Pursuant to Law No. 9,307/96, a Market Arbitration Panel, or the Panel, has been established by the B3. The Panel was established to settle certain types of disputes, including disputes relating to corporate governance, securities issues, financial regulatory issues and other capital market matters, with respect to B3 listed companies that have undertaken to voluntarily comply with Level 2 and Novo Mercado levels of corporate governance and disclosure. The Panel will provide a forum for dispute resolution involving, among others, the B3, the applicable listed company and the shareholders, directors and management of the applicable listed company.

Regulation of Brazilian Securities Markets

The Brazilian securities markets are principally governed by Law No. 6,385, of December 7, 1976, and Brazilian corporate law, each as amended and supplemented, and by regulations issued by the CVM, which has authority over stock exchanges and the securities markets in general; the National Monetary Council; and the Central Bank, which has, among other powers, licensing authority over brokerage firms and regulates foreign investment and foreign exchange transactions.

These laws and regulations, among others, provide for licensing and oversight of brokerage firms, governance of the Brazilian stock exchanges, disclosure requirements applicable to issuers of traded securities, restrictions on price manipulation and protection of minority shareholders. They also provide for restrictions on insider trading. Accordingly, any trades or transfers of our equity securities by our officers and directors, our controlling shareholders or any of the officers and directors of our controlling shareholders must comply with the regulations issued by the CVM.

Under Brazilian corporate law, a corporation is either publicly held (companhia aberta), as we are, or closely held (companhia fechada). All publicly held companies are registered with the CVM and are subject to reporting requirements. We have the option to ask that trading in securities on the B3 be suspended in anticipation of a material announcement. Trading may also be suspended on the initiative of the B3 or the CVM, based on or due to, among other reasons, a belief that a company has provided inadequate information regarding a material event or has provided inadequate responses to inquiries by the CVM or the B3.

The Brazilian over-the-counter market consists of direct trades between individuals in which a financial institution registered with the CVM serves as intermediary. No special application, other than registration with the

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CVM, is necessary for securities of a public company to be traded in this market. The CVM requires that it be given notice of all trades carried out in the Brazilian over-the-counter market by the respective intermediaries.

Trading on the B3 by non-residents of Brazil is subject to limitations under Brazilian foreign investment and tax legislation. The Brazilian custodian for our common shares on behalf of the depositary for the ADSs, has obtained registration from the Central Bank to remit U.S. dollars abroad for payments of dividends, any other cash distributions, or upon the disposition of the shares and sales proceeds thereto. In the event that a holder of ADSs exchanges common shares for ADSs, the holder will be entitled to continue to rely on the custodian’s registration for five business days after the exchange. Thereafter, the holder may not be able to obtain and remit U.S. dollars abroad upon the disposition of our common shares or upon distributions relating to our common shares, unless the holder obtains a new registration. See “Item 10. Additional Information—B. Memorandum and Articles of Association.”

Brazilian regulations also require that any person or group of persons representing the same interest that has directly or indirectly acquired an interest corresponding to 5% of a type or class of shares of a publicly traded company must provide such publicly traded company with information on such acquisition and its purpose, and such company must transmit this information to the CVM. If this acquisition causes a change in the corporate control or in the administrative structure of the company, as well as when such acquisition triggers the obligation of making a public offering in accordance with CVM Instruction 358/03, then the acquiring entity shall disclose this information to the applicable stock exchanges and the appropriate Brazilian newspapers. Regulations also require disclosure of any subsequent increase or decrease of 5% or more in ownership of common shares, including warrants and debentures convertible into common shares in the same terms above.

Trading on the NYSE

We are a “controlled company” and a “foreign private issuer” within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a controlled company is exempt from certain NYSE corporate governance requirements. In addition, a foreign private issuer may elect to comply with the practice of its home country and not to comply with certain NYSE corporate governance requirements, including the requirements that (1) a majority of the board of directors consist of independent directors, (2) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (3) a compensation committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities and (4) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken. Although we have similar practices, they do not entirely conform to the NYSE requirements, therefore, we currently use these exemptions and intend to continue using them.

Code of Business Conduct and Ethics

Although adoption of a code of ethics is not required by Brazilian Corporate Law, we implemented not only a code of ethics regulating the conduct of our managers in connection with the registration and control of financial and accounting information and their access to privileged and nonpublic information and data to comply with the requirements of Sarbanes-Oxley and NYSE rules, but also trainings and e-learnings to guarantee the understanding by the leadership. See “Item 16B. Code of Ethics.”

D.       Selling Shareholders

Not applicable.

E.       Dilution

Not applicable.

F.       Expenses of the issue

Not applicable.

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Item 10. Additional Information

A.       Share Capital

Not applicable.

B.       Memorandum and Articles of Association

The following summarizes certain material provisions of TIM’s By-laws and the Brazilian corporate law, the main bodies of regulation governing us. Copies of TIM’s By-laws have been filed as exhibits to this annual report on Form 20-F. Except as described in this section, TIM’s By-laws do not contain provisions addressing the duties, authority or liabilities of the directors and senior management, which are instead established by Brazilian corporate law.

Registration

TIM’s By-laws have been registered with the Public Registry of the state of Rio de Janeiro under company number (NIRE) 33.300.324.631.

Corporate Purpose

Article 2 of our By-laws provides that our corporate purpose is to: (1) hold interest in the capital of companies that explore any type of telecommunications services, under the terms and conditions provided for in the relevant permits, authorizations or concessions, companies that develop activities that are necessary or useful to the provision of such services, or companies that provide Internet connection services, Value-Added Services and Internet application services; (2) promote, through its controlled or affiliated companies, the expansion and implementation of any type of telecommunications services, under the terms and conditions provided for in the relevant permits, authorizations or concessions; (3) promote, perform or give guidance in relation to the borrowing of funds from internal and external sources to be invested by the Company or by its controlled companies; (4) promote and incentivize study and research activities for the development of any type of telecommunications services, as well as of Internet connection services, other Value-Added Services and Internet application services; (5) provide, directly or through controlled or affiliated companies, services related to the telecommunications industry; (6) promote, incentivize and coordinate, through controlled or affiliated companies, the education and training of the staff required by the telecommunications industry in general; (7) perform or promote the importation of goods and services for the controlled or affiliated companies; (8) engage in any other activities related or akin to its purpose; and (9) hold interest in the corporate capital of other companies.

Company Management

According to our By-laws, our Board of Directors is comprised of at least five and at most 19 permanent members. The following is a description of some of the provisions of our By-laws concerning the Board of Directors:

· the Board of Directors has the power to approve loans and financing as well as other transactions giving rise to indebtedness, for an amount exceeding R$300 million, as set forth in Article 22, Item XIII;

· the Board of Directors has the power to allocate the total budget for management remuneration approved by the shareholders’ meeting among the directors and the statutory officers, as necessary; and

· the Board of Directors has the power to authorize the Company, as well as its controlled companies and affiliates, to enter into, amend or terminate shareholders’ agreements.

There are no provisions in the By-laws with respect to:

· a director’s power to vote on a proposal in which such director is materially interested;

· a director’s power to vote compensation to him or herself in the absence of an independent quorum;

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· borrowing powers exercisable by the directors;

· age limits for retirement of directors;

· required shareholding for director qualification; or

· disclosure of share ownership.

The statutory officers are the Company’s representative and executive body, and each one of them shall act within his/her respective scope of authority. Following is a description of some of the provisions of our By-laws concerning the Board of Statutory Officers:

· the power to authorize the participation of the Company or its companies controlled in any joint venture, partnership, consortium or any similar structure;

· the power to ratify, within the limits set forth in the By-laws, the purchase of materials and equipment and the execution of property, construction work and service agreements; and

· the power to approve the contracting by the Company or by its controlled companies of loans, financing, or any other transactions implying indebtedness to the Company or its controlled companies, whose individual value is greater than R$50.0 million, provided that certain provisions of the By-laws are observed.

Rights Relating to Our Shares

Dividend Rights

Under our By-laws, we are required to distribute an aggregate amount equal to at least 25% of our adjusted net income to our shareholders, either as dividends or as tax-deductible interest on shareholders’ equity. We may also make additional distributions to the extent of available distributable profits and reserves.

Brazilian corporations may make payments to shareholders characterized as interest on shareholders’ equity (juros sobre capital próprio) as an alternative form of making dividend distributions to the shareholders. The interest rate may not be higher than the Federal Government’s long-term interest rate as determined by BNDES from time to time. Dividends are not subject to withholding income tax when paid. On the other hand, interest on shareholders’ equity paid to shareholders is deductible from the corporation’s net income for tax purposes, but the distributions are subject to withholding tax.

For the purposes of Brazilian corporate law, and in accordance with our By-laws, adjusted net income is an amount equal to net profit adjusted to reflect allocations to and from:

· the legal reserve; and

· contingency reserves.

We are required to maintain a legal reserve, to which we must allocate 5% of net income for each fiscal year until the amount for such reserve equals 20% of our capital. However, we are not required to make any allocations to our legal reserve in respect of any fiscal year in which our legal reserve, together with our other capital reserves, exceeds 30% of our capital. Losses, if any, may be charged against the legal reserve.

Brazilian corporate law also provides for two discretionary allocations of net income that are subject to approval by the shareholders at the annual meeting. First, a percentage of net income may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years. Any amount so allocated in a prior year must be either reversed in the fiscal year in which the loss was anticipated if such loss does not in fact occur, or written off in the event that the anticipated loss occurs. Second, if the mandatory distributable amount exceeds the sum of realized net income in a given year, such excess may be allocated to unrealized revenue reserve. Under Brazilian corporate law, realized net income is defined as the amount of net income that exceeds the net positive result of

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equity adjustments and profits or revenues from operations with financial results after the end of the next succeeding fiscal year.

Under Brazilian corporate law, any company may, as a term in its By-laws, create a discretionary reserve that authorizes the allocation of a percentage of a company’s net income to the discretionary reserve and must also indicate the purpose, criteria for allocation and a maximum amount of the reserve. The Company’s By-laws authorize the allocation of the net income balance not allocated to the payment of the mandatory minimum dividend to a supplementary reserve for the expansion of corporate business, not to exceed 80% of the capital.

We may also allocate a portion of our net income for discretionary appropriations for plant expansion and other capital investment projects, the amount of which would be based on a capital budget previously presented by our management and approved by shareholders. Under Brazilian corporate law, capital budgets covering more than one year must be reviewed at each annual shareholders’ meeting. After completion of the relevant capital projects, we may retain the appropriation until the shareholders vote to transfer all or a portion of the reserve to capital realized.

The amounts available for distribution may be further increased by a decrease in the contingency reserve for anticipated losses anticipated in prior years but not realized. The amounts available for distribution are determined on the basis of financial statements prepared in accordance with IFRS.

The legal reserve is subject to approval by the shareholders voting at the annual meeting and may be transferred to capital but is not available for the payment of dividends in subsequent years. Our calculation of net income and allocations to reserves for any fiscal year are determined on the basis of financial statements prepared in accordance with CVM rules and IFRS.

Under Brazilian corporate law, a company is permitted to suspend the mandatory dividend in respect of common shares not entitled to a fixed or minimum dividend if:

· its management (Board of Directors and Board of Statutory Officers) and Fiscal Council report to the shareholders’ meeting that the distribution would be incompatible with the financial circumstances of that company; and

· the shareholders ratify this conclusion at the shareholders’ meeting.

In this case,

· the management must forward to CVM within five days of the shareholders’ meeting an explanation justifying the information transmitted at the meeting; and

· the profits which were not distributed are to be recorded as a special reserve and, if not absorbed by losses in subsequent fiscal years, are to be paid as dividends as soon as the financial situation permits.

For the purposes of Brazilian corporate law, 25% of the net income after income tax and social contribution for such fiscal year, net of any accumulated losses from prior fiscal years and any amounts allocated to warrants and employees’ and management’s participation in a company’s profits, shall be distributed as dividends.

Payment of Dividends

We are required by law and by our By-laws to hold an annual shareholders’ meeting by April 30 of each year, at which, among other things, an annual dividend may be declared by decision of our shareholders on the recommendation of our statutory officers, as approved by our Board of Directors.

The payment of annual dividends is based on the financial statements prepared for the fiscal year ending December 31. Under Brazilian corporate law, dividends are required to be paid within 60 days following the date the dividend is declared to shareholders of record on such declaration date, unless a shareholders’ resolution sets forth another date of payment, which in any event shall occur prior to the end of the fiscal year in which such dividend was declared.

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A shareholder has a three-year period from the dividend payment date to claim dividends in respect of its shares, after which we have no liability for such payment. Because our shares are issued in book-entry form, dividends with respect to any share are credited to the account holding such share. We are not required to adjust the amount of paid-in capital for inflation. Annual dividends may be paid to shareholders on a pro rata basis according to the date when the subscription price is paid to us.

Voting Rights

Each common share entitles the holder to one vote at meetings of shareholders.

Rights to share in any surplus in the event of liquidation

The Company may be liquidated in the cases provided by law, or upon the decision of shareholders at a shareholders’ meeting, which shall determine the method of liquidation, elect the liquidator and install the fiscal council for the liquidation period, electing its members and determining their respective remuneration.

Meeting of Shareholders

According to Brazilian law, shareholders must be previously notified through a notice published three times in Brazilian official gazettes in order for an annual or extraordinary shareholders’ meeting to be held. The notification must occur at least 30 days prior to the meeting scheduled date. If the meeting so noticed is not held for any reason on first notice, a second notification must be published at least eight days before the second meeting date.

On the first notice, meetings may be held only if shareholders holding at least one-fourth of voting shares are represented. Extraordinary meetings for the amendment of the By-laws may be held on the first notice only if shareholders holding at least two-thirds of the voting capital are represented. On a second call, the meetings are held regardless of quorum.

Pursuant to our By-laws and Brazilian corporate law, shareholders at our annual shareholders’ meeting, which is required to be held within the first four months following the end of the fiscal year, will convene to:

· take the management accounts; examine, discuss and vote on the financial statements;

· decide on the uses to which the net income of the fiscal year should be put and on the distribution of dividends; and

· elect the members of the Fiscal Council and, when applicable, the members of the Board of Directors.

An extraordinary shareholders’ meeting shall be convened whenever the Company interests so require. Pursuant to our By-laws and Brazilian corporate law, the following actions, among others, are exclusive powers of the shareholders’ meeting:

· to amend the By-laws;

· to decide on the appraisal of assets given by shareholders to pay up capital stock;

· to decide on the Company’s transformation, merger, takeover and split-up; its dissolution and liquidation; to appoint and remove liquidators and appreciate their accounts;

· to suspend the rights of shareholders not in compliance with their duties imposed by-law, the By-laws or the Novo Mercado Listing Rules;

· to elect and remove, at any time, the members of the Board of Directors and the Fiscal Council;

· to determine the global or individual remuneration of the Board of Directors, Board of Statutory Officers and the Fiscal Council;

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· to annually take the accounts of the management and decide on the submitted financial statements;

· to decide where the Company shall file a civil liability lawsuit against the management for losses in the Company’s assets as provided by law;

· to resolve in compliance with all provisions of any law, the By-laws or the Novo Mercado rules about capital stock increase by means of subscription of new shares, and on the issuance of any other bonds or securities, whether in Brazil or abroad and whenever the limit of the authorized capital has been attained;

· to decide on the withdrawal from the register of publicly held companies before the CVM;

· to decide on the delisting of the Company from the Novo Mercado listing segment;

· to choose a company to prepare an opinion concerning the appraisal of the Company’s shares in the event of cancellation or delisting; and

· to previously approve the execution of loan agreements, management agreements and technical support services agreements, between the Company or its controlled companies, on the one side, and the controlling shareholder or its controlled companies, affiliated or under the same control or the controlling companies of the latter, or parties related to the Company, on the other side, after prior assessment of the Statutory Audit Committee to the effect that the terms and conditions of the agreement in question are in compliance with standards normally adopted in the market for transactions of the same nature between independent parties.

Preemptive Rights

Except in the case of a public offering of ordinary shares or convertible debentures, public subscription or a public tender offer (whereby such actions must be authorized by the Board of Directors in accordance with article 22, section II of the By-laws), each of our shareholders has a general preemptive right to subscribe shares in any capital increase, in proportion to its shareholding. A minimum period of 30 days following the publication of notice of the capital increase is allowed for the exercise of the right, and the right is transferable.

Preemptive rights to purchase shares may not be offered to U.S. holders of the ADSs unless a registration statement under the Securities Act is effective with respect to the shares underlying those rights or an exemption from the registration requirements of the Securities Act is available. Consequently, if you are a holder of our ADSs who is a U.S. person or is located in the United States, you may be restricted in your ability to participate in the exercise of preemptive rights.

Right of Redemption

Subject to certain exceptions, the common shares are redeemable by shareholders exercising withdrawal rights in the event that shareholders representing over 50% of the voting shares adopt a resolution at a duly convened shareholders meeting to:

· reduce the mandatory distribution of dividends;

· change our corporate purpose;

· participate in a group of companies;

· transfer all of our shares to another company in order to make us a wholly owned subsidiary of that company;

· split up, subject to the conditions set forth by Brazilian corporate law;

· change corporate form;

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· approve the acquisition of another company, the price of which exceeds certain limits set forth in Brazilian corporate law; or

· merge or consolidate ourselves with another company.

The redemption right expires 30 days after publication of the minutes of the relevant shareholders’ meeting. The shareholders would be entitled to reconsider any action giving rise to redemption rights within 10 days following the expiration of those rights if they determine that the redemption of shares of dissenting shareholders would jeopardize our financial stability.

Brazilian corporate law excludes dissenters’ rights in such cases for holders of shares that have a public float rate higher than 50% and that are “liquid.” Shares are defined as being “liquid” for these purposes if they are part of the B3 Index or another stock exchange index (as defined by CVM). For as long as our shares are part of any qualifying market index, the right of redemption shall not be extended to our shareholders with respect to decisions regarding our merger or consolidation with another company, or the participation in a group of companies as defined by Brazilian corporate law. Currently, our common shares do not have a public float rate higher than 50%; accordingly, dissenter’s withdrawal rights are applicable.

Unless otherwise provided in the By-laws, which is not the case with us, a shareholder exercising rights to redeem shares is entitled to receive the book value of such shares, determined on the basis of the last annual balance sheet approved by the shareholders. If the shareholders’ meeting giving rise to redemption rights occurs more than 60 days after the date of the last annual balance sheet, a shareholder may demand that its shares be valued on the basis of a new balance sheet that is as of a date within 60 days of such shareholders’ meeting.

Form and Transfer

Our shares are maintained in book-entry form with a transfer agent, Banco Bradesco S.A., and the transfer of our shares is made in accordance with the applicable provision of the Brazilian corporate law, which provides that a transfer of shares is effected by an entry made by the transfer agent on its books, debiting the share account of the seller and crediting the share account of the purchaser, against presentation of a written order of the seller, or judicial authorization or order, in an appropriate document which remains in the possession of the transfer agent. The common shares underlying our ADS are registered on the transfer agent’s records in the name of the Brazilian depositary.

Transfers of shares by a foreign investor are made in the same way and executed by such investor’s local agent on the investor’s behalf except that, if the original investment was registered with the Central Bank under the Brazilian foreign investment in capital markets regulations, the foreign investor should also seek amendment, if necessary, though its local agent, of the certificate of registration to reflect the new ownership.

The B3 reports transactions carried out in its market to its Central Depositária, which is the exchange’s central clearing system. A holder of our shares may choose, at its discretion, to participate in this system. All shares elected to be put into the system will be deposited in custody with the relevant stock exchange, through a Brazilian institution duly authorized to operate by the Central Bank and CVM and having a clearing account with the relevant stock exchange. The fact that such shares are subject to custody with the relevant stock exchange will be reflected in our register of shareholders. Each participating shareholder will, in turn, be registered in our register of beneficial shareholders, as the case may be, maintained by the relevant stock exchange and will be treated in the same way as registered shareholders.

C.       Material Contracts

See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Sources of Funds—Financial Contracts” the summary of certain financing agreements to which we have been a party, other than contracts entered into in the ordinary course of business.

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D.       Exchange Controls

There are no restrictions on ownership of our common shares by individuals or legal entities domiciled outside Brazil. However, the right to convert dividend payments and proceeds from the sale of shares into foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment legislation, which generally requires, among other things, that the relevant investments have been registered with the Central Bank.

Foreign investors may register their investment under Law No. 4,131/62 of September 3, 1962 or Resolution CMN 4,373 (that replaced Resolution CMN 2,689). Registration under Law No. 4,131/62 or under Resolution CMN 4,373 generally enables foreign investors to convert into foreign currency dividends, other distributions and sales proceeds received in connection with registered investments and to remit such amounts abroad. Resolution CMN 4,373 affords favorable tax treatment to foreign investors who are not resident in a Low or Nil Tax Jurisdiction, which is defined under Brazilian tax laws as a country that does not impose taxes or where the maximum income tax rate is lower than 17% or that restricts the disclosure of shareholder composition or ownership of investments.

Under Resolution CMN 4,373, foreign investors may invest in almost all financial assets and engage in almost all transactions available in the Brazilian financial and capital markets, provided that certain requirements are fulfilled. In accordance with Resolution CMN 4,373, foreign investors are individuals, corporations, mutual funds and collective investments domiciled or headquartered abroad.

Pursuant to Resolution CMN 4,373, foreign investors must:

· appoint at least one representative in Brazil with powers to perform actions relating to the foreign investment;

· complete the appropriate foreign investment registration form;

· obtain registration as a foreign investor with the CVM; and

· register the foreign investment with the Central Bank.

The securities and other financial assets held by the foreign investor pursuant to Resolution CMN 4,373 must be:

· registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or by the CVM; or

· registered in registration, clearing and custody systems authorized by the Central Bank or by the CVM.

In addition, securities trading by foreign investors pursuant to Resolution CMN 4,373 is restricted to transactions carried out on the stock exchanges or organized over-the-counter markets licensed by the CVM.

On January 26, 2000, the Central Bank enacted Circular No. 2,963, providing that beginning on March 31, 2000, all investments by a foreign investor under Resolution CMN 4,373 are subject to the electronic registration with the Central Bank. Foreign investments registered under the Annex IV regulations were required to conform to the new registration rules by June 30, 2000.

Resolution No. 1,927 of the CMN provides for the issuance of depositary receipts in foreign markets in respect of shares of Brazilian issuers. Our ADS program was approved under the Annex V regulations by the Central Bank and the CVM prior to the issuance of the ADSs. Accordingly, the proceeds from the sale of ADSs by ADR holders outside Brazil are free of Brazilian foreign investment controls and holders of the ADSs will be entitled to favorable tax treatment. According to Resolution CMN 2,689, foreign investments registered under Annex V Regulations may be converted into the new investment system and vice-versa, provided that the conditions set forth by the Central Bank and the CVM are complied with.

Under current Brazilian legislation, the Federal Government may impose temporary restrictions on remittances of foreign capital abroad in the event of a serious imbalance or an anticipated serious imbalance of Brazil’s balance

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of payments. For approximately six months in 1989 and early 1990, the Federal Government froze all dividend and capital repatriations that were owed to foreign equity investors, in order to conserve Brazil’s foreign currency reserves. These amounts were subsequently released in accordance with Federal Government directives. The imbalance in Brazil’s balance of payments increased during 1999, and there can be no assurance that such increases will not incur in the future or that the Federal Government will not impose similar restrictions on foreign repatriations in the future for similar or other reasons.

E.       Taxation

The following summary contains a description of the principal Brazilian and U.S. federal income tax consequences of the ownership and disposition of the common shares or ADSs, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to hold common shares or ADSs. The summary is based upon the tax laws of Brazil and regulations thereunder and on the federal income tax laws of the United States and regulations and other authorities thereunder as of the date hereof, all of which are subject to change. Holders of common shares or ADSs should consult their tax advisers as to the tax consequences of the ownership and disposition of common shares or ADSs in their particular circumstances.

Although there is at present no income tax treaty between Brazil and the United States, the two countries have tax treatment reciprocity, which means that a tax paid in one country might be offset against the income tax due in the other country, or vice-versa, if conditions are met. It is important to mention that the tax authorities of the two countries have had discussions that may culminate in such a treaty in the future. No assurance can be given, however, as to whether or when a treaty will enter into force or how it will affect the U.S. holders of common shares or ADSs.

Brazilian Tax Considerations

The following discussion summarizes the principal Brazilian tax consequences of the ownership and disposition of common shares or ADSs by a non-Brazilian holder. This discussion does not address all the Brazilian tax considerations that may be applicable to any particular non-Brazilian holder, and each non-Brazilian holder should consult its tax adviser about the Brazilian tax consequences of investing in common shares or ADSs.

Taxation of Dividends

Dividends paid by us in cash or in kind from profits of periods beginning on or after January 1, 1996 (1) to the depositary in respect of common shares underlying ADSs or (2) to a non-Brazilian holder in respect of common shares will generally not be subject to Brazilian income tax withholding.

Taxation of Gains

According to Article 26 of Law No. 10,833 of December 29, 2003, which came into force on February 1, 2004, capital gains realized on the disposition of assets located in Brazil by non-Brazilian residents, whether or not to other non-residents and whether made outside or within Brazil, are subject to taxation in Brazil. Since January 1, 2017, the rate of the income tax on capital gains accrued by non-Brazilian individual residents may vary between 15% and 22.5% depending on the capital gain amount. Ultimately, a 25% rate may applied if the capital gain is realized by investors located in a Low or Nil Tax Jurisdiction (see below under “—Discussion on Low or Nil Tax Jurisdictions”). Although we believe that the ADSs will not fall within the definition of assets located in Brazil for the purposes of Law No. 10,833, considering the general and unclear scope of Law No. 10,833 and the absence of any judicial guidance in respect thereof, we are unable to predict whether such interpretation will ultimately prevail in the Brazilian courts.

Gains realized by non-Brazilian holders on dispositions of common shares in Brazil or in transactions with Brazilian residents may be exempt from Brazilian income tax or taxed at a rate that may vary between 15% and 25%, depending on the circumstances. This is because the current legislation prescribes specific taxation rules for gains arising from investments in the Brazilian financial and capital markets as opposed to other types of gains.

In this sense, gains realized by non-Brazilian holders through transactions on Brazilian stock exchanges, if carried out in accordance with Resolution CMN 4,373 (that replaced Resolution CMN 2,689), as described below,

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are exempt from Brazilian income tax or subject to income tax at a rate of 15% if a holder in a Low or Nil Tax Jurisdiction realizes the gain. On the other hand, gains realized through transactions with Brazilian residents or not executed on the Brazilian stock exchanges are subject to tax at a rate that may vary between 15% and 22.5% depending on the capital gain amount, or of 25% if the transactions are made by investors resident in a Low or Nil Tax Jurisdiction. Non-Brazilian holders should consult their tax advisors on the applicable income tax rate.

Non-Brazilian holders of common shares registered under Resolution CMN 4,373 (which includes ADSs) will only be subject to the tax exemption mentioned herein if the investor has:

· appointed a representative in Brazil with power to take action relating to the investment in common shares;

· registered as a foreign investor with the CVM; and

· registered its investment in common shares with the Central Bank.

In addition, Resolution CMN 4,373 also establishes that securities held by foreign investors must be maintained under the custody of, or in deposit accounts with, financial institutions duly authorized by the Central Bank and the CVM.

Securities trading under Resolution CMN 4,373 is restricted to transactions on Brazilian stock exchanges or qualified over-the-counter markets. As stated herein, the preferential treatment afforded under Resolution CMN 4,373 and afforded to investors in ADSs is not available to investors resident or domiciled in Low or Nil Tax Jurisdictions.

There can be no assurance that the current preferential treatment for non-Brazilian holders of common shares under Resolution CMN 4,373 will be maintained.

Gain on the disposition of common shares, subject to the tax treatment described above, is measured by the difference between the amounts in Brazilian currency realized on the sale or exchange and the acquisition cost of the shares sold, measured in Brazilian currency, without any correction for inflation. The acquisition cost of shares must be supported by proven documents.

The deposit of common shares in exchange for the ADSs may be subject to Brazilian income tax if the amount previously registered with the Central Bank as a foreign investment in our common shares is lower than:

· the average price per common share on the B3 on the day of the deposit; or

· if no common shares were sold on that day, the average price per common share on the B3 during the fifteen preceding trading sessions.

The difference between the amount previously registered and the average price of the common shares, calculated as set forth above, may be considered by the tax authorities as a capital gain subject to income tax. Unless the common shares were held in accordance with Resolution CMN 4,373, in which case the exchange would be tax-free, the capital gain will be subject to income tax at the following rates: (1) 15%, for gains realized through transactions that were conducted on Brazilian stock exchanges; or (2) from 15% to 22.5% for gains realized through transactions in Brazil that were not conducted on the Brazilian stock exchanges, or 25% if realized by investors located at Low or Nil Tax Jurisdiction.

The cancellation of ADSs in exchange for common shares is not subject to Brazilian income tax if the non-Brazilian holder qualifies under Resolution CMN 4,373, but is subject to the IOF/Exchange tax as described below.

Discussion on Low or Nil Tax Jurisdictions

For purposes of Brazilian law, Low or Nil Tax Jurisdictions are countries and jurisdictions that do not tax income or that have a maximum income tax rate lower than 17%. Since 1998, the Brazilian Internal Revenue Service has issued acts expressly listing the countries/jurisdictions that are to be considered low tax jurisdictions for Brazilian tax purposes. Currently, the tax authorities have deemed approximately 60 countries to be low tax

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jurisdictions pursuant to Normative Instruction 1,037/2010, article 1. These countries include the Bahamas, the British Virgin Islands, the Cayman Islands and Hong Kong.

Under Brazilian tax legislation, holders domiciled in Low or Nil Tax Jurisdictions are: (1) subject to a higher rate of withholding tax on income and capital gains; (2) not entitled to exemptions for investments in the Brazilian capital markets; (3) subject to automatic application of transfer pricing rules in transactions with Brazilian legal entities that are resident in Brazil; and (4) subject to thin capitalization rules on debt with legal entities that are resident in Brazil.

On June 24, 2008, Law No. 11,727/08 established the concept of “privileged tax regime”, which is a tax regime that (1) does not tax income or taxes it at a maximum rate lower than 20%; (2) grants tax benefits to non-resident entities or individuals (a) without the requirement to carry out a substantial economic activity in the country or dependency or (b) contingent to the non-exercise of a substantial economic activity in the country or dependency; (3) does not tax or that taxes the income generated abroad at a maximum rate lower than 20%; or (4) does not provide access to information related to shareholding composition, ownership of assets and rights or economic transactions carried out. However in 2014, an executive order National Treasury Ordinance No. 488/14 was issued (endorsed by Normative Instruction No. 1,530/14) indicating that, if countries are aligned with the international standards of fiscal transparency, the maximum rate to be considered as a “privileged tax regime” would be 17% and not 20%.

In principle, the best interpretation of Law No. 11,727/08 is that the new concept of privileged tax regime should be solely applied for purposes of transfer pricing rules in export and import transactions. However, due to the recent enactment of this Law, we are unable to ascertain whether or not the privileged tax regime concept will be extended to the concept of Low or Nil Tax Jurisdiction. The provisions of Law No. 11,727/08 that refer to the privileged tax regime came into effect on January 1, 2009. Although we are of the opinion that the concept of privileged tax regime should not affect the tax treatment of a non-resident shareholder described above, we cannot assure you whether subsequent legislation or interpretations by the Brazilian tax authorities regarding the definition of privileged tax regime will extend such concept to the tax treatment of a non-resident shareholder described above.

Prospective purchasers should therefore consult with their tax advisors regarding the consequences of the implementation of Law No. 11,727/08, Normative Instruction No. 1,037/2010 and of any related Brazilian tax laws or regulations concerning Low or Nil Tax Jurisdictions and privileged tax regimes.

Distributions of Interest on Capital

A Brazilian corporation may make payments to its shareholders characterized as interest on the corporation’s capital as an alternative form of making dividend distributions. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” The rate of interest may not be higher than the TJLP, as determined by the Central Bank from time to time. The total amount distributed as interest on capital may not exceed, for tax purposes, the greater of:

· 50% of net income for the year in respect of which the payment is made, after the deduction of social contribution or net profits and before (1) making any deduction for corporate income taxes paid and (2) taking such distribution into account; or

· 50% of retained earnings for the year prior to the year in respect of which the payment is made.

Payments of interest on capital are decided by the shareholders on the basis of recommendations by our Board of Directors.

Distributions of interest on capital paid to Brazilian and non-Brazilian holders of common shares, including payments to the depositary in respect of common shares underlying ADSs, are deductible by us for Brazilian tax purposes up to the limit mentioned above. Such payments are subject to withholding income tax at the rate of 15%, or 25% in the case of a stockholder who is domiciled in a Low or Nil Tax Jurisdiction. These payments may be qualified, at their net value, as part of any mandatory dividend. As described herein the Company and its subsidiaries have been paying interest on equity since 2017 and paid in 2021 as well. Please refer to “Item 5. —

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Operating and Financial Review and Prospects” —Dividend Distribution —Interest on Equity” for detailed information. No assurance can be given that our Board of Directors will not recommend that future distributions of profits be made as interest on capital instead of as dividends.

Other Brazilian Taxes

There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of the common shares or ADSs by a non-Brazilian holder except for gift and inheritance taxes levied by some states in Brazil on gifts made or inheritances bestowed by individuals or entities not resident or domiciled in Brazil or in the relevant state to individuals or entities that are resident or domiciled within such state in Brazil. There is no Brazilian stamp, issue, registration or similar taxes or duties payable by holders of common shares or ADSs.

In 2018, there were two changes related to IOF: (i) the tax rate on foreign exchange transactions was increased to 1.10% (it was 0.38%) pursuant to Decree No. 9,297/2018; and (ii) rules were adopted relating to incidence of IOF in credit transactions of a period longer than one year pursuant to RFB Normative Instruction No. 1,814/2018 (and confirmed by RFB Normative Instruction No. 1,969/2020). Tax on Foreign Exchange and Financial Transactions

Tax on foreign exchange transactions (the “IOF/Exchange Tax”)

Brazilian law imposes the IOF/Exchange Tax on the conversion of reais into foreign currency and on the conversion of foreign currency into reais. Currently, the tax rate related to foreign investments in the Brazilian financial and capital markets is zero.

However, it is important to note that the Brazilian Government is permitted to increase such rate at any time up to 25%. However, any increase in rates may only apply to future foreign exchange transactions.

Tax on transactions involving bonds and securities (the “IOF/Bonds Tax.”)

Brazilian law imposes the IOF/Bonds Tax on transactions involving bonds and securities, including those carried out on a Brazilian stock exchange. The rate of IOF/Bonds Tax applicable to transactions involving the deposit of common shares in exchange for ADSs is currently zero, but can be reviewed by the Brazilian government any time.

U.S. Federal Income Tax Considerations

The following are the material U.S. federal income tax consequences to a U.S. Holder described below of owning and disposing of common shares or ADSs, but it does not purport to be a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to hold or dispose of such securities. This discussion applies only to a U.S. Holder that holds common shares or ADSs as capital assets for U.S. federal income tax purposes and it does not describe all tax consequences that may be relevant to U.S. Holders subject to special rules, such as:

· certain financial institutions;

· insurance companies;

· dealers or traders in securities or foreign currencies who use a mark-to-market method of tax accounting;

· persons holding common shares or ADSs as part of a “straddle,” wash sale, conversion transaction, integrated transaction or similar transaction or persons entering into a constructive sale with respect to the common shares or ADSs;

· persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

· partnerships or other entities classified as partnerships for U.S. federal income tax purposes;

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· persons liable for the alternative minimum tax or the provisions of the Code (as defined below) known as the Medicare Contribution Tax;

· tax-exempt entities, including “individual retirement accounts” (“Roth IRAs;”)

· persons who acquired our common shares or ADSs pursuant to the exercise of an employee stock option or otherwise as compensation;

· persons holding our common shares or ADSs in connection with a trade or business conducted outside the United States; or

· persons holding common shares or ADSs that own or are deemed to own 10% or more of our stock (by vote or value).

If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes holds common shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding common shares or ADSs and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of the common shares or ADSs.

This discussion is based on the Internal Revenue Code of 1986, as amended, or the “Code,” administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof. These laws are subject to change, possibly with retroactive effect.

A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of common shares or ADSs that is:

· a citizen or individual resident of the United States;

· a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or

· an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

In general, a U.S. Holder that owns ADSs will be treated as the owner of the underlying common shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. Holder exchanges ADSs for the underlying common shares represented by those ADSs.

U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of common shares or ADSs in their particular circumstances.

This discussion assumes that the Company is not, and will not become, a passive foreign investment company, as described below.

Taxation of Distributions

Distributions paid on common shares or ADSs, including distributions of interest on capital, will generally be treated as dividends to the extent paid out of the Company’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because the Company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends paid by qualified foreign corporations to certain non-corporate U.S. Holders are taxable at rates applicable to long-term capital gains. A foreign corporation is treated as a qualified foreign corporation with respect to dividends paid on stock that is readily tradable on a securities market in the United States, such as the NYSE (where our ADSs are traded). U.S. Holders should consult their tax advisers to determine whether these preferential rates will apply to dividends they receive and whether they are subject to any special rules that limit their ability to be taxed at these preferential rates.

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The amount of a dividend will include any amounts withheld by the Company in respect of Brazilian taxes on the distribution. The amount of the dividend will be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally allowed to U.S. corporations under the Code. Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s or, in the case of ADSs, the depositary’s receipt of the dividend. The amount of any dividend income paid in reais will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of such receipt regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of its receipt.

Sale or Other Disposition of Common Shares or ADSs

For U.S. federal income tax purposes, gain or loss realized on the sale or other disposition of common shares or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the common shares or ADSs for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the common shares or ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. Such gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. If Brazilian tax is withheld on the sale or other disposition of common shares or ADSs, a U.S. Holder’s amount realized will include the gross amount of the proceeds of such sale or other disposition before deduction of the Brazilian tax.

See “—Brazilian Tax Considerations—Taxation of Gains” for a description of when a disposition may be subject to taxation by Brazil.

Foreign Tax Credits in Respect of Brazilian Taxes

Subject to applicable limitations that may vary depending upon a U.S. Holder’s circumstances, Brazilian income taxes withheld from dividends on common shares or ADSs generally will be creditable against a U.S. Holder’s U.S. federal income tax liability, if such taxes were paid or accrued in a taxable year beginning before December 28, 2021.

A U.S. Holder will be entitled to use foreign tax credits to offset only the portion of its U.S. tax liability that is attributable to foreign-source income. This limitation on foreign taxes eligible for credit is calculated separately with regard to specific classes of income. Recently issued Treasury regulations, which apply to foreign taxes paid or accrued in taxable years beginning on or after December 28, 2021 (the “Final Treasury Regulations”), impose additional requirements for foreign taxes to be eligible for credit. We have not determined whether these requirements have been met with respect to any withholding tax imposed on dividends on common shares or ADSs and, therefore, U.S. Holders should consult their tax advisers as to the availability of foreign tax credits for any amounts withheld with respect to dividends on common shares or ADSs to which the Final Treasury Regulations apply. Because a U.S. Holder’s gains from the sale or exchange of common shares or ADSs will generally be treated as U.S.-source income, this limitation may preclude a U.S. Holder from claiming a credit for all or a portion of the Brazilian taxes imposed on any such gains. In addition, in taxable years to which they apply, the Final Treasury Regulations generally will preclude U.S. Holders from claiming a foreign tax credit with respect to any tax imposed on gains from the disposition of shares by a jurisdiction, such as Brazil, that does not have an applicable income tax treaty with the United States, although such taxes may be applied to reduce the amount realized by the U.S. Holder on the disposition. Instead of claiming a credit, a U.S. Holder may elect to deduct creditable Brazilian taxes in computing its taxable income, subject to generally applicable limitations under U.S. law. An election to deduct creditable foreign taxes instead of claiming foreign tax credits must apply to all such foreign taxes paid or accrued in the taxable year to foreign countries and possessions of the United States.

The Brazilian IOF/Bonds Tax and any IOF/Exchange Tax imposed on the deposit of common shares in exchange for ADSs and the cancellation of ADSs in exchange for common shares (as discussed above under
“—Brazilian Tax Considerations—Tax on Foreign Exchange and Financial Transactions”) will not be treated as creditable foreign taxes for U.S. federal income tax purposes. U.S. Holders should consult their tax advisers regarding the tax treatment of these taxes for U.S. federal income tax purposes.

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The rules governing foreign tax credits are complex and, therefore, U.S. Holders should consult their tax advisers regarding the availability of foreign tax credits in their particular circumstances (including any applicable limitations).

Passive Foreign Investment Company Rules

The Company believes that it was not a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for its 2021 taxable year. However, since PFIC status depends upon the composition of a company’s income and assets and the market value of its assets from time to time, there can be no assurance that the Company will not be a PFIC for any taxable year.

If the Company were a PFIC for any taxable year during which a U.S. Holder held common shares or ADSs, gain recognized by such U.S. Holder on a sale or other disposition (including certain pledges) of the common shares or ADSs would be allocated ratably over the U.S. Holder’s holding period for the common shares or ADSs. The amounts allocated to the taxable year of the sale or other disposition and to any year before the Company became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for such taxable year, and an interest charge would be imposed on the resulting tax liability for such taxable year. Similar rules would apply to any distribution received by a U.S. Holder on its common shares or ADSs to the extent in excess of 125% of the average of the annual distributions on common shares or ADSs received by a U.S. Holder during the preceding three years or such U.S. Holder’s holding period, whichever is shorter. Certain elections (such as a mark-to-market election) may be available that would result in alternative treatment under the PFIC rules. U.S. Holders should consult their tax advisers to determine whether the Company is a PFIC for any given taxable year and the tax consequences to them of holding shares in a PFIC.

If the Company is a PFIC for any taxable year during which a U.S. Holder owned common shares or ADSs, the U.S. Holder will generally be required to file IRS Form 8621 with its annual U.S. federal income tax returns, subject to certain exceptions.

Information Reporting and Backup Withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting and may be subject to backup withholding unless (1) the U.S. Holder is a corporation or other exempt recipient or (2) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.

The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

Certain U.S. Holders who are individuals (and certain specified entities) may be required to report information relating to their ownership of an interest in certain foreign financial assets, including stock of a non-U.S. person, subject to exceptions (including an exception for stock held through a U.S. financial institution). U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to our common shares or ADSs.

U.S. Holders of our common shares or ADSs should consult their own tax advisers as to the Brazilian, U.S. federal, state, local and other tax consequences of the ownership and disposition of our common shares or ADSs based upon their particular circumstances.

F.       Dividends and Paying Agents

Not applicable.

G.       Statement by Experts

Not applicable.

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H.       Documents on Display

Statements contained in this annual report as to the contents of any contract or other document referred to are not necessarily complete, and each of these statements is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit hereto. Anyone may read and copy this report, including the exhibits hereto, at the SEC’s public reference room in Washington, D.C. Information on the operation of the public reference room is available over the Internet at http://www.sec.gov.

We are subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, will file periodic reports and other information with the SEC. These periodic reports and other information will be available for inspection and copying at the regional offices, public reference facilities of the SEC referred to above. As a foreign private issuer, we are exempt from certain provisions of the Exchange Act prescribing the furnishing and content of proxy statements and periodic reports and from Section 16 of the Exchange Act relating to short swing profits reporting and liability.

We will furnish to J.P. Morgan, as depositary, copies of all reports we are required to file with the SEC under the Exchange Act, including our annual reports in English, containing a brief description of our operations and our audited annual financial statements. In addition, we are required under the Deposit Agreement to furnish the depositary with copies of English translations to the extent required under the rules of the SEC of all notices of common shareholders’ meetings and other reports and communications that are generally made available to holders of common shares. Under certain circumstances, the depositary will arrange for the mailing to all ADR holders, at our expense, of these notices, reports and communications.

We also file financial statements and other periodic reports with the CVM. Copies of our annual report on Form 20-F and documents referred to in this annual report and our By-laws will be available for inspection upon request at our offices at 850, João Cabral de Melo Neto, North Tower – 12th floor, 22775-057, Rio de Janeiro, RJ, Brasil.

I.       Subsidiary Information

Not applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in both foreign currency exchange and interest rates. We are exposed to foreign exchange rate risk mainly because certain of our costs are denominated in currencies (U.S. dollars) other than those in which we earn revenues (primarily reais). Similarly, we are subject to market risk deriving from changes in interest rates, which may affect the cost of our financing. Since 1999, we began entering into hedging agreements, derivative instruments such as foreign exchange forward contracts, foreign currency options, interest rate swaps and forward rate agreements, to manage these market risks, covering payments of principal on our foreign exchange denominated indebtedness. We also have entered into arrangements to hedge market risk deriving from changes in interest rates for some of our debt obligations. We do not hold or issue derivative or other financial instruments for trading purposes.

Interest Rate Risk

On December 31, 2021, the amount of our outstanding debt which accrued interest at the CDI, TJLP, SELIC and IPCA floating interest rates totaled R$3,845 million, compared to R$2,345 million for the year ended December 31, 2020. On the same date, we had cash and cash equivalents in the amount of R$9,797 million in instruments accruing interest at the CDI rate, as compared to R$4,646 million on December 31, 2020.

Over a one-year period, before accounting for tax expenses, a hypothetical, instantaneous and unfavorable change of 100 basis points in interest rates applicable to our financial assets and liabilities on December 31, 2021 would have resulted in a variation of R$38.5 million in our interest expenses from financial contracts and a variation of R$98.0 million in our income from financial investments (assuming that this hypothetical 100 basis point movement in interest rates uniformly applied to each “homogenous category” of our financial assets and liabilities and that such movement in interest rates was sustained over the full one-year period).

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For further information on our interest rate risks and related sensitivity analysis, see Note 36 to our audited financial statements.

Exchange Rate Risk

As of December 31, 2021, we did not have any outstanding unhedged financial loans denominated in foreign currency and were thus not exposed to exchange rate risk based on our loans. We enter into hedging agreements to hedge our borrowings denominated in foreign currency and thus have limited our exchange rate exposure regarding such borrowings.

Our revenues are earned almost entirely in real, and we have no material foreign currency-denominated assets. We acquire our equipment and handsets from global suppliers, the prices of which are primarily denominated in U.S. dollars. Thus, we are exposed to foreign exchange risk arising from our need to make substantial dollar-denominated expenditures, particularly for imported components, equipment and handsets, that we have limited capacity to hedge. In order to hedge part of the exchange rate risk linked to capital expenditures and operating expenses, a bandwidth of -/+ 10% is generally negotiated into our agreements in order to minimize effects of exchange rate fluctuations on the acquisition costs of equipment.

As of December 31, 2021 and 2020, we did not have call options.

For further information on our exchange rate risks and related sensitivity analysis, see Note 37 to our audited financial statements.

Item 12. Description of Securities Other than Equity Securities

A.       Debt Securities

Not applicable.

B.       Warrants and Rights

Not applicable.

C.       Other Securities

Not applicable.

D.       Description of American Depositary Receipts in Respect of Common Shares

Our depositary is J.P. Morgan Chase Bank, N.A., with its corporate trust office at which the ADRs will be administered is located at 4 New York Plaza, Floor 6, New York, NY, 10004, United States.

Each ADS represents five common shares, deposited with the custodian and registered in the name of the depositary.

Charges of Depositary

The depositary may charge U.S.$5.00 or less per 100 ADSs (or portion thereof) from each person to whom ADSs are issued, including issuances against deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by the Company or issuances pursuant to a merger, exchange of securities or any other event affecting the ADSs or the deposited securities. It may also charge each person surrendering ADRs for withdrawal or whose ADSs are cancelled or reduced for any other reason.

Furthermore, the depositary may also charge any additional fees incurred in connection with such transaction by any governmental authorities or other institutions such as the Brazilian Clearing and Depository Corporation

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(Companhia Brasileira de Liquidação e Custódia) or the B3, the stock exchange on which the shares are registered for trading.

Altogether, the following fees and charges can be incurred by ADR holders, any party depositing or withdrawing common shares or any party surrendering ADRs or to whom ADRs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by TIM Participações or an exchange of stock regarding the ADRs or deposited securities or a distribution of ADRs pursuant to the deposit agreement), whichever is applicable:

Depositary Actions:	Description of Fees Incurred by ADR Holders per Payment:
Depositing or substituting the underlying shares	U.S.$5.00 or less per 100 ADSs (or portion thereof)
Receiving or distributing dividends	U.S.$0.05 or less per ADS (or portion thereof)
Selling or exercising rights	U.S.$5.00 or less per 100 ADSs for all distributions of securities or the net cash proceeds from the sale thereof
Withdrawal of an underlying security	U.S.$5.00 or less per 100 ADSs (or portion thereof)
Transferring, splitting, grouping receipts	U.S.$1.50 per ADR or ADSs for transfers made, to the extent not prohibited by the rules of any stock exchange or interdealer quotation system upon which the ADSs are traded, including, as necessary, any transfer or registration fees in connection with the deposit or withdrawal of deposited securities
General depositary services	An aggregate fee of U.S.$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs. As necessary, expenses incurred by the depositary in connection with the conversion of reais into U.S. dollars As necessary, cable, telex and facsimile transmission and delivery charges incurred at the request of persons depositing or delivering common shares, ADRs or any deposited securities As necessary, any fees and expenses incurred by the depositary in connection with the delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable laws, rules or regulations.

Ongoing Reimbursements by the Depositary

J.P. Morgan, as depositary, has agreed to reimburse certain reasonable Company’s expenses related to the establishment and maintenance of the ADR program. Such reimbursable expenses include legal fees, investor relations servicing, investor related presentations, broker reimbursements, ADR-related advertising and public relations in those jurisdictions in which the ADRs may be listed or otherwise quoted for trading, accountants’ fees in relation to this Form 20-F filing with the SEC and other bona fide Program-related third party expenses.

During the year ended December 31, 2021, we received from our depositary as gross income U.S.$1,691,697 as reimbursement of expenses related to annual stock exchange listing fees, standard maintenance costs of ADRs, underwriting and legal fees and investor relations activities, from which U.S.$507,509 was withheld for U.S. federal income taxes.

See also “Item 10. Additional Information—E. Taxation.”

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Part II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

(a)       Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective controls and procedures can only provide reasonable assurance of achieving their control objectives.

Our chief executive officer and chief financial officer have concluded that as of December 31, 2021 our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)       Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control system was designed to provide reasonable assurance as to the integrity and reliability of the published financial statements. All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that the objectives of the control system are met.

Management evaluated the internal control over financial reporting under the supervision of our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as of December 31, 2021. Management evaluated the effectiveness of our internal control over financial reporting based on the criteria set forth in the Committee of Sponsoring Organizations of the Treadway Commission framework of 2013. Our management concluded that as of December 31, 2021, our internal control over financial reporting was effective and had no material weaknesses, based on those criteria.

We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures in order to ensure our compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the related rules promulgated by the SEC. Our independent registered public accounting firm during the year ended December 31, 2021, Ernst & Young Auditores Independentes S.S., has issued an audit report on the effectiveness of our internal controls over financial reporting as of December 31, 2021.

(c)       Attestation Report of the Registered Public Accounting Firm

Ernst & Young Auditores Independentes S.S., the independent registered public accounting firm that has audited our financial statements, has issued an audit report on the effectiveness of our internal controls over financial reporting as of December 31, 2021. Their attestation report on internal controls over financial reporting is included herein.

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(d)       Changes in Internal Control over Financial Reporting

The Company constantly aims to improve the quality of its internal controls over financial reporting. This may result in the modification of certain internal processes and operations, without necessarily affecting related controls. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this annual report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Item 16. [Reserved]

Item 16A. Audit Committee Financial Expert

Our Statutory Audit Committee, which functions as an audit committee, shall be comprised of at least three and at most five members and an equal number of alternates, who may or may not be shareholders, elected by the Board of Directors. In 2021, we had three members. Our Statutory Audit Committee has determined that one of its members, Mr. Herculano Aníbal Alves, an independent member of our Statutory Audit Committee under Brazilian rules, is an “audit committee financial expert,” as such term is defined by the SEC.

Item 16B. Code of Ethics

Code of Ethics

We believe that ethics in conducting business is always important for a company’s success. Accordingly, we adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and persons performing similar functions, as well as to our other Directors, Statutory Officers, controlling shareholders, members of our boards and committees, all employees and suppliers. Our Code of Ethics is filed as an exhibit to this annual report and is available on our website at https://ri.tim.com.br. It can also be requested, free of charge, by email or telephone at the address set forth in the second paragraph of “Item 4. Information on the Company—A. History and Development of the Company—Basic Information.” The Code of Ethics was updated at the Board of Directors’ meeting held on March 24, 2021.

Our Code of Ethics addresses most of the principles set forth by the SEC in Section 406 of Sarbanes-Oxley, and, pursuant to section 156 of Brazilian Corporate Law No. 6,404, establishes that an officer or a board member is prohibited from taking part in any corporate transaction in which he has an interest that conflicts with the interests of the Company, and is required to disclose to the board the conflict of interest. Any contract can only be entered into under reasonable and fair conditions. Contracts with a related party must be entered into on an arm’s-length basis.

The Code of Ethics also requires all adherents to immediately report any situation that is illegal and/or that may have a negative impact on the Company interests including any violation or incentive for violations of (a) laws or regulations, (b) the provisions of the Code of Ethics or (c) other internal regulation or occasional irregularities or negligence in the maintenance, information and management of accounting reports. The Code of Ethics also requires the maintenance of the related documentation and compliance with obligations related to accounting or internal management reports.

Anti-Corruption Policy

In order to ensure compliance with existing applicable Brazilian and international anti-corruption laws and minimize the risks associated with the same, the Company has adopted an Anti-Corruption Policy (Política Anticorrupção). Our Anti-Corruption Policy was approved by our Board of Directors on December 10, 2020, and focuses on internal mitigating controls to be followed to avoid vulnerability to corrupt practices, including our relationship with public officials. In conjunction with the adoption of this Anti-Corruption Policy, we also provide anti-corruption training courses to our managers, directors and employees. TIM was the first Brazilian telecom company nominated Pro-Etica. In December 2021, the Company was included for the second consecutive time on the Pro-Ethics Company List, now for the 2020-2021 period.

In December 2019, TIM Participações, which was subsequently merged into the Company in September 2020, was included on the Pro-Ethics Company List for the 2018-2019 period by the Brazilian Federal Ministry of

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Transparency and the Comptroller General of the Union, which promotes ethical business conduct throughout Brazil, granting the inclusion on the pro-ethic List to companies that demonstrate lawful business practices and operate with the highest level of fairness, transparency and integrity.

In this perspective, our Integrity Program aims to identify processes and controls to mitigate corrupt practices in order to generally promote honest and ethical conduct, and deter wrongdoing within the Company. We believe that the provisions of the Integrity Program is align with Legislative Decree No. 231/01 of Italy, the Brazilian Anti-Corruption Law and international standards on anti-corruption, such as the Foreign Corrupt Practices Act and the UK Bribery Act 2010.

Item 16C. Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors during the years ended December 31, 2021 and 2020, Ernst & Young Auditores Independentes S.S.:

	Year ended December 31,
	2021	2020
	(in thousands of reais)
Audit fees	6,940	7,751
Audit-related fees	130	97
Tax fees	—	—
All other fees	—	—
Total fees	7,070	7,848

Audit fees in the above table are the aggregate fees billed by Ernst & Young Auditores Independentes S.S., in connection with the audit of our annual financial statements and limited reviews of our quarterly financial information for statutory purposes and the assessment required under Section 404 of the Sarbanes-Oxley Act.

In 2021, our independent auditors provided audit and audit-related services other than in connection with the audit of our financial statements. Such services included the review of the information and providing external audit services on our sustainability report.

Audit Committee Pre-Approval Policies and Procedures

The general authority to pre-approve the engagement of our independent auditors to render non-audit services is under the purview of our Statutory Audit Committee. Accordingly, the Statutory Audit Committee has established pre-approval procedures to control the provision of all audit and non-audit services by our independent auditors, or the Pre-Approval Policy. Under the Pre-Approval Policy, the engagement of our independent auditors to provide audit and non-audit services must be pre-approved by the Statutory Audit Committee, either in the form of a special approval or through the inclusion of the services in question in a list adopted by the Statutory Audit Committee of pre-approved services. The Pre-Approval Policy is detailed as to the particular services to be provided.

Additionally, the Pre-Approval Policy affirms that the Statutory Audit Committee’s responsibilities under the Securities Exchange Act of 1934 are not delegated to management. All non-audit services provided by the Group’s principal auditing firm were approved by the audit committee, and all such non-audit services to be provided in the future will also require approval from the audit committee.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable. We have created a Statutory Audit Committee in accordance with Exchange Act Rule 10A-3 and CVM Instruction 509/2011.

For more details, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Statutory Audit Committee.”

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Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 16F. Change in Registrant’s Certifying Accountant

None.

Item 16G. Corporate Governance

Principal Differences Between Brazilian and U.S. Corporate Governance Practices

The significant differences between our corporate governance practices and those of the NYSE are as follows:

Independence of Directors and Independence Tests

Neither our Board of Directors nor our management tests the independence of directors before elections are made. However, both Brazilian corporate law and the CVM establish rules for certain qualification requirements and restrictions, investiture, compensation, and duties and responsibilities of the companies’ executives and directors. We believe these rules provide adequate assurances that our directors are independent, and they permit us to have directors that would not otherwise pass the independence tests established by the NYSE.

Executive Sessions

According to Brazilian corporate law, up to one-third of the members of the Board of Directors can be elected for executive positions. The remaining non-management directors are not expressly empowered to serve as a check on management and there is no requirement that those directors meet regularly without management.

Committees

Even though we are not required under applicable Brazilian corporate law to have special advisory committees of the Board of Directors, we have four such committees: the Statutory Audit Committee, the Control and Risks Committee the Compensation Committee and the Environmental, Social and Governance Committee. The first was implemented on December 12, 2013, the Control and Risks Committee and the Compensation Committee were implemented on September 30, 2008 and the last one was implemented on December 10, 2020. Pursuant to our By-laws, our shareholders elect our directors at a general shareholders’ meeting. Our shareholders also establish compensation for our directors and statutory officers.

Audit Committee and Additional Requirements

The Statutory Audit Committee was created and its members appointed at the shareholders’ meeting held on December 12, 2013, in accordance with Rule 10A-3 under Section 301 of Sarbanes-Oxley and CVM Instruction 509/2011. The Statutory Audit Committee’s internal regulations were approved at the Board of Directors meeting held on December 23, 2013. After the merger of TIM Participações S.A. into the Company, the Statutory Audit Committee was created and approved at its shareholders’ meeting held on July 29, 2020.

The Statutory Audit Committee is composed of at least three (3) and at the most five (5) members, all independent, and elected by the Board of Directors, who serve two-year terms of office, matching the terms of the members of the Board of Directors. Re-election is permitted up to, for a maximum period of 10 years. Our Board of Directors may dismiss members of the Statutory Audit Committee at any time and without cause.

Shareholder Approval of Equity Compensation Plans

NYSE rules require that shareholders be given the opportunity to vote on all equity compensation plans and material revisions thereto, with limited exceptions. Under the Brazilian corporate law, shareholders must approve all stock option plans. In addition, any issuance of new shares that exceeds our authorized share capital is subject to shareholder approval.

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Corporate Governance Guidelines

NYSE rules require that listed companies adopt and disclose corporate governance guidelines. Since we have migrated to the B3’s Novo Mercado, we are subject to those rules on corporate governance, which include a disclosure policy, a policy on publicizing acts or relevant facts, which requires the public disclosure of all relevant information pursuant to guidelines set forth by the CVM, as well as an insider trading policy, a policy on securities transactions, which, among other things, establishes blackout periods and requires insiders to inform management of all transactions involving our securities.

Code of Business Conduct and Ethics

NYSE rules require that listed companies adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or statutory officers. Applicable Brazilian law does not have a similar requirement.

Item 16H. Mine Safety Disclosure

Not applicable.

Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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Part III

Item 17. Financial Statements

We have responded to Item 18.

Item 18. Financial Statements

See our audited financial statements beginning at page F-1.

Item 19. Exhibit Index

See our exhibit index found immediately preceding the exhibits filed herewith.

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Technical Glossary

The following explanations are not intended as technical definitions, but to assist the general reader to understand certain terms as used in this annual report.

3G: The third generation of mobile telecommunications network technology that comply with the IMT-2000 standard as defined by the International Telecommunications Union.

3GPP (3rd Generation Partnership Project): An entity that unites seven telecommunications standard development organizations to produce reports and specifications.

4G: The fourth generation of mobile telecommunications network technology succeeding 3G, which comply with the IMT-Advanced standard as defined by the International Telecommunications Union.

5G: The fifth generation of wireless communications technologies supporting cellular data networks.

Access Network: The part of a telecommunications network which connects subscribers to their immediate service provider. It is contrasted with the core network, which connects local providers to each other.

Analog: A mode of transmission or switching which is not digital, e.g., the representation of voice, video or other modulated electrical audio signals which are not in digital form.

ARPU (Average Revenue Per User): A measure used in the mobile telecommunications industry to evaluate the revenue generated by customers.

Broadband services: Services characterized by a transmission speed of 2Mbps or more. According to international standards, these services are interactive services, including video telephone/videoconferencing (both point to point and multipoint).

Core Network: The central part of a telecommunication network that connects local providers to each other and provides various services to customers who are connected by the access network.

Channel: One of a number of discrete frequency ranges utilized by a radio base station.

Digital: A mode of representing a physical variable such as speech using digits 0 and 1 only. The digits are transmitted in binary form as a series of pulses. Digital networks allow for higher capacity and higher flexibility through the use of computer-related technology for the transmission and manipulation of telephone calls. Digital systems offer lower noise interference and can incorporate encryption as a protection from external interference.

EPC (Evolved Packet Core): A flat architecture used by network operators that provides a converged voice and data networking framework to connect users on a Long-Term Evolution (LTE) network.

FDD (Frequency Division Duplex): A technology used in wireless communications where the uplink and the downlink use a different frequency.

GB: A measure of the unit for digital information, representing one billion bytes.

GHz (Gigahertz): One billion cycles per second.

GSM (Global System Mobile): A standard of digital mobile telecommunications technology.

HetNet: A heterogeneous network is a network connecting computers and other devices with different operating systems and/or protocols.

Interconnection charge: Amount paid per minute charged by network operators for the use of their network by other network operators. Also known as an “access charge.”

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IP network: A communication network that uses Internet Protocol (IP) to send and receive messages by delivering packets from the source host to the destination host based on the IP addresses in the packet headers.

IoT (Internet of Things): IoT is a system of interrelated computing devices, mechanical and digital machines provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.

kHz (Kilohertz): One thousand cycles per second.

LTE (Long-Term Evolution): A wireless broadband technology designed to support roaming Internet access via cell phones and handheld devices.

M2M (Machine to machine): refers to machine-to-machine communication, being able to interconnect network systems, both wired and wireless, to remote devices. In M2M communication, data is transferred and used, in real time, via fixed or mobile networks, from remote equipment/terminals for their monitoring, measurement and control.:

Massive-MIMO (Multiple-input multiple-output): A wireless network that allows the transmitting and receiving of more than one data signal simultaneously over the same radio channel.

MB (Megabyte): A measure of the unit for digital information, representing one million bytes.

MBB (Mobile Broadband): Data transmission improvements for mobile broadband users through an expanded high-speed fiber optic network and new functionalities in the core and access networks.

MHz (Megahertz): One million cycles per second.

MMS: An enhanced version of SMS, which provides users with the capability to send, in a single message, multiple color images, sounds and different size text to another mobile phone or email account.

Mobile Packet Core: Architecture systems for supporting mobile technologies including 2G, 3G and 4G/LTE.

Mobile service: A mobile telecommunications service provided by means of a network of interconnected low powered radio base stations, each of which covers one small geographic cell within the total mobile telecommunications system service area.

MOU (Monthly Average Minutes of Usage): The monthly average number of minutes of use of each mobile phone user.

MVNO (Mobile Virtual Network Operator): is a wireless communications services provider that does not own the wireless network infrastructure over which it provides services to its customers.

NB-IoT (Narrowband Internet of Things): A low power wide area network radio technology standard to enable a wide range of cellular devices and services.

Network: An interconnected collection of elements. In a telephone network, these consist of switches connected to each other and to customer equipment. The transmission equipment may be based on fiber optic or metallic cable or point-to-point connections.

NFV (Network Functions Virtualization): The NFV paradigm allows both fixed and mobile network functions to become software applications, called VNF (Virtual Network Function), which the operator can instantiate on commercial servers, exploiting virtualization technologies, separating the link between hardware and software present in the current network devices.

O-RAN (Open Radio Access Network): Industry-wide standards for RAN interfaces that support interoperation between vendors’ equipment.

OTT (Over The Top): Media delivered and communication services provided through the Internet rather than traditional infrastructure.

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PaaS, SaaS or IaaS: Platform as a service (PaaS), software as a service (SaaS), or infrastructure as a service (IaaS).

Penetration: The measurement of the take-up of services. At any date, the penetration is calculated by dividing the number of customers by the population to which the service is available and multiplying the quotient by 100.

RAN: A radio access network, or the wireless radio frequency-based portion of a network providing access from a mobile terminal device (transmitter/receiver) to the core, or backbone, network of the radio service provider and ultimately to the public switched telephone network or the Internet or other IP-based network.

Refarming: The repurposing of frequency bands that have historically been allocated for 2G mobile services.

RF (Radio Frequency): A rate of oscillation which corresponds to the frequency of radio waves, and the alternating currents which carry radio signals.

Roaming: A function that enables customers to use their mobile telephone on networks of service providers other than the one with which they signed their initial contract.

SCM (Serviço de Comunicação Multimídia): Fixed telecommunications service of collective interest, provided nationally and internationally, in the private regime, which allows the provision of capacity for transmission, emission and reception of multimedia information (data, voice and image), using any means, to subscribers within a service delivery area.

SIM (Subscriber Identity Module) card: An integrated circuit intended to securely store the identity and authenticate users of mobile devices.

SLP (Serviço Limitado Privado): Limited, telephone, telegraphic, data transmission or any other form of telecommunications service, intended for the performer's own use, whether a natural or legal person.

SMS (Short Message Services): Two-way short (or text) message services, allowing users to send and receive short messages to and from users of networks of other carriers.

STFC (Serviço Telefônico Fixo Comutado): Provision of fixed telephony services in Brazil. It considers modalities of the Fixed Switched Telephone Service: local service, national long-distance service and international long-distance service.

TAC (Termo de Ajustamento de Conduta): it is an agreement signed between the interested parties with the objective of protecting rights of a transindividual nature.

UMTS (Universal Mobile Telecommunications System): A third-generation mobile communication standard in which data travels at 2 Mbps over a broadband system.

Value-Added Services: Value-added services provide additional functionality to the basic transmission services offered by a telecommunications network.

VoIP (Voice over Internet Protocol): Voice communication services provided over the Internet.

WAP (Wireless Application Protocol): A specification for a set of telecommunications protocols to standardize the way that wireless devices, such as mobile telephones and radio receivers, can be used to access the Internet.

WTTx (Wireless to the x): The use of wireless technologies to provide fiber optic-like connections to end users.

YoY (Year-over-year): Is a method of evaluating two or more measured events to compare the results at one period with those of a comparable period on an annualized basis.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Dated: April 14, 2022

TIM S.A.
By:	/s/ Alberto Mario Griselli
	Name:	Alberto Mario Griselli
	Title:	Chief Executive Officer

By:	/s/ Camille Loyo Faria
	Name:	Camille Loyo Faria
	Title:	Chief Financial Officer and Investor Relations Officer

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EXHIBIT INDEX

1.1	By-laws of TIM S.A. approved at the Annual Shareholder’s Meeting held on August 31, 2020, which is incorporated by reference to TIM Participações S.A.’s Form 6-K filed with the Securities and Exchange Commission on September 1, 2020.
2.1	Deposit Agreement, dated as of October 9, 2020, among TIM S.A., J.P. Morgan Chase Bank, N.A., as Depositary, and holders of American Depositary Receipts issued thereunder, which is incorporated by reference to our Form F-6 filed with the Securities and Exchange Commission on October 2, 2020.
2.2	Description of Securities registered under Section 12 of the Exchange Act which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 30, 2021.
4.1*	Private Deed for the Second Issue of Simple, Unsecured, and non-Convertible Debentures, in a Single Series, for Public Distribution with Restricted Efforts, of TIM S.A., dated as of June 10, 2021, between TIM S.A., as issuer and Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários, as fiduciary agent (English translation).
4.2	Share Purchase Agreement and Other Covenants, dated as of January 28, 2021, between OI S.A., Telemar Norte Leste S.A. and OI Móvel S.A. which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 30, 2021.
4.3	Credit Agreement, dated as of April 1, 2021, between BNP Paribas, as lender, and TIM S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 30, 2021.
4.4	Credit Agreement, dated as of April 1, 2021, between The Bank of Nova Scotia, as lender, and TIM S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 30, 2021.
4.5	Credit Agreement, dated as of May 22, 2020, between BNP Paribas, as lender, and TIM S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 30, 2021.
4.6	Credit Agreement, dated as of April 7, 2020, between The Bank of Nova Scotia, as lender and TIM S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 1, 2020.
4.7	Letter Loan Agreement, dated as of February 7, 2020, between Bank of America, N.A., as lender, and TIM S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 1, 2020.
4.8	English Language Summary of Credit Agreement, dated as of January 31, 2020, between Banco do Nordeste do Brasil S.A., as lender, and TIM S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 1, 2020.
4.9	Credit Agreement, dated as of January 31, 2020, between The Bank of Nova Scotia, as lender, and TIM S.A., as borrower, and TIM Participações S.A., guarantor, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 1, 2020.
4.10	English Language Summary of Deed of Indenture for the Issuance of Simple Unsubordinated Debentures, with Additional Personal Guarantee, Not Convertible into Shares, in a Single Series, for Public Placement with Limited Efforts of the First Issuance of TIM S.A., dated as of January 9, 2019, between TIM S.A., as issuer, Simplific Pavarini Distribuidora de Títulos e Valores Mobiliários Ltda., as fiduciary agent, and TIM Participações S.A., as guarantor, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 10, 2019.

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4.11	English Language Summary of Protocol and Justification of the Merger of TIM Celular S.A. by TIM S.A., dated as of October 15, 2018, between TIM Celular S.A. and TIM S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 10, 2019.
4.12	English Language Summary of Credit Agreement, dated as of May 2, 2018, between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender and TIM Celular S.A. (now TIM S.A.) as borrower, and TIM Participações S.A. as guarantor, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 10, 2019.
4.13	English Language Summary of Credit Agreement, dated March 20, 2019, between Agência Especial de Financiamento Industrial S.A. – FINAME, an entity within the BNDES system, as lender and TIM S.A. as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 10, 2019.
4.14	Tenth Amendment to the Cooperation and Support Agreement, dated as of April 26, 2017, between Telecom Italia S.p.A. and TIM Celular S.A. and Intelig Telecomunicações Ltda. with the Company as intervening party, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 6, 2018.
4.15	English Summary of Term of Authorization for Use of Radio frequency Blocks Associated with Personal Mobile Service No. 113/2016/SOR-ANATEL, dated as of July 26, 2016, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 11, 2017.
4.16	English Summary of Term of Authorization for Use of Radio frequency Blocks Associated with Personal Mobile Service No. 114/2016/SOR-ANATEL, dated as of July 26, 2016, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 11, 2017.
4.17	Loan Agreement, dated as of December 23, 2015, between Finnish Export Credit Ltd. as lender, KfW IPEX-Bank GmbH, as facility agent and TIM Celular S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 14, 2016.
4.18	Facility Agreement, dated as of October 27, 2015, between Cisco Systems Capital Corporation, as Lender and TIM Celular S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 14, 2016.
4.19	English Summary of Credit Agreement – Contrato de Financiamento Mediante Abertura de Crédito N° 15.2.0825.1, dated as of December 29, 2015, between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender, TIM Celular S.A., as borrower, and TIM Participações S.A. as guarantor, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 14, 2016.
4.20	English Summary of Term of Authorization for Use of Radio frequency Blocks Associated with Personal Mobile Service No. 144/2014/SOR-ANATEL, dated as of December 5, 2014, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2015.
4.21	English Summary of Term of Authorization for Use of Radio frequency Blocks Associated with Personal Mobile Service No. 145/2014/SOR-ANATEL, dated as of December 5, 2014, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2015.

156

4.22	English Summary of Term of Authorization for Use of Radio frequency Blocks Associated with Personal Mobile Service No. 146/2014/SOR-ANATEL, dated as of December 5, 2014, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2015.
4.23	Loan Agreement, dated as of April 15, 2014, between KfW IPEX-Bank GmbH, as lender and TIM Celular S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2015.
4.24	Facility Agreement Reference number TIMLAF2LT to Master Loan Agreement Reference No. TIMLALT, dated as of October 14, 2014, between Cisco Systems Capital Corporation, as lender and TIM Celular S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2015.
4.25	Finance Contract (Master Loan Agreement), dated as of June 20, 2013, between Cisco Systems Capital Corporation, as lender, TIM Celular S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2014.
4.26	Facility Agreement, dated as of August 28, 2013, between Cisco Systems Capital Corporation, as lender, and TIM Celular S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2014.
4.27	English Summary of Credit Agreement, dated as of December 23, 2013, between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender and TIM Celular S.A., as borrower, and TIM Participações S.A. as guarantor, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2014.
4.28	English Summary of Term of Authorization for Use of Radio frequencies, dated as of April 3, 2013, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 15, 2014.
4.29	Fourth Amendment, dated as of December 10, 2012, to the Loan Agreement between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender, and TIM Nordeste S.A. and TIM Celular S.A., as borrowers, dated November 19, 2008 (English translation), which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 26, 2013.
4.30	Fifth Amendment, dated as of December 10, 2012, to the Loan Agreement between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender, and TIM Nordeste S.A. and TIM Celular S.A., as borrowers, dated November 19, 2008 (English translation), which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on April 26, 2013.
4.31	Term of Authorization for provision of PCS service dated March 12, 2001 (English translation), which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 14, 2012.
4.32	Term of Authorization for provision of PCS services dated February 26, 2010 authorization (English translation), which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 14, 2012.
4.33	Term of Authorization for provision of PCS services dated November 29, 2010 (English translation), which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 14, 2012.
4.34	Amendment No. 5 to Cooperation and Support Agreement with Telecom Italia dated April 24, 2012, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on May 14, 2012.

157

4.35	Addendum to the Loan Agreement dated as of November 19, 2008, between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender, and TIM Nordeste S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.36	Loan Agreement, dated as of November 19, 2008, between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender, and TIM Nordeste S.A. and TIM Celular S.A., as borrowers, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.37	Addendum to the Credit Agreement dated as of November 19, 2008, between BNDES, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social), as lender, and TIM Celular S.A., as borrower, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.38	Authorization agreement for TIM Celular S.A. dated May 25, 2007 pursuant to which TIM is authorized to provide landline switched telephone services (STFC) in regions I, II and III, which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 3, 2008.
4.39	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.40	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.41	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.42	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.43	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.44	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.45	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.46	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Nordeste S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.47	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.48	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.49	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.

158

4.50	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.51	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.52	Term of Authorization for Use of Radio frequencies, dated as of April 29, 2008, between Anatel (the National Telecommunications Agency) and TIM Celular S.A., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 26, 2009.
4.53	Term of Authorization for Use of Radio frequencies, dated as of November 30, 2005, between Anatel (the National Telecommunications Agency) and Intelig Telecomunicações Ltda., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 30, 2010.
4.54	Term of Authorization for Use of Radio frequencies, dated as of May 5, 2006, between Anatel (the National Telecommunications Agency) and Intelig Telecomunicações Ltda., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 30, 2010.
4.55	Term of Authorization for Use of Radio frequencies, dated as of April 2, 2007, between Anatel (the National Telecommunications Agency) and Intelig Telecomunicações Ltda., which is incorporated by reference to our annual report filed on Form 20-F with the Securities and Exchange Commission on June 30, 2010.
6.1*	Statement regarding computation of per share earnings, which is incorporated by reference to Note 34 to our financial statements included in this annual report.
8.1	None.
11.1*	Code of Ethics (English free translation).
12.1*	Section 302 Certification of the Chief Executive Officer.
12.2*	Section 302 Certification of the Chief Financial Officer.
13.1*	Section 906 Certification of the Chief Executive Officer.
13.2*	Section 906 Certification of the Chief Financial Officer.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

159

TIM S.A.

Financial Statements as at

December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021 and Reports of Independent Registered Public Accounting Firm

TIM S.A.

As at December 31, 2021 and 2020 and for each of the

three years in the period ended December 31, 2021

Contents

Report of Independent Registered Public Accounting Firm (PCAOB ID: 01448)	F-1
Balance sheet	F-5
Statement of income	F-7
Statement of comprehensive income	F-8
Statement of changes in shareholders' equity	F-9
Statement of cash flows	F-12
Notes to the financial statements	F-14

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of TIM S.A.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of TIM S.A. (the “Company”) as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets of the Company as of December 31, 2021 and 2020, and the related statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated April 14, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company´s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company´s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definitions and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young Auditores Independentes S.S.

Rio de Janeiro, Brazil

April 14, 2022

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of TIM S.A.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of TIM S.A. (the “Company”) as of December 31, 2021 and 2020, the related statements of income, comprehensive income, changes in shareholders’ equity and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated April 14, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

F-2

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

	Provision for tax contingencies
Description of the Matter	As disclosed in note 24 to the financial statements, the Company is a party to numerous tax claims and proceedings at different jurisdictional levels, which amounted to R$16,739 million, as of December 31, 2021, for which a provision amounting to R$430 million was recorded in the financial statements, while the remaining R$16,309 million was disclosed as losses possible to occur, in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The determination of the provision and disclosures related to the tax contingencies involve significant judgment from management, including their analysis of the matters in dispute, the opinion of internal and external legal counsel and the estimation surrounding their ultimate resolution. Auditing management’s assessment of the probability of a loss on tax claims is complex, judgmental and based on interpretations of tax laws and legal rulings, as there is significant estimation uncertainty related to the ultimate outcome of court decisions, the evolution of jurisprudence and the position of the tax authorities.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of tax claims, including management’s process to determine whether the technical merits are more-likely-than-not to be sustained in court and over the generation of the report produced by the information technology system that support this process. To test the Company’s assessment of the probability of losses over tax claims, our audit procedures included, among others, involving our tax professionals to assess the Company’s technical merits regarding certain matters in dispute, obtaining and analyzing external legal opinions, obtaining internal and external legal counsel confirmation letters, meeting with internal legal counsel to discuss certain tax disputes, and obtaining a representation letter from the Company’s internal legal counsel. We also assessed the adequacy of the disclosures made by the Company with respect to the provision for tax related contingencies.
	Sale of 51% equity interest in I-System (formerly FiberCo Soluções Infraestrutura S/A)
Description of the Matter	As described in Note 1 to the financial statement, on November 16, 2021, the Company sold the 51% of its equity interest held in I-System, generating a gain of R$782 million, which was measured as the difference between the fair value of consideration received and the adjusted carrying value of the net assets of I-System. The determination of the adjusted carrying value of the net assets of I-System involved identifying and measuring the assets, the liabilities and the goodwill allocated to I-System as of the closing date of the transaction.
	Auditing the Company’s accounting for the sale of its 51% equity interest in I-System was complex and judgmental due to the nature of the significant judgment exercised by management in determining the amount of goodwill to allocate to I-System, the transaction and significant judgment exercised by management in determining the accounting analysis and implications for the loss of control determination and assessment of the master service agreement.

F-3

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for I-System sale. For example, we tested controls over management's review of the accounting treatment for the sale and for calculating the gain after tax effect, and controls over the preparation and review of key inputs, data and assumptions used by management to determine the allocation of goodwill to I-System.   To test management´s assessment of the sale, our procedures included, among others: inspecting the transaction agreements, assessing the reasonableness of judgments and testing the accuracy of the gain on the sale after tax effect’s calculation, assessing key inputs, data and assumptions used by management to determine the allocation of goodwill to I-System by examining audit evidence for key inputs, data and assumptions; evaluating management's application of the criteria for the loss of control by evaluating for contrary evidence on related documents for the transaction and management´s assessment of the master service agreement under IFRS 16; we also involved tax professionals to assess the Company´s sale tax implications. We also assessed the adequacy of the disclosures made by the Company with respect to the sale transaction.  

/s/ Ernst & Young Auditores Independentes S.S.

We have served as the Company´s auditor since 2019.

Rio de Janeiro, Brazil

April 14, 2022

F-4

TIM S.A.
BALANCE SHEET
December 31, 2021 and 2020
(In thousands of reais)
	Notes	2021	2020
Assets		49,819,186	41,654,417
Current assets		15,398,048	10,411,556
Cash and cash equivalents	4	5,228,615	2,575,291
Marketable securities	5	4,568,020	2,070,438
Trade accounts receivable	6	3,066,906	3,051,834
Inventories	7	202,553	246,602
Recoverable indirect taxes, charges and contributions	8	354,620	374,015
Recoverable direct taxes, charges and contributions	9	1,311,906	1,421,112
Prepaid expenses	11	275,148	149,796
Derivative financial instruments	37	134,292	262,666
Leases	16	30,076	5,357
Other amounts recoverable	17	28,661	43,906
Other assets		197,251	210,539
Non-current assets		34,421,138	31,242,861
Marketable securities	5	11,508	7,061
Trade accounts receivable	6	186,301	128,827
Recoverable indirect taxes, charges and contributions	8	905,312	856,786
Recoverable direct taxes, charges and contributions	9	730,455	1,277,127
Deferred income tax and social contribution	10	536,888	550,646
Judicial deposits	12	718,773	794,755
Prepaid expenses	11	83,139	73,598
Derivative financial instruments	37	521,627	239,423
Leases	16	213,045	156,841
Other assets		18,908	30,024
Investment in an associate	13	1,601,703	-
Property, plant and equipment	14	18,308,400	18,100,698
Intangible assets	15	10,585,079	9,027,075

The accompanying notes are an integral part of the financial statements.

F-5

TIM S.A.
BALANCE SHEET
December 31, 2021 and 2020
(In thousands of reais)
	Notes	2021	2020
Total liabilities and shareholders' equity		49,819,186	41,654,417
Total liabilities		24,712,080	18,471,672
Current liabilities		10,611,482	8,301,956
Suppliers	18	3,267,404	3,128,732
Loans and financing	20	538,450	1,689,385
Lease liabilities	16	1,269,878	1,054,709
Derivative financial instruments	37	194,837	7,273
Payroll and related charges		303,239	272,635
Indirect taxes, charges and contributions payable	21	1,418,682	935,778
Direct taxes, charges and contributions payable	22	245,113	296,299
Dividends and interest on shareholders' equity payable	25	533,580	538,576
Authorizations payable	19	2,630,169	102,507
Deferred revenues	23	197,179	266,436
Other liabilities		12,951	9,626
Non-current liabilities		14,100,598	10,169,716
Loans and financing	20	3,307,015	655,647
Derivative financial instruments	37	13,950	28,893
Lease liabilities	16	7,793,661	7,324,126
Indirect taxes, charges and contributions payable	21	3,273	3,102
Direct taxes, charges and contributions payable	22	13,227	212,444
Provision for legal and administrative proceedings	24	960,881	886,947
Pension plans and other post-employment benefits	38	6,492	7,346
Authorizations payable	19	1,250,918	232,940
Deferred revenues	23	689,161	755,488
Other liabilities		62,020	62,783
Shareholders' equity	25	25,107,106	23,182,745
Share capital		13,477,891	13,477,891
Capital reserves		401,806	397,183
Profit reserves		11,236,551	9,317,356
Other comprehensive income		(4,285)	(4,848)
Treasury shares		(4,857)	(4,837)

The accompanying notes are an integral part of the financial statements.

F-6

TIM S.A.
STATEMENT OF INCOME
Years ended December 31, 2021, 2020 and 2019
(In thousands of reais, except when otherwise indicated)
	Notes	2021	2020	2019
Revenue	27	18,058,027	17,267,812	17,377,194
Costs of services provided and goods sold	28	(8,443,023)	(7,996,615)	(7,433,731)
Gross income		9,615,004	9,271,197	9,943,463
Operating income (expenses)
Selling expenses	28	(4,621,788)	(4,443,027)	(4,986,289)
General and administrative expenses	28	(1,723,384)	(1,673,290)	(1,717,859)
Share of loss of an associate	13	(11,572)	-	-
Other income (expenses), net	29	497,771	(351,854)	1,275,542
		(5,858,973)	(6,468,171)	(5,428,606)
Profit before financial income and expenses		3,756,031	2,803,026	4,514,857
Financial income	30	1,091,748	438,598	1,430,171
Financial expenses	31	(1,745,213)	(1,242,255)	(1,408,053)
Foreign exchange variations, net	32	659	(6,965)	(908)
		(652,806)	(810,622)	21,210
Profit before income tax and social contribution		3,103,225	1,992,404	4,536,067
Income tax and social contribution	33	(146,051)	(164,150)	(913,940)
Profit for the year		2,957,174	1,828,254	3,622,127
Earnings per share attributable to the Company’s shareholders (in R$ per share)
Basic earnings per share	34	1.22	0.76	1.50
Diluted earnings per share	34	1.22	0.76	1.50

The accompanying notes are an integral part of the financial statements. 

F-7

TIM S.A.
STATEMENT OF COMPREHENSIVE INCOME
Years ended December 31, 2021, 2020 and 2019
(In thousands of reais)
	2021	2020	2019
Profit for the year	2,957,174	1,828,254	3,622,127
Other comprehensive income
Item that will not be reclassified to profit or loss in subsequent periods:
Pension plans and other post-employment benefits	853	(1,562)	(2,932)
Deferred taxes	(290)	531	997
Total comprehensive income for the year, net of tax	2,957,737	1,827,223	3,620,192

The accompanying notes are an integral part of the financial statements.

F-8

TIM S.A.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 2021, 2020 and 2019
(In thousands of reais)
			Profit reserves
	Share capital	Capital reserve	Legal reserve	Reserve for expansion	Tax benefit reserve	Treasury shares	Other comprehensive income	Retained earnings	Total
Balances at January 01, 2021	13,477,891	397,183	1,036,194	6,499,602	1,781,560	(4,837)	(4,848)	-	23,182,745
Total comprehensive income for the year
Profit for the year	-	-	-	-	-	-	-	2,957,174	2,957,174
Remeasurement of post-employment benefit obligation	-	-	-	-			563	-	563
Total comprehensive income for the year	-	-	-	-	-	-	563	2,957,174	2,957,737
Total contributions from shareholders and distributions to shareholders
Long-term incentive plan (note 26)	-	4,623	-	-			-	-	4,623
Purchase of treasury shares, net of disposals	-	-	-	-		(20)	-	-	(20)
Allocation of profit for the year:
Legal reserve (note 25)	-	-	139,021	-			-	(139,021)	-
Interest on shareholders’ equity (note 25)	-	-	-	-				(1,047,500)	(1,047,500)
Tax benefit reserve (note 25)	-	-			176,741		-	(176,741)	-
Reserve for expansion (note 25)	-	-	-	1,593,912			-	(1,593,912)	-
Unclaimed dividends (note 25)	-	-	-	9,521			-	-	9,521
Total contributions from shareholders and distributions to shareholders	-	4,623	139,021	1,603,433	176,741	(20)	-	(2,957,174)	(1,033,376)
Balances at December 31, 2021	13,477,891	401,806	1,175,215	8,103,035	1,958,301	(4,857)	(4,285)	-	25,107,106

The accompanying notes are an integral part of the financial statements.

F-9

TIM S.A.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Years ended December 31, 2021, 2020 and 2019
(In thousands of reais)
				Profit reserves
	Share capital	Capital reserve	Legal reserve	Reserve for expansion	Tax benefit reserve	Treasury shares	Other comprehensive income	Retained earnings	Total
Balances at January 01, 2020	9,866,298	410,650	1,010,090	9,537,053	1,612,019	(3,204)	(1,088)	-	22,431,818
Total comprehensive income for the year
Profit for the year	-	-	-	-	-	-	-	1,828,254	1,828,254
Remeasurement of post-employment benefit obligation	-	-	-	-	-	-	(1,031)	-	(1,031)
Total comprehensive income for the year	-	-	-	-	-	-	(1,031)	1,828,254	1,827,223
Total contributions from shareholders and distributions to shareholders
Corporate restructure (note 1)	3,611,593	(20,892)	(57,604)	(3,535,824)		5,456	(2,729)	-	-
Long-term incentive plan (note 26)	-	7,425	-	-			-	-	7,425
Purchase of treasury shares, net of disposals	-	-	-	-		(7,089)	-	-	(7,089)
Allocation of profit for the year (note 25):
Legal reserve (note 25)	-	-	83,708	-			-	(83,708)	-
Interest on shareholders’ equity (note 25)	-	-	-	-				(1,083,000)	(1,083,000)
Tax incentive reserve (note 25)	-	-			169,541		-	(169,541)	-
Reserve for expansion (note 25)	-	-	-	492,005			-	(492,005)	-
Unclaimed dividends (note 25)	-	-	-	6,368			-	-	6,368
									-
Total contributions from shareholders and distributions to shareholders	3,611,593	(13,467)	26,104	(3,037,451)	169,541	(1,633)	(2,729)	(1,828,254)	(1,076,296)
Balances at December 31, 2020	13,477,891	397,183	1,036,194	6,499,602	1,781,560	(4,837)	(4,848)	-	23,182,745

The accompanying notes are an integral part of the financial statements.

F-10

TIM S.A.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Years ended December 31, 2021, 2020 and 2019
(In thousands of Reais)
			Profit reserves
	Share capital	Capital reserves	Legal reserve	Reserve for expansion	Tax benefit reserve	Treasury shares	Other comprehensive income	Retained earnings	Total
Balances as at January 01, 2019	9,866,298	412,091	838,692	7,267,574	1,417,858	(8,523)	847	-	19,794,837
Total comprehensive income for the year
Profit for the year								3,622,127	3,622,127
Remeasurement of post-employment benefit obligation	-	-	-	-	-	-	(1,935)	-	(1,935)
Total comprehensive income for the year	-	-	-	-	-	-	(1,935)	3,622,127	3,620,192
Total contributions from shareholders and distributions to shareholders
Long-term incentive plan (note 26)	-	(1,441)	-	-		-	-	-	(1,441)
Purchases of treasury shares, net of disposals	-	-	-	-		5,319	-	-	5,319
Allocation of profit for the year:
Legal Reserve (note 25)	-	-	171,398	-		-	-	(171,398)	-
Interest on shareholders’ equity (note 25)	-	-	-	-		-		(995,438)	(995,438)
Tax benefit reserve (note 25)	-	-		-	194,161	-	-	(194,161)	-
Reserve for expansion (note 25)	-	-	-	2,261,130		-	-	(2,261,130)	-
Unclaimed dividends (note 25)	-	-	-	8,349		-	-	-	8,349
Total contributions from shareholders and distributions to shareholders	-	(1,441)	171,398	2,269,479	194,161	5,319	-	(3,622,127)	(983,211)
Balances as at December 31, 2019	9,866,298	410,650	1,010,090	9,537,053	1,612,019	(3,204)	(1,088)	-	22,431,818

The accompanying notes are an integral part of the financial statements.

F-11

TIM S.A.
STATEMENT OF CASH FLOWS
Years ended December 31, 2021, 2020 and 2019
(In thousands of reais)
	Notes	2021	2020	2019
Operating activities
Profit before income tax and social contribution		3,103,225	1,992,404	4,536,067
Adjustments to reconcile profit before income tax and social contribution to net cash generated by operating activities:
Depreciation and amortization	28	5,691,696	5,527,012	5,128,981
Share of loss of an associate	13	11,572	-	-
Residual value of property, plant and equipment and intangible written-off		51,913	(88,085)	32,411
Gain on sale of 51% of I-Systems (formerly FiberCo) (note 1)		(782,237)	-	-
Interest on asset retirement obligation		1,486	(284)	226
Provision for legal and administrative proceedings	24	278,789	333,724	547,691
Inflation adjustment on judicial deposits and legal and administrative proceedings		(27,768)	138,109	200,469
Interest, monetary and foreign exchange variations on loans and other financial adjustments		119,864	168,362	(950,675)
Interest on lease liabilities		858,259	910,691	821,463
Interest on lease receivable		56	(10,698)	(6,422)
Provision for expected credit losses	28	544,642	552,817	748,291
Long-term incentive plans	26	15,672	2,588	3,443
		9,867,169	9,526,640	11,061,945
Decrease (increase) in operating assets
Trade accounts receivable		(583,346)	(390,087)	(1,027,131)
Recoverable taxes, charges and contributions		664,397	1,260,949	(1,601,276)
Inventories		44,050	(43,325)	(20,219)
Prepaid expenses		(134,893)	20,928	100,917
Judicial deposits		215,698	203,567	296,486
Other assets		41,610	(111,003)	5,059
Increase (decrease) in operating liabilities
Payroll and related charges		35,506	53,667	6,736
Suppliers		153,357	(818,989)	(401,200)
Taxes, charges and contributions payable		366,605	(320,674)	40,045
Authorizations payable		(8,604)	(10,871)	(100,182)
Payments for legal and administrative proceedings	24	(316,804)	(413,635)	(715,203)
Deferred revenues		(135,583)	(87,188)	(204,355)
Other liabilities		(116,981)	(126,530)	(215,063)
Cash generated by operations		10,092,181	8,743,449	7,226,559
Income tax and social contribution paid		(14,094)	(69,578)	(161,833)
Net cash flows from operating activities		10,078,087	8,673,871	7,064,726

F-12

TIM S.A.
STATEMENT OF CASH FLOWS
Years ended December 31, 2021, 2020 and 2019
(In thousands of reais)
	Notes	2021	2020	2019
Investing activities
Marketable securities		(2,502,030)	(1,428,888)	131,742
Cash from the sale of 51% of I-Systems (formerly FiberCo) (note 1)		1,096,294	-	-
Cash from the merger of TIM Participações		-	21,959	-
Additions to property, plant and equipment and intangible assets (i)		(5,283,707)	(3,891,306)	(3,853,484)
Other derivatives		-	(161,429)	-
Proceeds received fromleases		47	4,879	9,100
Net cash flows used in investing activities		(6,689,396)	(5,454,785)	(3,712,642)
Financing activities
New loans		3,062,000	1,800,000	1,000,000
Amortization of loans		(1,710,935)	(1,806,922)	(723,500)
Interest paid on loans		(78,952)	(72,643)	(96,649)
Lease payments		(1,179,723)	(927,903)	(800,621)
Interest paid on lease liabilities		(832,928)	(794,391)	(785,091)
Proceeds from financing for the 5G license acquisition		843,020	-	-
Derivative financial instruments		216,197	27,070	32,761
Purchase of treasury shares, net of disposals		(11,069)	-	435
Dividends and interest on shareholders’ equity paid		(1,042,976)	(1,153,054)	(770,139)
Net cash flows used in financing activities		(735,366)	(2,927,843)	(2,142,804)
Increase in cash and cash equivalents		2,653,325	291,243	1,209,280
Cash and cash equivalents at the beginning of the year		2,575,290	2,284,048	1,075,530
Cash and cash equivalents at the end of the year		5,228,615	2,575,291	2,284,810

(i) For the effects of the 5G acquisition with no cash impact, see note 40. 

The accompanying notes are an integral part of the financial statements.

F-13 

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

 1. Operations

Corporate structure

TIM S.A. (“TIM” “Company” and/or “TIM Group”) is a public limited company with Registered office in the city of Rio de Janeiro, RJ, and a subsidiary of TIM Brasil Serviços e Participações S.A. (“TIM Brasil”). TIM Brasil is a subsidiary of the Telecom Italia Group that held 66.59% of the share capital of TIM S.A. on December 31, 2021 (66.58% on December 31, 2020).

The Company provides Landline Switched Telephone Service (”STFC“) in Local, National Long-Distance and International Long-Distance modes, as well as Personal Mobile Service (”SMP“) and Multimedia Communication Service (”SCM"), in all Brazilian states and in the Federal District.

The Company's shares are traded on B3 (formerly BM&F/Bovespa). Additionally, TIM S.A. has American Depositary Receipts (ADRs), Level II, traded on the New York Stock Exchange (NYSE) – USA. As a result, the company is subject to the rules of the Securities and Exchange Commission of Brazil (“CVM”) and the Securities and Exchange Commission (“SEC”). In order to comply with good market practices, the company adopts as a principle the simultaneous disclosure of its financial information in both markets, in reais, in Portuguese and English.

In December 2020, TIM’s Board of Directors, after analyzing the studies prepared and the non-binding proposals received, approved, in a meeting held on December 10, 2020, the incorporation of FiberCo Soluções de Infraestrutura Ltda., as preparation for future segregation of assets and provision of infrastructure services for residential fiber optic of TIM S.A.

On May 5, 2021, TIM S.A. informed its shareholders and the market in general that, at a meeting of the Company’s Board of Directors held on the same day, an agreement between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda. (“IHS”) was approved for the acquisition, by IHS, of an equity interest in FiberCo Soluções de Infraestrutura S.A. (“FiberCo”).

The process for acquisition of equity interest at FiberCo, later named I–Systems, by IHS was completed on November 16, 2021. As a result, IHS currently holds 51% of the share capital of I-Systems, with TIM S.A. having a minority (non-controlling) interest of 49% in I-Systems.

The details of the sale of FiberCo’s equity interest are described below.

Corporate Reorganization

Sale of 51% of I-Systems (formerly FiberCo) to IHS

On May 5, 2021, the Company disclosed the decision of its Board of Directors on the sale by TIM of 51% of the share capital of FiberCo to IHS, with the remaining 49% remaining under the control of the Company upon closing of the transaction.

F-14

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

FiberCo was established by the Company to segregate network assets and provide infrastructure services. FiberCo was born to implement, operate and maintain last-mile infrastructure for broadband access to be offered in the wholesale market. Nevertheless, the terms of the agreement define TIM as current main customer, having the prerogative of 6 months of exclusivity after entering new areas.

In November 2021, as a result of the spin-off of net assets from the broadband business and with the subsequent disposal of 51% of its equity interest on behalf of IHS, TIM S.A. recorded an investment in an associated company in the amount of R$ 1,612,957, at fair value, for the remaining minority interest (non-controlling) of 49%.

Currently, due to the closing of the transaction, TIM S.A. wrote-off about 90% of the total goodwill recorded in the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A. in the amount of R$ 1,051,477.

According to the valuation report of the net assets and liabilities, the calculated amount of R$ 1,211,789 was paid-in as share capital of I-Systems on November 1, 2021.

The process of selling the 51% equity interest in the new company, I-Systems, to IHS was completed on November 16, 2021. For the conclusion of the sale, IHS made a capital contribution of R$ 582,498 (primary) in the new company (I-Systems) and the payment of R$ 1,096,294 (secondary) directly to TIM S.A., thus totaling R$ 1,678,792 for the acquisition of a 51% equity interest. The fair value calculated for 100% of the new company was R$ 3,291,749.

Upon closing, the interest in the investee was recorded at fair value as provided for by IFRS 10, and evaluated by the equity method subsequently, as defined in IAS 28.

As provided for in IFRS 10, the sale of an investment with loss of control must be recognized by the total write-off of the investment and recognition of part of the associated company’s investment at fair value.

The effects of the transaction are detailed below: 

F-15

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

Description	12/31/2021
Transaction price	1,096,294
Investment registration at fair value	1,612,957
Cost of assets
Derecognition of the assets and liabilities of the subsidiary	(1,211,472)
Write-off of goodwill	(1,051,477)
Write-off of deferred tax on goodwill amortized	335,935
Gain on transaction	782,237
Income tax and social contribution	(509,245)
Net gain on transaction	272,992
Gain before income tax and social contribution on remeasurement of investment at fair value	668,720
Gain before income tax and social contribution on asset disposal	113,517

Merger of TIM Participações by TIM S.A.

On July 29, 2020, the Board of Directors of the Company approved the submission to the Extraordinary General Meeting of the proposed merger of TIM Participações by TIM S.A.

The Extraordinary General Meeting was held on August 31, 2020, and approved, by a majority of votes, the incorporation of TIM Participações by TIM S. A, in accordance with the protocol and justification of Incorporation concluded between the administrations of the Companies on July 29, 2020.

As a result the Company’s Management proceeded with the merger on August 31, 2020, based on the net book assets of TIM Participações, in the amount of R$ 355,323.

The changes in TIM Participações’s equity between the date of the report (March 31, 2020) and the merger (August 31, 2020) were transferred, absorbed and incorporated into the operating income of TIM Participações S.A. (incorporated), as set forth in the protocol of incorporation. As a result of the merger, all operations of TIM Participações were transferred to TIM S.A., which succeeded it in all its assets, rights and obligations, universally and for all purposes of law. This transaction had no economic or tax impact and the incorporated goodwill will not be used for the purposes of any tax offsets.

F-16

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

This corporate reorganization aimed to provide greater efficiency and simplification of the organizational structure of the TIM Group, making the structure of internal controls more efficient. In addition, the corporate reorganization provides a better tax efficiency in future distributions of Interest on Shareholders’ Equity, and also, greater integration of administrative and financial unities allowing a cut-off in operational costs and expenses, as well as improvement of synergies, which shall result in a more efficient operation. As a result from this transaction, there was no impact on the controlling and non-controlling shareholders.

After the merger, TIM S.A. started to be traded with the codes TIMS3 on B3 and TIMB on the NYSE.

F-17

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

2. Management statement and basis of preparation of the financial statements

The financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties.

The significant accounting policies applied to the preparation of this financial statements are described below and/or presented in the respective notes. These policies were consistently applied to the years presented, unless otherwise indicated.

a. Basis of presentation of Company’s consolidated financial statements – Predecessor method

As previously described with completion of the merger, TIM S.A. became the surviving entity, and the new SEC registrant. Further, since the merger effective date, TIM S.A. shares replaced TIM Participações S.A. shares and are currently listed in the Brazilian Stock Exchange (“B3”) as well as in the New York Stock Exchange (“NYSE”).

Upon the completion of the Corporate restructure, the historical consolidated financial statements of TIM Participações S.A. became the historical consolidated financial statements of TIM S.A. The transaction was recorded at book value since it was a transaction under common control. The consolidated financial statements for the prior periods are presented for TIM Participações S.A. as the predecessor of the Company as the historical operations of TIM Participações S.A. are deemed to be those of the Company.  

The related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year ended December 31, 2019 are those of TIM Participações.

The number of shares of TIM S.A. prior to the Corporate reorganization was 2,420,447,019, an equivalent number of common shares of the extinguished entity TIM Participações as of the date of the merger. Consequently, basic and diluted earnings per share presented in note 34 were not impacted by the corporate reorganization.

The impact of the reverse merger of TIM Participações by TIM S.A. was limited to reclassifications among certain accounts within the current year statement of changes in shareholders’ equity as follows:

F-18

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

Equity accounts	The Company’s equity reserves	Impact on TIM S.A. statement of changes in equity	TIM Participações
Share capital	13,477,891	3,611,593	9,866,298
Capital reserve	397,183	(20,892)	418,075
Legal reserve	1,036,194	(57,603)	1,093,797
Tax benefit reserve	1,781,560	-	1,781,560
Reserve for expansion	6,499,602	(3,535,824)	10,035,426
Treasury shares	(4,837)	5,456	(10,293)
Other comprehensive income	(4,848)	(2,730)	(2,118)
Total	23,182,745	-	23,182,745

b. General criteria for preparation and disclosure

The financial statements were prepared taking into account the historical cost as the base value as well as financial assets and liabilities (including derivative financial instruments) measured at fair value.

Assets and liabilities are reported according to their degree of liquidity and collectability. They are reported as current when they are likely to be realized or settled over the next 12 months. Otherwise, they are recorded as non-current. The exception to this procedure involves deferred income tax and social contribution balances (assets and liabilities) and contingent liabilities that are fully classified as long-term.

Interests paid are classified as financing cash flow in the statement of cash flows as it represents costs of obtaining financial resources.

c. Functional currency and presentation currency

The presentation currency of the financial statements is the Real (R$), which is also the Company´s functional currency.

Foreign currency transactions are recognized at the exchange rate on the date of the transaction. Monetary items in foreign currency are converted into reais at the exchange rate on the balance sheet date, informed by Banco Central do Brasil (Central Bank of Brazil). Foreign exchange gains and losses linked to these items are recorded in the statement of income.

d. Segment information

Operating segments are components of the entity that carry out business activities from which revenues can be obtained and expenses incurred. Its operating results are regularly reviewed by the entity's main operations manager, who makes decisions on resource allocation and evaluates segment performance. For the segment to exist, individualized financial information is required.

The main operational decision maker in the Company, responsible for the allocation of resources and periodically evaluating performance, is the Executive Board, which, along with the Board of Directors, are responsible for making the strategic decisions of the company and its management.

F-19

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

The Group's strategy is focused on optimizing results, and from the corporate reorganization mentioned in note 1, all the operating activities of the group are concentrated exclusively in TIM S.A.. Although there are diverse activities, decision makers understand that the company represents only one business segment and do not contemplate specific strategies focused only on one service line. All decisions regarding strategic, financial planning, purchases, investments and investment of resources are made on a consolidated basis. The aim is to maximize the consolidated result obtained by operating the SMP, STFC and SCM licenses.

e. Consolidation procedures

Subsidiaries are all the entities in which the Group retains control. The Group controls an entity when it is exposed to, or has a right over the variable returns arising from its involvement with the entity and has the ability to interfere in those returns due to its power over the entity. The subsidiaries are fully consolidated as of the date control is transferred to the Group. Consolidation is interrupted beginning as of the date in which the Group no longer holds control.

The purchase accounting method is used to record the acquisition of subsidiaries by the Group. The acquisition cost is measured as the fair value of the assets acquired, equity instruments (i.e.: shares) and liabilities incurred or assumed by the acquirer on the date of the change of control. Identifiable assets acquired, contingencies and liabilities assumed in a business combination are initially measured at fair value on the date of acquisition, regardless of the proportion of any minority interest. The portion exceeding the acquisition cost of the Group's interest in the acquired identifiable net assets, is recorded as goodwill. Should the acquisition cost be less than the fair value of the net assets of the acquired subsidiary, the difference is recognized directly in the statement of income as a revenue once concepts and calculations applied are reviewed.

Intercompany transactions, as well as the balances and unrealized gains and losses in those transactions, are eliminated. The base date of the financial information used for consolidation purposes is the same for all the companies in the Group.

As of December 31, 2020, the Company only had one subsidiary named I-Systems (formerly FiberCo). The consolidated financial statements as of December 31, 2021 is not being presented since I-Systems had been sold before December 31, 2021, as described in Note 1. The Company had 51% of its equity interest on the investee sold to IHS, and TIM S.A. now holds a non-controlling minority interest of 49%. At that moment, TIM S.A. started having I-Systems as an affiliated company and to record the income (loss) of this company under the equity method, no longer consolidating it. That said, the balances of December 31, 2021 are not comparable to the same of December 31, 2020.

f. Approval of financial statements

These financial statements were approved by the Board of Directors of the Company on April 14, 2022.

g. New standards, amendments and interpretations of standards

The following new standards/amendments were issued by the International Accounting Standards Board (IASB), are effective for the year ended December 31, 2021.

F-20

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

· Amendments to IFRS 16, IFRS 4, IFRS 7 and IFRS 9: Benchmark Interest Rate Reform

The amendments to Pronouncements IAS 39 and IFRS 9 provide for temporary exceptions that address the financial statement effects when a rate of interbank deposit certificate is replaced with an alternative to an almost risk-free rate. The amendments include the following practical expedients:

· A practical expedient that requires contractual changes, or changes in cash flows which are directly required by the reform, to be treated as changes in a floating interest rate, equivalent to a change in a market rate;

· A practical expedient that allows changes required by the reform, to be carried out in hedge designation and documentation and hedge relationship will not be discontinued.

· A practical expedient that provides a temporary exception to entities so they will comply with the separately identifiable requirement when a risk-free rate instrument is designated as a hedge risk component.

These changes have not impacted the individual and consolidated financial statements of the Group.

If they become applicable, the group intends to use the practical expedients in future periods.

· IFRS 16 COVID-19 related benefits granted to leaseholders in lease agreements that go beyond June 30, 2021.

The amendments provide for the granting of benefits to lessees upon adoption of the guidelines of IFRS 16 on the modification of the lease agreement, when accounting for the related benefits as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may choose not to assess whether a benefit related to Covid-19 granted by the lessor is a modification of the lease agreement. The lessee who makes this option must account for any change in the lease payment resulting from the benefit granted in the lease agreement related to Covid-19 in the same way that it would account for the change by adopting IFRS 16 if the change was not a modification of the lease agreement.

The amendment was intended to be applied until June 30, 2021, but as the impact of COVID-19 pandemic may continue, on March 31, 2021, the IASB extended the application period of this practical expedient to June 30, 2022. This amendment becomes effective for the fiscal years beginning on or after January 1, 2021. However, the Group has not yet received COVID-19 benefits granted to lessees, but the application of practical expedient is planned to be applied once it is available within the standard period.

The following new standards were issued by the International Accounting Standards Board (IASB), but are not effective for the year ended December 31, 2021.

F-21

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

· IFRS 17 - Insurance Contracts

In May 2017, the IASB issued IFRS 17 - Insurance Contracts, a new comprehensive accounting standard for insurance contracts that includes recognition and measurement, presentation and disclosure. As soon as it comes into force, IFRS 17 will replace IFRS 4 - Insurance Contracts, issued in 2005. IFRS 17 applies to all types of insurance contracts (such as life, non-life, direct insurance and reinsurance), regardless of the type of entity that issues them, as well as certain guarantees and financial instruments with discretionary participation characteristics. Some scope exceptions apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements of IFRS 4, which are largely based on local accounting policies in force in previous periods, IFRS 17 provides for a comprehensive model for insurance contracts, covering all relevant accounting aspects. The focus of IFRS 17 is the general model, covering the following:

• A specific adaptation for contracts with direct participation characteristics (variable rate approach).

• A simplified approach (premium allocation approach), mainly for short-term contracts. IFRS 17 is effective for periods beginning on or after January 1, 2023, requiring the presentation of comparative amounts. Early adoption is allowed if the entity also adopts IFRS 9 and IFRS 15 on the same date or before the first-time adoption of IFRS 17.

This standard does not apply to the Company.

· Amendments to IAS 1: Classification of liabilities as current or non-current

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1, aiming to specify the requirements for classifying the liabilities as current or non-current. The amendments clarify the following:

• What a right to postpone settlement means;

• That the right to postpone settlement must exist on the base date of the report;

• That this classification is not affected by the likelihood that an entity will exercise its right to postpone settlement;

• That only if a derivative embedded in a convertible liability is itself an equity instrument would the terms of a liability not affect its classification. Amendments are valid for periods started on January 1, 2023 and must be applied on a retrospective basis.

The Company currently assesses the impact that the changes will have on current practice and whether existing loan agreements may require renegotiation.

· Amendments to IAS 8: Definition of accounting estimates

In February 2021, IASB issued amendments to IAS 8, in which the definition of ‘accounting estimates’ is introduced. The amendments clarify the difference between changes in accounting estimates and changes in accounting policies and correction of errors. Additionally, they clarify how entities use measurement and input techniques to develop accounting estimates.

F-22

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

The amendments will become effective for periods beginning on or after January 1, 2023 and will be applied to changes in accounting policies and estimates that occur on or after the beginning of that period. If disclosed, early adoption is allowed.

Amendments are not expected to have a significant impact on the Group’s financial statements.

· Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies

In February 2021, IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgments, in which guides and examples are provided to help entities to apply materiality judgment to the disclosure of accounting policies. The aim of amendments is to assist entities in the disclosure of accounting policies that are most useful by replacing the requirement for disclosure of significant accounting policies to material accounting policies and adding guides about how entities should apply the concept of materiality to make decisions about the disclosure of accounting policies.

The amendments to IAS 1 are applicable for periods started as of or after January 1, 2023, with early adoption allowed. Since the amendments to Practice Statement 2 provide non-mandatory guides about the application of material definition to the accounting policy information, an adoption date is not required for this amendment.

The Group is currently evaluating the impacts of these amendments to the accounting policies disclosed. 

COVID-19 impacts

Since March 2020, a pandemic was declared by the World Health Organization due to the outbreak of the new Coronavirus (COVID-19). The main impacts and first cases were recorded in Brazil and in the world also in the first quarter of 2020.

The outbreak of COVID-19 developed rapidly in 2020 and continues until 2021. The measures taken to contain the virus greatly affected economic activity, including some impacts on the operating results and cash flows of the Companies in Brazil. Throughout 2020, lockdowns were decreed in several states in Brazil, lasting from March to June 2020.

In 2020, the Company has a robust infrastructure and is part of an extremely important segment in this period of crisis, essential for the population, government and health system.  After an internal analysis, there was no indication of impairment of assets or risks associated with the fulfillment of obligations since the Company is not highly leveraged and still has credit lines available to be used in the event of a significant reduction in cash volume. 

F-23

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

In 2021, the crisis worsened with an increase in the number of cases. Consequently, there was a need for new restrictive measures, including the closing of the trade, impacting the operation of stores again; however, the restrictions’ period was shorter in relation to 2020, thus, reducing the impact of closing of stores. Said restrictions were implemented mainly in the month of March in different cities in Brazil.

In September 2021, the country showed a significant evolution in vaccination levels, with a reduction in the transmission rate and number of cases. Thus, there was a slight improvement in economic activities. In June, the stores returned with activities with a positive impact on device sales.

We are in the 2nd year of the pandemic and there is no impact on the Company’s financial statements.

3. Estimates and areas where judgment is significant in the application of the Company's accounting policies

Accounting estimates and judgments are continuously assessed. They are based on the Company's historical experience and on other factors, such as expectations of future events, considering the circumstances present on the base date of financial statements.

By definition, the resulting accounting estimates will rarely be the same as the actual results. The estimates and assumptions that present a significant risk, with the probability of causing a material adjustment to the book values of assets and liabilities for the fiscal period, are covered below.

(a)       Impairment loss on non-financial assets and investments in associated companies

Impairment losses occur when book value of an asset or cash generating unit exceeds its recoverable value, which is the highest of fair value less selling costs and value in use. Calculation of fair value less selling costs is based on information available on similar assets’ selling transactions or market prices less additional costs to dispose of the asset. The calculation of value in use is based on the discounted cash flow model.

Any reorganization activities with which the Company is not committed to on the reporting date of the Presentation of financial statements or significant future investments that could improve the asset base of the cash generating unit under test are excluded for impairment testing purposes.

The main non-financial assets for which this assessment was made are goodwill recorded by the Company (note 15) and its tangible and intangible assets.

Net investments in associated companies are valued after applying the equity method to determine whether there is any objective evidence of impairment. The recoverable amount of an investment in an associated company must be determined for each investment, unless the associated company does not generate cash inflows on an ongoing basis that are largely independent of those generated by the entity’s other assets. The investment in an associated company was valued as described in Note 13.

F-24

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

(b)       Income tax and social contribution (current and deferred)

Income tax and social contribution (current and deferred) are calculated according to interpretations of current legislation and IAS 12. This process typically involves complex estimates to determine taxable income and temporary differences. In particular, the deferred assets on tax losses, negative basis of social contribution and temporary differences is recognized in proportion to the probability that future taxable income is available and can be used. The measurement of the recoverability of deferred income tax on tax losses, negative basis of social contribution and temporary differences takes the history of taxable income into account, as well as the estimate of future taxable income (note 10).

(c)       Provision for legal and administrative proceedings

The legal and administrative proceedings are analyzed by the Management along with its legal advisors (internal and external). The Company considers factors in its analysis such as hierarchy of laws, precedents available, recent court judgments, their relevance in the legal system and payment history. These assessments involve Management’s judgment (note 24).

(d)       Fair value of derivatives and other financial instruments

The financial instruments presented in the balance sheet at fair value are measured using valuation techniques that consider observable data or observable data derived from market (note 37).

(e)       Unbilled revenues

Since some cut dates for billing occur at intermediate dates within the months of the year, as the end of each month there are revenues earned by the Company, but not actually invoiced to its customers. These unbilled revenues are recorded based on estimate that takes into consideration historical consumption data, number of days elapsed since the last billing date, among others (note 27).

(f)       Leases

The Company has a significant number of the lease contracts in which it acts a lessee (note 16), and with the adoption of the accounting standard IFRS 16 – Leases, on 01/01/2019, certain judgments were exercised by Company’s management in measuring lease liabilities and right-of-use assets, such as: (i) estimate of the lease term, considering non-cancellable period and the period covered by options to extend the contract term, when the exercise depends only from the Company, and this exercise is reasonably certain; and (ii) using certain assumptions to calculate the discount rate.

The company is not able to readily determine the interest rate implicit on the lease and, therefore, considers its incremental rate on loans to measure lease liabilities. Incremental rate on the lessee’s loan is the interest rate that the lessee would have to pay when borrowing, for a similar term and with a similar guarantee, the resources necessary to obtain the asset with a value similar to the right of use asset in a similar economic environment. The company estimates the incremental rate using observable data (such as market interest rates) when available and considers aspects that are specific to the Company (such as the cost of debt) in this estimate.

F-25

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS

On December 31, 2021 - continued

(In thousands of Reais, except when otherwise indicated)

4. Cash and cash equivalents

These are financial assets measured at amortized cost through the effective interest rate method.

The Company’s Management determines the classification of its financial assets upon initial recognition.

	2021	2020
Cash and banks	99,821	100,009
Unrestrictedly available financial investments investments:
Bank Deposit Certificates (CDB)/Repurchase and resale agreements	5,128,794	2,475,282
	5,228,615	2,575,291

Bank certificates of deposit (“CDBs”) and committed transactions are nominative securities issued by banks and sold to the public as a form of fund raising. Such securities may be traded during the contracted term, at any time, without significant loss in their value and are used for the fulfilment of short-term obligations by the company.

The annual average return of the Company's investments related to CDBs and Committed Operations is 101.57% (101.24% as of December 31, 2020) of the variation of the Interbank Deposit Certificate – CDI.

F-26

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

5. Marketable securities

Comprise financial assets measured at fair value through profit or loss.

 Schedule of marketable securities

	2021	2020
FUNCINE (i)	11,508	7,061
Fundo Soberano (ii)	9,624	5,220
FIC: (iii)
Government bonds (iv)	2,975,613	1,345,797
CDB (v)	40,496	17,370
Financial bills (vi)	703,118	292,500
Other (vii)	839,169	409,551
	4,579,528	2,077,499
Current portion	(4,568,020)	(2,070,438)
Non-current portion	11,508	7,061

(i)	As of December 2017, the Company, with the aim of using tax deductibility benefit for income tax and social contribution purposes, started investing in the National Film Industry Financing Fund (FUNCINE). The average remuneration in 2021 is -0.06% p.a. (-3.34% p.a. on December 31, 2020).
(ii)	Fundo Soberano is composed only of federal government bonds. The average remuneration in 2021 is 95.13% (87.71% on December 31, 2020) of the variation of the interbank deposit certificate – CDI.
(iii)	In August 2017, the Company invested in open FIC's (Quota Investment Fund). Funds are mostly made up of federal government bonds and papers from top-tier financial institutions. The average remuneration in 2021 of the FICs was 122.76% (112.72% on December 31, 2020) of the variation of the Interbank Deposit Certificate – CDI.
(iv)	Government bonds are fixed income financial instruments issued by the National Treasury to finance the activities of the Federal Government.
(v)	The CDB operations are emitted by the banks with the commitment of stock buyback by the bank itself and with predetermined taxes.
(vi)	The Financial bills is a fix income tittle emitted by financial institutions with the objective of a long-term fund raising
(vii)	Is represented by: Debentures, FIDC, commercial notes, promissory notes, bank credit note.

6. Trade accounts receivable

These are financial assets measured at amortized cost, and refer to accounts receivable from users of telecommunications services, from network use (interconnection) and from sales of handsets and accessories. Accounts receivable are recorded at the price charged at the time of the transaction. The balances of accounts receivable also include services provided and not billed (“unbilled”) up to the balance sheet date. Accounts receivable from clients are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method less the provision for expected credit losses ("impairment").

F-27

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The provision for expected credit losses was recognized as a reduction in accounts receivable based on the profile of the subscriber portfolio, the aging of overdue accounts receivable, the economic situation, the risks involved in each case and the collection curve, at an amount deemed sufficient by Management, as adjusted to reflect current and prospective information on macroeconomic factors that affect the customers’ ability to settle the receivables.

The fair value of trade accounts receivable is close to the book value recorded on December 31, 2021 and December 31, 2020.

The average rate considered in calculating the present value of accounts receivable recorded in the long term is 0.19% (0.22% on December 31, 2020).

	2021	2020
Trade accounts receivable	3,253,207	3,180,661
Gross accounts receivables	4,000,026	3,831,921
Billed services	2,107,682	2,039,403
Unbilled services	849,762	817,669
Network use (interconnexion)	504,333	399,083
Goods sold	521,362	552,962
Contractual assets (note 23)	15,340	14,914
Other accounts receivable	1,547	7,890
Provision for expected credit losses	(746,819)	(651,260)
Current portion	(3,066,906)	(3,051,834)
Non-current portion	186,301	128,827

The movement of the provision for loss on expected settlement credits, accounted for as an asset reduction account, was as follows:

	2021	2020
Opening balance	651,260	774,077
Supplement to expected losses	544,642	552,817
Write-off of provision	(449,083)	(675,634)
Closing Balance	746,819	651,260

F-28

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The aging of accounts receivable is as follows: 

	2021	2020
Total	4,000,026	3,831,921
Undue	2,895,999	2,785,469
Overdue up to (days):
30	246,195	248,955
60	100,027	84,218
90	77,280	71,635
>90	680,525	641,644

7. Inventories

Inventories are presented at the average acquisition cost. A loss is recognized to adjust the cost of Handsets and accessories to the net realizable value (selling price) when this value is less than the average acquisition cost.

	2021	2020
Inventories	202,553	246,602
Inventories	214,605	257,477
Mobile handsets and tablets	140,934	186,961
Accessories and prepaid cards	53,791	55,558
TIM chips	19,880	14,958
Losses on adjustment to realizable amount	(12,052)	(10,875)

8. Recoverable indirect taxes, charges and contributions

	2021	2020
Recoverable indirect taxes, fees and contributions	1,259,932	1,230,801
ICMS	1,216,912	1,188,018
Other	43,020	42,783
Current portion	(354,620)	(374,015)
Non-current portion	905,312	856,786

The amounts of recoverable ICMS (state VAT) are mainly comprised by:

(i)	credits on the acquisition of property, plant and equipment directly related to the provision of telecommunication services (credits divided over 48 months).
(ii)	ICMS amounts paid under the tax substitution regime from goods acquired for resale, mainly mobile handsets, chips, tablets and modems sold by TIM.
(iii)	ICMS credits from the final and unappealable decision in May 2021 for a lawsuit involving the repetition of prepaid telephone services in Santa Catarina, in the amount of R$52 million.

F-29

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

9. Recoverable direct taxes, charges and contributions

 Schedule of direct taxes, fees and contributions recoverable

	2021	2020
Recoverable direct taxes, charges and contributions	2,042,361	2,698,239
Income tax (IR) and social contribution (CS) (i)	807,096	381,905
PIS / COFINS (ii)	1,164,772	2,253,545
Other	70,493	62,789
Current portion	(1,311,906)	(1,421,112)
Non-current portion	730,455	1,277,127

(i)

Income tax and social contribution amounts are mainly related to other income tax and social contribution credits from previous years, whose current estimated term for use is later than 12 months. In September 2021, the Federal Supreme Court (STF), with general repercussions, established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement using the SELIC rate in cases of undue payment. Although the aforementioned decision is still pending publication, as well as the specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to date, in the amount of R$ 547 million, since the likelihood of a favorable outcome for the Company becomes probable.

(ii)

The Recoverable PIS/COFINS amounts mainly refer to credits from a legal proceeding filed by TIM Celular S.A. (ultimately merged into TIM S.A., as well as TIM S.A. itself), with a favorable final decision in Higher Courts which discussed the exclusion of the ICMS from the PIS and COFINS calculation bases. According to the Company’s internal assessment, we expect to use these credits by the 2nd quarter of 2022.

In March 2017, the Federal Supreme Court (“STF”) recognized the unconstitutionality of including ICMS amounts in the calculation base of PIS and COFINS contributions.  TIM S.A. (previously named “Intelig Telecomunicações Ltda.”), as the surviving company from the merger of TIM Celular S.A. and other entities existing in the Group in the past, which had filed proceedings of the same nature, has been challenging this issue in court since 2006, with effects retroactive to five years, as permitted by the legislation. The total amount recorded in 2019 related to these credits was R$ 3,023 million, of which R$1,795 million relates to principal and R$1,228 million was inflation adjustment.

The amount recorded are updated monthly at the interest rate equivalent to the reference rate of the Special Settlement and Custody System (Selic), available on the website of the Brazilian Federal Revenue.

F-30

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

In 2020, TIM had utilized credits arising from the process of exclusion of ICMS from the calculation bases of PIS and COFINS, for payments of federal taxes, in the total amount of R$ 1,516 million. In 2021, total offsetting of R$ 957 million was made for said PIS and COFINS credits.

In May 2021, the Brazilian Supreme Court (STF) ended the discussion regarding the credit rights of the companies, defining in the judgment of Motions for Clarification that the exclusion of ICMS from the PIS and COFINS calculation basis is valid as of March 15, 2017, when the general repercussion thesis (Topic 69) was established, in the judgment of Special Appeal (RE) No. 574706.

Considering that the judges ratified that the ICMS not included in the PIS/COFINS calculation basis is highlighted in the invoice, we confirm that the procedures adopted by TIM S.A., when providing for PIS/COFINS credits, are adequate. 

10. Deferred income tax and social contribution

Deferred income tax and social contribution are recognized regarding the (1) accumulated tax losses and negative bases of social contribution and (2) temporary differences arising from differences between the tax basis of assets and liabilities and their book values in the financial statements. Deferred income tax is determined using the tax rates (and tax laws) enacted, or substantially enacted, up to the balance sheet date. Subsequent changes in tax rates or tax legislation may modify the deferred tax credit and debit balances.

Deferred tax assets on income tax and social contribution are recognized only in the event of a profitable track record and/or when the annual forecasts prepared by the Company, examined by the Tax Council and Statutory Audit Committee and approved by other Management bodies, indicate the likelihood of the future realization of those tax credits.

The balances of deferred income tax assets and liabilities are presented at net value in balance sheet when there is the legal right and the intention of offsetting them upon calculation of current taxes, in general related to the same legal entity and the same tax authority. Thus, deferred tax assets and liabilities belonging to different entities are in general shown separately, not at their net amounts.

On December 31, 2021 and 2020, the rates in force were 25% for income tax and 9% for social contribution. In addition, there is no statute of limitation in regard to the income tax and social contribution carried forward losses, which it can be offset by up to 30% of the taxable profit reached at each fiscal year, according to the current tax legislation. 

F-31

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The amounts recorded are as follows:

	2021	2020
Tax loss and negative basis of social contribution	219,876	475,128
Temporary differences:
Provision for legal and administrative proceedings	330,627	303,948
Losses on doubtful accounts receivable	257,529	224,459
Adjustments to present value – 3G license	3,298	5,240
Lease of LT Amazonas infrastructure	32,377	29,971
Employee profit sharing	40,177	36,915
Taxes with enforceability suspended (i)	437,950	258,246
Amortized Goodwill – TIM Fiber (ii)	(34,560)	(370,494)
Derivative financial instruments	(143,948)	(154,718)
Capitalized interest on 4G authorization	(233,433)	(262,608)
Deemed costs – TIM S.A	(42,617)	(53,792)
Adjustments to lease agreements	369,521	303,833
Accelerated depreciation (iii)	(466,863)	(266,464)
Fair value adjustment I–Systems (former FiberCo) (iv)	(249,477)	-
Other	16,431	20,982
	536,888	550,646
Deferred active tax portion	536,888	550,646

(i)	Mainly represented by the Fistel fee for the financial years 2020 and 2021. The Operating Inspection Fee (TFF) for the years 2020 and 2021 had its payments suspended by virtue of an injunction and, therefore, still do not have a specific date for payment. See note 21 for details.
(ii)	Represented by the goodwill on the business combination of companies TIM Fiber RJ and SP acquired by TIM in 2012, partially realized in November 2021 once this transaction is completed.
(iii)	As of the 1Q20, TIM S.A. excludes the portion of acceleration of depreciation of movable assets belonging to property, plant and equipment from the calculation basis of the IRPJ and CSLL, due to their uninterrupted use in three operating shifts, supported by technical expert report, as provided for in Article 323 of the RIR/2018, or by the adequacy to the tax depreciation provided for in IN 1700/2017. Such tax adjustment generated a deferred liability of R$ 467 million until December 31, 2021 (R$ 266.5 million up to December 31, 2020) and applied as of January 1, 2020.
(iv)	Refers to deferred charges on the fair value of the non-majority interest calculated in the sale transaction described in Note 1 that took place in November 2021 between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda.

Expectation of recovery of tax credits

The estimates of recoverability of tax credits were calculated taking into consideration financial and business assumptions available on December 31, 2021.

F-32

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Based on these projections, the company has the following expectation of recovery of credits:

Deferred income tax and social contribution	Tax losses and negative basis
2022	103,847
2023	79,581
2024	36,448
2025	-
Total	219,876

The company based on a history of profitability and based on projections of future taxable results, constitutes deferred income tax credits and social contribution on all of its tax losses, negative social contribution basis and temporary differences.

The Company used credits from tax losses and the negative basis of social contribution in the amount of R$ 255,252 during the year up to December 31, 2021 (R$ 325,583 on December 31, 2020, including tax losses).

11. Prepaid expenses

 Schedule of prepaid expenses

	2021	2020
	358,287	223,394
Advertisements not released (i)	86,154	1,679
Rentals and insurance	67,034	69,208
Incremental costs for obtaining contracts with customers (ii)	153,988	125,114
IT Services (iii)	28,626	10,535
Other	22,485	16,858
Current portion	(275,148)	(149,796)
Non-current portion	83,139	73,598

(i)	Represent prepaid payments of advertising expenses for products and services of the TIM brand that are recognized in the result according to the period of serving the advertisement.
(ii)	It is substantially represented by incremental costs related to sales commissions paid to partners for obtaining customer contracts arising from the adoption of IFRS 15, which are deferred to the result in accordance with the term of the contract and/or economic benefit, usually from 1 to 2 years.
(iii)	They represent prepayments of IT services expenses for network migration of information to the “cloud.”

F-33

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

12. Judicial deposits

 Schedule of detailed information about judicial deposits

They are recorded at historical cost and updated according to current legislation:

	2021	2020
	718,773	794,755
Civil	285,583	315,312
Labor	128,607	149,390
Tax	178,914	181,670
Regulatory	111	111
Online attachment (i)	125,558	148,272

(i) Refer to legal blockages directly in the company's current accounts and financial investments linked to certain legal proceedings. This amount is periodically analyzed and when identified, reclassification is made to one of the other specific accounts of the legal deposit item.

Civil

These are court deposits to guarantee the execution of civil proceedings where the Company is challenging the amounts involved. Most of these proceedings refer to lawsuits filed by customers, involving issues of consumer rights, among others.

There are some processes with differentiated matters, for instance, in which the value set by ANATEL for vacating certain transmission sub-bands is discussed, enabling the implementation of 4G technology. In this case, the amount deposited updated in court under discussion is R$ 72,533 (R$ 70,560 on December 31, 2020). 

Labor

These are amounts deposited in court as guarantees for the execution and the filing of appropriate appeals, where the relevant matters or amounts involved are still being discussed. The total amount has been allocated between the various claims filed by registered employees and third-party service providers.

F-34

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Tax

The company has legal deposits, relating to tax matters, made to support several ongoing legal discussions. Such deposits mainly relate to the following discussions:

(a) Use of credit in the acquisition of electricity directly employed in the production process of companies, matter with positive bias in the judiciary. The current value of the deposits referring to this discussion is R$ 34,289 (R$ 34,544 on December 31, 2020).

(b) CPMF levy on loan conversion operations into the Company’s equity; recognition of the right not to collect the contribution allegedly levied on the simple change of ownership of current accounts due to merger. The current value of the deposits referring to this discussion is R$ 9,073 (R$ 8,862 on December 31, 2020).

(c) Constitutionality of the collection of the functioning supervision fee (TFF - Taxa de Fiscalização do Funcionamento) by municipal authorities of different localities. The current value of the deposits related to this discussion is R$ 20,022 (R$ 18,883 as of December 31, 2020).

(d) Non-homologation of compensation of federal debts withholding income tax credits (IRRF) for the alleged insufficiency of credits, as well as the deposit made for the purposes of release of negative Certificate of debts. The current value of the deposits related to this discussion is R$ 11,254 (R$ 11,317 as of December 31, 2020).

(e) Incidence of ISS on import services and third parties; alleged lack of collection in relation to ground cleaning and maintenance service of BRS (Base Radio Station), the ISS itself, the ISS incident on co-billing services and software licensing (blackberry). Guarantee of the right to take advantage of the benefit of spontaneous denunciation and search for the removal of confiscatory fines in the case of late payment. The current value of the deposits related to this discussion is R$ 8,048 (R$ 7,843 as of December 31, 2020).

(f) Accessory services provided for in the agreement 69/98 ICMS incident on the provision of communication services of the amounts charged for ACCESS, Membership, Activation, qualification, availability, subscription and use of the services, among others. The current value of the deposits related to this discussion is R$ 3,478 (R$ 3,329 as of December 31, 2020).

(g) Requirement by ANATEL of the public price for the administration of numbering resources. The current value of the deposits related to this discussion is R$ 3,582 (R$ 3,514 as of December 31, 2020).

(h) Deposit made by TIM S. A – unconstitutionality and illegality of the collection of FUST (Fund for Universalisation of Telecommunications Services). The right not to collect FUST, failing to include in its calculation base the revenues transferred by way of interconnection and EILD (Industrial Exploitation of Dedicated Line), as well as the right not to suffer the retroactive collection of the differences determined in function of not observing sum 7/2005 of ANATEL. The current value of the deposits referring to this discussion is R$ 61,752 (R$ 58,664 on December 31, 2020).

F-35

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

(i) ICMS - Miscellaneous. Deposits made in several processes that discuss ICMS charges, mainly related to discussions on loan, DIFAL, exempt and non-taxed services, ICAP and Covenant 39. The current value of the deposits related to this discussion is R$ 9,960 (R$ 14,505 on December 31, 2020).

(j) CSLL - charges related to cases of Jornal do Brasil that were directed to the company, as well as charges related to successful Negative BC Compensation/Tax Loss. The current value of the deposits related to this discussion is R$ 9,730 (R$ 9,739 on December 31, 2020).

13. Investment

The ownership interest in associated company or subsidiary is valued using the equity accounting method.

TIM’s Board of Directors, after analyzing the studies prepared and the non-binding proposals received, approved, in a meeting held on December 10, 2020, the incorporation of FiberCo Soluções de Infraestrutura Ltda. (“FiberCo”), a limited liability company, in preparation for a possible (or eventual) segregation of assets and provision of residential fiber optic infrastructure services. The Company was organized on December 16, 2020 and transformed on a limited liability corporation in May 2021.

This process was one of the intermediate steps in the transformation of TIM in a provider of broadband services, and aimed to create an open fiber optic infrastructure vehicle (“FiberCo”) with the acquisition of a strategic partner that will become a partner of FiberCo. FiberCo operates in the wholesale market and can provide last-mile fiber connectivity and transportation services to market operators, with TIM as the client (see note 1).

As mentioned in note 1, in November 2021, as a result of the spin-off of net assets of the broadband business and the creation of I-Systems (formerly FiberCo) with subsequent sale of 51% of its equity interest on behalf of IHS, TIM S.A. assessed the transaction as a loss of control and stopped consolidating it, recording the investment in an associated company, in the amount of R$ 1,612,957 at fair value for the remaining minority interest (non-controlling) of 49% (R$ 1,601,703 as of December 31, 2021).

TIM S.A. has 49% (100% as of December 31, 2020) in the share capital of I-Systems (formerly FiberCo).

On December 31, 2021, the Company does not present indications of impairment in the recorded net investment.

F-36

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

a) Interest in subsidiary

As of December 31, 2020, TIM S.A. held 100% control over FiberCo (currently I-Systems).

	2021 Fiber Co (current I-Systems)	2020 Fiber Co (current I-Systems)
Number of quotas/shares held	1,000	1,000
Interest in total capital	100%	100%
Shareholders' equity at 10/31/2021	(318)	1
Net loss from January to October 2021	(318)	-
Share of loss until October 31, 2021	(318)	-
Amount of the investment on December 31	-	1

Changes in investments in subsidiaries:

	FiberCo (current I-Systems) (subsidiary)
Balance of investment at December 31, 2020	1
Share of loss until October 2021	(318)
Capital increase	1,211,789
Write-off of investment	(1,211,472)
Balance of investment at November 16, 2021	-

F-37

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

b) Interest in associate

On December 31, 2021, the Company does not have subsidiaries in its corporate structure. In November 2021, TIM S.A. started having I-Systems as an affiliated company and to record the income (loss) of this company under the equity method, no longer consolidating it.

	2021 I-Systems
Number of shares held	1,794,287,995
Interest in total capital	49%
Shareholders' equity	1,794,288
Net loss for the year	(22,968)
Equity in earnings	(11,254)
Investment amount	1,601,703

Change of investment in associate:

	I-Systems (associated company)
Balance of investment at December 31, 2020	-
Revaluation of minority interest at fair value	1,612,957
Share of loss - November 2021 and December 2021	(11,254)
Balance of investment at December 31, 2021	1,601,703

14. Property, plant and equipment

Property, plant and equipment are stated at acquisition and/or construction cost, less accumulated depreciation and impairment losses (the latter only if applicable). Depreciation is calculated based on the straight-line method over terms that take into account the expected useful lives of the assets and their residual values. As of December 31, 2021, and December 31, 2020, the Company has no indication of impairment in its property, plant and equipment.

The estimated costs of dismantling towers and equipment on rented properties are capitalized and depreciated over the estimated useful lives of these assets. The Company recognizes the present value of these costs in property, plant and equipment with a counter-entry to the liability “provision for future asset retirement.” Interest incurred on updating the provision is classified within financial expenses.

Gains and losses on disposal are determined by comparing the amounts of these disposals with the book value at the time of the transaction and are recognized in “other operating income (expenses), net” in the statement of income.

· Changes in property, plant and equipment

F-38

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

	Balance at December 2020	Additions	Write-offs (i)	Transfers	Balance at December 2021
Total cost of property, plant and equipment, gross	47,429,167	5,572,362	(3,841,851)	-	49,159,678
Commutation/transmission equipment	25,875,916	26,905	(2,920,511)	2,872,144	25,854,454
Fiber optic cables	878,100	-	(125,366)	25,778	778,512
Leased handsets	2,643,336	805	(13,495)	175,808	2,806,454
Infrastructure	6,436,572	-	(511,635)	518,348	6,443,285
Informatics assets	1,770,386	-	(46,584)	32,538	1,756,340
General use assets	902,287	-	(43,401)	57,959	916,845
Right-of-use assets	8,367,895	1,591,307	(179,875)	-	9,779,327
Land	40,794	-	-	-	40,794
Construction in progress	513,881	3,953,345	(984)	(3,682,575)	783,667
Total Accumulated Depreciation	(29,328,469)	(3,951,760)	2,428,951	-	(30,851,278)
Commutation/transmission equipment	(18,130,526)	(1,983,589)	1,926,121	-	(18,187,994)
Fiber optic cables	(482,613)	(65,669)	26,077	-	(522,205)
Leased handsets	(2,398,217)	(145,661)	9,187	-	(2,534,691)
Infrastructure	(4,018,854)	(408,540)	384,239	-	(4,043,155)
Informatics assets	(1,617,970)	(58,209)	46,449	-	(1,629,730)
General use assets	(637,903)	(48,204)	36,878	-	(649,229)
Right-of-use assets	(2,042,386)	(1,241,888)	-	-	(3,284,274)
Total property, plant and equipment, net	18,100,698	1,620,602	(1,412,900)	-	18,308,400
Commutation/transmission equipment	7,745,390	(1,956,684)	(994,390)	2,872,144	7,666,460
Fiber optic cables	395,487	(65,669)	(99,289)	25,778	256,307
Leased handsets	245,119	(144,856)	(4,308)	175,808	271,763
Infrastructure	2,417,718	(408,540)	(127,396)	518,348	2,400,130
Informatics assets	152,416	(58,209)	(135)	32,538	126,610
General use assets	264,384	(48,204)	(6,523)	57,959	267,616
Right-of-use assets	6,325,509	349,419	(179,875)	-	6,495,053
Land	40,794	-	-	-	40,794
Construction in progress	513,881	3,953,345	(984)	(3,682,575)	783,667

(i) Net write-offs are mainly represented by:

· R$ 1,218,340 as write-off of property, plant and equipment, which makes up part of the balance of R$ 1,211,789 of net assets that was paid-in as share capital of I-Systems (formerly FiberCo) on November 1, 2021, as described in note 1.

· R$ 179,875 in right-of-use assets due to remeasurement of contracts, including changes in the term and scope of leases.

F-39

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

	Balance in December 2019	Additions	Write-offs (i)	Transfers	Balance in December 2020
Total cost of property, plant and equipment, gross	43,358,751	4,687,207	(616,791)	-	47,429,167
Commutation/transmission equipment	22,817,681	10,464	(174,249)	3,222,020	25,875,916
Fiber optic cables	813,589	-	-	64,511	878,100
Leased handsets	2,489,995	912	(7,140)	159,569	2,643,336
Infrastructure	6,096,847	92,234	(8,063)	255,554	6,436,572
Informatics assets	1,721,251	1	(9,996)	59,130	1,770,386
General use assets	859,505	1	(1,544)	44,325	902,287
Right-of-use assets	6,933,416	1,849,539	(415,060)	-	8,367,895
Land	40,794	-	-	-	40,794
Construction in progress	1,585,673	2,734,056	(739)	(3,805,109)	513,881
					-
Total accumulated depreciation	(25,746,587)	(3,767,678)	185,796	-	(29,328,469)
Commutation/transmission equipment	(16,389,213)	(1,906,480)	165,167	-	(18,130,526)
Fiber optic cables	(410,567)	(72,046)	-	-	(482,613)
Leased handsets	(2,256,863)	(143,309)	1,955	-	(2,398,217)
Infrastructure	(3,593,833)	(432,549)	7,528	-	(4,018,854)
Informatics assets	(1,565,309)	(62,649)	9,988	-	(1,617,970)
General use assets	(590,658)	(48,403)	1,158	-	(637,903)
Right-of-use assets	(940,144)	(1,102,242)	-	-	(2,042,386)
Total property, plant and equipment, net	17,612,164	919,529	(430,995)	-	18,100,698
Commutation/transmission equipment	6,428,468	(1,896,016)	(9,082)	3,222,020	7,745,390
Fiber optic cables	403,022	(72,046)	-	64,511	395,487
Leased handsets	233,132	(142,397)	(5,185)	159,569	245,119
Infrastructure	2,503,014	(340,315)	(535)	255,554	2,417,718
Informatics assets	155,942	(62,648)	(8)	59,130	152,416
General use assets	268,847	(48,402)	(386)	44,325	264,384
Right-of-use assets	5,993,272	747,297	(415,060)	-	6,325,509
Land	40,794	-	-	-	40,794
Construction in progress	1,585,673	2,734,056	(739)	(3,805,109)	513,881

(i) The amount of R$ 415,060 is represented by remeasurement of contracts and includes changes in the term and scope of leases and a review of the estimate in relation to low-value vehicle contracts.

The construction in progress represent the cost of projects in progress related to the construction of networks and/or other tangible assets in the period of their construction and installation, until the moment they come into operation, when they will be transferred to the corresponding accounts of these assets.

The lease rights of use are represented by leased agreements of identifiable assets within the scope of IFRS16 standard. These rights refer to leases of network infrastructure, stores and kiosks, real estate, land (Network) and fiber, as below:

F-40

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Right-of-use assets	Network infrastructure	Shops & kiosks & real estate	Land (Network)	Fiber	Total
Balances at December 31, 2020	3,019,900	400,262	1,500,909	1,404,438	6,325,509
Additions	630,805	295,874	237,150	427,478	1,591,307
Remeasurement	(83,606)	(45,312)	(23,772)	(27,185)	(179,875)
Depreciation	(518,590)	(109,512)	(210,054)	(403,732)	(1,241,888)
Balances at December 31, 2021	3,048,509	541,312	1,504,233	1,400,999	6,495,053
Useful life – %	7.86%	9.70%	9.47%	3.24%

· Depreciation rates

	Annual fee %
Commutation/transmission equipment	08–14.29
Fiber optic cables	4–10
Leased handsets	14.28–50
Infrastructure	4–20
Informatics assets	10–20
General use assets	10–20

In 2021, pursuant to IAS 16, approved by a CVM Deliberation, the Company assessed the useful life estimates for their property, plant and equipment, and concluded that there were no significant changes or alterations to the circumstances on which the estimates were based that would justify changes to the useful lives currently in use. As of December 31, 2021, and December 31, 2020, the Company has no indication of impairment in its property, plant and equipment.

15. Intangible assets

Intangible assets are measured at historical cost less accumulated amortization and impairment losses (if applicable) and reflect: (i) the purchase of authorizations and rights to use radio frequency bands, and (ii) software in use and/or development. Intangible assets also include: (i) infrastructure right-of-use of other companies, and (ii) goodwill on expectation of future profits in purchases of companies.

Amortization charges are calculated using the straight-line method over the estimated useful life of the assets contracted and over the terms of the authorizations. The useful life estimates of intangible assets are reviewed regularly.

Financial costs on funds raised generically (with no specific allocation), used to obtain a qualifying asset, which is an asset that necessarily demands a substantial period of time to become ready for intended use is capitalized as part of this asset’s cost when it is probable that will result in future economic benefits to the Company and such costs can be reliably measured. Within this concept, we had the capitalization of costs for the 700MHz 4G license between 2014 and 2019 and we currently have the capitalization of costs on the acquisition of the 5G license for the radio frequency not readily available and other obligations related to such radio frequency. Said capitalization occurs until the asset is considered available for use by Management, and as of that date onwards, capitalization of interest and charges on this asset ends. These costs are amortized over the estimated useful lives.

F-41

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The values of permits for the operation of SMP and rights to use radio frequencies, as well as software, goodwill and others are demonstrated as follows:

 Schedule of movement in intangible assets

(a) Changes in intangible assets

	Balance in December 2020	Additions/ Amortization	Write-offs	Transfers	Balance in December 2021
Total cost of intangible assets, gross	31,444,050	4,352,331	(1,165,840)	-	34,630,541
Right to use software	19,117,515	-	(112,626)	906,115	19,911,004
Authorizations	9,931,248	50,408	(1,737)	1,171,578	11,151,497
Goodwill (i)	1,527,220	-	(1,051,477)	-	475,743
Infrastructure right-of-use - LT Amazonas	177,866	-	-	8,355	186,221
Other assets	329,626	-	-	3,490	333,116
Intangible assets under development	360,575	4,301,923	-	(2,089,538)	2,572,960
Total accumulated amortization	(22,416,975)	(1,739,937)	111,450	-	(24,045,462)
Right to use software	(16,378,487)	(1,164,210)	110,679	-	(17,432,018)
Authorizations	(5,816,241)	(542,196)	771	-	(6,357,666)
Infrastructure right-of-use - LT Amazonas	(67,966)	(8,731)	-	-	(76,697)
Other assets	(154,281)	(24,800)	-		(179,081)
Total intangible assets, net	9,027,075	2,612,394	(1,054,390)	-	10,585,079
Right to use software (c)	2,739,028	(1,164,210)	(1,947)	906,115	2,478,986
Authorizations (f)	4,115,007	(491,788)	(966)	1,171,578	4,793,831
Goodwill (d)	1,527,220	-	(1,051,477)	-	475,743
Infrastructure right-of-use - LT Amazonas (e)	109,900	(8,731)	-	8,355	109,524
Other assets	175,345	(24,800)	-	3,490	154,035
Intangible assets under development	360,575	4,301,923	-	(2,089,538)	2,572,960

(i) Includes the write-off of approximately 90% of the total goodwill recorded on the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A., in the amount of R$ 1,051,477.

F-42

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

	Balance in December 2019	Balance of merged company	Additions/ Amortization	Write-offs	Transfers	Balance in December 2020
Total cost of intangible assets, gross	29,861,788	367,571	1,215,636	(945)	-	31,444,050
Right to use software	18,184,382	-	-	(939)	934,072	19,117,515
Authorizations	9,811,794	-	32,105	(6)	87,355	9,931,248
Goodwill	1,159,649	367,571	-	-	-	1,527,220
Infrastructure right-of-use - LT Amazonas	169,327	-	8,539	-	-	177,866
Other assets	327,360	-	-	-	2,266	329,626
Intangible assets under development	209,276	-	1,174,992	-	(1,023,693)	360,575
Total Accumulated Amortization	(20,561,032)		(1,856,917)	974	-	(22,416,975)
Right to use software	(15,093,166)	-	(1,286,295)	974	-	(16,378,487)
Authorizations	(5,278,413)	-	(537,828)	-	-	(5,816,241)
Infrastructure right-of-use - LT Amazonas	(60,204)	-	(7,762)	-	-	(67,966)
Other assets	(129,249)	-	(25,032)	-		(154,281)
Total intangible assets, net	9,300,756	367,571	(641,281)	29	-	9,027,075
Right to use software (c)	3,091,216	-	(1,286,295)	35	934,072	2,739,028
Authorizations (f)	4,533,381	-	(505,723)	(6)	87,355	4,115,007
Goodwill (d)	1,159,649	367,571	-	-	-	1,527,220
Infrastructure right-of-use - LT Amazonas (e)	109,123	-	777	-	-	109,900
Other assets	198,111	-	(25,032)	-	2,266	175,345
Intangible assets under development	209,276	-	1,174,992	-	(1,023,693)	360,575

F-43

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The intangible assets in progress represent the cost of projects in progress related to the intangible assets in the period of their construction and installation, until the moment they come into operation, when they will be transferred to the corresponding accounts of these assets. Includes 5G License acquisition values, pursuant to note 15.f.

 Schedule of amortization rates

(b) Amortization rates

	Annual fee %
Software licenses	20
Authorizations	5–50
Right to use infrastructure	5
Other assets	7–10

(c) Right to use software 

The costs associated with maintaining software are recognized as expense, as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the group are recognized as intangible assets when capitalization criteria are met.

Directly attributable costs that are capitalized as part of the software product are related to employee costs directly allocated in its development.

(d) Goodwill registered in previous years

The Company has the following goodwill, based on the expected future profitability on December 31, 2021 and 2020:

Goodwill from TIM Fiber SP and TIM Fiber RJ acquisitions - TIM Celular S.A (merged by Intelig, current TIM S.A) acquired, at the end of 2011, the companies Eletropaulo Telecomunicações Ltda. (which subsequently had its trade name changed to TIM Fiber SP Ltda. – “TIM Fiber SP”) and AES Communications Rio de Janeiro S.A. (which subsequently had its trade name changed to TIM Fiber RJ S.A. – “TIM Fiber RJ”). These companies were SCM providers in the main municipalities of the Greater São Paulo and Greater Rio de Janeiro areas, respectively. TIM Fiber SP Ltda. and TIM Fiber RJ. S.A. were merged into TIM Celular S.A. on August 29, 2012. TIM Celular S.A. recorded the goodwill allocation related to the purchase of the companies TIM Fiber SP and TIM Fiber RJ, at the end of the purchase price allocation process, in the amount of R$ 1,159,649.

In November 2021, the Company concluded the drop-down of liquid assets related to the residential broadband business linked to the secondary network infrastructure to the wholly-owned subsidiary FiberCo and sold 51% of the equity interest in FiberCo, currently named I- Systems, on behalf of IHS. Currently, due to the closing of the transaction, TIM S.A. wrote-off about 90% of the total goodwill recorded in the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A. in the amount of R$ 1,051,477. As a result, IHS currently holds 51% of the share capital of I-Systems, with TIM S.A. having a minority (non-controlling) interest of 49% in I-Systems. Consequently, with the closing of this deal in November 2021, the goodwill initially recorded on the acquisition of the companies Fiber RJ and Fiber SP was reduced to R$ 108,171. This is the balance recorded on December 31, 2021.

F-44

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

On August 31, 2020, with the merger of TIM Participações S.A. by TIM S.A, the Company recorded the goodwill arising from the merger of the net assets of TIM Participações, which were originated in acquisition transactions as described below:

Goodwill acquisition of "Intelig" by TIM Participações – the goodwill arising from the acquisition of TIM S.A. (formerly "Intelig") in December 2009 in the amount of R$ 210,015 is represented/based on the expectation of future profitability of the Company. Its recoverability is tested annually, through the impairment testing.

Goodwill from the acquisition of minority interests in TIM Sul and TIM Nordeste – TIM Participações S.A. (merged by TIM S.A. in August 2020) acquired in 2005, all the shares of the minority shareholders of TIM Sul and TIM Nordeste, in exchange for shares issued by TIM Participações, converting these companies into full subsidiaries. The goodwill resulting from this transaction amounted to R$ 157,556. 

Impairment test

As required by the accounting standard, the Company tests goodwill on business combinations involving TIM Group companies.

The methodology and assumptions used by Management for the aforementioned impairment test is summarized below:

The management of the Company understands that the smallest unit generating cash for impairment testing of goodwill in the acquisition of the companies previously described covers the business at the consolidated level, therefore it covers the consolidated group. This methodology is aligned with the company's strategic direction. It is important to note that the results of the group are essentially represented by TIM S.A. Thus, the results of TIM S.A. are the main cash generator of the TIM Group, since the only operating company operating in Brazil is TIM S.A., and thus the Company represents a single cash-generating unit for the purpose of impairment test of assets with indefinite useful lives, pursuant to IAS 36.

F-45

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

On December 31, 2021, the impairment test was performed by comparing the book value with the fair value minus the disposal costs of the asset, as foreseen in IAS 36.

For the calculation of fair value, the level of hierarchy within which the measurement of the fair value of the asset (cash generating unit) is classified was considered. For the company, as there is only one CGU this was classified in its entirety as Level 1, for the disposal costs we consider that it is irrelevant considering the variation between the fair value level 1 and the book value of the cash generating unit.

The fair value of Level 1 financial instruments comprises the instruments traded in active markets and based on quoted market prices on the balance sheet date. A market is considered active when the quoted prices are readily and regularly available from an Exchange, distributor, broker, industry group, pricing service or regulatory agency, and these prices represent actual market transactions which occur regularly on a purely commercial basis.

Its securities are traded on BOVESPA with code (TIMS3) and have a regular trading volume that allows the measurement (Level 1) as the product between the quoted price for the individual asset or liability and the amount held by the entity.

The measurement was made based on the value of the share at the balance sheet closing date and sensitivity tests were also performed and in none of the scenarios was identified any indication of impairment, being the fair value determined higher than the book value. Therefore, being the fair value higher than the book value, it is not necessary to calculate the value in use. The effects of TIM Participações holding (incorporated by TIM S.A) on the value of the book value in 2021 were irrelevant and also its effects on the result of the Consolidated Group. Therefore, the calculations carried out at the consolidated level essentially contemplate the results and accounting balances of TIM S.A., so the management of the Company concludes that the use of the fair value less of cost of sales methodology is adequate to conclude that there is no provision for impairment since the fair value less the cost of sales is higher than the total book value of the cash generating unit.

(e) Infrastructure right-of-use - LT Amazonas

The company has signed infrastructure rights agreements with companies that operate electricity transmission lines in the Northern Region of Brazil. These contracts fall within the scope of IFRIC 4 as financial commercial leases.

Additionally, the Company has signed network infrastructure sharing agreements with Telefónica Brasil S.A., also in the North Region. In these, the two operators optimize resources and reduce their respective operating costs (note 16).

(f) Authorizations

In this item are recorded the values related to the acquisition of Lot 2 in the auction of the 700 MHz band in the amount of R$ 1,739 million, in addition to the costs related to the cleaning of the frequency of the 700 MHZ band acquired, which totaled R$1,199 million, in nominal values. As it is a long-term obligation, the amount payable of R$ 1,199 million was reduced by R$ 47 million by applying the concept of adjustment to present value (“AVP”). The aforementioned license falls under the concept of qualifying asset. Consequently, the financial charges on resources raised without a specific destination, used for the purpose of obtaining a qualifying asset, were capitalized between the years 2014 to 2019.

F-46

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

In 2021, the Company recorded the values related to the acquisition of the 5th Generation (“5G”) mobile telephony radio frequencies. In November 2021, TIM participated in the 5G Auction and was the winner of several lots in the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands. These licenses will be paid over a period of 10 to 20 years, subject to the Selic rate. In December 2021, the Company signed the Terms of Authorization for these radio frequencies, generating the accounting of an intangible asset related to the licenses in the amount of R$ 884 million and the obligations related to said licenses (among them, disbursements with costs of the public notice and disbursement obligations with the management entities described below) in the amount of R$ 2,680 million.

Aiming to fulfill the additional obligations, the Company foresees, according to the notice, that there will the constitution of managing entities, which are only intended to fulfill the commitments provided for in the Auction. The companies that win the Auction must disburse only the amounts provided for in the public notice so that such entities comply with the defined obligations. There are additional obligations provided for related to 3.5GHz radio frequency (the band cleaning obligation, interference solution, among others), which must be complied with by the Band Management Entity (“EAF”), and related to 26GHz radio frequency (connectivity project for public schools), which must be complied with by the Entity Managing the Connectivity of Schools (“EACE”).

The 2.3GHz and 26GHz radio frequencies are readily available for use by the Company (operating assets), generating the registration in “Authorizations” of the amounts related to the licenses (R$ 614 million) and the obligations related to the 26GHz license, which will be fulfilled through EACE (R$ 550 million). The disbursements with EACE (R$ 633 million), provided for in the Public Notice, will occur in 5 semi-annual installments between 2022 and 2024, and are monetarily restated by the IGP-DI. The Company evaluated the application of the concept of adjustment to present value (“AVP”) upon initial recognition (R$ 83 million).

The 3.5GHz radio frequency is not readily available, requiring spectrum cleaning activities to be available for use, and, thus, it is registered in assets in progress (R$ 270 million). Therefore, the obligations related to this activity, to be carried out by EAF (R$ 2,104 million) are also recorded under assets in progress. The disbursements with EAF, provided for in the Notice, will occur in 2 installments throughout the year 2022, and are restated by the IGP-DI.

Furthermore, as described above, the Company capitalizes loan costs for qualifying assets that require a substantial period of time to be in a condition for use as intended by Management. This concept includes the 3.5GHz radio frequency. On December 31, 2021, the Company recorded R$ 1 million in intangible assets referring to Selic interest incurred on the 3.5GHz radio frequency and R$ 19 million related to the monetary restatement of amounts due to EAF. Said balances are recorded under assets in progress.

F-47

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Thus, the total effect on the Company’s intangible assets in 2021 referring to 5G radio frequencies and related obligations was R$ 3,584 million, of which R$ 2,394 in assets in progress and R$ 1,190 million in Authorizations.

16. Leases

Leases that the Company, as a lessee, holds substantially all the risks and rewards of ownership are classified as finance leases. They are capitalized at the lease's commencement at the lower of the fair value of the leased asset and the present value of payments provided for in contract, and lease liability as a counterparty. Interest related to the leases is recognized in the statement of income as financial costs over the term of the contract.

Leases in which the Company, as a lessor, transfers substantially all the risks and rewards of ownership to the other party (lessee) are classified as finance leases. These lease values are transferred from the intangible assets of the Company and are recognized as a lease receivable at the lower of the fair value of the leased item and/or the present value of the receipts provided for in the agreement. Interest related to the lease is recognized in the statement of income as financial income over the contractual term. 

Asset leases are financial assets or liabilities classified and/or measured at amortized cost.

Assets

	2021	2020
LT Amazonas	166,944	162,198
Subleases - Stores – IFRS 16	76,177	-
	243,121	162,198
Current portion	(30,076)	(5,357)
Non-current portion	213,045	156,841

The table below presents the schedule of cash receipts for the agreement currently in force, representing the estimated receipts (nominal values) in the signed agreements. These balances differ from those shown in the books since, in the case of the latter, the amounts are shown at present value:

Schedule of lease receivables nominal and present value 

	Up to December 2022	Jan 2023–Dec 2026	Jan 2027 onwards	Nominal values	Present value
	55,939	167,320	176,895	400,154	243,121
LT Amazonas (i)	26,124	106,491	176,895	309,510	166,944
Subleases - Stores – IFRS 16 (ii)	29,815	60,829	-	90,644	76,177

(i) LT Amazonas

As a result of the contract signed with LT Amazonas, the Company signed network infrastructure sharing agreements with Telefónica Brasil S.A. In these agreements, the company and Telefónica Brasil S.A. share investments made in the Northern Region of Brazil. The company has monthly amounts receivable from Telefónica Brasil S.A. for a period of 20 years, adjusted annually by the IPC-A. The discount rate used to calculate the present value of the installments due is 12.56% per annum, considering the date of signing the agreement.

F-48

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

(ii) Subleases - Stores - IFRS 16

The Company, due to sublease agreements for third parties in some of its stores, recognized the present value of short and long term receivables, which are equal in value and term to the liability cash flows of the contracts called “resale stores.” The impact on lease liabilities is reflected in “Leases - Stores & Kiosks.”

Liabilities

	2021	2020
LT Amazonas (i)	302,091	290,385
Sale of Towers (leaseback) (ii)	1,507,629	1,256,410
Other (iv)	142,458	115,027
Sub-total	1,952,178	1,661,822
Other leases (iii):
Leases – Network Infrastructure	3,345,930	3,252,463
Leases - Shops & kiosks & real estate	653,422	434,990
Leases - Land (Network)	1,657,345	1,606,567
Leases – Fiber	1,454,664	1,422,993
Subtotal lease IFRS 16	7,111,361	6,717,013
Total	9,063,539	8,378,835
Current portion	(1,269,878)	(1,054,709)
Non-current portion	7,793,661	7,324,126

The amount of interest paid in the year ended December 31, 2021 related to IFRS 16 is R$ 599,296 (R$ 567,261 in the year ended December 31, 2020).

Changes to the lease liabilities are shown in note 37.

The table below presents the future payment schedule for the agreements in force, representing the estimated disbursements (nominal values) in the signed agreements. These nominal balances differ from those shown in the books since, in the case of the latter, the amounts are shown at present value:

	Up to December 2022	Jan 2023–Dec 2026	Jan 2027 onwards	Nominal values	Present value
Total - Lease liability	2,139,718	6,431,022	5,898,599	14,469,339	9,063,539
LT Amazonas (i)	57,349	202,271	336,138	595,758	302,091
Sale and leaseback of Towers (ii)	245,800	992,299	2,135,989	3,374,088	1,507,629
Other (iv)	28,348	112,493	142,458	283,299	142,458
Total other leases (iii)	1,808,221	5,123,959	3,284,014	10,216,194	7,111,361
Leases – Network infrastructure	752,818	2,450,689	1,735,619	4,939,126	3,345,930
Leases - Shops & kiosks & real estate	183,468	440,996	356,198	980,662	653,422
Leases - Land (Network)	340,099	1,135,266	1,192,197	2,667,562	1,657,345
Leases – Fiber	531,836	1,097,008	-	1,628,844	1,454,664

i) LT Amazonas

The Company executed agreements for the right to use the infrastructure of companies that operate electric power transmission lines in Northern Brazil (“LT Amazonas”). The terms of these agreements are for 20 years, counted from the date on which the assets are ready to operate. The contracts provide for monthly payments to the electric power transmission companies, restated annually at the IPCA.

The discount rate used to calculate the present value of the installments due is 14.44% per annum, considering the signing date of agreements with transmission companies.

ii) Sale and leaseback of Towers

The Company entered into two Sales Agreements with American Tower do Brasil Cessão de Infraestruturas Ltda. (“ATC”) in November 2014 and January 2015 for up to 6,481 telecommunications towers then owned by TIM Celular, for an amount of approximately R$  3 billion, and a Master Lease Agreement (“MLA”) for part of the space on these towers for a period of 20 years from the date of transfer of each tower, under a sale and leaseback transaction, with a provision for monthly rental amounts depending on the type of tower (greenfield or rooftop). The sales agreements provided for the towers to be transferred in tranches to ATC, due to the need to meet certain conditions precedent.

In total, 5,873 transfers of towers occurred, being 54, 336 and 5,483 in the years 2017, 2016 and 2015, respectively. This transaction resulted in a sales amount of R$ 2,651,247, of which R$ 1,088,390 was booked as deferred revenue and will be amortized over the period of the contract (note 23).

The discount rates used at the date of the transactions, ranging from 11.01% to 17.08% per annum, were determined based on observable market transactions that the company (the lessee) would have to pay on a similar lease and/or loan.

(iii) Other leases:

In addition to lease agreements mentioned above, the Company also has lease agreements that qualify within the scope of IFRS 16.

F-49

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The present value, principal and interest value on December 31, 2021 for the above contracts was estimated month-to-month, based on the average incremental rate of the Company’s loans, namely 8.94% (9.06% in 2020).

(iv) It is substantially represented by lease transactions in transmission towers.

The lease amounts considered low value or lower in the 12-month period recognized as rental expense on December 31, 2021 is R$ 36,310 (R$ 28,523 on December 31, 2020).

17. Other amounts recoverable

These refer to Fistel credit amounts arising from the reduction of the client base, which may be offset by future changes in the base, or used to reduce future obligations, and are expected to be used in the reduction of the TFF contribution (operating supervision fee) due to Fistel.

As of December 31, 2021, this credit is R$ 28,661 (R$ 43,906 as of December 31, 2020).

18. Supplier

Accounts payable to suppliers are obligations payable for goods or services that were acquired in the usual course of business. They are initially recognized by fair value and subsequently measured by amortized cost using the effective interest rate method. Given the short maturity of these obligations, in practical terms, they are usually recognized at the value of the corresponding invoice.

	2021	2020
	3,267,404	3,128,732
Local currency	3,063,458	2,932,486
Suppliers of materials and services (i)	2,966,897	2,839,547
Interconnection (ii)	65,464	64,066
Roaming (iii)	212	212
Co-billing (iv)	30,885	28,661
Foreign currency	203,946	196,246
Suppliers of materials and services (i)	153,082	148,888
Roaming (iii)	50,864	47,358
Current portion	3,267,404	3,128,732

(i) Represents the amount to be paid to suppliers in the acquisition of materials and in the provision of services applied to the tangible and intangible asset or for consumption in the operation, maintenance and administration, in accordance with the terms of the contract between the parties.

F-50

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

(ii)	Refers to as the use of the network of other fixed and mobile operators such cases where calls are initiated on the TIM network and terminated on the other operators.
(iii)	Refers to calls made when the customer is outside their registration area and is considered a visitor on the other network.
(vi)	Refers to calls made by the customer when choosing another long-distance operator.

19. Authorizations payable

	2021	2020
Renewal of authorizations (i)	191,329	188,498
Updated ANATEL liability (ii)	164,269	146,949
Authorizations payable (iii)	3,525,489	-
	3,881,087	335,447
Current portion	(2,630,169)	(102,507)
Non-current portion	1,250,918	232,940

(i)To provide the SMP, the Company obtained authorizations of the right to use radio frequency for a fixed term, renewable for another 15 (fifteen) years. In the option for the extension of the right of this use, it is due the payment of the amount of 2% on the net revenue of the region covered by the authorization that ends each biennium. On December 31, 2021, the Company had balances falling due related to renovation of authorizations in the amount of R$ 191,329 (R$ 188,498 on December 31, 2020).

(ii) On December 5, 2014, the company signed the authorization term of the 700 MHz band and paid the equivalent of R$1,678 million, recording the remaining balance in the amount of R$ 61 million as commercial liability, according to the payment method provided for in the notice.

On June 30, 2015, the company filed a lawsuit questioning the collection of the excess nominal value of R$ 61 million (R$ 164 million on December 31, 2021) which is still pending trial.

(iii) As described in note 15.f, in November 2021, TIM participated in the 5G Auction of the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands for the deployment of the 5th Generation mobile telephony, winning several lots in these radio frequencies. In December 2021, the Authorization Terms were signed, characterizing the actual acquisition of the right over the lots of these radio frequencies.

For the amounts related to radio frequencies (R$ 884 million upon initial registration), Selic interest is levied, and the Company will make annual payments for a period of 20 years. Regarding amounts related to disbursement obligations with EAF and EACE entities (R$ 2,737 million upon initial registration, of which R$ 2,654 million net of adjustment do present value), there is a monetary restatement by IGP-DI, and disbursements will occur between 2022 and 2024. As of December 31, 2021, the outstanding balance is 3,525 million.

F-51

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The authorizations payable on December 31, 2021 due in long-term is in accordance with the following schedule:

2023	406,371
2024	141,151
2025	46,535
2026	46,535
2027	46,535
2028	46,535
2029	46,535
2030	46,535
2031	424,186
	1,250,918

F-52

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The primary authorizations held by TIM S.A. on December 31, 2021, as well as their expiration dates, are shown in the table below:

	Maturity date
Terms of authorization	450 MHz	800 MHz, 900 MHz and 1,800 MHz	Additional frequencies 1800 MHz	1900 MHz and 2100 MHz (3G)	2500 MHz V1 band (4G)	2500 MHz (P band**) (4G)	700 MHz (4G)	2.3 GHz (5G)	3.5 GHz (5G)	26 GHz (5G)
Amapá, Roraima, Pará, Amazonas and Maranhão	-	Mar 2031*	Apr 2023	Apr 2023	Oct 2027	Part of AR92 (PA), Feb 2024*	Dec 2029	-	Dec 2041	Dec 2031
Rio de Janeiro and Espírito Santo	Oct 2027	Mar 2031*	ES, Apr 2023	Apr 2023	Oct 2027	Part of AR21 (RJ), Feb 2024*	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Acre, Rondônia, Mato Grosso, Mato Grosso do Sul, Tocantins, Distrito Federal, Goiás, Rio Grande do Sul (except county of Pelotas and region) and municipalities of Londrina and Tamarana in Paraná	PR, Oct 2027	Mar 2031*	Apr 2023	Apr 2023	Oct 2027	Part of AR61 (DF), Feb 2024*	Dec 2029	South – Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
São Paulo	-	Mar 2031*	Countryside, Apr 2023	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Paraná (except counties of Londrina and Tamarana)	Oct 2027	Sep 2022*	Apr 2023	Apr 2023	Oct 2027	AR41, except Curitiba and the Metropolitan Region, Feb 2024* AR41, Curitiba and Metropolitan Region, July 2031	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Santa Catarina	Oct 2027	Sep 2023*	Apr 2023	Apr 2023	Oct 2027	-	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
County and region of Pelotas, in the state of Rio Grande do Sul	-	Apr 2024*	-	Apr 2023	Oct 2027	-	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Pernambuco	-	May 2024*	-	Apr 2023	Oct 2027	Part of AR81, July 2031	Dec 2029	-	Dec 2041	Dec 2031
Ceará	-	Nov 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec S2031
Paraíba	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Rio Grande do Norte	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Alagoas	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Piauí	-	Mar 2024*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Minas Gerais (except the counties of Sector 3 of the PGO for 3G radio frequencies, leftovers and 5G)	-	Apr 2028*	Apr 2023	Apr 2023	Oct 2027	Part of AR31, Feb 2030*	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Bahia and Sergipe	-	Aug 2027*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031

*	Terms already renewed for 15 years.
**	Only complementary areas in specific states.

20. Loans and financing

They are classified as financial liabilities measured at amortized cost, being represented by non-derivative financial liabilities that are not usually traded before maturity.

F-53

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

At the initial recognition they are recorded by their fair value, and after initial recognition, they are measured by the effective interest rate method. Appropriations of financial expenses according to the effective interest rate method are recognized in income, under financial expenses. 

Description	Currency	Charge	Maturity	December 2021	December 2020
KFW Finnvera (ii)	USD	Libor 6M+ 0.75% p.a.	Jan 2024–Dec 2025	278,176	344,125
BAML (ii)	EUR	0.2790% p.a.	Aug 2021	-	570,844
Scotia¹ (ii)	USD	1.2410–1.7340% p.a.	Apr 2024	559,650	1,030,761
BNP Paribas (ii)	USD	2.8220% p.a.	Jan 2022	428,793	399,302
BNP Paribas (ii)	BRL	7.0907% p.a.	Jan 2024	515,166	-
Debêntures² (ii)	BRL	IPCA + 4.1682% p.a. (i)	June 2028	1,667,399	-
BNDES (i)	BRL	IPCA + 4.2283% p.a.	Nov 2031	396,281	-
Total				3,845,465	2,345,032
Current				(538,450)	(1,689,385)
Non-current				3,307,015	655,647

¹ The outstanding debt rate on December 31, 2021 with Scotia Bank is 1.4748% p.a.

² The automatic decrease of up to 0.25bps is estimated in remunerative interest will comply with sustainable targets established in the indenture.

Insurances

_(i) Certain receivables from TIM S.A.;

_(ii) Do not have a guarantee.

The Company's financing, contracted with BNDES, was obtained for the expansion of the mobile telephone network and has restrictive contractual clauses that provide for the fulfilment of certain financial and non-financial rates calculated every six months. In February 2020, the company made the full prepayment of financing obtained from BNDES, active at that time; however, there are still contracts in effect with the bank regulating the lines of credit available for withdrawal that are shown in the table below: Financial indices are: (1) Shareholders' equity over total assets; (2) EBITDA on net financial expenses; (3) Total financial debt on EBITDA and (4) Short-term net financial debt to EBITDA. The Company has been complying with all the established ratios.

In April 2021, the Company contracted a new loan with The Bank of Nova Scotia, in the amount of R$ 572 million, at the cost of CDI + 1.05% p.a. and a 3-year term. The operation aimed to strengthen the Company's cash for working capital.

F-54

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

In April 2021, the Company contracted a new loan with BNP Paribas, in the amount of R$ 500 million, at the cost of CDI + 1.07% p.a. and a 2.9-year term. The operation aimed to strengthen the Company's cash for working capital.

In June 2021, the Company carried out the second issue of simple, non-convertible, unsecured debentures, carried out pursuant to CVM Instruction No. 476, in the amount of R$ 1,600 million. The debentures have a sustainable component that allows them to be qualified as sustainability-linked and, in case of compliance with the sustainable targets established in the indenture, the remunerative interest of IPCA + 4.1682% p.a. can be automatically reduced by up to 0.25bps. The debentures will bear semiannual interest and amortization will take place, respectively, in the 5th, 6th and 7th year. The issue was aimed at financing projects for the implementation, expansion and modernization of fixed and mobile networks in different technologies, including 5G, and falls within the provisions of Law No. 12431 of June 24, 2011. Within the scope of this operation, the Company elected to sign an interest rate swap contract for hedging purposes, at the cost of CDI + 0.95% per annum. During the term of the operation, compliance with the financial ratio of Net debt to EBITDA, an indicator that has been met to date, must also be observed.

In November 2021, the Company obtained from BNDES the FINAME credit facility in the total available amount of R$ 390 million, at the cost of IPCA + 4.2283% p.a. and a total term of 10 years with a 3-year grace period to start of amortization. The Company elected to sign an interest rate swap contract for hedging purposes, at the final cost of 96.95% of CDI.

The table below shows the position of financing and available lines of credit:

					Amount used until 30 September 2020
Type	Currency	Term	Term	Remaining value		Amount used up to December 31, 2021
BNDES (i)	TJLP	May 2018	Mar 2022	1,090,000	1,090,000	-
BNDES (ii)	TJLP	May 2018	Mar 2022	20,000	20,000	-
FINAME (iii)	IPCA	Mar 2019	Mar 2022	390,000	-	390,000
BNB (iv)	IPCA	Jan 2020	June 2023	752,479	752,479	-
Total R$:				2,252,479	1,862,479	390,000

Objective:

(i) Support to TIM's investment plan for the years 2017 to 2019 including, but not limited to, the acquisition of National equipment

(ii) Investments in social projects within the community

(iii) Exclusive application in the acquisition of machinery and equipment, industrial systems and/or other components of national manufacture.

(iv) Support to TIM's investment plan for the years 2020 to 2022 in the region of operation of Banco do Nordeste do Brasil

F-55

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Loans and financing on December 31, 2021 due in long-term is in accordance with the following schedule:

2023	88,818
2024	1,125,526
2025	80,712
2026	615,727
2027	615,727
2028	618,006
2029	55,714
2030	55,714
2031	51,071
	3,307,015

The nominal value of the loans and financing is consistent with their respective payment schedule.

	Nominal value
2022	538,450
2023	88,818
2024	1,125,526
2025	80,712
2026	615,727
2027	615,727
2028	618,006
2029	55,714
2030	55,714
2031	51,071
	3,845,465

Fair value of loans

In Brazil, there is no consolidated long-term debt market with the characteristics verified in the financing obtained from KFW Finnvera, which has the Finnish development agency Finnvera as guarantor. Both are financing for the purchase of equipment and, therefore, have a character of subsidy and promotion of commercial activity between the company and certain suppliers. For the purposes of fair value analysis, considering the characteristics of this transaction, the company understands that its fair value is equal to that recorded on the balance sheet.

With respect to proceeds contracted with the Bank of Nova Scotia, BNP Paribas, Debentures and BNDES, the fair value of these loans is considered to be the present value of the active tip of the swap contracts that protect the company from changes in exchange rates and interest. The fair value of the operations on December 31, 2021 is, respectively, R$ 563,259, R$ 524,422, R$ 1,635,203 and R$ 384,073.

F-56

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

21. Indirect taxes, charges and contributions payable

	2021	2020
Indirect taxes, charges and contributions payable	1,421,955	938,880
Value added tax on goods and services - ICMS	303,721	359,498
ANATEL’s taxes and fees (i)	1,042,933	509,087
Imposto sobre Serviço (Service tax) - ISS	66,075	66,082
Other	9,226	4,213
Current portion	(1,418,682)	(935,778)
Non-current portion	3,273	3,102

(i) In 2020, to minimize the impacts of the pandemic, Provisional Act 952, dated April 15, 2020, was enacted, authorizing the postponement of payment of taxes, such as TFF, Condecine and CFRP, in the amount of R$ 790 million, to August 31, 2020. In the third quarter of 2020, the Company made a partial payment in the amount of R$ 300 million referring to CFRP and Condecine, but due to a preliminary injunction in court, there was no need to pay the Fistel (TFF), which remains outstanding until the final and unappealable decision.

In 2021, there was the partial payment of fees of approximately R$ 300 million related to CFRP and Condecine and the remaining amount of R$ 480 million related to 2021 Fistel (TFF) remains suspended, with no defined date for payment based on injunction also issued by the Regional Court of the 1st Region.

During 2021, there was the recognition of R$ 51.2 million in default interest on Fistel (TFF) amounts related to fiscal years 2020 and 2021 with suspended payment by preliminary injunction.

22. Direct taxes, charges and contributions payable

Current income tax and social contribution charges are calculated on the basis of the tax laws enacted, or substantially enacted, up to the balance sheet date.

The legislation allows companies to opt for quarterly or monthly payment of income tax and social contribution. In 2021, the Company has chosen to make the quarterly payment of income tax and social contribution.

	2021	2020
Direct taxes, charges and contributions payable	258,340	508,743
Income tax (IR) and social contribution (CS) (i)	186,294	313,145
PIS/COFINS (Social integration program/Social security)	41,916	154,353
Other (ii)	30,130	41,245
Current portion	(245,113)	(296,299)
Non-current portion	13,227	212,444

(i) The variation is related to the changes in the calculation of the Annual Taxable Income by the Quarterly Taxable Income. Thus, the amount presented in December 2020 comprised the IRPJ and CSLL due between January and December of that year, while in 2021 the liabilities presented represent only the amount due in the fourth quarter.

(ii) The breakdown of this account mainly refers to the company's adhesion to the Tax Recovery Program - REFIS from 2009 for payment of installments of the outstanding debts of federal taxes (PIS – Social Integration Program, COFINS – Contribution to Social Security Financing, IRPJ – Corporate Income Tax and CSLL – social contribution on Net Profit), whose final maturity will be on October 31, 2024.

23. Deferred revenues

	2021	2020
Deferred revenues	886,340	1,021,924
Prepaid services (i)	118,795	189,482
Government grants (ii)	11,184	24,732
Anticipated revenues	8,522	11,163
Deferred revenues on sale of towers (iii)	734,826	788,921
Contractual liabilities (iv)	13,013	7,626
Current portion	(197,179)	(266,436)
Non-current portion	689,161	755,488

(i) Referring to the recharge of voice credits and data not yet used by customers relating to prepaid system services that are appropriate to the result when the actual use of these services by clients.

(ii) Referring to the release of resources related to the financing line with BNDES (Investment Support Program-BNDES PSI). The sum of grants granted by BNDES up to December 31, 2021 is R$ 203 million and the outstanding amount on December 31, 2021 is R$ 11,184 (R$ 24,732 on December 31, 2020). This amount is being amortized by the lifespan of the asset being financed and appropriated in the group of “other net revenues (expenses)” (note 29).

(iii) Referring to the amount of revenue to be appropriated by the sale of the towers (note 16).

(iv) Contracts with customers. The table below includes information on the portion of trade accounts receivable, from which contractual assets and liabilities originate.

F-57

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

	2021
Accounts receivable included in trade accounts	2,051,120
Contractual assets	15,340
Contractual liabilities	(13,013)

The contracts with customers gave rise to the allocation of discounts under combined loyalty offers, where the discount may be given on equipment and / or service, generating a contractual asset or liability, respectively, depending on the nature of the offer in question.

Summary of the main variations in the year.

	Contractual assets (liabilities)
Balance at December 31, 2020	7,288
Additions	8,800
Write-offs	(13,761)
Balance at December 31, 2021	2,327

The balances of contractual assets and liabilities are expected to be realized according to the table below:

	2022	2023
Contractual assets (liabilities)	3,685	(1,358)

The Company in line with paragraph 121 of IFRS 15, is not presenting the effects of information on customer contracts with terms of duration of less than 1 year.

F-58

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

24. Provision for legal and administrative proceedings

The company is an integral part in judicial and administrative proceedings in the civil, labor, tax and regulatory spheres, which arise in the normal course of its business.

The provision is constituted based on the opinions of the company's legal advisors and management, for amounts considered sufficient and adequate to cover losses and risks considered probable. Situations where losses are considered probable and possible are recorded and disclosure, respectively, by their updated values, and those in which losses are considered remote are not disclosed.

The provision for judicial and administrative proceedings constituted, updated, is composed as follows:

	2021	2020
Provision for judicial and administrative proceedings	960,881	886,947
Civil (a)	309,019	245,432
Labor (b)	192,132	213,026
Tax (c)	429,951	399,288
Regulatory (d)	29,779	29,201

The changes in the provision for judicial and administrative proceedings are summarized below:

	December 31, 2020	Additions, net of reversals	Payment	Currency update	December 31, 2021
	886,947	278,789	(316,804)	111,949	960,881
Civil (a)	245,432	175,715	(194,501)	82,373	309,019
Labor (b)	213,026	71,961	(98,730)	5,875	192,132
Tax (c)	399,288	31,078	(23,539)	23,124	429,951
Regulatory (d)	29,201	35	(34)	577	29,779

	December 31, 2019	Balance company incorporated	Additions, net of reversals	Payment	Currency update	December 31, 2020
	703,522	125,956	333,724	(413,634)	137,379	886,947
Civil (a)	208,202	4,501	224,416	(266,872)	75,185	245,432
Labor (b)	208,224	45,691	63,649	(138,899)	34,361	213,026
Tax (c)	254,833	75,646	48,897	(7,792)	27,704	399,288
Regulatory (d)	32,263	118	(3,238)	(71)	129	29,201

F-59

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The company is subject to several legal actions and administrative procedures proposed by consumers, suppliers, service providers and consumer protection agencies and treasury agencies, which deal with various matters that arise in the normal course of the entities' business. The main processes are summarized below:

a. Civil proceedings

a.1 Consumer lawsuits

The company is a party in lawsuits related to various claims filed by consumers, in the judicial and administrative spheres. The aforementioned actions in the amount provisioned of R$ 150,881 (R$ 139,429 on December 31, 2020) refer mainly to alleged improper collection, cancellation of contract, quality of services, unilateral contract amendment and undue negative entry.

a.2 Consumer Protection Agencies

TIM is a party to legal and administrative lawsuits filed by the Public Prosecutor's Office, Procon and other consumer protection agencies, arising from consumer complaints, in which, and among other topics, discusses: (i) alleged failures in the provision of network services; (ii) questions of quality in service; (iii) alleged violations of the SAC [customer service hotline] decree; (iv) alleged contractual violations; (v) alleged misleading advertising and; (vi) discussion of the collection of loyalty fines, in cases of theft and theft of the device. The amounts involved are equivalent to R$ 116,985 (R$ 51,713 on December 31, 2020).

a.3 Former trading partners

TIM is a defendant in lawsuits proposed by former trade partners claiming, among others, amounts on the basis of alleged non-compliance with agreements. The amounts involved are equivalent to R$ 20,708 (R$ 18,634 on December 31, 2020).

a.4 Other

TIM is a defendant in other actions of essentially non-consumer objects proposed by the most diverse agents from those described above, in which, among others, it is discussed: (i) share subscription; (ii) claims for civil liability indemnification; (iii) alleged breach of contract and; (iv). The amounts involved are equivalent to R$ 20,089 (R$ 33,682 on December 31, 2020).

a.5 Social and environmental and infrastructure

The Company is a party to lawsuits involving various agents who discuss aspects related to licensing, among which environmental licensing and infrastructure licensing (installation/operation). The amounts involved and provisioned are equivalent to R$ 356 (R$ 610 on December 31, 2020).

a.6 ANATEL

The Company is a party to lawsuits in front of ANATEL, in which it is discussed: (i) debit related to the collection of 2% of revenues from Value - Added Services-VAS and interconnection; (ii) pro-rata inflation adjustment applied to the price proposal defined in the notice for the use of 4G frequencies and (iii) alleged non-compliance with service quality targets. No correspondent amount on December 31, 2021 (R$ 1,364 on December 31, 2020).

F-60

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

b. Labor lawsuits

These are processes involving several labor claims filed by both former employees, in relation to matters such as salary differences, leveling, payments of variable compensation, additional legal and working hours, as well as by former employees of service providers, all of whom, taking advantage of the labor laws in force require it to keep the Company in compliance with labor obligations does not abide by contractors hired for that purpose.

From the total of 1,314 Labor claims on December 31, 2021 (1,873 on December 31, 2020) filed against the company, the majority relate to claims involving former employees of service providers followed by lawsuits from employees of their own. The provisioning of these claims totals R$ 192,132 updated monetarily (R$ 213,026 as of December 31, 2020).

c. Tax lawsuits

		2021		2020
Federal Taxes	202,743		182,146
State Taxes	145,436		135,891
Municipal Taxes	7,626		5,633
TIM S.A. processes (Purchase price allocation)	74,146		75,618
	429,951		399,288

The total recorded provision is substantially composed of the following processes whose indicated values are estimated by the indices established by the federal government for late taxes, being linked to the variation in the SELIC rate.

Federal taxes

The provision is substantially composed of the following processes:

(i) The provision for TIM S.A. supports sixty-four proceedings, relating to questions involving the impact on operations of CIDE, CPMF, CSLL, IRRF, spontaneous denunciation of the fine in the payment of FUST and ancillary obligations. Of this total, the amounts involved in the legal proceedings that seek recognition of the right not to collect the CPMF allegedly incident on simultaneous transactions of purchase and sale of foreign currency and exchange of account ownership arising from corporate incorporation, whose provisioned values, updated, equal to R$ 8,510 (R$ 8,355 on December 31, 2020), as well as the amount related to the fine and interest 2009, where the benefit of spontaneous denunciation is not being recognized, whose provisioned and updated value is R$ 15,149 (R$ 14,771 on December 31, 2020).

(ii) The Company constituted a provision for a process aimed to collecting the pension contribution withheld at the rate of 11% to which, allegedly, payments made by the company to other legal entities should have been submitted as remuneration for various activities, whose provisioned and updated value is R$ 39,554 (R$ 38,584 on December 31, 2020).

(iii) Additionally, in the second quarter of 2019, the Company constituted the provision for the FUST process, which seeks the unconstitutionality and illegality of the collection of FUST (Telecommunications Services Universalization Fund). Lawsuit for the recognition of the right not to collect Fust, failing to include in its calculation base the revenues transferred by way of interconnection and EILD (Dedicated Line Industrial Exploitation), as well as the right not to suffer the retroactive collection of the differences determined due to not observing sum 7/2005 of ANATEL, in the amount of R$ 60,382 (R$ 58,988 on December 31, 2020).

(iv) The company made a provision for federal compensation processes arising from a repurchase carried out in 2006, for which the documentary support was not robust enough after appraisals carried out. The provisioned and updated value is R$ 18,579 (R$ 5,313 on December 31, 2020).

F-61

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

State Taxes

The provision is substantially composed of the following processes:

The provision of the TIM S.A. in support of ninety-one cases, among which the following stand out: (i) the amounts involved in the proceedings, that the question of the reversal of the amounts payable for the ICMS tax, as well as the supporting documentation for the verification of the loan are appropriate for a Company whose values are recorded up-to-date, amounting to R$ 41,352 (R$ 36,491 on December 31, 2020), (ii) the amount not offered to tax for the provision of telecommunications services, which is up-to-date, equals to R$ 5,291 (R$ 5,135 on December 31, 2020), as well as (iii) the charges on the grounds of supposed differences in both the inputs as the output of goods in the process of the withdrawal amount of the inventory, whose values are updated to the equivalent of R$ 16,216 (R$ 15,751 on December 31, 2020); (iv) amounts allegedly improperly credited relating to CIAP credits, whose updated amounts are equivalent to R$ 16,374 (R$ 14,912 as of December 31, 2020) and (v) credits related to tax substitution operations, whose updated amounts are equivalent to R$ 22,183 without equivalence on December 31, 2020. (vi) alleged lack of collection or alleged misappropriation of credits related to ICMS rate difference (DIFAL), whose restated amounts are equivalent to R$ 13,963 (without equivalence on December 31, 2020).

Municipal Taxes

It is also worth noting the amounts involved in the assessments that questions the withholding and collection of the ISS-source of third-party services without employment relationship, as well as the collection of its own ISS corresponding to services provided in co-billing.

PPA TIM S.A.

There are tax lawsuits arising from the acquisition of former Intelig (current TIM S.A.) due to the former parent company of the TIM Participações group, which comprise the process of allocating the acquisition price of the former Intelig and amount to R$ 74,146 (R$ 75,618 as of December 31, 2020).

d. Regulatory processes

ANATEL initiated administrative proceedings against the company for: (i) non-compliance with certain quality indicators; (ii) non-compliance with other obligations derived from the terms of authorization and; (iii) non-compliance with the SMP and STFC regulations, among others.

F-62

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

On December 31, 2021, the amount indicated for the procedures for the determination of non-compliance with obligations (“PADOs”), considering the inflation adjustment, classified with risk of probable loss is R$ 29,779 (R$ 29,201 on December 31, 2020).

e. Judicial and administrative proceedings whose losses are assessed as possible

The company has actions of a civil, labor, tax and regulatory nature involving risks of loss classified by its legal advisers and the administration as possible, for which there is no provision for legal and administrative proceedings constituted, and no adverse material effects are expected in the financial statements, according to the values presented below:

	2021	2020
	18,140,556	18,147,562
Civil (e. 1)	1,292,202	1,101,332
Labor and Social Security (e. 2)	392,035	340,801
Tax (e. 3)	16,309,439	16,586,353
Regulatory (e. 4)	146,880	119,076

Legal and administrative proceedings whose losses are assessed as possible and monitored by Management are disclosed at their updated values.

The main actions with risk of loss classified as possible are described below:

e.1. Civil

		2021		2020
Consumer actions (e. 1. 1)	160,696		220,347
ANATEL (e.1.2)	258,683		223,066
Consumer protection bodies (e.1.3)	493,806		160,279
Former trading partners (e.1.4)	216,054		193,529
Environmental and infrastructure (e.1.5)	99,743		154,187
Other (e.1.6)	63,220		149,924
	1,292,202		1,101,332

e. 1. 1 Actions filed by consumers

They mainly refer to actions for alleged improper collection, cancellation of contract, quality of services, defects and failures in the delivery of devices and undue negative entry.

e.1.2 ANATEL

The Company is a party to lawsuits in front of ANATEL, in which it is discussed: (i) debit related to the collection of 2% of revenues from Value - Added Services-VAS and interconnection; (ii) pro-rata inflation adjustment applied to the price proposal defined in the notice for the use of 4G frequencies and (iii) alleged non-compliance with service quality targets.

F-63

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

e.1.3 Consumer protection agencies

TIM is a party to legal and administrative lawsuits filed by the Public Prosecutor's Office, Procon and other consumer protection agencies, arising from consumer complaints, in which, and among other topics, discusses: (i) alleged failures in the provision of network services; (i) alleged failure in the delivery of handsets; (iii) alleged non-compliance with state laws; (iv) hiring model and alleged improper charges of Value-Added Services-VAS; (v) alleged violations of the SAC decree; (vi) alleged contractual violations; and (vii) blocking of data. 

e.1.4 Former Trading Partners

TIM is a defendant in actions proposed by several former trading partners in which are claimed, among others, values based on alleged contractual defaults.

1. 5 Social and environmental and infrastructure

The Company is a party to lawsuits involving various agents that discuss aspects related to (1) environmental licensing and structure licensing (installation/operation) and (2) (i) electromagnetic radiation emitted by Telecom structures; (ii) renewal of land leases for site installation; (iii) dumping on leased land for site installation; (iv) presentation of registering data, among others.

e.1.6 Other

TIM is a defendant in other actions of essentially non-consumer objects proposed by the most diverse agents from those described above, in which, among others, it is discussed: ; (ii) amounts supposedly due as a result of share subscription; (iii) civil liability claims; (iv) alleged breach of contract.

e.2. Labor and Social Security

e.2.1. Social Security

TIM S.A received a Tax Notice for the Release of the Debt relating to the alleged irregularity in the payment of social security contributions relating to the payment of Profit Sharing, in the likely restated amount of R$ 23,786 (R$ 10,467 on December 31, 2020). Moreover, it received Tax Notifications of Release of Debts, referring to the alleged irregularity in the collection of Social Security contributions on installments received as indemnity allowances, unadjusted bonuses, hiring bonuses and incentives, in the total possible amount of R$ 85,720, updated (R$ 22,829 updated on December 31, 2020).

e.2.2. Labor

There are 3,067 Labor claims as of December 31, 2021 (3,038 as of December 31, 2020) filed against the company and with possible risk, concerning claims involving former employees and employees of service providers in the amount of updated R$ 306,315 (R$ 317,971 as of December 31, 2020).

F-64

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The other values are related to labor processes of various requests filed by former employees of their own and third-party companies.

e.3. Tax

	2021	2020
	16,309,439	16,586,353
Federal taxes (e. 3.1)	3,026,326	4,268,212
State taxes (e. 3. 2)	8,782,114	8,562,352
Municipal taxes (e. 3. 3)	1,234,618	740,813
FUST, FUNTTEL e EBC (e.3.4)	3,266,381	3,014,976

The values presented are corrected, in an estimated way, based on the SELIC index. The historical amount involved is R$ 12,133,168 (R$ 11,976,959 on December 31, 2020).

e.3.1. Federal taxes

The total amount assessed against the TIM Group in relation to federal taxes is R$ 3,026,326 on December 31, 2021 (R$ 4,268,212 on December 31, 2020). Of this value, the following discussions stand out mainly:

a. Allegation of alleged incorrect use of tax credits for carrying out a reverse merger, amortization of goodwill paid on the acquisition of cell phone companies, deduction of goodwill amortization expenses, exclusion of goodwill reversal, other reflections and disallowances of compensations and deductions paid by estimate, allegedly improper use of the SUDENE benefit due to lack of formalization of the benefit at the Internal Revenue Service (RFB), and failure to pay IRPJ and CSLL due by estimate. The amount involved is R$ 1,467,409 (R$ 2,715,670 on December 31, 2020). The Company was notified of the decision on April 28, 2021 and, as a result, the partial payment of R$ 1.4 billion was confirmed.

b. Compensation method for tax losses and negative bases. The amount involved is R$ 231,810 (R$ 193,181 on December 31, 2020).

c. Collection of CSLL on currency changes arising from swap transactions accounted for by the cash regime. The amount involved is R$ 69,124 (R$ 67,572 on December 31, 2020).

d. Collection of IRRF [withholding income tax] on income of residents abroad, including those remitted by way of international roaming and payment to unidentified beneficiaries, as well as the collection of CIDE on payment of royalties on remittances abroad, including remittances by way of international roaming. The amount involved is R$ 268,170 (R$ 259,088 on December 31, 2020).

e. Collection of IRPJ, PIS/COFINS and CSLL debits arising from non-homologation or partial homologation of compensations made by the company from credits of withholding taxes on financial investments and negative balance of IRPJ. The amount involved is R$ 410,662 (R$ 399,691 on December 31, 2020).

F-65

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

e.3.2. State Taxes

The total assessed amount against TIM Group regarding state taxes on December 31, 2021 is R$ 8,782,114 (R$ 8,562,352 on December 31, 2020). Of this value, the following discussions stand out mainly:

a. Non-inclusion in the ICMS calculation basis of unconditional discounts offered to customers, as well as a fine for the alleged failure to comply with a related accessory obligation, including for the failure to present the 60i record of the SINTEGRA file. The amount involved is R$ 1,140,553 (R$ 1,128,741 on December 31, 2020).

b. Use of tax benefit (program for the promotion of integrated and sustainable economic development of the Federal District - PRÓ-DF) granted by the taxing entity itself, but later declared unconstitutional, as well as alleged improper credit of ICMS arising from the interstate purchase of goods with tax benefit granted in the state of origin. The amount involved is R$ 356,251 (R$ 492,935 on December 31, 2020).

c. Credit reversal and extemporaneous credit related to acquisitions of permanent assets. The amount involved for TIM S.A. is R$ 654,011 (R$ 608,316 on December 31, 2020).

d. Credits and chargebacks of ICMS, as well as the identification and documentary support of values and information released in customer accounts, such as tax rates and credits granted in anticipation of future surcharges (special credit), as well as credits related to tax substitution operations and exempt and untaxed operations. On December 31, 2021, the involved amount is R$ 3,449,439 (R$ 3,356,501 on December 31, 2020).

e. Use of credit in the acquisition of electricity directly employed in the production process of companies. The amount involved is R$ 138,242 (R$ 136,286 on December 31, 2020).

f. Alleged conflict between the information contained in ancillary obligations and the collection of the tax, as well as specific questioning of fine for non-compliance with ancillary obligations. The amount involved is R$ 727,057 (R$ 698,673 on December 31, 2020).

g. Alleged lack of collection of ICMS due to the gloss of chargebacks related to the prepaid service, improper credit of ICMS in the outputs of goods allegedly benefited with reduction of the calculation base, as well as an allegation of improper non-inclusion of Value-Added Services (VAS) of the ICMS calculation base. The amount involved is R$ 547,575 (R$ 249,271 on December 31, 2020).

h. Launch of credits related to the return of mobile devices lent on loan. The amount involved is R$ 116,700 (R$ 197,521 on December 31, 2020).

i. Collection of ICMS related to subscription services and their alleged improper non-inclusion in the ICMS calculation base due to their nature. The amount involved is R$ 286,519 (R$ 260,447 on December 31, 2020).

F-66

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

e.3.3. Municipal Taxes

The total assessed amount against TIM Group regarding municipal taxes with possible risk is R$ 1,234,618 on December 31, 2021 (R$ 740,813 on December 31, 2020). Of this value, the following discussions stand out mainly:

a. Collection of ISS, as well as the punitive fine for the absence of the supposed tax due, on several revenue accounts of the company. The amount involved is R$ 618,343 (R$ 150,023 on December 31, 2020).

b. Collection of ISS on importation of services or services performed in other municipalities. The amount involved is R$ 399,141 (R$ 385,536 on December 31, 2020).

c. Constitutionality of the collection of the functioning supervision fee (TFF - Taxa de Fiscalização do Funcionamento) by municipal authorities of different localities. The amount involved is R$ 137,944 (R$ 126,159 on December 31, 2020).

e.3.4. FUST and FUNTTEL

The total amount charged against the TIM Group in relation to the contributions to FUST and FUNTTEL with a possible risk rating is R$ 3,266,381 (R$ 3,014,976 on December 31, 2020). The main discussion involves the collection of the contribution to FUST and FUNTTEL (Fund for the technological development of Telecommunications) from the issuance by ANATEL of Sum no. 07/2005, aiming, among others, and mainly, the collection of the contribution to FUST and FUNTTEL on interconnection revenues earned by mobile telecommunications service providers, from the validity of Law 9998/2000.

e.4. Regulatory

ANATEL filed administrative proceedings against the Company for: (i) non-compliance with certain quality indicators; (ii) non-compliance with other obligations derived from the terms of authorization and; (iii) non-compliance with the SMP and STFC regulations, among others.

On December 31, 2021, the value indicated for the PADOs (procedure for determining non-compliance with obligations), considering the inflation adjustment, classified with possible risk was R$ 120,218 (R$ 119,076 on December 31, 2020). The variation was mainly due to monetary adjustment for the year.

On August 22, 2019, ANATEL's Board of Directors unanimously approved TIM's conduct adjustment term (TAC), which had been negotiated since June 2018 with the regulator. The agreement covers a sanctions reference value of R$ 627 million. The commitment includes actions to improve three pillars of action-customer experience, quality and infrastructure - through initiatives associated with improvements in the licensing process of stations, efficient use of numbering resources, evolution of digital service channels, reduction of complaint rates, repair of users and strengthening of transport and access networks. In addition, it contemplates the additional commitment to bring mobile broadband, through the 4G network, to 366 municipalities with less than 30 thousand inhabitants thus reaching more than 3.4 million people. The new infrastructure will be implemented in three years - more than 80% in the first two years – being guaranteed by the company the sharing regime with the other providers.

F-67

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

On June 19, 2020, the Board of Directors of the company approved the said TAC after final deliberation of the regulator and the signing of the term took place on June 25. The agreement covers sanctions totaling a value of approximately R$ 639 million, updated, which will be filed according to commitments represented in actions to improve quality and customer experience as well as increase network infrastructure in more than 2,000 locations.

During the fourth quarter of 2021, the Company carried out all the activities planned for the strict compliance with the Conduct Adjustment Instrument (TAC) 001/2020 entered into with Anatel, aiming at achieving the goals associated with the TAC for the second year. With the closing of the 1st TAC Year, inspection activities by the Agency are taking place in relation to commitments due and they were recognized as met by Anatel: Additional commitments; Internal controls; Complaints Index; General quality index; Numbering; Interconnection and; Impediment. The Company will continue fully implementing the internal monitoring mechanisms through the quarterly report on the evolution of the schedules by the Governance Office in Management and Board of Directors. So far, the Company has been complying with the TAC implementation schedule without the need for any additional obligations.

By obtaining the extension of the term of the authorizations to use the radio frequencies associated with the SMP, TIM S.A. becomes liable for the contractual burden on the net revenue arising from the service plans marketed under each authorization. However, since 2011 ANATEL began to include in the basis of calculation of said burden also the revenues obtained with interconnection, and from 2012, the revenues obtained with Value-Added Services. In the company's opinion, the inclusion of such revenues is improper because it is not expressly provided for in the terms of original authorizations, so the collections received are discussed in the administrative and/or judicial sphere.

25. Shareholders' equity

a. Share capital

The share capital is recorded by the amount effectively raised from the shareholders, net of the costs directly linked to the funding process.

The subscribed and paid-up share capital on December 31, 2021, is represented by 2,420,804,398 common shares (2,420,804,398 common shares on December 31, 2020).

The Company is authorized to increase its share capital up to the limit of 4,450,000,000 common shares, by resolution of Board of Directors, regardless of any amendment to its bylaws.

As of July 2, 2020, the Board of Directors of the Company approved the reverse split of all of the 42,296,789,606 of common shares without par value issued by the Company pursuant to the terms of Art. 12 of Law 6404/76, with no change in the share capital, at a ratio of 100 shares to form 1 common stock, through the share capital, to be represented by the 422,967,896 common shares, without par value, while preserving all of the rights and privileges of those shares are common shares. The proposed grouping did not result in fractions of shares. The incorporation resulted in the cancellation of all the shares issued by the company, which were owned by TIM Participações.

F-68

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Following the merger mentioned in note 1, is checked for the condition precedent, the shareholders of TIM Participações received 1 common share issued by the TIM S.A. for each 1 common share issued by TIM Participações, of ownership, and that, assuming the maintenance of the number of shares issued by TIM Participações, ex-treasury shares, resulting in the issuance of a 2,420,447,019 the common shares by the management of TIM S.A., all nominative, book-entry and with no par value.

On August 31, 2020, the increase in the share capital of the company in the amount of R$ 1,719defined in the incorporation protocol was approved at an ordinary and Extraordinary General Meeting, which was represented by R$ 13,477,891.

On September 28, 2020, at a meeting of the Board of directors, and the directors of the Company has become aware of the payments relating to the awards of the 2018 and 2019, based on the transfer of shares held in treasury stock to the beneficiaries as provided for in the Plans and pursuant to the terms of the share buy-back Programme as approved by the Board of Directors of TIM Participações S.A. (merged into TIM S.A.) in the meeting held on the 29th of July 2020, in the amount of 357,379 shares (note 1).

b. Capital reserves

The use of capital reserves complies with the precepts of art. 200 of Law 6404/76, which provides for Joint-Stock Companies. This reserve is composed as follows:

	2021	2020
	401,806	397,183
Special Reserve of goodwill	353,604	353,604
Long-term incentive plan	48,202	43,579

b.1 Special Reserve of goodwill

The special reserve of goodwill was constituted from the incorporation of the net assets of the former parent company Tim Participações S.A. (note 1)

b.2 Long-term incentive plan

The balances recorded under these items represent the Company's expenses related to the long-term incentive program granted to employees (note 26).

c. Profit reserves

c.1 Legal Reserve

It refers to the allocation of 5% of the net profit for the year ended December 31 of each year, until the Reserve equals 20% of the share capital, excluding from 2018 the balance allocated to the reserve of tax incentives. In addition, the company may cease to constitute the legal reserve when this, added to the capital reserves, exceeds 30% of the share capital.

F-69

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

This Reserve may only be used to increase capital or offset accumulated losses.

c. 2 Reserve for expansion

The allocation to this reserve is foreseen in Paragraph 2 of art. 46 of the bylaws of the company and is aimed at the expansion of social business.

The balance of profit that is not compulsorily allocated to other reserves and is not intended for the payment of dividends is allocated to this reserve, which may not exceed 80% of the share capital. Reaching this limit, it will be up to the General Meeting to decide on the balance, distributing it to shareholders or increasing capital.

c.3 Tax Benefit Reserve

The company enjoys tax benefits that provide for restrictions on the distribution of profits. According to the legislation that establishes these tax benefits, the amount of tax that is no longer paid due to exemptions and reductions in the tax burden may not be distributed to members and will constitute a reserve of tax incentive of the legal entity. Such a reserve may only be used to absorb losses or increase the share capital. As of December 31, 2021, the cumulative value of the benefits enjoyed by the Company amounts to R$ 1,958,301 (R$ 1,781,560 as of December 31, 2020).

The said tax benefit basically corresponds to the reduction of the Corporate Income Tax (IRPJ) incident on the profit of the exploitation calculated in the units encouraged. The Company operates in the area of the defunct Superintendence of development of the Amazon (SUDENE / SUDAM), being the tax incentive awards granted by state of the Federation, for a period of 10 years, subject to renewal.

d. Dividends

Dividends are calculated in conformity with the bylaws and the Brazilian Corporate Law.

According to its latest bylaws, approved on August 31, 2020, the company must distribute as a mandatory dividend each year ending December 31, provided that there are amounts available for distribution, an amount equivalent to 25% of Adjusted Net Profit.

As provided in the company's bylaws, unclaimed dividends within 3 years will revert to the company.

As of December 31, 2021, and 2020, dividends and interest on shareholders' equity were calculated as follows:

	2021	2020
Net profit for the year	2,957,174	1,828,254
(-) non-distributable tax incentives	(176,741)	(169,540)
(-) Constitution of legal reserve	(139,021)	(83,707)
Adjusted Net Profit	2,641,412	1,575,007
Minimum dividends calculated on the basis of 25% of adjusted profit	660,353	397,752
Breakdown of dividends payable interest on equity:
Interest on shareholders' equity	1,047,500	1,083,000
Total dividends and interest on shareholders' equity distributed and proposed	1,047,500	1,083,000
Withholding income tax (IRRF) on interest on shareholders' equity	(142,977)	(162,450)
Total dividends and interest on shareholders’ equity, net	904,523	920,550

Interest on Shareholders' Equity paid and/or payable is accounted for against financial expenses which, for the purposes of presenting the quarterly information, are reclassified and disclosed as allocation of net profit for the year, in changes in shareholders' equity.

During 2021, the amount of R$ 1,047,500 was distributed, as follows:

Interest on shareholders’ equity	Approval	Payment
R$ 350,000	06/09/2021	07/20/2021
R$ 137,500	09/24/2021	10/27/2021
R$ 560,000	12/15/2021	01/25/2022

The balance on December 31, 2021 of the item “dividends and interest on shareholders' equity payable” totaling R$ 533,580, is composed of the outstanding amounts of previous years in the amount of R$ 49,955 (R$ 43,026 on December 31, 2020) in addition to the paid amount January 25, 2022, in the amount of R$ 483,625, net.

As set forth in the Law 6404/76 and the Bylaws of the Company, unclaimed dividends - as established in the Joint Stock Company Law, dividends and Interest on Shareholders' Equity declared and unclaimed by shareholders within 3 years, are reverted to shareholders' equity at the time of its prescription and allocated to a supplementary reserve to expand businesses.

For the statement of cash flows, Interest on Shareholders' Equity and dividends paid to its shareholders are being allocated in the group of “financing activities.” 

26. Long-Term Incentive Plan

2011-2013 Plan, 2014-2016 Plan, 2018-2020 Plan and 2021-2023 Plan

On August 5, 2011, April 10, 2014, April 19, 2018 and March 30, 2021, they were approved by the General Meeting of shareholders of TIM S.A. (TIM Participações S.A. before the merger by TIM S.A. on August 31, 2020), long-term incentive plans; “2011-2013 Plan”, “2014-2016 Plan”, “2018-2020 Plan” and “2021-2023 Plan” respectively, granted to senior directors and to those who occupy the position of key positions in the Company.

The 2011-2013 and 2014-2016 Plans addresses the granting of stock options, while the 2018-2020 and 2021-2023 Plans provides for the granting of shares (performance shares and/or restricted shares).

F-70

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The exercise of the options of the 2011-2013 Plan is conditioned on the achievement of specific performance targets that could prevent the exercise of options, while when in the exercise of the options of the 2014-2016 Plan, the achievement of goals may affect only the acquisition price of the shares. The strike price is calculated by applying a plus or minus adjustment to the Base price of the share as a result of shareholder performance, taking into account the criteria provided for in each plan.

The 2018-2020 and 2021-2023 Plans propose to grant participants shares issued by the Company, subject to the participant’s permanence in the Company (achievement of specific goals). The number of shares may vary, for more or for less, as a result of the performance and possibly of the dividend award, considering the criteria provided for in each Grant.

The term of validity of the options of the 2011-2013 and 2014-2016 plans is 6 years and TIM S.A. has no legal or non-formalized obligation to repurchase or settle the options in cash. For the 2018-2020 and 2021-2023 plan, the term of validity has the same periodicity of 3 years related to its vesting. In turn, the new Plans, in addition to considering the transfer of shares, also provides for the possibility of making payment to participants of the equivalent amount in cash.

The total amount of the expense was calculated considering the fair value of the options and the value of the shares and is recognized in the results over the vesting period.

Stock Options Program Table

Grant date	Options granted	Expiry date	Base Price	Balance at the beginning of the year	Granted during the year	Exercise during exercise	Expired during exercise	Overdue during the year	Balance at the end of the year
2014-2016 Plan – 3rd Grant	3,922,204	Nov 2022	R$ 8.10	295,063	-	(182,511)	-	-	112,552
2014-2016 Plan – 2nd Grant	3,355,229	Oct 2021	R$ 8.45	21,771	-	(21,771)	-	-	0
Plan 2014-2016-1st Grant	1,687,686	Sep 2020	R$ 13.42	-	-	-	-	-	-
2011-2013 Plan – 3rd Grant	3,072,418	July 2019	R$ 8.13	-	-	-	-	-	-
2011-2013 Plan – 2nd Grant	2,661,752	Sep 2018	R$ 8.96	-	-	-	-	-	-
2011-2013 Plan – 1st Grant	2,833,595	Aug 2017	R$ 8.84	-	-	-	-	-	-
Total	17,532,884			316,834	-	(204,282)	-	-	112,552
Weighted average price of the balance of grants				R$ 8.10

F-71

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Stock Program Table (Performance Shares and Restricted Shares)

Identification of grant:	Shares granted	Expiry date	Grant Price		Balance at the beginning of the year	Granted during the year	Transferred during the year*			Paid in cash*			Canceled during the year	Balance at the end of the year
							Volume Vested	Performance change	Additional Dividends	Volume Vested	Performance change	Additional dividends
2021-2023 Plan 2021 Grant(s)	3,431,610	May 2024	R$ 12.95		-	3,431,610	-	-	-	-	-	-	(311,876)	3,119,734
2018-2020 Plan 2020 Grant(s)	796,054	Apr 2023	R$ 14.40		796,054	-	(206,578)	(51,634)	(8,933)	-	-	-	(70,378)	519098
2018-2020 Plan 2019 Grant(s)	930,662	July 2022	R$ 11.28		687,895	-	(207,859)	(78,111)	(23,252)	-	-	-	(53,006)	427,030
2018-2020 Plan 2018 Grant*	849,932	Apr 2021	R$ 14.41		199,594	-	(187,039)	(42,854)	(22,250)	(9,101)	(2,305)	(1,094)	(3,454)	-
Total	6,008,258				1,683,543	3,431,610	(601,476)	(172,599)	(54,435)	(9,101)	(2,305)	(1,094)	(438,714)	4,065,862
Weighted average price of the balance of grants				R$ 12.96

The significant data included in the model, for the Stock Option Grants, was as follows:

Grant date	Base price - weighted average share in the period of measurement of the grant	Volatility	Expected life of the option	Annual interest rate without risk
2011 Grant	R$ 8.84	51.73% p.a.	6 years	11.94% p.a.
2012 Grant	R$ 8.96	50.46% p.a.	6 years	8.89% p.a.
2013 Grant	R$ 8.13	48.45% p.a.	6 years	10.66% p.a.
2014 Grant	R$ 13.42	44.60% p.a.	6 years	10.66% p.a.
2015 Grant	R$ 8.45	35.50% p.a.	6 years	16.10% p.a.
2016 Grant	R$ 8.10	36.70% p.a.	6 years	11.73% p.a.

Note: Significant data is characteristic of an option-based plan, considering the use of fair value as the appropriate method for calculating expenses with option remuneration.

The base price of the share of each share was calculated using the weighted averages of TIM S.A.’s share price. (TIM Participações S.A. before the merger by TIM S.A. on August 31, 2020), considering the following periods:

· 2011-2013 Plan - 1st Grant-traded volume and trading price of TIM Participações shares in the period of 30 days prior to the date of 07/20/2011 (date on which the Board of Directors of TIM Participações approved the benefit).

F-72

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

· 2011–2013 Plan – 2nd Grant – traded volume and trading price of shares of TIM Participações for the period 07/01/2012–08/31/2012.

· 2011–2013 Plan – 3rd Grant-traded volume and trading price of TIM Participações shares for the period of 30 days prior to 07/20/2013.

· 2014-2016 Plan – 1st Grant-traded volume and trading price of TIM Participações in the 30 days prior to the date defined by the Board of Directors of TIM Participações (September 29, 2014).

· 2014-2016 Plan – 2nd Grant-traded volume and trading price of TIM Participações in the 30 days prior to the date defined by the Board of Directors of TIM Participações (September 29, 2015).

· 2014-2016 Plan – 3rd Grant-traded volume and trading price of TIM Participações in the 30 days prior to the date defined by the Board of Directors of TIM Participações (September 29, 2016).

· 2018-2020 Plan – 1st Grant-traded volume and trading price of TIM Participações shares for the period 03/01/2018–03/31/2018.

· 2018-2020 Plan – 2nd Grant-traded volume and trading price of TIM Participações shares for the period 06/01/2019–06/30/2019.

· 2018-2020 Plan – 3rd Grant-traded volume and trading price of TIM Participações shares for the period 03/01/2020–03/31/2020.

· 2021-2023 Plan - 1st Grant - traded volume and trading price of TIM S.A. shares in the period from March 01, 2021 to March 31, 2021.

On December 31, 2021, expenses pegged to these long-term benefit plans totaled R$ 22,212 (R$ 9,999, on December 31, 2020). 

27. Revenue

Revenue from services rendered

The principal service revenue derives from monthly subscription, the provision of separate voice, SMS and data services, and user packages combining these services, roaming charges and interconnection revenue. The revenue is recognized as the services are used, net of sales taxes and discounts granted on services. This revenue is recognized only when the amount of services rendered can be estimated reliably.

F-73

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Revenues are recognized monthly, through billing, and revenues to be billed between the billing date and the end of the month (unbilled) are identified, processed, and recognized in the month in which the service was provided. These non-billed revenues are recorded on an estimated basis, which takes into account consumption data, number of days elapsed since the last billing date.

Interconnection traffic and roaming revenue are recorded separately, without offsetting the amounts owed to other telecom operators (the latter are accounted for as operating costs).

The minutes not used by customers and/or reload credits in the possession of commercial partners regarding the prepaid service system are recorded as deferred revenue and allocated to income when these services are actually used by customers.

The net service revenue item also includes revenue from new partnership agreements, and the amount of revenue recognized in the year ended December 31, 2021 is R$ 119,457.

Arbitration Procedure No. 28/2021/SEC8 was filed before the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce (“CCBC” and “Arbitration Procedure”, respectively), by TIM against Banco C6 S.A., Carbon Holding Financeira S.A. and Carbon Holding S.A (together, “Defendants”), through which the interpretation of certain clauses in the contracts that rule the partnership between the parties will be discussed. In case of loss, the partnership may be terminated. 

Revenues from sales of goods

Revenues from sales of goods (telephones, mini-modems, tablets and other equipment) are recognized when the performance obligations associated with the contract are transferred to the buyer. Revenues from sales of devices to trading partners are accounted for at the time of their physical delivery to the partner, net of discounts, and not at the time of sale to the end customer, since the Company has no control over the good sold. 

Contract identification 

The Company monitors commercial contracts in order to identify the main contractual clauses and other elements present in the contracts that could be relevant in the application of the accounting rule IFRS 15 – Revenue from Contracts with Customers. 

Identification of the performance obligation 

Based on the review of its contracts, the Company mainly verified the existence of the following performance obligations:

(i) sale of equipment; and e

(ii) provision of mobile, fixed and internet telephony services.

F-74

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Thus, the Company started to recognize revenues when (or as) the Company meets the performance obligation by transferring the asset or service promised to the client; and the asset is considered transferred when (or as) the client obtains control of that asset. 

 Determining and Allocating the Transaction Price to the Performance Obligation 

The Company understands that its commercial packages that combine services and sale of cellular handsets with discounts. In accordance with IFRS 15, the Company is required to perform the discount allocation and recognize revenues related to each performance obligation based on their standalone selling prices. 

Cost to obtain contract 

All incremental costs related to obtaining a contract (sales commissions and other costs of acquisition from third parties) are recorded as prepaid expenses and (as described in note 11) amortized over the same period as the revenue associated with this asset. Similarly, certain contract compliance costs are also deferred to the extent that they relate to performance obligations under the customer agreement, i.e. when the customer obtains control over the asset. 

	2021	2020	2019
Net revenue	18,058,027	17,267,812	17,377,194
Gross revenue	25,357,429	24,346,101	25,182,831
Service revenue	24,264,246	23,279,423	23,820,343
Service revenue-Mobile	22,433,225	21,522,135	22,145,033
Service revenue - Landline	1,831,021	1,757,288	1,675,310
Goods sold	1,093,183	1,066,678	1,362,488
Deductions from gross revenue	(7,299,402)	(7,078,289)	(7,805,637)
Taxes incidents	(4,679,722)	(4,534,582)	(4,939,980)
Discounts granted	(2,610,388)	(2,531,920)	(2,843,670)
Returns and other	(9,292)	(11,787)	(21,987)

F-75

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

28. Operating costs and expenses

	2021				2020
	Cost of services rendered and goods sold	Selling expenses	General and administrative expenses	Total	Cost of services rendered and goods sold	Selling expenses	General and administrative expenses	Total
	(8,443,023)	(4,621,788)	(1,723,384)	(14,788,195)	(7,996,615)	(4,443,027)	(1,673,290)	(14,112,932)
Personal	(62,214)	(676,479)	(387,735)	(1,126,428)	(58,024)	(632,231)	(321,967)	(1,012,222)
Third party services	(560,039)	(1,763,360)	(668,641)	(2,992,040)	(587,835)	(1,743,644)	(538,584)	(2,870,063)
Interconnection and means of connection	(1,840,139)	-	-	(1,840,139)	(1,672,655)	-	-	(1,672,655)
Depreciation and amortization	(4,847,995)	(265,565)	(578,136)	(5,691,696)	(4,569,064)	(247,666)	(710,282)	(5,527,012)
Taxes, fees and contributions	(34,732)	(777,819)	(29,388)	(841,939)	(28,675)	(761,152)	(23,809)	(813,636)
Rent and insurance	(362,171)	(109,781)	(20,082)	(492,034)	(316,650)	(107,550)	(15,753)	(439,953)
Cost of goods sold	(731,007)	-	-	(731,007)	(756,060)	-	-	(756,060)
Publicity and advertising	-	(459,811)	-	(459,811)	-	(377,184)	-	(377,184)
Expected credit losses of trade accounts receivable	-	(544,642)	-	(544,642)	-	(552,817)	-	(552,817)
Other	(4,726)	(24,331)	(39,402)	(68,459)	(7,652)	(20,783)	(62,895)	(91,330)

	2019
	Cost of services provided and goods sold	Seling expenses	General and administrative expenses	Total
	(7,433,731)	(4,986,289)	(1,717,859)	(14,137,879)
Personnel	(53,392)	(624,353)	(392,984)	(1,070,729)
Third-party services	(569,242)	(2,041,646)	(512,643)	(3,123,531)
Interconnection and means of connection	(1,419,464)	-	-	(1,419,464)
Depreciation and amortization	(4,132,223)	(256,898)	(739,860)	(5,128,981)
Taxes, fees and contributions	(32,120)	(817,369)	(18,846)	(868,335)
Rent and insurance	(291,302)	(121,795)	(20,590)	(433,687)
Cost of goods sold	(931,818)	-	-	(931,818)
Publicity and advertising	-	(355,234)	-	(355,234)
Expected credit losses of trade accounts receivable	-	(748,291)	-	(748,291)
Other	(4,170)	(20,703)	(32,936)	(57,809)

The company makes contributions to public or private pension insurance plans on a mandatory, contractual or voluntary basis while the employee is on the staff of the company. Such plans do not bring any additional obligations to the company. If the employee ceases to be part of the company's staff in the period necessary to have the right to withdraw contributions made by sponsors, the amounts to which the employee is no longer entitled and which may represent a reduction in the company's future contributions to active employees, or a cash refund of these amounts, are released as assets.

F-76

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

29. Other income (expenses), net

	2021	2020	2019
Income
Income from grant, net	13,548	17,427	21,572
Fines on telecommunications services	58,793	37,490	50,499
Revenue on disposal of assets (ii)	2,711,535	5,375	2,214
PIS/COFINS credits (i)	-	-	1,795,000
Other income	65,482	68,651	83,558
	2,849,358	128,943	1,952,843
Expenses
FUST/FUNTTEL (iii)	(134,962)	(133,378)	(137,169)
Taxes, fees and contributions	(2,274)	(10,316)	(4,024)
Provision for legal and administrative proceedings, net of reversal	(248,987)	(290,789)	(466,460)
Expense on disposal of assets (ii)	(1,942,791)	(13,538)	(7,055)
Other expenses	(22,573)	(32,776)	(62,593)
	(2,351,587)	(480,797)	(677,301)
Other income (expenses), net	497,771	(351,854)	1,275,542

(i) The change refers to the update of claims arising from judicial proceedings with a final decision passed in favor of the company in higher courts, in 2019, which discussed the exclusion of ICMS from calculation basis of PIS and COFINS contributions. The amount of R$ 1,795 million was recorded under Other income in 2019 (note 9).

(ii) Represents the revenue from the sale of 51% equity interest in I-Systems (formerly FiberCo) to IHS, in the amount of R$ 2,709,251, which is composed of the (secondary) cash paid to TIM S.A. and the fair value of the minority interest of 49% that remained with TIM S.A.

In expenses, the amount of 1,927,014 is represented by the write-off of the net assets written-off at TIM S.A. and paid-in as share capital at I-Systems, in addition to the write-off of goodwill and deferred income tax related to goodwill due to the sale of 51% of I -Systems (formerly FiberCo). The gain on this transaction before income tax and social contribution is R$ 782,237. See note 1.

(iii) Representing the expenses incurred with contributions on the various telecommunications revenues due to ANATEL, according to current legislation.S 

F-77

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

30. Financial income

	2021	2020	2019
Financial income	1,091,748	438,598	1,430,171
Interest on financial investments	339,681	82,512	88,224
Interest received from clients	28,427	28,686	37,233
Swap interest	203,852	32,955	15,536
Interest on lease	24,788	19,924	20,528
Inflation adjustment (i)	208,029	116,441	1,263,793
Other derivatives (ii)	285,009	155,165	-
Other income	1,962	2,915	4,857

(i)

A substantial part is related to the monetary restatement on judicial and administrative proceedings and judicial deposits.

(ii)

It is the difference between the market cost and value of the share subscription option related to Banco C6 partnership; therefore, the mark-to-market value of these derivatives includes a gain of R$ 285 million referring to the company’s stock option obtained through achievement of contractual target defined in an operational partnership started in 2020. The market value was calculated based on information available in the last investment transaction carried out by the partner and disclosed in the market. The disclosures of this derivative financial instrument are detailed in note 37, which was measured at fair value, and will subsequently be measured in the Company’s income, also considering the risks related to arbitration disclosed in note 27.

31. Financial expenses

	2021	2020	2019
Financial expenses	(1,745,213)	(1,242,255)	(1,408,053)
Interest on loans and financing	(99,183)	(70,400)	(116,735)
Interest on taxes and fees	(61,745)	(43,616)	(28,396)
Swap interest	(352,029)	(45,970)	(24,604)
Interest on lease	(845,033)	(766,263)	(821,463)
Inflation adjustment (i)	(247,200)	(161,892)	(191,309)
Discounts granted	(52,509)	(33,725)	(36,047)
Other expenses	(87,514)	(120,389)	(189,499)

(i) Substantial portion related to the inflation adjustment of lawsuits, in the amount of R$ 111,949 - see note 24 (R$ 137,379 as of December 31, 2020).

F-78

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

32. Foreign exchange variations, net

	2021	2020	2019
Revenues
Loans and financing (ii)	215,262	-	22,494
Suppliers	13,190	15,981	9,004
Swap (i)	275,836	305,012	40,742
Other	16,640	43,155	15,952
	520,928	364,148	88,192
Expenses
Loans and financing (ii)	(275,724)	(305,010)	(40,715)
Suppliers	(20,061)	(46,112)	(13,201)
Swap (i)	(215,262)	-	(22,493)
Other	(9,222)	(19,991)	(12,691)
	(520,269)	(371,113)	(89,100)
Foreign exchange variations, net	659	(6,965)	(908)

(i) Referring to derivative financial instruments to mitigate risks of foreign exchange variations related to foreign currency debts (note 37).

(ii) It mainly refers to foreign exchange variation on loans and financing in foreign currency.

33. Expense with current and deferred income tax and social contribution

	2021	2020	2019
Current income tax and social contribution
Income tax for the period	9,697	(684,099)	(155,521)
Social contribution for the period	26,538	(232,671)	(58,905)
Tax incentive – SUDENE/SUDAM (i)	167,118	164,442	156,594
	203,353	(752,328)	(57,832)
Deferred income tax and social contribution
Deferred income tax	(255,972)	453,127	(625,516)
Deferred social contribution	(93,432)	144,722	(225,186)
	(349,404)	597,849	(850,702)
Provision for income tax and social contribution contingencies	-	(9,671)	(5,406)
	(349,404)	588,178	(856,108)
	(146,051)	(164,150)	(913,940)

F-79

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The reconciliation of income tax expense and social contribution calculated by applying the combined tax rates with the values reflected in the result is shown below:

	2021	2020	2019
Income before income tax and social contribution	3,103,225	1,992,404	4,536,067
Combined tax rate	34%	34%	34%
Combined tax rate on income tax and social contribution	(1,055,097)	(677,417)	(1,542,263)
(Additions) / deletions:
Permanent additions and exclusions:
Non-taxable revenues	135,465	11,370	7,790
Non-deductible expenses for tax purposes	(53,505)	(42,329)	(18,748)
Tax incentive – SUDENE/SUDAM (i)	167,118	164,442	194,161
Tax benefit related to interest on shareholders’ equity	356,150	368,220	338,449
Sale I – Systems (formerly FiberCo) (ii)	(335,935)	-	-
IR/CS credit on Selic related do tax overpayment (iii)	534,804	-	-
Reversal of Provision for IR/CS - TIM Nordeste (iv)	87,565	-	-
Other amounts	17,384	11,564	106,670
	909,046	513,267	628,322
Income tax and social contribution recorded in income for the period
	(146,051)	(164,150)	(913,941)
Effective rate	4.71%	8.24%	20.15%

(i) As mentioned in note 25 c.3, in order for investment grants not to be computed in taxable income, they must be recorded as a tax incentive reserve, which can only be used to absorb losses or be incorporated into the share capital. TIM S.A. has tax benefits that fall under these rules.

(ii) Refers to deferred taxes on goodwill written-off, according to the sale transaction described in Note 1, which took place in November 2021 between TIM S.A. and IHS. See note 15.d.

(iii) As mentioned in note 9, in September 2021, the Federal Supreme Court (STF), with general repercussions, established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement using the SELIC rate in cases of undue payment. Although the aforementioned decision is still pending publication, as well as the specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to date, in the amount of R$ 534 million, since the likelihood of a favorable outcome for the Company becomes probable.

(iv) In the second quarter of 2021, there was a positive impact of R$ 87 million arising from the write-off of assets and reversal of the provision for income tax and social contribution, set up in 2009, due to the partial success in an administrative proceeding related to the merger of the company TIM Nordeste by TIM Celular.

34. Earnings per share

The number of TIM.SA shares before the corporate reorganization was 2,420,447,019, equivalent to the number of TIM Participações common shares on the merger date. Consequently, basic and diluted earnings per share were calculated considering the retrospective impact of the change in the number of shares, pursuant to IAS 33.

F-80

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

(a)       Basic

Basic earnings per share are calculated by dividing profit attributable to Company’s shareholders by the weighted average number of shares issued during the year.

	2021	2020	2019
Income attributable to the shareholders of the company	2,957,174	1,828,254	3,622,127
Weighted average number of common shares issued (thousands)	2,420,314	2,420,804	2,420,481
Basic earnings per share (expressed in R$)	1.22	0.76	1.50

(b)       Diluted

Diluted earnings per share are calculated by adjusting the weighted average amount of shares outstanding to assume the conversion of all potential dilutive shares.

	2021	2020	2019
Income attributable to the shareholders of the company	2,957,174	1,828,254	3,622,127
Weighted average number of common shares issued (thousands)	2,420,638	2,421,065	2,421,018
Diluted earnings per share (in R$)	1.22	0.76	1.50

The calculation of diluted earnings per share considered 324 thousands (261 thousands on December 31, 2020) shares related to the long-term incentive plan, as mentioned in note 26.

35. Balances and transactions with related parties

The balances of transactions with Telecom Italia Group companies are as follows:

	Assets
	2021	2020
Telecom Italia Sparkle (i)	1,414	1,630
Gruppo Havas (vi)	83,613	-
TI Sparkle (iii)	5,084	1,915
TIM Brasil (vii)	23,069	6,129
Telecom Italia S.p.A. (ii)	1,502	370
I Systems (ix)	5,879	-
Other	674	674
Total	121,235	10,718

F-81

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

	Liabilities
	2021	2020
Telecom Italia S.p.A. (ii)	71,288	75,317
Telecom Italia Sparkle (i)	3,689	10,576
TI Sparkle (iii)	10,205	7,333
TIM Brasil (iv)	6,558	6,145
Vivendi Group (v)	1,238	1,150
Gruppo Havas (vi)	19,794	24,068
I Systems (viii)	31,596	-
Other	4,585	2,797
Total	148,953	127,386

	Revenue
	2021	2020	2019
Telecom Italia S.p.A. (ii)	1,112	1,197	775
Telecom Italia Sparkle (i)	353	2,994	5,371
TI Sparkle (iii)	3,347	4,059	2,052
I Systems (ix)	5,881	-	-
Total	10,693	8,250	8,198

	Cost / Expense
	2021	2020	2019
Telecom Italia S.p.A. (ii)	105,137	110,407	93,188
Telecom Italia Sparkle (i)	19,219	27,485	24,914
TI Sparkle (iii)	20,533	19,923	18,700
Vivendi Group (v)	1,271	1,207	1,386
Gruppo Havas (vi)	206,349	207,682	264,318
I Systems (viii)	31,596	-	-
Other	22,597	22,308	18,713
Total	406,702	389,012	421,219

(i) amounts refer to roaming, Value-Added Services – VAS, transfer of means and international voice-wholesale.

(ii) The amounts refer to international roaming, technical assistance and value added services – VAS and licensing for the use of a registered trademark, granting TIM. S.A. the right to use the “TIM” brand upon payment of royalties in the amount of 0.5% of the company’s net revenue, with payment made on a quarterly basis.

F-82

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

(iii) Values refer to link rental, EILD rental, media rental (submarine cable) and signaling service.

(iv) Mainly refer to judicial deposits made on account of labor causes and transfers of employees.

(v) the values refer to Value Added Services-VAS.

(vi) From the values described above, in the result, they refer to advertising services, of which, R$ 143,439 (R$ 195,117 on December 31, 2020), are related to media transfers.

(vii) Refer to judicial deposits made on account of labor claims.

(viii) The amounts refer to fiber infrastructure services.

(ix) The amounts are related to services provided by TIM S.A., mainly related to network operation and maintenance in the scope of Transition Service Agreement, signed when closing the transaction.

The company has social investment actions that include donations, projects developed by the Tim Institute and sponsorships. On December 31, 2021, the Company invested R$ 9,147 (R$ 4,829 on December 31, 2020).

Balances on equity accounts are recorded in the groups: trade accounts receivable, prepaid expenses, suppliers and other current assets and liabilities.

36. Management remuneration

The key management personnel includes statutory directors and the Board of Directors. The payment of key management personnel for the provision of their services is presented below:

	2021	2020	2019
Short-term benefits	31,494	23,949	22,524
Other long-term benefits	1,052	4,544	900
Share-based payments remuneration	15,176	6,343	5,379
	47,722	34,836	28,803

37. Financial instruments and risk management

Among the financial instruments registered in the Company, there are derivatives that are financial assets or liabilities measured at fair value through the result. At each balance sheet date such assets/liabilities are measured at their fair value. Interest, monetary correction, foreign exchange variation and variations arising from the fair value measurement, where applicable, shall be recognized in the statement of income when incurred, under the line item financial income or financial expenses.

F-83

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Initially, derivatives are recognized at fair value on the date a derivative contract is concluded and are subsequently remeasured at fair value. The company does not apply “hedge accounting.”

The Company carries out transactions with derivative financial instruments, without speculative purposes, only with the aim of i) reducing risks related to foreign exchange variation and ii) managing interest rate exposure. The Company's derivative financial instruments are specifically represented by swap contracts.

The company's financial instruments are being presented in compliance with IFRS 9.

The main risk factors that the company is exposed to are as follows:

(i) Risks of foreign exchange variations

The risks of foreign exchange variations relate to the possibility of the Company computing i) losses derived from fluctuations in exchange rates by increasing the balances of debt with loans and financing obtained in the market and the corresponding financial expenses or ii) increase in cost in commercial contracts that have some type of link to foreign exchange variation. In order for these types of risks to be mitigated, the company performs: swap contracts with financial institutions with the aim of canceling the impacts arising from the fluctuation of exchange rates on the balance sheet and financial result and commercial contracts with foreign exchange band clauses with the aim of partially mitigating foreign exchange risks or derivative financial instruments to reduce the remaining risks of foreign exchange exposure in commercial contracts.

On December 31, 2021, the Company's loans and financings indexed to the variation of foreign currencies are fully protected, both in terms and in value, by swap contracts. Gains or losses on these swap contracts are recorded in the company's earnings.

In addition to the risks mentioned above, there are no other financial assets and liabilities in significant amounts that are indexed to foreign currencies.

(ii) Interest rate risks

Interest rate risks relate to:

The possibility of variations in the fair value of the loans obtained by the company indexed to TJLP, IPCA, fixed rate and/or TLP, when such rates pose a risk to the company’s perspective of not corresponding proportionally to the rates relating to Interbank Certificates of Deposit (CDI). The Company opted to hedge the exposure linked to the IPCA arising from the issuance of debentures, financing to BNDES and the exposure to a rate linked to the debt with BNP Paribas, all of them until maturity.

The possibility of an unfavorable movement in interest rates would cause an increase in the financial expenses of the Company, as a result of the share of the debt and the passive positions that the Company has in swap contracts linked to floating interest rates (percentage of the CDI). However, on December 31, 2021, the Company maintains its financial resources applied to Interbank Certificates of Deposit (CDI), which substantially reduces this risk.

(iii) Credit risk inherent in the provision of services

F-84

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

The risk is related to the possibility of the company computing losses derived from the inability of the subscribers to honor the payments of the invoiced amounts. To minimize this risk, the company preventively performs credit analysis of all orders imputed by the sales areas and monitors the accounts receivable of subscribers, blocking the ability to use services, among other actions, if customers do not pay their debts. There are no customers who have contributed more than 10% of net accounts receivable on December 31, 2021 and December 31, 2020 or revenues from services rendered during the year ended December 31, 2021 and 2020.

(iv) Credit risk inherent in the sale of telephone sets and prepaid telephone cards

The group's policy for the sale of telephone devices and the distribution of prepaid telephone cards is directly related to the credit risk levels accepted during the normal course of business. The selection of partners, the diversification of the portfolio of accounts receivable, the monitoring of loan conditions, the positions and limits of orders established for traders, the formation of collateral are procedures adopted by the company to minimize possible collection problems with its trading partners. There are no customers who contributed more than 10% of revenues from sale of goods during the year ended December 31, 2021 and 2020. There are no customers who contributed more than 10% of the net accounts receivable from the sale of goods on December 31, 2021 and December 31, 2020.

(v)       Liquidity risk

- Liquidity risk arises from the need for cash before the obligations assumed. The company structures the maturities of its non-derivative financial instruments and their respective derivative financial instruments so as not to affect liquidity.

- The management of liquidity and cash flow of the Company are performed on a daily basis to ensure that cash operating generation and previous fund raising, as necessary, are sufficient to maintain the schedule of operating and financial commitments.

- All financial investments of the Company have daily liquidity and the Management may, even in specific cases: i) revise the dividend payment policy; ii) issue new shares; and/or, iii) sell assets to increase liquidity.

(vi) Financial credit risk

The cash flow forecast is performed by the Finance Executive Board, which monitors the continuous forecasts of the liquidity requirements to ensure that the Company has enough cash to satisfy its operating needs. This forecast takes into account investment plans, debt financing, compliance with contractual clauses, compliance with internal goals and, if applicable, external regulatory or legal requirements.

The risk is related to the possibility of the company computing losses derived from the difficulty of redemption of short-term financial investments and swap contracts, due to possible insolvency of counter-parties. The company minimizes the risk associated with these financial instruments by maintaining operations only with financial institutions of recognized market strength, in addition to following a policy that establishes maximum levels of risk concentration per financial institution. 

F-85

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Fair value of derivative financial instruments:

The consolidated derivative financial instruments are presented below:

	2021		2020
	Assets	Liabilities	Assets	Liabilities
Derivative transactions	198,027	208,787	340,660	36,166
Other derivatives (i)	457,892	-	161,429	-
	655,919	208,787	502,089	36,166
Current portion	(134,292)	(194,837)	(262,666)	(7,273)
Non-current portion	521,627	13,950	239,423	28,893

(i) Other derivatives are instruments of share subscription options represent the option of the Company to subscribe 4.08% of the shares of C6 capital, where the Group/Company paid a share subscription premium in the amount of R$ 17.7 million. As required by IFRS 9, the financial instrument must be valued at its fair value that on December 31, 2021 and December 31, 2020 corresponds to R$ 458 million and R$ 161 million, respectively. The impact of the mark-to-market of the stock conversion option calculated, of R$ 440.3 million, represents the difference in the fair value of the option less the amount paid for the share subscription premium. This financial instrument was measured at fair value and will be subsequently verified in the company’s results for the year, also considering the arbitration risks disclosed in note 27.

The long-term derivative financial instruments on December 31, 2021 are due in accordance with the following schedule:

	Assets
2023	39,335
2024	16,843
2025 onwards	465,449
	521,627

Non-derivative financial liabilities are substantially composed of accounts payable with suppliers, dividends payable and other obligations, the maturity of which will occur in the next 12 months, except for loans and financing and leases, the nominal flows of payments of which are disclosed in notes 20 and 16.

F-86

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Financial instruments measured at fair value:

	2021
	Level 1	Level 2	TOTAL
Total assets	4,579,528	655,919	5,235,447
Financial assets at fair value through profit or loss	4,579,528	655,919	5,235,447
Derivative financial instruments	-	198,027	198,027
Other derivatives	-	457,892	457,892
Marketable securities	4,579,528	-	4,579,528
Total liabilities	-	208,787	208,787
Financial liabilities at fair value through profit or loss	-	208,787	208,787
Derivative financial instruments	-	208,787	208,787
	2020
	Level 1	Level 2	TOTAL
Total assets	2,077,499	502,089	2,579,588
Financial assets at fair value through profit or loss	2,077,499	502,089	2,579,588
Derivative financial instruments	-	340,660	340,660
Other derivatives	-	161,429	161,429
Marketable securities	2,077,499	-	2,077,499
Total liabilities	-	36,166	36,166
Financial liabilities at fair value through profit or loss	-	36,166	36,166
Derivative financial instruments	-	36,166	36,166

The fair value of financial instruments traded on active markets is based on market prices quoted on the balance sheet date. A market is considered active when the quoted prices are readily and regularly available from an Exchange, distributor, broker, industry group, pricing service or regulatory agency, and these prices represent actual market transactions which occur regularly on a purely commercial basis. These instruments are included in Level 1. The instruments included in Level 1 mainly comprise the equity investments of bank certificates of deposit (CDB) and committed classified as securities for trading.

The fair value of financial instruments that are not traded on active markets (e.g. over-the-counter derivatives) is determined through the use of valuation techniques. These valuation techniques maximize the use of data adopted by the market where it is available and rely as little as possible on entity-specific estimates. If all relevant information required for the fair value of an instrument is adopted by the market, the instrument is included in Level 2.

F-87

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

If one or more relevant information is not based on data adopted by the market, the instrument shall be included in Level 3.

Specific valuation techniques used to value financial instruments include:

· Quoted market prices or quotes of financial institutions or brokers for similar instruments.

· The fair value of interest rate swaps is calculated by the present value of estimated future cash flows based on the yield curves adopted by the market.

· Other techniques, such as analysis of discounted cash flows, available data of the last relevant transaction and analysis of results based on multiples of similar companies, are used to determine the fair value of the remaining financial instruments.

 The fair values of currency derivative financial instruments and interest rates of the Company were determined by means of future cash flows (active and passive position) using the contracted conditions and bringing these flows to present value through discounts for the use of future interest rate disclosed by market sources. Fair values were estimated at a specific time, based on available information and own evaluation methodologies.

Financial assets and liabilities by Category

The financial instruments of the company by category can be summarized as follows:

December 31, 2021

	Measured at amortized cost	Fair value through profit or loss	Total
Assets, as per balance sheet	9,472,377	5,235,447	14,707,824
Derivative financial instruments	-	198,027	198,027
Other derivatives	-	457,892	457,892
Trade accounts receivable and other accounts receivable, excluding prepayments	3,253,207	-	3,253,207
Marketable securities	-	4,579,528	4,579,528
Cash and cash equivalents	5,228,615	-	5,228,615
Leases	243,121	-	243,121
Judicial deposits	718,773	-	718,773
Other amounts recoverable	28,661	-	28,661
	Measured at amortized cost	Fair value through profit or loss	Total
Liabilities, as per balance sheet	16,095,802	208,787	16,304,589
Loans and financing	3,845,465	-	3,845,465
Derivative financial instruments	-	208,787	208,787
Suppliers and other obligations, excluding legal obligations	2,653,218	-	2,653,218
Lease liabilities	9,063,539	-	9,063,539
Dividends and interest on shareholders' equity payable	533,580	-	533,580

December 31, 2020

	Measured at amortized cost	Fair value through profit or loss	Total
Assets, as per balance sheet	6,756,811	2,579,588	9,336,399
Derivative financial instruments	-	340,660	340,660
Other derivatives		161,429	161,429
Trade accounts receivable and other accounts receivable, excluding prepayments	3,180,661	-	3,180,661
Marketable securities	-	2,077,499	2,077,499
Cash and cash equivalents	2,575,291	-	2,575,291
Leases	162,198	-	162,198
Judicial deposits	794,755	-	794,755
Other amounts recoverable	43,906	-	43,906
	Measured at amortized cost	Fair value through profit or loss	Total
Liabilities, as per balance sheet	14,391,175	36,166	14,427,341
Loans and financing	2,345,032	-	2,345,032
Derivative financial instruments	-	36,166	36,166
Suppliers and other obligations, excluding legal obligations	3,128,732	-	3,128,732
Leases	8,378,835	-	8,378,835
Dividends and interest on shareholders' equity payable	538,576	-	538,576

F-88

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Regular purchases and sales of financial assets are recognized on the trading date - the date on which the Company undertakes to buy or sell the asset. Investments are initially recognized at fair value. After initial recognition, changes in fair value are recorded in the profit and loss for the year, in the financial income and expenses’ group.

Financial risk hedge policy adopted by the Company

The Company's policy establishes that mechanisms must be adopted to protect against financial risks arising from the contracting of financing in foreign currency or indexed to the interest rate, in order to manage said exposure.

The contracting of derivative financial instruments against foreign exchange exposure shall occur simultaneously with the contracting of the debt that gave rise to such exposure. The level of coverage to be contracted for such foreign exchange exposures shall be 100% of the risk, both in terms and in value. To cover interest rates, it is up to the Company to elect or not to contract a hedging mechanism, as provided for in the internal policies.

On December 31, 2021, there are no margins or guarantees applied to transactions with derivative financial instruments of the Company.

Criteria for selection of financial institutions obey parameters that take into consideration rating made available by renowned agencies of analysis of risk, shareholders' equity and transactions, and resources’ concentration levels.

The operations with derivative financial instruments contracted by the company and in force on December 31, 2021 and December 31, 2020 are shown in the following table:

December 31, 2021

COUNTERPARTY

% Coverage

AVERAGE SWAP RATES

Currency

SWAP type

Debt

SWAP

Total Debt

Total swap (Long position)¹

Active Tip

Short position

USD

LIBOR x DI

KFW/ Finnvera

JP Morgan and Bank of America

282,474

282,474

100%

LIBOR 6M + 0.75% p.a.

79.00% to 92.59% of CDI

USD

PRE x DI

BNP Paribas

BNP Paribas

428,793

429,247

100%

3.32% p.a.

155% CDI

USD

PRE x DI

The Bank of Nova Scotia

Scotiabank

559,650

559,933

100%

1.73% p.a.

CDI + 1.05%

BRL

PRE x DI

BNP Paribas

BNP Paribas

515,166

517,843

100%

8.34% p.a.

CDI + 1.07%

BRL

IPCA x DI

DEBENTURE

ITAU

1,696,999

1,696,999

100%

IPCA + 4.17% p.a.

CDI + 0.95%

BRL

IPCA x DI

BNDES

XP

396,281

396,281

100%

IPCA + 4.23% p.a.

96.95% CDI

¹ In certain swap contracts, active tip includes the cost of income tax (15%). After related taxes, coverage remains at 100%.

F-89

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

December 31, 2020

COUNTERPARTY

% Coverage

AVERAGE SWAP RATES

Currency

SWAP type

Debt

SWAP

Total Debt

Total swap (Long position)¹

Active Tip

Short position

USD

LIBOR x DI

KFW/ Finnvera

JP Morgan and Bank of America

351,233

351,233

100%

LIBOR 6M + 0.75% p.a.

85.25% CDI

EUR

PRE x DI

Bank of America

Bank of America

570,878

570,878

100%

0.33% p.a.

108.05% CDI

USD

PRE x DI

The Bank of Nova Scotia.

Scotiabank

1,031,526

1,031,526

100%

1.72% p.a.

134.43% CDI

USD

PRE x DI

BNP Paribas

BNP Paribas

399,725

399,725

100%

3.32% p.a.

155% CDI

Position showing the sensitivity analysis – effect of variations in the fair value of the swaps

For the purpose of identifying possible distortions arising from operations with consolidated derivative financial instruments currently in force, a sensitivity analysis was performed considering the variables CDI, US dollar (USD), Libor and IPCA, individually, in three distinct scenarios (probable, possible and remote), and their respective impacts on the results obtained.

Our assumptions basically observed the individual effect of the CDI, USD, Libor and IPCA variation used in the transactions as the case may be, and for each scenario the following percentages and quotes were used:

Sensitivity scenario		Fair value in USD, EUR, BRL and IPCA (1)	A) ∆ Accumulated variation in debt	Fair value of the active tip of the swap (+)	Fair value of the passive tip of the swap (-)	Swap result	B) ∆ Accumulated variation in swap	C) Final Result (B-A)
	Dez/21	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
CDI	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,388,105	(2,301)	3,388,105	(3,428,742)	(40,637)	(29,671)	(27,370)
	remote	3,385,955	(4,451)	3,385,955	(3,455,013)	(69,058)	(58,093)	(53,641)
USD	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,709,499	319,094	3,709,499	(3,401,372)	308,127	319,094	-
	remote	4,028,593	638,187	4,028,593	(3,401,372)	627,221	638,187	-
LIBOR	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,391,542	1,136	3,391,542	(3,401,372)	(9,830)	1,136	-
	remote	3,392,677	2,271	3,392,677	(3,401,372)	(8,695)	2,271	-
IPCA	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,277,656	(112,750)	3,277,656	(3,401,372)	(123,716)	(112,750)	-
	remote	3,173,004	(217,402)	3,173,004	(3,401,372)	(228,368)	(217,402)	-

(1) (KFW Finnvera, Scotia, BofA, BNP, Debenture and BNDES)

F-90

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Risk variable	Sensitivity scenario	CDI	USD	LIBOR	IPCA
CDI	probable	9.15%	5.5805	0.3433%	10.06%
	possible	11.44%	5.5805	0.3433%	10.06%
	remote	13.73%	5.5805	0.3433%	10.06%
USD	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	6.3210	0.3433%	10.06%
	remote	9.15%	8.3708	0.3433%	10.06%
LIBOR	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	5.5805	0.4291%	10.06%
	remote	9.15%	5.5805	0.5149%	10.06%
IPCA	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	5.5805	0.3433%	12.58%
	remote	9.15%	5.5805	0.3433%	15.09%

As the Company has derivative financial instruments for the purposes of protection of its respective financial liabilities, the changes in the scenarios are accompanied by the respective object of protection, thus showing that the effects related to the exposure generated in the swaps will have their counterpart reflected in the debt. For these transactions, the Company discloses the fair value of the object (debt) and the protective derivative financial instrument on separate lines, as demonstrated above in the sensitivity analysis demonstration table, in order to report the company's net exposure in each of the scenarios mentioned.

It is noteworthy that the operations with derivative financial instruments contracted by the company have as sole objective the patrimonial protection. In this way, an improvement or worsening in their respective market values will be equivalent to an inverse movement in the corresponding portions of the value of the financial debt contracted, object of the derivative financial instruments of the company.

The sensitivity analyses for derivative financial instruments in force on December 31, 2021 were carried out considering, basically, the assumptions related to changes in market interest rates and the change in the US dollar used in swap contracts. The use of these assumptions in the analysis is due exclusively to the characteristics of derivative financial instruments, which have exposure only to changes in interest and exchange rates.

Chart of gains and losses with derivatives during the year

Schedule of position showing gains and losses with derivatives

	2021	2020
Net income from derivative operations	(87,603)	290,856
Income (loss) from operations with other derivatives	285,009	155,165

F-91

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Capital Management

The group's objectives in managing its capital are to safeguard the group's ability to continue to deliver return to shareholders and benefits to other stakeholders, as well as maintain a capital structure to reduce this cost. To maintain or adjust the group's capital structure, management may review the dividend payment policy, return capital to shareholders, or issue new shares or sell assets to reduce, for example, the level of debt. The financial leverage ratios on December 31, 2021 and 2020 can be summarized as follows:

	2021	2020
Total loans and derivatives (note 20 and 37)	3,398,333	1,879,109
Leases - Liabilities (note 16)	9,063,539	8,378,835
Leases - Assets (note 16)	(243,121)	(162,198)
Less: Cash and cash equivalents (note 4)	(5,228,615)	(2,575,291)
FIC (note 5)	(4,568,020)	(2,070,438)
Net debt	2,422,116	5,450,017
Other derivatives (note 37)	457,892	161,429
Financing of 5G License	843,020	-
Adjusted net debt	3,723,028	5,611,447
Adjusted EBITDA (1) (last 12 months)	9,459,299	8,330,038
Leverage ratio	0.39	0.65
Reconciliation of profit for the year to Adjusted EBITDA:
Profit for the year	2,957,174	1,828,254
Depreciation and amortization	5,691,696	5,527,012
Finance Income (Cost), Net	652,806	810,622
Income tax and social contribution	146,051	164,150
Share of loss of an associate	11,572	-
Adjusted EBITDA(i)	9,459,299	8,330,038

(i) Adjusted EBITDA: Presentation of Adjusted EBITDA as a non-GAAP measure is useful to management, investors and other users of our financial information in evaluating operating profitability of the Company. Adjusted EBITDA is calculated by adding back financial income (expenses), income tax and social contribution, depreciation and amortization cost and expense, and share of loss of an associate to profit for the year.

F-92

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Changes in financial liabilities

Changes in liabilities arising from financing activities such as loans and financing, lease liabilities lease and financial instruments are presented below:

	Loans and financing	Lease liabilities	Derivative financial instruments (assets) liabilities
December 31, 2020	2,345,032	8,378,835	(465,922)
Inflows	3,062,000	2,041,474	(296,464)
Cancellations	-	(202,379)	-
Financial expenses	167,857	858,260	148,177
Foreign exchange variations, net	60,463	-	(60,574)
Payment	(1,789,887)	(2,012,651)	227,651
		-
December 31, 2021	3,845,465	9,063,539	(447,132)

	Loans and financing	Lease liabilities	Derivative financial instruments (Assets) Liabilities
December 31, 2019	2,029,088	7,780,870	(42,106)
Inflows	1,800,000	1,966,355	(161,429)
Remeasurement	-	(443,666)	-
Financial expenses	90,500	797,569	13,016
Foreign exchange variations, net	305,010	-	(305,012)
Payment	(1,879,566)	(1,722,293)	29,610
December 31, 2020	2,345,032	8,378,835	(465,922)

38. Defined benefit pension plans and other post-employment benefits

	2021	2020
PAMEC/asset policy and medical plan	6,492	7,346

ICATU, SISTEL and VIVEST

The Company has been sponsoring defined benefit private pension plans for a group of employees from the former TELEBRÁS system, which are currently under the administration of the Sistel Foundation for Social Security and the ICATU multi-sponsor fund. In addition to the plans coming from the TELEBRÁS system, there is also the plan administered by the VIVEST foundation resulting from the incorporation of AES Atimus.

F-93

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Such pension plans, as well as medical plans, are briefly explained below:

PBS assisted (PBS-Tele Celular Sul and PBS-Tele Nordeste Celular): SISTEL benefit plan with a defined benefit feature. It includes retired employees who were part of the plans sponsored by the companies of the old TELEBRÁS system;

PBS (PBS Tele Celular Sul and PBS Tele Nordeste Celular): pension plan for active and assisted employees with defined benefit characteristics. These benefit plans are managed by the ICATU Fundo MULTIPATROCINADO;

TIMPREV Plan (South and Northeast): pension plan for active and assisted employees with defined contribution characteristics. These benefit plans are managed by the ICATU Fundo MULTIPATROCINADO;

Administration agreement: administration agreement for retirement payment to retirees and pensioners of the company's predecessors. Said plan is managed by ICATU Fundo MULTIPATROCINADO;

PAMEC/Asset Policy: complementary health care plan for retirees of the Company's predecessors;

AES Telecom: Complementary pension plan managed by Vivest, which is the responsibility of TIM, due to the acquisition of AES Atimus, a company that belonged to the former Eletropaulo.

Fiber medical plan: Provision for maintenance of health plan as post-employment benefit to former employees of AES Atimus (as established in Law 9656/98, articles 30 and 31), which was acquired and incorporated by TIM.

The actuarial position of liabilities and assets related to retirement and health care plans, on December 31, 2020, in accordance with the rules provided for by IAS 19 is presented below.

a) Effects on the base date of December 31:

	Plans						Total
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan	2021	2020
Reconciliation of assets and liabilities on 12/31/2021	(*)		(*)
Present value of the actuarial obligations	38,869	9,176	119	672	14,100	3,231	66,167	69,362
Fair value of the plan assets	(56,478)	(14,739)	(405)	-	(11,511)	-	(83,133)	(80,856)
Present value of the obligations exceeding the fair value of the assets	(17,609)	(5,563)	(286)	672	2,589	3,231	(16,966)	(11,494)
Amount recognized in other comprehensive income	-	2,327	168	-	-	-	2,495	2,023
Net actuarial liabilities/(assets)	(17,609)	(3,236)	(118)	672	2,589	3,231	(14,471)	(9,471)

(*) No asset was recognized by the sponsors, due to the impossibility of reimbursing this surplus, and the fact that the sponsor’s contributions will not be reduced in the future.

b) Changes in net actuarial liabilities (assets)

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Actuarial liabilities (assets) on 12/31/2020	(15,731)	(1,360)	(287)	858	2,145	4,343
Expense (revenue) recognized in income (loss)	(1,063)	(90)	(20)	57	160	535
Contributions of the sponsor	-	-	-	(45)	-	(8)
Recognized actuarial (gains) or losses	(815)	(1,786)	189	(198)	284	(1,639)
Unrecognized actuarial (gains) or losses	-	-	-	-	-	-
Net actuarial liabilities (assets) on 12/31/2021	(17,609)	(3,236)	(118)	672	2,589	3,231

c) Reconciliation of present value of obligations

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Value of obligations on 12/31/2020	41,852	10,072	147	858	12,090	4,343
Cost of current service	17	-	-	-	-	213
Interest on actuarial obligation	2,743	640	10	57	868	322
Benefits paid in the year	(2,898)	(768)	(9)	(45)	(605)	(8)
Contributions paid by participants	-				0
(Gains)/losses in obligations	(2,845)	(768)	(29)	(198)	1,747	(1,639)
Value of obligations on 12/31/2021	38,869	9,176	119	672	14,100	3,231

F-94

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

d) Reconciliation of the fair value of the assets

Plans
PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan

Fair value of assets on 12/31/2020	57,479	12,998	434	-	9,945	-
Benefits paid in the year	(2,898)	(768)	(9)	-	(605)	-
Actual earnings from assets during the year	3,799	834	29	-	708	-
Actuarial gain (loss) on plan assets	(1,902)	1,675	(49)	-	1,463	-
Contributions paid by participants	-	-	-	-	-	-
Contributions of sponsor converted in the plan	-	-	-	-		-
Fair value of assets on 12/31/2021	56,478	14,739	405	-	11,511	-

e) Expenses planned for 2022

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Current service cost (with interest)	4	-	-	-	-	121
Interest on actuarial obligations	3,289	769	10	57	1,242	290
Earnings expected from assets	(4,841)	(1,257)	(35)	-	(1,008)	-
Interest on the effect of the (asset)/liability limit	1,552	284	10	-	-	-
Total unrecognized net expense (revenue)	4	(204)	(15)	57	234	411

F-95

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Actuarial assumptions adopted in the calculations

The main actuarial assumptions adopted in the calculation were as follows:

Nominal discount rate for the actuarial obligation:	PBS South: 8.81% / 5.13%; PBS Nordeste: 8.84% / 5.16%; CA: 8.81% / 5.13%; PBS-A: 8.78% / 5.10%; AES: 9.02% / 5.33%; PAMEC: 8.81% / 5.13%; FIBER: 9.02% / 5.33%
Salary growth rate - nominal:	PBS: 3.50%/ 0.00% CA, PBS-A, AES, PAMEC and FIBER: Not applicable
Biometric general mortality table:	PBS, CA, PAMEC and FIBER: AT-2000 segregated per sex, decreased by 10%
Biometric table of new disability benefit vested:	PBS and FIBER: Álvaro Vindas; CA, PBS-A, AES and PAMEC: Not applicable
Expected turnover rate:	PBS: Null; CA, PBS-A, AES and PAMEC: Not applicable; FIBER: 0.15/ (length of service + 1), being null as of 50 years old
Probability of retirement:	PBS and FIBER: 100% at 1st eligibility; CA, PBS-A, AES and PAMEC: Not applicable
Estimated long-term inflation rate	PAMEC and FIBER: 6.60% / 3.00%
Determination method	Projected Unit Credit Method

39. Insurances

The Company maintains a policy of monitoring the risks inherent in its operations. As a result, on December 31, 2021, the company had insurance contracts in force to cover operational risks, civil liability, cyber risks, health, among others. The management of the company understands that the policies represent sufficient amounts to cover any losses. The main assets, liabilities or interests covered by insurance and their maximum indemnity limits are as follows:

Modalities	Maximum indemnity limits
Operational Risks	R$550,000
General Civil Liability - RCG	R$ 80,000
Cyber risks	R$ 30,001
Automobile (executive and operational fleet)	R$ 1,000 for optional civil liability (property damage and bodily harm) and R$ 100 for pain and suffering.

40. Supplementary information to the cash flow

Schedule of supplementary information to the cash flow

	2021	2020	2019
Non-cash transactions
Additions to property, plant and equipment and intangible assets - with no effect on cash	(1,929,392)	(1,315,151)	(6,653,985)
Additions to intangible assets - acquisition of licenses	2,682,469	-	-

TIM participated in the 5G Auction for the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands to deploy the 5th Generation mobile telephony, winning several lots in these radio frequencies. In December 2021, the Capex recorded for licenses and related obligations is R$ 3,584 million, with the amount of R$ 2,682 as a contra entry to commitments payable and R$ 902 million with a cash impac

F-96

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

41.       Subsequent events

Mr. Alberto Mario Griselli appointed as CEO of TIM S.A.

TIM S.A., in continuity with the Material Fact published on January 21, 2022, communicated that, on January 31, 2022, its Board of Directors accepted the resignation of Mr. Pietro Labriola from the positions of Chief Executive Officer (“CEO”) and Board Member of the Company.

The Company’s Board of Directors subsequently appointed Mr. Alberto Mario Griselli to effectively and immediately replace Mr. Labriola in the positions of CEO and Board member. The election of Mr. Griselli to the Company’s Board needs to be confirmed by the next Annual General Meeting of TIM.

The position of Chief Revenue Officer (“CRO”), previously held by Mr. Griselli, will be temporarily vacant, and the CEO will accumulate his responsibilities.

Mr. Griselli holds a degree in Electronic Engineering from La Sapienza University in Rome and a FMBA from Columbia University. With over 20 years of experience in the telecommunications industry, he has held relevant positions such as Vice-President for Latin America at TIMwe, a global provider of mobile engagement solutions for telecom operators, and Managing Director for Latin America at Value Partners, a management consulting firm. Mr. Griselli held the position of CRO at TIM since July 30, 2019.

Transfer control of Oi’s mobile telephony activities

TIM S.A. became aware that in an extraordinary public meeting of its Board of Directors held on January 31, 2022, ANATEL – the National Telecommunications Agency, unanimously granted prior consent to the implementation of the corporate transaction referring to the full transfer of control of the three specific purpose entities (“Mobile Assets SPE” or “SPE”) (1), which correspond to the mobile telephony activities of Oi Móvel S.A. – Under Judicial Reorganization (“Oi Móvel”), for the companies TIM, Telefônica Brasil S.A. and Claro S.A. (“Transaction”).

On February 9, 2022, the Administrative Court of the Administrative Council for Economic Defense (CADE), approved the implementation of the corporate transaction referring to the full transfer of control of the three special purpose entities (“Mobile Assets SPE” or “SPE”)1, which correspond to the mobile telephony activities of Oi Móvel S.A. – Under Judicial Recovery (“Oi Móvel,” “Seller”), for the companies TIM, Telefônica Brasil S.A. and Claro S.A.

F-97

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

On 13th April 2022, TIM, Telefônica Brasil S.A. and Claro S.A. (together “Buyers”) delivered to Oi Móvel S.A. – Under Judicial Reorganization (“Oi Móvel”, “Seller”), the closing notice related to the process of acquisition of the Seller's mobile assets (“Transaction”).

In order for such delivery to become possible, approvals were obtained by the Administrative Council for Economic Defense (CADE), through the signing of an Agreement on Concentration Control, which has already become final, and by the National Telecommunications Agency (ANATEL), in particular with the publication of Acts No. 4,949/2022, 4,950/2022 e 4,951/2022, in addition to being met or waived by the Buyers, as the case may be, all contractual precedent conditions. Thus, the parties scheduled the closing of the transaction for April 20th, 2022.

¹ Cozani RJ Infraestrutura e Rede de Telecomunicações S.A. (SPE TIM), Garliava RJ Infraestrutura e Rede de Telecomunicações S.A. (SPE Telefônica) and Jonava RJ Infraestrutura e Rede de Telecomunicações S.A. (SPE Claro).

F-98

TIM S.A.

NOTES TO THE FINANCIAL STATEMENTS - Continued

December 31, 2021

(In thousands of Reais, except when otherwise indicated)

Distribution of Interest on Shareholders’ Equity (JSCP)

The Company's Board of Directors approved on March 22, 2022 the payment of R$ 195,000 in Interest on Equity. The payment will occur until April 27th, 2022 and the date for identification of shareholders entitled to receive such values is March 28th, 2022.

F-99

EX-4.1

PRIVATE DEED FOR THE SECOND ISSUE OF SIMPLE, UNSECURED, AND NON-CONVERTIBLE DEBENTURES, IN A SINGLE SERIES, FOR PUBLIC DISTRIBUTION WITH RESTRICTED EFFORTS, OF TIM S.A.

This “Private Deed for the Second Issue of Simple, Unsecured and Non-Convertible Debentures, in a Single Series, for Public Distribution with Restricted Efforts, of Tim S.A.” (“Deed of Issue”) is entered into by the following parties (collectively, “Parties”):

A. TIM S.A., a corporation registered as a publicly-held company with the Securities and Exchange Commission (Comissão de Valores Mobiliários - “CVM”), headquartered at Avenida João Cabral de Mello Neto, nº 850, Bloco 01, Salas 501 a 1208, Barra da Tijuca neighborhood, City and State of Rio de Janeiro, CEP 22775-057, enrolled in the Brazilian Registry of Legal Entities of the Ministry of Finance (“CNPJ [EIN]”) 02.421.421/0001-11, with its articles of incorporation registered with the Board of Trade of the State of Rio de Janeiro (“JUCERJA”) under NIRE [Company Registration Number] 333.0032463-1, herein represented under the terms of its bylaws (“Issuer” or “Company”); and

B. PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS, a financial institution headquartered in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas, nº 4200, bloco 8, ala B, salas 302, 303 e 304, enrolled in the CNPJ/ME [EIN] 17.343.682/0001-38, herein represented under the terms of its bylaws (“Fiduciary Agent”), representing the pool of Debentureholders (as defined below) (“Debentureholders” and, individually, “Debentureholder”), pursuant to Law 6404, of December 15, 1976, as amended (“Brazilian Corporation Law”).

that decide to enter into this Deed of Issue, in accordance with the following terms and conditions:

1. AUTHORIZATION

1.1. The 2^nd (second) issue of simple, unsecured, and non-convertible debentures, in a single series, issued by the Issuer (“Issue”), for public distribution with restricted efforts, pursuant to the Brazilian Corporation Law, of Law 6385, of December 7, 1976, as amended (“Securities Market Law”), and CVM Instruction 476, of January 16, 2009, as amended (“CVM Instruction 476”), of the effective “ANBIMA Code for Public Offerings” (“ANBIMA Code”) and other applicable legal and regulatory provisions (“Offering”), the execution of this Deed of Issue and the Distribution Agreement (as defined below), will be carried out based on the resolutions of the Issuer’s Board of Directors’ Meeting held on May 20, 2021 (“Issuer’s Board of Directors' Meeting”).

2. REQUIREMENTS

2.1. The Issue, Offering, and execution of this Deed of Issue, of the “Agreement for Coordination and Public Distribution with Restricted Efforts of the Simple, Unsecured and Non-Convertible Second-Issue Debentures, of TIM S.A.”, entered into between the Issuer and the institution that is part of the securities distribution system hired to coordinate and intermediate the Offering (“Lead Coordinator” and “Distribution Agreement”, respectively) will be carried out in compliance with the following requirements:

1 

 

2.2. Exemption from Registration with the CVM and Registration with the Brazilian Association of Financial and Capital Market Entities ("ANBIMA")

2.2.1. The Offering is automatically exempt from registration with the CVM, as provided for in article

19 of the Securities Market Law, pursuant to article 6 of CVM Instruction 476, as it is a public offering for distribution with restricted efforts, not being the subject of a protocol, registration, or filing with the CVM, except for the sending to the CVM of the communication of the commencement of the Offering, pursuant to article 7-A of CVM Instruction 476 (“Commencement Notice”), and the notice of closing of the Offering, pursuant to article 8 of CVM Instruction 476 (“Closing Notice”).

2.2.2. As it is a public distribution with restricted efforts, the Offering will be registered with ANBIMA, under the terms of articles 16, item II and 18, item V of the ANBIMA Code, within a period of up to 15 (fifteen) days from the sending of the Closing Notice.

2.3. Project Classification

2.3.1. The issue of the Debentures will be carried out pursuant to article 2 of Law 12431, of June 24, 2011 (“Law 12431”), of Decree 8874, of October 11, 2016 (“Decree 8874”) and the Resolution of the Brazilian Monetary Council (“CMN”) 3947, of January 27, 2011 (“CMN Resolution 3947”) or subsequent rules that amend, replace or complement them, and the applicable regulations, in view of the classification of the Project (as defined below) as a priority project, through Ordinance 2447, issued by the Ministry of Communications, on April 22, 2021, published in the Brazilian Federal Official Gazette on April 23, 2021, whose copy is attached to this Deed of Issue as Annex I (“Ordinance”).

2.4. Filing and Publication of the Issuer’s RCA.

2.4.1. The Issuer’s Board of Directors' Meeting will be filed with JUCERJA and published in the Official Gazette of the State of Rio de Janeiro (“DOERJ”) and in the newspaper “Valor Econômico” (together with DOERJ, “Publication Newspapers”), pursuant to item I of article 62 and article 289 of the Brazilian Corporation Law. The Issuer shall file with JUCERJA the Issuer’s Board of Directors' Meeting and other corporate acts carried out under the terms of the Debentures, within a period of up to three (3) Business Days (as defined below) counted from the respective occurrence, and the registration must be made within thirty (30) days from its occurrence.

2.4.2. The Issuer shall send to the Fiduciary Agent: (i) one (1) soft copy (PDF), with the due digital seal of JUCERJA of the Issuer’s Board of Directors' Meeting duly registered with JUCERJA within a period of up to three (3) Business Days from the approval of the respective registration.

2 

 

2.5. Filing and Registration of this Deed of Issue and any amendments with JUCERJA.

2.5.1. Pursuant to article 62, item II and paragraph 3 of the Brazilian Corporation Law, this Deed of Issue and any amendments thereto will be registered with JUCERJA. The Issuer shall file this Deed of Issue and any amendments thereto within a period of up to three (3) Business Days from the respective signature date, and it must (i) be registered within thirty (30) days from the respective signature date; and (ii) a soft copy (PDF) of this Deed of Issue and any amendments thereto, containing the digital registration seal with JUCERJA, to be sent to the Fiduciary Agent within three (3) Business Days after its effective filing.

2.5.2. As long as the measures restricting the normal operation of JUCERJA continue exclusively due to the COVID-19 pandemic, this Deed of Issue and any amendments thereto must be filed within a period of up to thirty (30) days from the regular re-establishment of JUCERJA’s activities, in compliance with the provisions of article 6, item II, of Law 14030 or any other rule or measure that may replace it.

2.6. Distribution, Trading and Electronic Custody.

2.6.1. The Debentures will be deposited for (i) distribution in the primary market through the MDA - Asset Distribution Module (“MDA”), managed and operated by B3 S.A. – Brasil, Bolsa, Balcão - Balcão B3 (“B3”), and the distribution will be financially settled through B3; and (ii) electronic trading and custody in the secondary market through CETIP21 - Marketable Securities, also managed and operated by B3, with the trades being financially settled and the Debentures electronically held in custody in B3.

2.6.2. Notwithstanding what is described in Clause 2.6.1 above, the Debentures may only be traded, as provided for in articles 13 and 15 of CVM Instruction 476, between Qualified Investors (as defined below) (unless the Company obtains the registration referred to in article 21 of the Securities Market Law) on the regulated securities markets after ninety (90) days from the date of each subscription or acquisition by the Professional Investor (as defined below), except, if any, the batch of Debentures subject to a firm guarantee exercised by the Lead Coordinator, which may be traded regardless of the term set forth herein, however, (i) the acquirer of the Debentures subscribed by the Lead Coordinator, in the subsequent trading, must comply with the restriction on trading of ninety (90) days mentioned above, counted from the date of the exercise of the firm guarantee and the other applicable legal and regulatory provisions, and (ii) the Lead Coordinator must comply with the limits and conditions provided for in articles 2 and 3 of CVM Instruction 476 and other applicable legal and regulatory provisions, and the Issuer must also comply with the obligations set forth in article 17 of CVM Instruction 476.

3 

 

3. CORPORATE PURPOSE OF THE ISSUER

3.1. The Company is engaged in: (i) Implement, expand, operate and provide any type of electronic communications services and their respective contents, in accordance with applicable legislation; (ii) Build, manage, deploy, execute, operate, provide maintenance services, or sell infrastructure for its own and/or third-party use; (iii) Sell goods and/or products, provide services, develop activities and practice any acts and/or legal transactions related, directly or indirectly, or that are complementary, associated, or linked to the services and activities provided for within the scope of the corporate purpose of the Company; and

(iv) Hold interests in the capital of other business or non-business companies. Without prejudice to the development of new services or activities, the Company may, among other activities: (a) Trade, rent, lend for use, provide installation and/or maintenance services for the goods and/or products necessary or useful for the provision of services included in its corporate purpose, such as telephone sets, electronics, computers, and related technology, their accessories and spare parts; (b) Promote and carry out the import and export of goods and services necessary or useful for the execution of activities included in its purpose; (c) Provide administrative, consulting, advisory, and planning services; (d) Provide services and/or develop activities related to the internet of things, artificial intelligence and the like; (e) Provide services in the areas of information technology and the internet, such as licensing services or assignment of the right to use computer programs, technical support services in information technology, including installation, configuration, development, and maintenance of programs, computer systems and databases, and data processing services; (f) Provide information security, monitoring and georeferencing services;

(g) Provide marketing and support services to own or third-party marketing and advertising campaigns, including the activities of preparing and sending offers, advertising, and publicity materials to customers, through any physical or virtual means; (h) Provide mercantile representation and insurance representation services; (i) Provide services to financial institutions, including correspondent banking, in accordance with legislation, including, but not limited to: (1) receiving and forwarding proposals for opening demand, term, and savings accounts held by the contracting institution; (2) receiving and forwarding proposals for credit and leasing operations granted by the contracting institution, as well as other services provided to monitor the operation; and (3) receiving and forwarding proposals for the supply of credit cards under the responsibility of the contracting institution; (j) Buy, sell, or provide, through any means of electronic communication, digital goods and products, such as electronic books, audiobooks, newspapers, journals, and the like; (k) Carry out registration information management and collection activities; and (l) Carry out other activities similar or correlated to those described in the previous items.

4 

 

4. ALLOCATION OF FUNDS

4.1. Pursuant to article 2, paragraph 1, of Law 12431, as well as Decree 8874, and CMN Resolution 3947, the funds obtained by the Issuer through the full payment of the Debentures will be used exclusively to finance the implementation, expansion, maintenance, recovery, adaptation and/or modernization of the transportation network, fixed and mobile access network, data center, machine-to-machine communication network, 5G or higher network and infrastructure for telecommunication network virtualization, improving the quality and availability of the services offered (“Project”), pursuant to the following table:

Project
Purpose	Implement, expand, maintain, recover, adapt and/or modernize transportation network, fixed and mobile access network, data center, machine-to-machine communication network, 5G or higher network, and infrastructure for telecommunication network virtualization, improving the quality and availability of the services offered.
Start-up date	01/01/2020
Project Construction Completion Date	12/31/2023
Current Project Phase	in progress
Volume of financial resources needed to carry out the Project	R$ 9,588,678,443.28
Amount of Debentures that will be allocated to the Project	R$ 1,600,000,000.00
Allocation of funds to be raised through Debentures	R$ 1,600,000,000.00
Percentage of the financial resources needed for the Project from the Debentures	Approximately 16.7%

4.2.The Issuer shall send to the Fiduciary Agent a statement on letterhead and signed by a legal representative, attesting the evidence of the effective destination of the funds of this Issue, and such statement must be sent on April 30^th each year, until the evidence of the effective destination of all the resources or until the Due Date, whichever occurs first, and the Fiduciary Agent may request to the Issuer all eventual clarifications and additional documents that may be necessary.

5 

 

5. OFFER'S CHARACTERISTICS

5.1. Placement and Distribution Procedure.

5.1.1. The Debentures will be subject to a public offering for distribution with restricted efforts, pursuant to the Securities Market Law, CVM Instruction 476, and other applicable legal and regulatory provisions, and pursuant to the Distribution Agreement, with the intermediation of the Lead Coordinator, under the regime of firm placement guarantee for all the Debentures, targeting exclusively Professional Investors.

5.1.2. The Lead Coordinator may access up to a maximum of 75 (seventy-five) Professional Investors, being possible the subscription or acquisition of the Debentures by a maximum of 50 (fifty) Professional Investors, pursuant to article 3 of CVM Instruction 476.

5.1.3. Investment funds and managed securities portfolios whose investment decisions are taken by the same manager will be considered as a single investor for the purposes of the limits provided for in Clause 5.1.2 above, as provided for in article 3, paragraph 1, of CVM Instruction 476.

5.1.4. Pursuant to CVM Resolution 30, of May 11, 2021, as amended (“CVM Resolution 30”) and for the purposes of the Offering, the following will be considered:

(a) “Professional Investors”: (i) financial institutions and other institutions authorized to operate by the Central Bank of Brazil; (ii) insurance companies and capitalization companies; (iii) open and closed supplementary pension entities; (iv) individuals or legal entities that have financial investments in an amount greater than R$ 10,000,000.00 (ten million reais) and that, in addition, certify in writing their status as a professional investor by means of their own term, in accordance with Annex A of CVM Resolution 30; (v) investment funds; (vi) investment clubs, provided that their portfolio is managed by a securities portfolio manager authorized by the CVM; (vii) autonomous investment agents, portfolio managers, analysts, and marketable securities consultants authorized by the CVM, in relation to their own resources; and (viii) non-resident investors; and

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(b) “Qualified Investors”: (i) Professional Investors; (ii) individuals or legal entities that have financial investments in an amount greater than R$ 1,000,000.00 (one million reais) and that, in addition, certify in writing their status of a qualified investor by means of their own term, in accordance with Annex B of CVM Resolution 30; (iii) individuals who have passed technical qualification exams or hold certifications approved by the CVM as requirements for the registration of autonomous investment agents, portfolio managers, analysts, and marketable securities consultants, in relation to their own resources; and (iv) investment clubs, provided that their portfolio is managed by one or more shareholders, who are qualified investors.

5.1.4.1. The specific social security systems established by the Federal Government, States, Federal District, or Municipalities are considered Professional Investors or Qualified Investors only if recognized as such according to specific regulations of the Special Social Security and Labor Department of the Ministry of Finance.

5.1.5. Partial Distribution. Partial distribution will not be accepted.

5.2. Settlement Bank and Bookkeeping Agent. The institution providing the Debentures settlement agent services will be Banco Bradesco S.A., a financial institution headquartered in the City of Osasco, São Paulo, in the administrative center “Cidade de Deus”, s/n, Vila Yara, enrolled in the CNPJ [EIN] 60.746.948/0001-12 (“Settlement Bank”, whose definition includes any other institution that will succeed the Settlement Bank in the provision of services related to the Debentures and “Bookkeeping Agent”, whose definition includes any other institution that may succeed the Bookkeeping Agent in the provision of services related to the Debentures, respectively).

5.3. Term and Form of Subscription and Payment and Price of Payment. The Debentures will be subscribed and paid-up through the MDA, and the distribution will be financially settled through B3 by a maximum of 50 (fifty) Professional Investors, in cash, in national currency, at the time of subscription, at the Unit Nominal Value. For the purposes of this Deed of Issue, the “First Payment Date” will be considered the date of the first subscription and payment of the Debentures. If the Debentures are paid in on more than one date, the subscription price for the respective Debentures that were paid in after the First Payment Date will be the Unit Nominal Value plus the respective Compensatory Interest (as defined below) and the Monetary Adjustment of the Debentures (as defined below), calculated pro rata temporis from the First Payment Date of the respective Debentures to the date of their effective payment (“Payment Price”).

6. CHARACTERISTICS OF THE ISSUE AND DEBENTURES

6.1. Issue Number. This Issue contemplates the 2^nd (second) issue of debentures of the Issuer, which will be subject to public distribution with restricted efforts, pursuant to CVM Instruction 476.

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6.2. Series. The Issue will be carried out in a single series.

6.3. Issue amount. The total amount of the Issue will be R$ 1,600,000,000.00 (one billion, six hundred million reais), on the Issue Date (as defined below) (“Total Issue Amount”).

6.4. Quantity. One million, six hundred thousand (1,600,000) Debentures will be issued.

6.5. Unit nominal value. The Debentures will have a unit nominal value of R$ 1,000.00 (one thousand reais), on the Issue Date (“Unit Nominal Value”).

6.6. Type and form. The Debentures will be issued in registered, book-entry form, without the issue of certificates.

6.7. Proof of Debenture Ownership. For all legal purposes, ownership of the Debentures will be evidenced by the statement issued by the Bookkeeping Agent, and, additionally, with regard to the Debentures that are electronically held in custody in B3, it will be evidenced by the statement issued by B3 on behalf of the Debentureholders.

6.8. Convertibility and Exchangeability. The Debentures will be simple, not convertible into shares issued by the Issuer nor exchangeable into shares of another company.

6.9. Type. The Debentures will be unsecured, pursuant to article 58 of the Brazilian Corporation Law.

6.10. Issue date. For all legal purposes, the issue date of the Debentures will be June 15, 2021 (“Issue Date”).

6.11. Term and Maturity Date. Except in cases of Mandatory Early Redemption (as defined below), Early Redemption Offering (as defined below), Optional Acquisition (as defined below) with the total cancellation of the debentures and/or early maturity of the obligations under the Debentures, the Debentures will have a maturity of 7 (seven) years from the Issue Date, therefore expiring on June 15, 2028 (“Due Date”), pursuant to this Deed of Issue and applicable legislation and regulations and Law 12431 and CMN regulations.

6.12. ESG (Environmental, Social and Corporate Governance) Principles. As described and exemplified in greater detail in Annex III to this Deed of Issue, the Debentures will have an ESG component that will allow their classification as sustainability-linked, in accordance with the principles established by the International Capital Markets Association (“ICMA”).

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6.13. Inflation adjustment. The Debentures will have their Unit Nominal Value or the balance of the Unit Par Value, as the case may be, adjusted for inflation (“Inflation Adjustment of Debentures”) from the First Date of Payment of the Debentures until the full settlement of the Debentures, based on the variation of the Brazilian Extended Consumer Price Index calculated and disclosed by the Brazilian Institute of Geography and Statistics - IBGE (“IPCA”), calculated on a pro rata temporis basis per Business Day, based on 252 (two hundred and fifty-two) Business Days, and the result of the Inflation Adjustment of Debentures will be automatically incorporated into the Unit Nominal Value or balance of the Unit Nominal Value, as the case may be, of the Debentures (“Adjusted Nominal Value”), according to the following formula:

VNa = VNe ´ C

Where:

VNa = Adjusted Nominal Value of the Debentures, calculated to 8 (eight) decimal places, without rounding;

VNe = Unit Nominal Value or the balance of the Unit Nominal Value of the Debentures, as the case may be, informed/calculated to 8 (eight) decimal places, without rounding; and

C = cumulative factor of monthly IPCA variations, calculated to 8 (eight) decimal places, without rounding, calculated as follows:

Where:

n = total number of indexes considered in the Monetary Adjustment of the Debentures; where “n” is an integer number;

NIK = value of the IPCA index number for the month prior to the adjustment month, if the adjustment is on an earlier date or on the Anniversary Date (as defined below). After the Anniversary Date, value of the adjustment month’s index number; NIK-1 = value of the IPCA index number of the month prior to month “k”;

dup = number of Business Days between the First Date of Payment of the Debentures or the immediately preceding Anniversary Date (inclusive), as the case may be, and the calculation date (exclusive), limited to the total number of Business Days of validity of the price index; where “dup” is an integer number; and

dut = number of Business Days contained between the last Anniversary Date and the next Anniversary Date; where “dut” is an integer number.

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Whereas:

(i) the application of the IPCA will occur in the shortest period allowed by the legislation in force, without the need for adjustment to the Deed of Issue or any other formality;

(ii) the IPCA must be used considering the same number of decimal places disclosed by the body responsible for its calculation;

(iii) the 15^th (fifteenth) day of each month is considered to be the anniversary date (“Anniversary Date”);

(iv) the monthly period between two (2) consecutive Anniversary Dates is considered as the adjustment month;

(v) the factors resulting from the expression: are considered to 8 (eight) decimal places, without rounding;

(vi) the result is run starting from the most recent factor, then adding the most remote ones. Intermediate results are calculated to 16 (sixteen) decimal places, without rounding;

(vii) if, up to the Anniversary Date, the NIk has not been disclosed, a projected index number, calculated based on the last available projection, released by ANBIMA (“Projected Index Number” and “Projection”, respectively) of the IPCA percentage variation, shall be used instead of the NIk in the calculation of factor “C”, according to the following formula:

 

Where:

NIkp = Projected Index Number of the IPCA for the adjustment month, calculated to 2 (two) decimal places, rounded off; and

Projection = Percentage variation projected by ANBIMA for the adjustment month.

(viii) the Projected Index Number will be used, provisionally, while the index number corresponding to the adjustment month has not been disclosed. However, there is no compensation due between the Issuer and the Debentureholders upon the posterior disclosure of the IPCA that would be applicable; and

(ix) the IPCA index number, as well as the projections of its variation, must be used considering the same number of decimal places disclosed by the body responsible for its calculation/assessment.

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6.14. IPCA unavailability. In the absence of calculation and/or disclosure of the IPCA for a period exceeding 10 (ten) Business Days from the expected date for calculation and/or disclosure (“IPCA Unavailability Period”) or, even, in the event of extinction or inapplicability by a legal provision or court order of the IPCA, its legal substitute will be used. If it is not possible to use the above alternative, the Fiduciary agent must call, within three (3) Business Days counting from the last day of the IPCA Unavailability Period, of the extinction or inapplicability by a legal provision or court order, a General Meeting of Debentureholders (as defined below) in the form and within the terms stipulated in article 124 of the Brazilian Corporation Law and in Clause 10 of this Deed of Issue. This General Meeting of Debentureholders must be held to define, in agreement with the Issuer, in compliance with the applicable regulations, the new parameter to be applied, which must comply with the applicable regulations (including, but not limited to, the requirements set forth in paragraph 1 of article 2 of Law 12431) and should reflect parameters used in similar operations existing at the time (“IPCA Unavailability” and “IPCA Substitute Rate”, respectively). The respective General Meeting of Debentureholders will be held in the manner and within the terms stipulated in article 124 of the Brazilian Corporation Law and in Clause 10 of this Deed of Issue. Until the resolution of this parameter, the last available IPCA Projection officially disclosed will be used to calculate (i) the “C” factor of the Monetary Adjustment of the Debentures and (ii) any pecuniary obligations related to the Debentures provided for in this Deed of Issue. There is no compensation due between the Issuer and the Debentureholders upon deliberation of the new parameter for the Monetary Adjustment of the Debentures. If the IPCA or its legal substitutes, as the case may be, are disclosed before the said General Meeting of Debentureholders, except in the event of its inapplicability by a legal provision or court order, said General Meeting of Debentureholders will no longer be held, and the respective index, from the date of its validity, will be used again for the calculation of the Monetary Adjustment of the Debentures.

6.14.1.If the IPCA is not available when calculating the Monetary Adjustment of the Debentures, the variation corresponding to the last available IPCA Projection officially disclosed until the calculation date will be used, in its replacement, without any financial compensation, fines, or penalties between the Issuer and the holders of the Debentures, upon the subsequent disclosure of the IPCA that becomes available.

6.14.2.If there is no agreement on the IPCA Substitute Rate between the Issuer and the Debentureholders, due to the absence of a quorum as established in Clause 10 below, at the General Meeting of Debentureholders referred to in Clause 6.14 above, or if the quorum for the aforementioned General Meeting of Debentureholders is not reached, (i) if permitted under the terms of CMN Resolution 4751, of September 26, 2019, as amended (“CMN Resolution 4751”), of Law 12431 and applicable legislation and regulations, all the Debentures must be redeemed within a period of at least thirty (30) days and, at most, 45 (forty-five) days from the date of the respective General Meeting of Debentureholders convened for this purpose or from the date it should have taken place, or on the Due Date of the Debentures, whichever occurs first, subject to the provisions of Clause 6.30 below and the definition of the Redemption Discount Rate at said General Meeting of Debentureholders (as applicable) (ii) the last available IPCA Projection officially disclosed will be used to calculate the “C” factor of the Monetary Adjustment of the Debentures, if, at the time of the aforementioned General Meeting of Debentureholders or the date it should have taken place, the redemption of the Debentures is not allowed, pursuant to CMN Resolution 4751, Law 12431 and applicable legislation and regulations.

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6.14.3.In any case provided for in Clause 6.14.2 above, when permitted by CMN Resolution 4751, Law 12431, and applicable legislation and regulations, the Issuer shall carry out the Mandatory Early Redemption of the Debentures, pursuant to Clause 6.30 below.

6.15. Remuneration interest. Compensatory Interest (Monetary Adjustment and Compensatory Interest, together, “Compensation”), base 252 (two hundred and fifty-two) Business Days, calculated exponentially and cumulatively pro rata temporis, will apply to the Adjusted Nominal Value of the Debentures per Business Day elapsed, from the First Date of Payment of the Debentures or the immediately preceding Compensatory Interest payment date, as the case may be, until the effective payment date.

6.15.1.The compensatory interest, levied on the Adjusted Nominal Value of the Debentures, in compliance with the criteria established in clause 6.15.4 below, will correspond to a surcharge of 4.1682% per annum, based on 252 (two hundred and fifty-two) Business Days (“Compensatory Interest”).

6.15.2.The “Debentures Capitalization Period” is defined as the time interval that begins on the First Date of Payment of the Debentures (inclusive), in the case of the first Capitalization Period of the Debentures, or on the payment date of the Compensatory Interest (inclusive), as applicable, immediately preceding, in the case of the other Capitalization Periods of the Debentures, and ends on the payment date of the Compensatory Interest (exclusive), as applicable, corresponding to the period in question. Each Debenture Capitalization Period succeeds the previous one without interruption until the Due Date.

6.15.3.The payment of the Compensation, as applicable, will be made by the Issuer to the Debentureholders, in accordance with the rules and procedures of B3, considering that the Debentures are electronically held in custody in B3 at the time of payment.

6.15.4.Reduction of Compensatory Interest. The Compensatory Interest will be automatically reduced, without the need to amend this Deed of Issue, in the following events (“Reduction of Compensatory Interest”):

(i)If the Company (a) complies with the 4G Presence Goal (as defined in Annex III) on the Verification Date (as defined in Annex III) and (b) proves fulfillment of the goal to the Fiduciary agent and Debentureholders, through the submission of its Annual ESG Report (as defined in Annex III) by June 5, 2024 (“Step-Down by Evidence of Fulfillment of the 4G Presence Goal”), there will be a reduction in Compensatory Interest by 0.125%, i.e. Compensatory Interest changing to 4.0432% per annum, based on 252 (two hundred and fifty-two) Business Days, calculated exponentially and cumulatively pro rata temporis per Business Days elapsed, from the beginning of the immediately subsequent Capitalization Period, i.e. from June 15, 2024 (inclusive). This Reduction of Compensatory Interest will be applied automatically, without the need to amend this Deed of Issue, and the Fiduciary agent must notify B3 within three (3) Business Days from the receipt of the Annual ESG Report and no later than 11 June 2024. Compensatory Interest incurred up to June 15, 2024 (exclusive) based on the surcharge previously in effect must be paid on June 15, 2024; and

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(ii)If the Company (a) complies with the Eco-efficiency Goal (as defined in Annex III) on the Verification Date (as defined in Annex III), and (b) proves fulfillment of the goal to the Fiduciary agent and Debentureholders, through the submission of its Annual ESG Report (as defined in Annex III) by June 5, 2026 (“Step-Down by Evidence of Fulfillment of the Eco-efficiency Goal”), there will be a reduction in the Compensatory Interest then in effect by 0.125% per annum, i.e. (a) changing the Compensatory Interest to 3.9182% per annum, based on two hundred and fifty-two (252) Business Days, calculated exponentially and cumulatively pro rata temporis per Business Days elapsed, if the Step-Down by Evidence of Fulfillment of the 4G Presence Goal has occurred or (b) changing the Compensatory Interest to 4.0432% per annum, based on 252 (two hundred and fifty-two) Business Days, calculated exponentially and cumulatively pro rata temporis per Business Days elapsed, if the Step-Down by Evidence of Fulfillment of the 4G Presence Goal has not occurred; from the beginning of the immediately subsequent Capitalization Period, i.e. from June 15, 2026 (inclusive). This Reduction in Compensatory Interest will be applied automatically, without the need to amend this Deed of Issue, and the Fiduciary agent must notify B3 within

three (3) Business Days from the receipt of the Annual ESG Report indicated above and, no later than June 10, 2026. Compensatory Interest incurred up to June 15, 2026 (exclusive) based on the surcharge previously in effect must be paid on June 15, 2026.

6.15.4.1. Without prejudice to the provisions of Clause 6.15.4 above, the Issuer shall comply with the terms and conditions indicated in Annex III of this Deed of Issue to be entitled to the Reduction of Compensatory Interest. Reductions may be applied cumulatively or alternately, subject to fulfillment of applicable goals. In any case, the maximum reduction in Compensatory Interest will be 0.25% (twenty-five hundredths percent).

6.15.4.2 Furthermore, for clarification purposes: (i) if none of the events indicated in Clause

6.15.4 above is verified or (ii) if the information is not provided to the Fiduciary agent within the agreed period, no Reduction of Compensatory Interest will be applied.

6.15.4.3The Issuer shall prepare a notice to the Debentureholders, with a copy to the Fiduciary agent available on the Issuer’s investor relations website, on the Reduction of Compensatory Interest valid for the subsequent Capitalization Period, regardless of any additional formality or amendment to this Deed of Issue, within the periods provided for in this Clause.

6.15.4.4The Parties hereby agree that the Fiduciary agent will be limited to monitoring the fulfillment of the 4G Presence Goal and the Eco-Efficiency Goal (as described in Annex III) through the information provided in the Annual ESG Report, as verified by an External Verifier (as defined in Annex III). The Fiduciary agent shall not be responsible for verifying the sufficiency, validity, quality, veracity, or completeness of the technical and financial information contained in the Annual ESG Report, or in any other document sent to them in order to complement, clarify, rectify or ratify information from the aforementioned Annual ESG Report.

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6.15.4.5Within up to three (3) Business Days from the receipt of the Annual ESG Report, the Fiduciary agent shall notify the Bookkeeping Agent, the Settlement Bank, and B3, with a copy to the Issuer, about the Reduction of Compensatory Interest, regardless of any additional formality or amendment to this Deed of Issue.

.

6.15.5. Compensation will be calculated according to the following formula:

J = VNa x (Spread factor – 1)

where:

J =       unit value of the Compensatory Interest of the Debentures due at the end of the Capitalization Period of the Debentures (as defined below), calculated to 8 (eight) decimal places, without rounding.

VNa = Adjusted Nominal Value of the Debentures, calculated to 8 (eight) decimal places, without rounding;

Spread factor = Fixed Spread Factor calculated to 9 (nine) decimal places, with rounding, calculated as follows:

where:

Spread = 4.1682 (except for the Reduction of Compensatory Interest rules under the terms of Clause 6.15.1.2. above).

n = number of Business Days between the First Payment Date (or the respective immediately preceding Compensatory Interest Payment Date, as the case may be), and the calculation date; where “n” is an integer number

6.16. Payment of Compensatory Interest. Without prejudice to payments as a result of Mandatory Early Redemption, Early Redemption Offering, Optional Acquisition, and/or early maturity of the obligations under the Debentures, pursuant to this Deed of Issue, the payment of Compensatory Interest will be made every six months, as of the Issue Date, with the first payment due on December 15, 2021, and the other payments always due on the 15^th (fifteenth) day of the months of June and December each year, until the Due Date (each date, a “Compensatory Interest Payment Date”).

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6.17. Amortization of the Unit Nominal Value. Without prejudice to payments as a result of Mandatory Early Redemption, Early Redemption Offering, Optional Acquisition, and/or early maturity of the obligations under the Debentures, under the terms set forth in this Deed of Issue, the Unit Nominal Value of the Debentures will be amortized in annual and successive installments plus their respective and proportional Monetary Adjustment, from the 5^th (fifth) year, always on the 15^th day of June, with the first amortization due on June 15, 2026, and the last amortization due on the Due Date of the Debentures, as shown in the table below:

INSTALLMENT	AMORTIZATION DATE	PERCENTAGE OF AMORTIZATION OF THE UNIT NOMINAL VALUE AMORTIZED
1.	June 15, 2026	33.3333%
2.	June 15, 2027	33.3333%
3.	Maturity	33.3334%

6.18. Late-payment charges. Without prejudice to the provisions of Clause 7 below, in the event of failure to pay any amount due by the Issuer to the Debentureholders under the terms of this Deed of Issue, in addition to the payment of Compensatory Interest, which will continue to be calculated pro rata temporis, from the date of default to the date of effective payment, on any and all amounts in arrears, the following will apply, regardless of notice, notification or judicial or extrajudicial interpellation, (i) late-payment interest of 0.5% (five-tenths percent) per month or fraction of a month, calculated pro rata temporis from the date of default to the date of actual payment; and (ii) late-payment and non-compensatory fine of 1% (one percent), subject to the respective cross-default deadlines, until the date of effective payment (“Late-Payment Charges”).

6.19. Place of payment. The payments to which the Debentures are entitled will be made by the Issuer on the day of their respective maturity, through B3, as the Debentures are electronically held in custody in B3, and in compliance with its procedures, or through the Debenture Bookkeeping Agent for holders of Debentures that are not electronically held in custody in B3.

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6.20. Extension of Terms. The terms referring to the payment of any obligation until the 1^st (first) subsequent Business Day will be considered extended, if the due date coincides with a day on which there is no banking service at the place of payment of the Debentures, except for cases in which payments must be carried out through B3, in which case there will only be an extension when the payment date coincides with a declared national holiday, Saturday or Sunday or any day when B3 is not open.

6.21. Except as otherwise expressly provided for in this Deed of Issue, “Business Day(s)” means (i) with respect to any obligation performed through B3, including for calculation purposes, (i.1) any day other than a Saturday, Sunday or a declared national holiday; and (ii) with respect to any obligation that is not performed through B3, any day on which commercial banks are open in the City of Rio de Janeiro, State of Rio de Janeiro or in the City of São Paulo, State of São Paulo.

6.22. Right to Receive Payments. Those who are Debentureholders at the close of the Business Day immediately prior to the respective payment date will be entitled to receive any amount due to Debentureholders under the terms of this Deed of Issue.

6.23. Advertising. All acts and decisions relating exclusively to the Issue and/or the Debentures that, in any way, may involve, directly or indirectly, the interests of the Debentureholders, must be published in the form of a “Notice to Debentureholders” in the following newspapers of major circulation: (i) DOERJ; and (ii) newspaper “Valor Econômico” (“Disclosure Newspapers”), pursuant to article 62, item I, of the Brazilian Corporation Law, used by the Issuer to carry out the publications ordered by the Brazilian Corporation Law, and if the Issuer changes its Disclosure Newspaper after the Issue Date, it must send a notification to the Fiduciary agent informing the new vehicle.

6.24. Tax Treatment of Debentures

6.24.1. The Debentures are entitled to the tax treatment provided for in article 2 of Law 12431.

6.24.2. If any Debentureholder has tax treatment different from that provided for in Law 12431, they must forward to the Settlement Bank, at least 10 (ten) Business Days before the date scheduled for receipt of amounts related to the Debentures, documentation proving such tax immunity or exemption, which will be evaluated by the Settlement Bank and may or may not be deemed appropriate by the Settlement Bank, under penalty of having the amounts due under the terms of the tax legislation in force deducted from the income, as if it were not immune or entitled to tax exemption. The Debentureholder that has presented documentation proving its tax immunity or exemption status must communicate this fact, in detail and in writing, to the Settlement Bank, as well as provide any additional information in relation to the subject that is requested by the Settlement Bank or by the Issuer.

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6.24.3.Additionally, pursuant to paragraph 8, article 1 of Law 12431, if the Issuer does not use the funds raised through the Debentures as provided for in Clause

4.1 of this Deed of Issue, it will be responsible for the fine to be paid under the terms of said Law, equivalent to 20% (twenty percent) of the value of the resources not allocated to the Project.

6.24.4.Without prejudice to the fine mentioned in Clause 6.24.3 above, under the terms of Law 12,431, the income generated by the Debentures is subject to the reduced rate of income tax even if there is a hypothesis of non-allocation of the funds raised in the Offering as provided for in Clause 4.1 of this Deed of Issue.

6.24.5.Without prejudice to the provisions above, if, at any time during the term of this Issuance and until the Due Date, the loss of the tax benefit provided for in Law 12431 occurs and/or a law is enacted determining the levy of withholding income tax on the Compensatory Interest due to the Debentureholders at rates higher than those in force on the this date, the Issuer shall (i) as long as permitted under the terms of CMN Resolution 4751, of Law 12431 and the applicable legislation and regulation, regardless of any procedure or approval, perform the Mandatory Early Redemption of all of the Debentures, under the terms of Clause 6.30 below, and (ii) in the event the early redemption of all of the Debentures is not permitted or until the Mandatory Early Redemption of all of the Debentures is completed, it shall add to the payments of the Compensatory Interest of the Debentures additional amounts sufficient for the Debentureholders to receive such payments as if the withholding income tax were levied at the rates in force on the date of execution of this Deed of Issue (gross up), and the payment of such accrual shall be made outside the B3 environment, and it must perform the Mandatory Early Redemption of all of the Debentures as soon as permitted under CMN Resolution 4751, Law 12431 and applicable laws and regulations, regardless of any procedure or approval.

6.25. Risk rating

6.25.1.No risk rating agency will be hired within the scope of the Offering to assign a rating to the Debentures.

6.26. Preference Right. There will be no preemptive right for the subscription of the Debentures by the Issuer’s current shareholders.

6.27. Expiration of Accrual Rights. The non-attendance of the Debentureholder to receive the amount corresponding to any pecuniary obligations on the dates provided for in this Deed of Issue or in any communication made or notice published under the terms of this Deed of Issue will not entitle them to any increase in the period related to the delay in receiving, however, the rights acquired up to the date of maturity or payment are assured, in the event of late payment.

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6.28. Scheduled Renegotiation. The Debentures of this Issue will not be subject to scheduled renegotiation.

6.29. Total optional early redemption. The Debentures will not be subject to optional early redemption, in whole or in part.

6.30. Mandatory Early Redemption of Debentures. The Issuer shall carry out the mandatory early redemption of all the Debentures, with partial early redemption being prohibited, in compliance with the terms of CMN Resolution 4751, Law 12431 and applicable legislation and regulations, in the event of IPCA Unavailability, pursuant to Clauses 6.14.2 and 6.14.3 above, and Clause 6.24.5 above, with the cancellation, by the Issuer, of the Debentures that have been subject to early redemption (“Mandatory Early Redemption”).

6.30.1.The Mandatory Early Redemption will be carried out through the publication of an announcement to be widely publicized under the terms of Clause 6.23 above, or by sending a notice to the Debentureholders, as the case may be, with a copy to the Fiduciary agent, with at least thirty (30) days and, at most, 45 (forty-five) days in advance of the date planned for the Mandatory Early Redemption, which must indicate: (i) the effective date for the Mandatory Early Redemption of the Debentures and payment to the Debentureholders, which must be on a Business Day; and (ii) other information necessary to carry out the Mandatory Early Redemption.

6.30.2.The amount to be paid by the Issuer in relation to each of the Debentures within the scope of the Mandatory Early Redemption will be equivalent to the highest amount between:

(i) the Adjusted Nominal Value of the Debentures, plus the Compensatory Interest, calculated pro rata temporis from the First Date of Payment of the Debentures or the immediately preceding Date of Payment of the Compensatory Interest of the Debentures, as the case may be (inclusive) until the date of their effective payment (exclusively), the Late-Payment Charges and any pecuniary obligations and other accruals referring to the Debentures, if any;

(ii) the present value of the remaining installments of amortization payment of the Adjusted Nominal Value of the Debentures and the Compensatory Interest of the Debentures, using as (i) discount rate the coupon of the Treasury IPCA+ bond with Semiannual Interest (NTN-B), with duration closest to the remaining duration of the Debentures, calculated according to the formula below, plus the Late-Payment Charges and any pecuniary obligations and other accruals referring to the Debentures, if any:

 

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VP = sum of the present value of the Debentures payment installments; C = as defined and calculated in Clause 6.13 above;

n = total number of payment events to be performed for the Debentures; where “n” is an integer number;

VNEk = unit value of each of the “k” amounts due of the Debentures, and the value of each installment “k” is equivalent to the payment of the Compensatory Interest of the Debentures and/or the amortization of the Adjusted Nominal Value of the Debentures;

FVPk = present value factor, calculated according to the following formula, calculated to 9 (nine) decimal places, with rounding:

𝐹𝑉𝑃𝑘 = {[(1 + 𝑇𝐸𝑆𝑂𝑈𝑅𝑂𝐼𝑃𝐶𝐴)252]}

TESOUROIPCA = Treasury IPCA+ bond coupon with Semiannual Interest (NTN-B), with duration closest to the remaining duration of the Debentures less the discount rate to be defined in agreement with the Debentureholders, provided that, if there is no agreement or if the Issuer chooses not to submit the claim to the General Meeting of Debentureholders, it will be reduced by 0.10% (“Redemption Discount Rate”); and

nk = number of Business Days between the date of the Mandatory Early Redemption of the Debentures and the scheduled due date of each installment “k” falling due.

6.30.3.The payment of the Debentures to be redeemed in full in advance through the Mandatory Early Redemption of the Debentures will be carried out by the Issuer (i) through the procedures adopted by B3, as the case may be, for the Debentures electronically held in custody in B3; or (ii) by means of a deposit in checking accounts indicated by the Debentureholders, to be made by the Bookkeeping Agent, in the case of Debentures that are not electronically held in custody in B3.

6.30.4.B3 must be notified by the Issuer of the Mandatory Early Redemption of the Debentures at least three (3) Business Days in advance of the effective Mandatory Early Redemption of the Debentures.

6.31. Debenture Early Redemption Offering

6.31.1.The Issuer may, at its sole discretion, carry out an optional offering for the early redemption of all of the Debentures, in compliance with the provisions of article 1, paragraph 1, item II, of Law 12431, the terms of Resolution CMN 4751 and the applicable legislation and regulations, which will be addressed to all Debentureholders, without distinction, ensuring equal conditions for all Debentureholders to accept or not the early redemption of the Debentures hold by them (“Early Redemption Offering”), as described in the clauses below.

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6.31.2.The Issuer will carry out the Early Redemption Offering by publishing an advertisement to be widely publicized pursuant to Clause 6.23. above, or sending a notice to all Debentureholders, with a copy to the Fiduciary agent, which must describe the terms and conditions of the Early Redemption Offering, including: (i) the form of manifestation, to the Issuer, by the Debentureholder who accepts the Early Redemption Offering; (ii) the effective date for early redemption of the Debentures and payment to Debentureholders, which must be on a Business Day; (iii) information on the payment or not, to the Debentureholders, at the sole discretion of the Issuer, of a premium for those who adhere to the Early Redemption Offering, which cannot be negative; and (iv) other information necessary for the decision-making and operation by the Debentureholders (“Early Redemption Offering Notice”).

6.31.3.After the publication or communication of the terms of the Early Redemption Offering, all Debentureholders who choose to adhere to said offering shall communicate directly to the Issuer, with a copy to the Fiduciary agent, within the period established in the Early Redemption Offering Notice. At the end of this period, the Issuer will have the period established in the Early Redemption Offering Notice to proceed with the settlement of the Early Redemption Offering, except in cases in which, exclusively for operational reasons, the settlement of all the Debentures subject to the Optional Early Redemption Offering must occur on different dates.

6.31.4.The amount to be paid to Debentureholders within the scope of the Early Redemption Offering will be equivalent to the Adjusted Nominal Value of the Debentures plus the Compensatory Interest, calculated pro rata temporis, as of the First Date of Payment of the Debentures or the immediately preceding Date of Payment of the Compensatory Interest of the Debentures, as the case may be (inclusive), until the date of their effective payment (exclusive), and any premium offered by the Issuer or regulated by the CMN.

6.31.5.Case (a) for the Debentures that are electronically held in custody in B3, the early redemption of the Debentures must take place in accordance with the operating procedures provided for by B3; or (b) for the Debentures that are not electronically held in custody in the B3 environment, the early redemption of the Debentures shall occur in accordance with the operating procedures provided for by the Bookkeeping Agent, as the case may be, by means of a deposit in checking accounts indicated by the Debentureholders to be carried out by the Settlement Bank.

6.31.6.B3 must be notified at least three (3) Business Days in advance of the date of payment of the Early Redemption Offering, by the Issuer.

6.31.7.The redeemed Debentures, pursuant to this Clause 6.31, shall be canceled, in the latter case following the terms of article 1, paragraph 1, item II, of Law 12431, as regulated by the CMN.

6.32. Optional Early Amortization. The Issuer will not be allowed to carry out Optional extraordinary amortization of the Debentures.

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6.33. Optional Acquisition. After the first 2 (two) years from the Issue Date (or shorter-term that may be authorized by applicable legislation or regulations) have elapsed, the Issuer may, at its sole discretion, acquire the Debentures, pursuant to items I and II of paragraph 1 of article 1 of Law 12431 (“Optional Acquisition”).

6.33.1.The Issuer may acquire the Debentures, in compliance with the provisions of article 55, paragraph 3, of the Brazilian Corporation Law, for an amount equal to or less than the Adjusted Nominal Value of the Debentures. This fact must be included in the management report and in the Issuer’s financial statements, or for an amount greater than the Adjusted Nominal Value of the Debentures, provided that the provisions of CVM Instruction 620, of March 17, 2020, as amended (“CVM Instruction 620”) are followed.

6.33.2.Subject to the provisions of Law 12431, the rules issued by the CMN and the applicable regulations, the Debentures acquired by the Issuer may, at the Issuer’s discretion: (i) be cancelled, as long as it is legally permitted; (ii) remain in treasury; or (iii) be placed on the market again. The Debentures acquired by the Issuer to be held in treasury under the terms of this Clause 6.33, if and when placed back on the market, will be entitled to the same Compensatory Interest applicable to the other Debentures, as the case may be.

6.33.3.If the Issuer wishes to acquire the Debentures for an amount greater than the Adjusted Nominal Value of the Debentures, it must previously notify the Fiduciary agent and the Debentureholders of its acquisition intention, providing the following minimum information: (i) date intended for the acquisition (which must comply with the interval of at least 16 (sixteen) and at most 31 (thirty-one) days from the date of communication); (ii) issue and series to be acquired; (iii) amount of Debentures that it intends to acquire (minimum, fixed, or maximum amount, indicating whether the offering will remain valid if the amount indicated in the disposal statements received from the Debentureholders is lower than the intended amount and what treatment will be given if the statements indicate a number of debentures greater than the object of acquisition); (iv) settlement date and eventual conditions; (v) destination of the acquired Debentures; (vi) maximum acquisition price, detailing what refers to the Unit Nominal Value, monetary adjustment (if applicable), and acquisition premium; (vii) term of manifestation to the holders of the Debentures, which cannot be less than 15 (fifteen) days from the date of communication; and (viii) other information considered relevant by the Issuer, in compliance with the exemption contained in article 9, paragraph 12, of CVM Instruction 620.

6.33.4.The Debentureholders who opt for the sale of their respective Debentures within the scope of the Optional Acquisition must manifest, under the terms of the notice of Optional Acquisition, to the Issuer, within 15 (fifteen) days from the sending of the notice of Optional Acquisition. At the end of this period, the Issuer will have up to 2 (two) Business Days to proceed, at its sole discretion, with the Optional Acquisition, provided that all Debentures subject to the Optional Acquisition will be canceled on the same date.

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6.33.5.In the event that the adhesion by the Debentureholders exceeds the amount available by the Issuer for carrying out the Optional Acquisition, the Debentureholders who choose to sell their respective Debentures will have their Debentures acquired in proportion to the number of Debentures offered by them for Optional Acquisition.

6.33.6.For Debentures held in custody in B3, in the case of Optional Acquisition, the B3 procedure will be followed for the operation and payment of the Debentures subject to such Optional Acquisition, provided that each Debentureholder that has indicated an interest in selling their debentures must have at least 1 (one) Debenture acquired by the Issuer.

7. EARLY MATURITY

7.1. Automatic Early Maturity. The Fiduciary agent shall consider all obligations under this Deed of Issue to have expired in advance, regardless of notice, notification, or judicial or extrajudicial interpellation, and demand the immediate payment, by the Issuer, of the Adjusted Nominal Value, plus the Compensatory Interest, calculated pro rata temporis from the First Payment Date or from the immediately preceding Date of Payment of the Compensatory Interest, as the case may be, until the date of its effective payment, in addition to the Late-Payment Charges and any other amounts eventually due by the Issuer in the event of any of the following events (each event, an “Automatic Early Maturity Event”):

a) corporate transformation of the Company pursuant to articles 220 and 222 of the Brazilian Corporation Law;

b) Company’s bankruptcy filing based on debt in an amount, individually or jointly, greater than R$ 100,000,000.00 (one hundred million reais); this amount is updated annually, as of the Issue Date, by the accumulated variation of the IPCA, and which has not been suspended or canceled within the legal term, adjudication of bankruptcy of the Company or request for self-bankruptcy by the Company;

c) proposed by the Company and any creditor or creditor class of a judicial or extra-judicial recovery plan, irrespective of having been requested or judicial ratification obtained;

d) request by the Company for judicial reorganization, regardless of the granting of the reorganization processing or its concession by the competent judge;

e) early maturity or default of any pecuniary obligation of the Company arising from default in the obligation to pay any individual or aggregate amount greater than R$ 150,000,000.00 (one hundred and fifty million reais), this amount being updated annually, from the Date of Issue, by the accumulated IPCA variation;

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f) distribution of dividends, payment of interest on shareholders’ equity or any other payments to its shareholders, in case the Company is undergoing an event of early maturity of the Debentures, except, however, the payment of the mandatory minimum dividend provided for in article 202 the Brazilian Corporation Law;

g) failure by the Company to comply with any pecuniary obligations assumed in this Deed of Issue, provided that it is not remedied within 2 (two) Business Days of said payment date; and/or

h) invalidity, nullity or unenforceability of this Deed of Issue, as declared by any final court decision that has become final.

7.1.1. The occurrence of any Automatic Early Maturity Event above will result in the automatic early maturity of the Debentures, regardless of any judicial or extrajudicial notice or notification, and the Fiduciary agent, within one (1) Business Day from the knowledge of the occurrence of said events, must issue and send to the Issuer a notification informing the early maturity of all obligations under the Debentures and demand payment of what is due, outside the scope of B3.

7.1.2. If the payment of all the Debentures provided for in Clause 7.1.1 above is made through B3, the Issuer shall notify B3, by means of correspondence together with the Fiduciary agent, about such payment, at least three (3) Business Days in advance of the date stipulated to be made.

7.2. Non-Automatic Early Maturity. The Fiduciary agent shall, within 5 (five) Business Days from the date on which it becomes aware of the occurrence of any of the events listed below, call a General Meeting to resolve the non-declaration of the early maturity of the Debentures, in compliance with the provisions of Clause 10 below, including the provisions relating to the procedures of convening and quorums of the General Meeting (each event a “Non-Automatic Early Maturity Event” and, together with Automatic Early Maturity Events, “Early Maturity Events”):

a) modification or change in the Company’s shareholding control that may result in Telecom Itália S.p.A.’s loss of its direct or indirect shareholding control;

b) liquidation, dissolution, spin-off, merger, takeover, merger of shares or any form of corporate reorganization directly involving the Company (“Corporate Reorganization”), unless the resulting company and/or the successor company remains under the direct or indirect control of Telecom Itália S.p.A and provided that said Corporate Reorganization does not materially affect the Company’s (or its successor) to fulfill the obligations arising from the Issue;

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c) protests of securities against the Company, which are not remedied or declared illegitimate within a period of thirty (30) days, whose amount, individually or jointly, exceeds R$ 300,000,000.00 (three hundred million reais), updated annually, as of the Issue Date, by the accumulated IPCA variation, except for the protest made by a third-party error or bad faith, provided that it is duly proven by the Company within the period established in this item;

d) reduction of the Company’s share capital, except for the absorption of losses, under the terms of the law;

e) failure by the Company to comply with any and all non-monetary obligations provided for in the Deed of Issue not remedied within thirty (30) days from the date of non-compliance;

f) evidence that any of the statements made by the Company in this Deed of Issue is inconsistent or incorrect and that materially affects the Issuer’s ability to meet the obligations assumed under this Deed of Issue, not remedied within three (3) days from the date of proof;

g) proof that any of the statements made by the Company in this Deed of Issue is false;

h) application of the proceeds from the Issue in a destination other than that defined in Clause 4 above;

i) expiry, annulment, termination, expropriation, revocation or cancellation of the concession, permission or authorization that allows the Company to operate or provide telecommunications services, except those that (i) are related to technologies and operating systems or (ii) whose expiry, annulment, termination, expropriation, revocation or cancellation does not materially impact the Company’s activities as currently conducted or does not have the potential to adversely affect the Company’s ability to fulfill its obligations under this Deed of Issue;

j) change or alteration of the Company’s corporate purpose that significantly modifies the main activities currently carried out;

k) existence of a court sentence with immediate enforceability related to environmental crimes provided for in environmental legislation, including in the Brazilian Environmental Policy, in the Resolutions of CONAMA - Brazilian Council on the Environment, as well as in other environmental laws and regulations, except in cases where (i) said non-compliance is, directly or indirectly, remedied or compensated within the period indicated by the competent authority or, in the absence of a specific period, within thirty (30) days of non-compliance and there is evidence to that effect; and/or (ii) said non-compliance is being discussed in good faith, in the administrative and/or arbitration and/or judicial levels; and/or (iii) does not cause a Material Adverse Effect. For the purposes of this Deed of Issue, a “Relevant Adverse Effect” is considered to be the occurrence of a materially adverse change in the economic, financial, reputational, and/or operational conditions, exclusively of the Issuer, which significantly and materially impacts the ability to comply with obligations assumed by the Issuer before the Debentureholders, under the terms of this Deed of Issue;

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l) existence of a court order with immediate enforceability related to crimes provided for in the labor and social security legislation in force, in the rules related to occupational health and safety, related to slave labor and illegal work of children and adolescents, the encouragement of prostitution, or even, rights related to race and gender, as well as other labor laws and regulations;

m) failure by the Company to maintain a Net Debt/EBITDA (“Financial Ratio”) equal to or less than 4.0 (four), calculated based on its consolidated half-yearly financial statements audited by independent auditors, including the corresponding notes. In the event of a corporate reorganization carried out pursuant to Clause 7.2. (b) above, the Financial Ratio shall be measured by taking into account the legal entity that is the successor of the transaction.

For the purposes of this Deed of Issue, the following definitions will be considered:

Net debt: It means the sum of short and long-term loans and financing, leasing/financial leasing, non-convertible fixed-income securities resulting from public or private issuance, in the local or international markets, operations with short- and long-term derivatives, less cash, and cash equivalents, financial investments, assets arising from financial instruments (derivatives) and leases receivable.

EBITDA: It means operating profit before financial income, income tax, depreciation, and amortization, referring to the last 12 (twelve) months of each calculation.

It is hereby established that all effects generated by the adoption of the IFRS 16 accounting standard will be considered for the purposes of calculating the Financial Ratio and the definitions of “Net Debt” and “EBITDA” referred to herein.

7.2.1. In the event of any Non-Automatic Early Maturity Event, the Fiduciary agent shall call a general meeting of Debentureholders, to be held within the minimum period provided for by law. If, at the aforementioned general meeting of Debentureholders, Debentureholders representing at least 50% (fifty percent) plus one outstanding Debenture, on the first call, or the majority of Debentureholders attending, on the second call, following the minimum attendance of 25% (twenty-five percent), decide to consider the early maturity of the obligations under the Debentures, the Fiduciary agent shall declare the early maturity of the obligations under the Debentures; otherwise, or in case of non-installation, or failure to obtain a quorum to resolve, on second call of the aforementioned general meeting of Debentureholders, the Fiduciary agent shall not declare the early maturity of the obligations under the Debentures.

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7.3. For clarification purposes, non-compliance with the 4G Presence Goal and/or the Eco-Efficiency Goal (as defined in Annex III) will not constitute an Event of Default by the Issuer.

7.4. In the event of early maturity of the Debentures, the Issuer undertakes to pay the Adjusted Nominal Value, plus the Compensatory Interest, calculated pro rata temporis from the First Payment Date or from the immediately preceding Date of Payment of the Compensatory Interest, as the case, until the date of its effective payment and any other amounts eventually due by the Issuer under the terms of this Deed of Issue, within 5 (five) Business Days from the written communication to be sent by the Fiduciary agent to the Issuer (in the case of the automatic early maturity) or the date on which the respective General Meeting was held (when the non-automatic early maturity occurs), under the penalty of, by not doing so, being obliged to pay the Late-Payment Charges. B3 must be notified immediately after the declaration of early maturity, in compliance with the B3 Operations Manual.

7.5. In order for the payment of all the Debentures provided for in Clause 7.4 above to be made through B3, the Issuer shall notify B3, by means of correspondence together with the Fiduciary agent, about such payment, at least three (3) Business Days in advance of the date stipulated to be made.

7.6. The Debentures subject to the procedure described in Clause 7.4 above will be mandatorily canceled by the Issuer.

8. ADDITIONAL OBLIGATIONS OF THE ISSUER

8.1. The Issuer undertakes, without prejudice to the other obligations set forth in this Deed of Issue and in the other documents of the Issue:

(i) disclose on the Company’s website (i) within three (3) months from the end of each fiscal year or (ii) on the effective disclosure date, whichever occurs first, a copy of the Company’s consolidated financial statements audited by an independent auditor (“Independent Auditors”), relating to the respective fiscal year, prepared in accordance with the accounting principles determined by the legislation and regulations in force (“Company’s Consolidated Financial Statements”) accompanied by a statement by the Company’s legal representatives, pursuant to its bylaws, that it is up to date with the fulfillment of the obligations set forth in this Deed of Issue;

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(ii) provide the Fiduciary agent:

(a)a copy of any and all notices to Debentureholders, within a period of up to 5 (five) Business Days from the date on which such notices are made;

(b) within 2 (two) Business Days after its acknowledgment or receipt, as the case may be,

(i) information regarding the occurrence of any Early Maturity Event or (ii) sending a copy of any judicial or extrajudicial correspondence or notification, received by the Company related to an Early Maturity Event. Failure by the Company to comply with this duty shall not prevent the Fiduciary agent or the Debentureholders from, at their sole discretion, exercising their faculties, claims and powers provided for in this Deed of Issue, including that of declaring early maturity;

(c)within a period of up to 10 (ten) Business Days from the date of receipt of the respective request that may be reasonably required, response to any doubts of the Fiduciary agent about any information that may be reasonably requested;

(d)within a period of up to 2 (two) Business Days from the date of knowledge, information regarding the occurrence of any event or situation (i) that causes any material adverse effect on the situation (financial or otherwise), the business, the assets, the Company’s operating results and/or prospects; and/or (ii) that causes any adverse effect on the Company’s ability to fulfill any of its obligations under this Deed of Issue; and/or (iii) that causes the Company’s Consolidated Financial Statements to no longer reflect the Company’s actual economic and financial condition;

(e)1 (one) original copy of the Deed of Issue and any amendments duly registered with JUCERJA, within 10 (ten) Business Days after its effective registration;

(f)inform and send the organizational chart, financial data, and corporate acts necessary to carry out the annual report, in accordance with CVM Resolution 17, of February 9, 2021, as amended (“RCVM 17”), which may be reasonably requested by the Fiduciary agent, which must be duly forwarded by the Company within thirty (30) days before the end of the term provided for in item “XVII” of Clause 9.5 below. The aforementioned organizational chart of the Company’s corporate group shall contain, including, the controlling shareholders, the subsidiaries, the common control, the affiliates, and member of the control block, at the end of each fiscal year;

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(g)within 5 (five) Business Days, an original copy filed with JUCERJA of the acts and meetings of the Debentureholders that make up the Issue;

(h)within a period of up to 2 (two) Business Days after the first between the 90^th (ninetieth) day counted from the end of each semester and the date of effective disclosure:

(a) a copy of the Company’s Consolidated Financial Statements and calculation log with all the necessary items that demonstrate compliance with the Financial Ratio, under penalty of the impossibility of monitoring by the Fiduciary agent, who may request the Issuer and/or the Issuer’s Independent Auditors any additional clarifications that may be necessary, and (b) a statement signed by the Issuer’s legal representative(s), pursuant to its Bylaws, attesting: (i) that the provisions contained in this Deed of Issue remain valid; (ii) compliance with the Financial Ratio; (iii) non-occurrence of any of the Early Maturity Events and non-existence of any non-compliance with the Issuer’s obligations to the Debentureholders;

(i) within 5 (five) Business Days, an original copy filed with JUCERJA of the acts and meetings of the Debentureholders that make up the Issue;

(iii) Within 150 (one hundred and fifty) days from the end of each fiscal year, publish the Annual ESG Report (as defined below) in an electronic address directed to the Issuer’s investors and, on the same date, forward it to the Fiduciary agent said Annual ESG Report (as defined below);

(iv) inform the Fiduciary agent, the Bookkeeping Agent, the Settlement Bank and B3 of any prepayment of the Debentures and/or adjustment in the Compensatory Interest (under the terms of this Deed of Issue), at least 2 (two) Business Days in advance of the date planned for the respective early payment;

(v) comply with the laws, regulations, administrative rules and determinations of the governmental bodies, autarchies or courts, necessary for the conduction of its business, except for those questioned in good faith in the administrative and/or judicial levels with a decision that has suspensive effects or whose non-compliance does not adversely and materially affect the Company’s capacity to honor its obligations under the terms of this Deed of Issue or the Company’s reputation;

(vi) (a) comply with and enforce compliance, as well as its subsidiaries, parent companies, affiliates, companies under common control, managers, employees, and (b) maintain measures and policies aimed at complying with the applicable rules that deal with acts of corruption and harmful acts against the public administration, pursuant to Law 12846, of August 1, 2013, as amended, of Decree 8420, of March 18, 2015, of the U.S. Foreign Corrupt Practices Act of 1977 and the UK Bribery Act, as applicable (“Anti-Corruption Laws”);

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(vii) make the best efforts so that its eventual subcontractors undertake to comply with the Anti-Corruption Laws;

(viii) comply, in a way that does not cause a Relevant Adverse Effect, the environmental legislation in force, adopting preventive or remedial measures and actions, aimed at avoiding and correcting eventual damages to the environment resulting from the activities described in its corporate purpose;

(ix) communicate, within 2 (two) Business Days, the Debentureholders and the Fiduciary agent if it becomes aware of any act or fact that violates the Anti-Corruption Laws and/or environmental legislation, including the Brazilian Environmental Policy, CONAMA Resolutions - Brazilian Council on the Environment, the rules related to occupational health and safety, related to slave labor and illegal work of children and adolescents, the encouragement of prostitution, or even, rights related to race and gender, as well as other legislation and environmental and labor regulations (“Socio-Environmental Legislation”);

(x) comply with, and ensure that its subsidiaries comply with, the labor legislation in force, which deals with the use of illegal or discriminatory work or the practice of acts that involve child labor, slavery-like labor or criminal profit from prostitution, in all its aspects;

(xi) always keep valid, effective, in perfect order and in full force all authorizations and licenses, including environmental ones, required for the regular exercise of activities developed by the Company and/or any its subsidiaries, except: (a) if after expiration, such authorization or license is in a timely process of renewal by the Company; or (b) if the failure to maintain such authorizations and licenses does not result in a Material Adverse Effect or (c) if the terms and conditions of such authorization or license are under discussion and/or under administrative, arbitration or judicial judgment, without a final decision in the administrative, arbitration or judicial sphere and provided that the effects of the judicial decision are suspended;

(xii) always maintain valid, effective, in perfect order and in full force all the authorizations necessary for the execution of this Deed of Issue and for the fulfillment of all obligations set forth herein;

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(xiii) contract and maintain contracted, at its own expense, the service providers inherent in the obligations set forth in this Deed of Issue, including the Fiduciary agent, the Bookkeeping Agent, the Settlement Bank and the Debentures trading system on the secondary market;

(xiv) pay all taxes levied or to be levied on the Debentures that are the Company’s responsibility;

(xv) use the proceeds obtained from the Issue strictly in accordance with Clause 4 above;

(xvi) notify, within 1 (one) Business Day, the Fiduciary agent of the convening of any general meeting of Debentureholders by the Company;

(xvii) call, within 1 (one) Business Day, a general meeting of Debentureholders to deliberate on any of the matters that are of interest to the Debentureholders if the Fiduciary agent must do so, pursuant to this Deed of Issue, but fails to do so within the applicable time frame;

(xviii) attending the meetings of Debentureholders whenever requested;

(xix) without prejudice to the other obligations set forth above or other obligations expressly provided for in the regulations in force and in this Deed of Issue, pursuant to article 17 of CVM Instruction 476: comply with all rules and regulations (including those pertaining to self-regulation) related to the Issue and the Offering, including, but not limited to, those provided for in article 17 of CVM Instruction 476, namely:

(a)prepare year-end financial statements and, if applicable, consolidated statements, in accordance with the Brazilian Corporation Law, and with the rules issued by the CVM; (b) submit its financial statements to an audit by an auditor registered with the CVM; (c) disclose, until the day before the Issue Date, the financial statements, together with notes and the report of the independent auditors, related to the last three (3) fiscal years ended, except when the issuer does not have them because it does not have started its activities prior to said period; (d) disclose the subsequent financial statements, accompanied by notes and the independent auditors’ report, within three (3) months from the end of the fiscal year;

(e) comply with the provisions of CVM Instruction 358, regarding the duty of secrecy and prohibitions on trading; (f) disclose the occurrence of a material fact, as defined by art. 2 of CVM Instruction 358; (g) provide the information requested by the CVM; (h) disclose the annual report and other communications sent by the Fiduciary agent on its page on the Internet on the same date of its receipt, in compliance with the provisions of item (d) above; as well as the other rules and regulations of the CVM, B3 and ANBIMA, including by sending documents, also providing the information that is requested and (i) to comply with the provisions of the specific regulations issued by the CVM, in the event a meeting of the holders of debentures is called, to be held partially or exclusively digitally;

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(xx) comply with all obligations, as applicable, related to CVM Instruction 400, including the provisions of its article 48, as applicable;

(xxi) not to disclose to the public information related to the Issuer, to the issue and debentures without complying with the provisions set forth in the applicable regulations, including, without limitation, the provisions set forth in CVM Instruction 476 and in article 48 of CVM Instruction 400;

(xxii) refrain from trading securities issued by it until the Closing Notice is sent, except in the cases provided for in item II of article 48 of CVM Instruction 400;

(xxiii) to abstain, until the Closing Notice is sent to the CVM, from disclosing information related to the Debenture Issue, except for what is necessary to achieve its objectives, advising the recipients about the reserved nature of the information transmitted;

(xxiv) comply with all CVM and B3 determinations, sending documents and also providing the information requested;

(xxv) bear all costs arising from (i) the distribution of the Debentures, including all costs related to their deposit in B3, (ii) registration and publication of the acts necessary for the Issue, such as this Deed of Issue, any amendments thereto, and the Issuer’s Board of Directors' Meeting and (iii) the reasonable and duly proven expenses and compensation of the Fiduciary agent, Settlement Bank, Bookkeeping Agent and Depository Bank;

(xxvi) keep the Debentures registered for trading on the secondary market during the term of validity of the Debentures, bearing the costs of said registration;

(xxvii) timely pay any taxes or contributions that are levied or will be levied on the Issue and that are under its responsibility; and

(xxviii) keep the Project classified under the terms of Law 12431 during the term of the Debentures and notify the Fiduciary agent within five (5) Business Days of the receipt of any written communications, demands, or subpoenas regarding the initiation of any administrative or judicial process that may result in the Project being disqualified as priorities, under the terms of Law 12431.

9. FIDUCIARY AGENT

9.1. The Issuer appoints and constitutes as a fiduciary agent of the Issue, the Fiduciary agent, described in the preamble of this Deed of Issue, which it hereby signs, and in the best terms of law, and accepts the appointment to, under the terms of the law and this Deed of Issue, represent the pool of Debentureholders, declaring that:

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I. is a duly organized financial institution, incorporated and existing in the form of a limited liability company, in accordance with Brazilian law;

II. is duly authorized and has obtained all authorizations, including, as applicable, legal, corporate, regulatory and third-party authorizations, necessary for the execution of this Deed of Issue and for the fulfillment of all obligations set forth herein, with all legal, corporate, regulatory and third-party requirements necessary to do so having been duly met;

III. the legal representative of the Fiduciary agent who signs this Deed of Issue has, as the case may be, corporate and/or delegated powers to assume, on behalf of the Fiduciary agent, the obligations set forth herein and, as a representative, has the powers legitimately granted, and the respective mandate is in full force;

IV. this Deed of Issue and the obligations set forth herein constitute lawful, valid, binding and effective obligations of the Fiduciary agent, enforceable in accordance with its terms and conditions;

V. the execution, terms and conditions of this Deed of Issue and the fulfillment of the obligations set forth herein (a) do not violate the Trustee’s bylaws;

(b) do not breach any contract or instrument to which the Fiduciary agent is a party and/or to which any of its assets is subject; (c) do not violate any legal or regulatory provision to which the Fiduciary agent and/or any of its assets are subject; and (d) do not violate any administrative, judicial or arbitration order, decision or sentence that affects the Fiduciary agent and/or any of its assets;

VI. accepts the function for which it was appointed, fully assuming the duties and attributions provided for in the specific legislation and in this Deed of Issue;

VII. knows and fully accepts this Deed of Issue and all its terms and conditions;

VIII. verified the consistency of the information contained in this Deed of Issue, endeavoring to remedy the omissions, failures or defects of which it is aware;

IX. is aware of the applicable regulations issued by the Central Bank of Brazil and the CVM;

X. does not have, under the penalties of law, any legal impediment, pursuant to article 66, paragraph 3, of the Brazilian Corporation Law, RCVM 17, and other applicable rules, to perform the function granted to it;

XI. is not in any of the situations of conflict of interest provided for in RCVM 17;

XII. ensures and will ensure, under the terms of paragraph 1 of article 6 of RCVM 17, equitable treatment to all Debentureholders and to all holders of marketable securities in which it acts or will act as a fiduciary agent, note agent or escrow agent, complying with the guarantees, obligations and specific rights attributed to the respective holders of securities of each issue or series; and

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XIII. on the date of execution of this Deed of Issue and based on the organizational chart sent by the Issuer, the Fiduciary agent declares, for the purposes of RCVM 17, that it does not provide the services of a fiduciary agent and/or a note agent in the issuance of securities of the Issuer, an affiliate, subsidiary or parent company or a company member of the same economic group as the Issuer, as per Annex II of this Deed of Issue.

9.2. The Fiduciary agent will perform its functions from the date of execution of this Deed of Issue, and shall remain in the exercise of its functions until the full discharge of all obligations under this Deed of Issue or until its replacement.

9.3. In the event of impediments, resignation, dismissal, intervention, judicial or extrajudicial liquidation or any other case of vacancy of the Fiduciary agent, it must be replaced within a period of up to thirty (30) days, upon resolution of the General Meeting, provided that:

I. the Debentureholders may replace the Fiduciary agent and appoint its replacement at any time during the term of the Debentures, at a General Meeting specially convened for this purpose;

II. if the Fiduciary agent cannot continue to perform its functions due to circumstances arising from this Deed of Issue, it must immediately communicate the fact to the Issuer and the Debentureholders, by calling a General Meeting, requesting its replacement;

III. if the Fiduciary agent resigns from its functions, it shall remain in the exercise of its functions until a substitute institution is appointed by the Issuer and approved by the General Meeting and effectively assumes its functions;

IV. a General Meeting will be held, within no later than thirty (30) days counted from the date of the event that determines it pursuant to Clause 9.3 above, for the choice of a new fiduciary agent, which shall be called by the very Fiduciary agent to be replaced, and may be called by Debentureholders representing, at least, 10% (ten percent) of the Outstanding Debentures; in the event that the call does not occur within a period of up to 15 (fifteen) days before the end of the period set forth herein, the Issuer will be responsible for carrying it out; in exceptional cases, the CVM may convene the General Meeting to choose the new fiduciary agent or appoint a provisional substitute;

V. the replacement of the Fiduciary agent must be communicated to the CVM within a period of up to 7 (seven) Business Days from the registration of the amendment to this Deed of Issue pursuant to Clause 2.1 together with the declaration and other information required in article 7, caput and paragraph 1, of RCVM 17;

VI. the payments to the replaced Fiduciary agent will be carried out in compliance with the proportionality to the period of effective provision of the services, in compliance with the provisions of Clause 9.4 below;

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VII. the substitute fiduciary agent will be entitled to the same compensation received by the previous one, if (a) the Issuer has not agreed with the new amount of the trustee’s compensation proposed by the General Meeting referred to in item IV above; or (b) the General Meeting referred to in item IV above do not deliberate on the matter;

VIII. if the CVM appoints a provisional substitute, the substitute fiduciary agent shall, immediately after its appointment, notify the Issuer and the Debentureholders pursuant to Clauses 6.23. and 13.2; and

IX. the rules and precepts issued by the CVM apply to the hypotheses of replacement of the Fiduciary agent.

9.4. For the performance of the duties and attributions that are incumbent upon it, under the terms of the law and this Deed of Issue, the Fiduciary agent, or the institution that may replace it in this capacity:

I. The Fiduciary agent will be due fees for the performance of its duties and attributions, under the terms of the legislation in force and this Deed of Issue, corresponding to annual installments of R$ 5,000.00 (five thousand reais). The first payment is due until the 30^th (thirtieth) consecutive day after the signature date of the deed of issue, and the following ones on the same day of the subsequent years, calculated pro rata die, if necessary.

II. The first installment of fees will be due even if the operation is not paid in, for structuring and implementation purposes;

III. In case of need to hold a General Meeting of Debentureholders, or execute amendments or legal instruments related to the issue, the Fiduciary agent will be due an additional compensation equivalent to R$ 450.00 (four hundred and fifty reais) per man-hour dedicated to the activities related to the issue, to be paid within thirty (30) days after submission, by the Fiduciary agent, to the Issuer of the time report. For the purpose of the concept of the General Meeting of Debentureholders, it encompasses all the activities related to the meeting and not only the analysis of the minutes and attendance at it in person or virtually. Thus, these activities include, but are not limited to (a) notice analysis; (b) participation in calls or meetings; (c) quorum conference prior to the meeting; (d) conference of power of attorney prior to the meeting and (d) amendments and contracts resulting from the meeting. For clarification purposes, “time report” is the material to be sent by the Fiduciary agent indicating the task performed (for example, analysis of a certain document or attendance in a meeting), the Trustee’s employee, the time spent in the function, and the value relative to time. The installments mentioned above will be readjusted annually by the accumulated IPCA/IBGE variation, or in the absence of it, or even in the impossibility of its use, by the index that will replace it, from the date of the first payment, until the following payment dates, calculated pro rata die, if necessary. The compensation will be due even after the final maturity of the Debentures, if the Fiduciary agent is still performing activities inherent in its function in relation to the issuance, and this compensation will be calculated pro rata die.

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IV. The installments mentioned in the items above will be increased by ISS (Service Tax), PIS (Social Integration Program), COFINS (Contribution to Social Security Financing), CSLL (Social Contribution on Net Profit), and IRRF (Withholding Income Tax) and any other taxes that may be levied on the Trustee’s compensation at the rates in force on the dates of each payment.

V. In case of late payment of any amount due, a contractual fine of 1% (one percent) on the amount of the debt will be levied on overdue debts, as well as default interest equivalent to the variation of the SELIC rate of the Central Bank of Brazil, published by Anbima and calculated pro rata die on the days elapsed, incurring from the date of default until the date of actual payment.

VI. The compensation of the Fiduciary agent, in the event that the Issuer remains in default with respect to its payment for a period exceeding thirty (30) days, will be borne by the Debentureholders, as well as the reimbursable expenses.

VII. Expenses: The compensation does not include expenses considered necessary for the performance of the function of fiduciary agent during the implementation and duration of the service, which will be covered by the Issuer, upon payment of the respective charges accompanied by the respective vouchers, issued directly on behalf of the Issuer or upon reimbursement, after, whenever possible, prior approval, which are: publications in general, notifications, extraction of certificates, notarial expenses, photocopies, scans, sending of documents, trips, meals and stays, expenses with specialists, such as auditing and/or inspection, among others, or legal advice to debentureholders; and the reimbursement referred to in the Clause above will be made within thirty (30) calendar days after the respective rendering of accounts to the Issuer and sending of a copy of the respective proof of payment.

VIII. All expenses arising from legal procedures, including administrative expenses, which Pentágono may incur to protect the interests of debentureholders must be, whenever possible, previously approved and advanced by the debentureholders and, subsequently, as provided by law, reimbursed by the Issuer. Such expenses to be advanced by the debentureholders correspond to deposits, costs, and court fees in the lawsuits proposed by Pentágono, as a representative of the debentureholders’ pool. The fees for loss of suit in lawsuits will also be borne by the debentureholders, as well as the Pentágono’s compensation in the event that the Issuer remains in default with respect to its payment for a period exceeding thirty (30) days, and Pentágono may request a guarantee from the debentureholders to cover the risk of loss of suit.

IX. The Fiduciary agent will not advance funds for the payment of expenses arising from the Issue, given that such funds will always be due and anticipated by the Issuer or by the Debentureholders, as the case may be.

9.5. In addition to others provided for by law, in the CVM regulations and in this Deed of Issue, the Trustee’s duties and attributions are:

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I. to carry out its activities with good faith, transparency and loyalty towards the Debentureholders;

II. protect rights and interests of debentureholders, applying the care and diligence that any active and honest man normally applies when managing his/her own assets;

III. resign from the position, in the event of a conflict of interest or any other type of incapacity, and immediately convene the General Meeting provided for in article 7 of RCVM 17 to resolve on its replacement;

IV. keep in good custody all documentation relating to the exercise of its functions;

V. verify, at the time of accepting the role, the consistency of the information contained in this Deed of Issue, endeavoring to remedy the omissions, failures or defects of which it is aware;

VI. make arrangements with the Issuer so that this Deed of Issue and its amendments are registered under the terms of Clause 2.4. above, adopting, in the event of the Issuer’s omission, the measures eventually provided for by law;

VII. monitor the provision of periodic information by the Issuer and alert the Debentureholders, in the annual report referred to in item XVI below, about inconsistencies or omissions of which it is aware;

VIII. give an opinion on the sufficiency of the information provided in the proposals for modifying the conditions of the Debentures;

IX. request, when deemed necessary for the faithful performance of its functions, updated certificates of the Issuer, before public bodies and entities and public registry offices, civil distributors, Public Treasury courts, protest offices, Labor Courts and the Public Treasury Attorney’s Office, of the locality of domicile or where the headquarters of the Issuer is located;

X. request, when deemed necessary, an external audit of the Issuer;

XI. call, when necessary, a General Meeting pursuant to the Brazilian Corporation Law and Clause 10;

XII. attend the General Meetings in order to provide the information requested;

XIII. keep the list of the Debentureholders and their addresses updated, including through dealings with the Issuer, the Bookkeeping Agent, the Settlement Bank and B3, and, for purposes of compliance with the provisions in this item, the Issuer and the Debentureholders, as soon as they subscribe and pay-in or acquire the Debentures, expressly authorize, as of now, the Bookkeeping Agent, the Settlement Bank and B3 to meet any requests made by the Fiduciary agent, including regarding the disclosure, at any time, of the positions of the Debentures, and their respective Debentureholders;

XIV. supervise compliance with the clauses contained in this Deed of Issue, including those imposing obligations to do and not to do;

XV. communicate to the Debentureholders any default, by the Issuer, of financial obligations assumed in this Deed of Issue, including obligations related to contractual clauses intended to protect the interest of the Debentureholders and that establish conditions that must not be breached by the Issuer, indicating the consequences for the Debentureholders and the measures it intends to take on the matter, within a period of up to 7 (seven) Business Days from the date of knowledge, by the Fiduciary agent, of the default;

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XVI. within a period of up to four (4) months from the end of the Issuer’s fiscal year, disclose, on its website, and send to the Issuer for disclosure in the manner provided for in the specific regulation, an annual report intended for Debentureholders, pursuant to article 68, paragraph 1, item (b), of the Brazilian Corporation Law and article 15 of RCVM 17, describing the material facts that occurred during the year related to the Debentures, in accordance with the minimum content established in article 15 of RCVM 17;

XVII. keep the annual report referred to in item XVI available for public consultation on its website for a period of three (3) years;

XVIII. keep available on its website an updated list of issues in which it performs the function of fiduciary agent, note agent or escrow agent;

XIX. disclose on its website the information provided for in article 16 of RCVM 17 and keep it available for public consultation on its website for a period of three (3) years;

XX. maintain, for a minimum period of 5 (five) years, or for a longer period as expressly determined by the CVM, all documents and information required by RCVM 17, and such documents and information may be stored in physical or electronic media, assuming replacing documents with their scanned images.

9.6. In the event of default, by the Issuer, of any of its obligations set forth in this Deed of Issue, the Fiduciary agent shall use any and all measures provided for by law or in this Deed of Issue to protect the rights or defend the interests of the Debentureholders, pursuant to article 68, paragraph 3, of the Brazilian Corporation Law and article 12 of RCVM 17, including:

I. to declare, in compliance with the conditions of this Deed of Issue, that the obligations under the Debentures have expired in advance, and to collect their principal and accessories;

II. take any other measures necessary for the Debentureholders to realize their credits; and

III. represent the Debentureholders under bankruptcy, judicial recovery, extrajudicial recovery or, if applicable, intervention or extrajudicial liquidation of the Issuer.

9.7. The Fiduciary agent will rely on the information made available by the Issuer to monitor compliance with the Financial Ratio.

9.8. The acts or manifestations on the part of the Fiduciary agent, which create liability for the Debentureholders and/or exempt third parties from obligations towards them, as well as those related to the due fulfillment of the obligations assumed in this instrument, will only be valid when previously resolved by the Debentureholders gathered at the General Meeting.

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9.9. The performance of the Fiduciary agent is limited to the scope of RCVM 17, the applicable articles of the Brazilian Corporation Law, and this Deed of Issue, and the Fiduciary agent is exempt, in any form or pretext, from any additional liability that has not arisen from the applicable legal and regulatory provisions and this Deed of Issue.

10. GENERAL MEETING OF DEBENTUREHOLDERS

10.1. The Debentureholders may, at any time, meet in a general meeting, in accordance with the provisions of article 71 of the Brazilian Corporation Law, in order to resolve matters of interest to the Debentureholders (“General Meeting”).

10.1.1. Exclusively and/or partially digital Shareholders’ Meetings will be allowed, subject to the provisions of CVM Instruction 625, of May 14, 2020, as amended.

10.2. The General Meetings may be called by the Fiduciary agent, the Issuer, or by Debentureholders representing at least 10% (ten percent) of the Outstanding Debentures, or by the CVM.

10.3. The General Meetings shall be convened by means of an announcement published at least three (3) times, at least thirty (30) days in advance, for the first call, and eight (8) days after the publication of the announcement of the second call, for the second call, pursuant to Clause 6.23. in compliance with the other rules related to the publication of the announcement of the call for general meetings, contained in the Brazilian Corporation Law, in the applicable regulations, and in this Deed of Issue, and the call is exempted in case all Debentureholders are present.

10.4. The attendance of any person who is not a Party to this Deed of Issue or who does not prove their status as Debentureholder or agent, upon prior presentation of regular identification documents, corporate documents, and powers of attorney, will not be admitted at the General Meeting of the Debentureholders.

10.5. The General Meetings will be installed, on the first call, with the presence of holders of at least 50% (fifty percent) of the Outstanding Debentures, and, on the second call, with any quorum.

10.6. For the purposes of establishing the quorum of this Deed of Issue, “Outstanding Debentures” means all subscribed and paid-in and not redeemed Debentures, excluding the Debentures held in treasury and, additionally, for the purpose of constituting a quorum, excluding the Debentures belonging, directly or indirectly, (i) to the Issuer; (ii) to any parent company, any subsidiary (if any), and/or any affiliate (if any) of any of the persons indicated in this item and in the previous item; or (iii) to any officer, director, spouse, partner or relative up to the 3^rd (third) degree of any of the persons referred to herein.

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10.7. The chairmanship of the General Meetings of Debentureholders shall be the responsibility of the person elected by the Debentureholders or those appointed by the CVM.

10.8. The attendance of the Company’s legal representatives will be mandatory at the meetings of Debentureholders called by the Company, while at the meetings called by the Debentureholders or by the Fiduciary agent, the attendance of the Company’s legal representatives will be optional unless it is requested by the Debentureholders or by the Fiduciary agent, as the case may be, in which case it will be mandatory. The Fiduciary agent must attend the General Meetings and provide the Debentureholders with the information requested.

10.9. As for discussions at general meetings, each outstanding debenture must receive one vote, and a proxy, either debentureholder or not, may be appointed. Except as provided for in Clause 10.10 below or by the other quorums expressly provided for in other items of this Deed of Issue, the resolutions to be taken at the General Meeting will depend on the approval of Debentureholders representing at least 50% (fifty percent) plus one outstanding Debenture, on the first call, or the majority of Debentureholders attending, on the second call, following the minimum attendance of Debentureholders representing 20% (twenty percent) of the outstanding Debenture at said General Meeting on the second call, including: (i) with respect to changes in the clauses or conditions provided for in this Deed of Issue that do not present another specific quorum; (ii) temporary forgiveness and/or waiver of any of the events of early maturity established in this Deed of Issue; (iii) amendment of the Issuer’s additional obligations established in Clause 8 above; and/or (iv) change of the Trustee’s obligations, established in Clause 9 above.

10.10. The following are not included in the quorum referred to in Clause 10.9 above:

a) the quorums expressly provided for in other Clauses of this Deed of Issue; and

b) the changes, which must be approved by Debentureholders representing at least 90% (ninety percent) of the Outstanding Debentures, which are (i) the provisions established in this Clause 10, as well as the quorums provided for in this Deed of Issue; (ii) the Compensatory Interest and Monetary Adjustment (except with regard to the specific quorum provided for in the event of IPCA Unavailability) of the Debentures;

(iii)to any payment dates of any amounts provided for in this Deed of Issue; (iv) the maturity term of the Debentures; (v) the type of Debentures; (vi) the creation of a renegotiation event, (vii) the Debentures principal amounts and amortization dates, and/or (viii) change of any of the cases of early maturity established in this Deed of Issue, except in the case of temporary waiver or forgiveness, which must comply with the provisions of Clause 10.9 above.

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10.11. A General Meeting to resolve on (i) the correction of a gross, typing or arithmetic error is hereby waived; (ii) changes to this Deed of Issue already expressly permitted under the terms of this Deed of Issue; (iii) amendments to this Deed of Issue as a result of requirements formulated by the CVM, B3, or ANBIMA; or

(iv)changes to this Deed of Issue as a result of updating the registration data of the Parties, such as changes in the corporate name, address, and telephone number, among others, provided that the changes or corrections referred to in items (i), (ii), (iii) and (iv) above may not cause any loss to the Debentureholders and/or the Issuer or any change in the flow of Debentures, and provided that there is no additional cost or expense for the Debentureholders.

10.12. The provisions of the Brazilian Corporation Law on the shareholders’ general meeting apply to General Meetings, where applicable.

10.13. The resolutions taken by the Debentureholders at the general meetings of Debentureholders within the scope of their legal competence, in compliance with the quorums in this Deed of Issue, will bind the Company and will oblige all holders of Outstanding Debentures, regardless of whether they attended the general meeting of Debentureholders or the vote given at the respective general meetings of Debentureholders.

11. ISSUER’S REPRESENTATIONS AND WARRANTIES

11.1. The Issuer hereby represents and warrants that:

(i) is a company duly organized, incorporated and existing in the form of a joint stock company, in accordance with Brazilian law;

(ii) is registered as a securities issuer with the CVM;

(iii) the Issuer’s publicly-held company registration is updated with the CVM as required by CVM Instruction 480, of December 7, 2009, as amended (“CVM Instruction 480”), and its information contained therein and made public is updated as required by CVM Instruction 480;

(iv) is fully capable of complying with all (financial and non-financial) obligations provided for in this Deed of Issue and in any other documents of the Issue;

(v) is duly authorized and has obtained all authorizations, including, as applicable, legal, corporate, regulatory and third-party authorizations, necessary for the execution of this Deed of Issue and any other documents of the Issue to which it is a party, and the fulfillment of all obligations set forth herein and the completion of the Issue and the Offering, with all legal, corporate, regulatory and third-party requirements necessary to do so having been duly met;

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(vi) the Issuer’s legal representatives who sign this Deed of Issue, the Distribution Agreement and any other documents of the Issue have, as the case may be, corporate and/or delegated powers to assume, on behalf of the Issuer, the obligations set forth herein and therein and, as representatives, they have the powers legitimately granted, and the respective mandates are in full force and effect;

(vii) this Deed of Issue, the Distribution Agreement and any other documents of the Issue, and the obligations set forth herein, constitute lawful, valid, binding and effective obligations of the Issuer, enforceable in accordance with its terms and conditions, effective as an extrajudicial document valid to commence execution process pursuant to article 784 of Law 13105, of March 16, 2015, as amended (“Civil Procedure Code”), on this date in force;

(viii) the information provided at the time of the Issue and in the notices of material act or fact disclosed by the Company are true, consistent, accurate, complete, correct and sufficient, allowing investors to make an informed decision regarding the Issue;

(ix) except as shown in the Company’s financial statements and/or in the reference form prepared by the Issuer under the terms of CVM Instruction 480 (“Reference Form”) in relation to judicial and administrative proceedings classified as probable or possible loss, it is not aware of any lawsuit, administrative or arbitration proceedings, inquiry or other governmental investigation procedure that may affect the Issue or the Company’s ability to honor its obligations under this Deed of Issue or the Company’s reputation;

(x) the Company’s consolidated financial statements for the fiscal years ended on December 31, 2018, 2019 and 2020, correctly represent the Company’s consolidated equity and financial position on those dates and for those periods and were duly prepared in accordance with the accounting principles determined by the applicable regulations;

(xi) (a) it complies and enforces, as well as its parent companies, subsidiaries, affiliates, companies under common control, managers and employees comply, with the Anti-Corruption Laws, (b) it has measures aimed at complying with the Anti-Corruption Laws, to the extent that (1) it maintains internal policies and procedures that ensure full compliance with such standards and (2) it gives full knowledge of such standards to all professionals with whom it may have a relationship, prior to the start of its performance; (c) it refrains from committing acts of corruption and from acting in a manner harmful to the national and foreign public administration, in its interest or for its benefit, exclusive or not; and (d) it makes best efforts so that its eventual subcontractors undertake to comply with the provisions herein;

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(xii) complies with current legislation, in particular labor legislation and regulations, so that (a) they do not use, directly or indirectly, slavery-like or child labor; (b) the workers are duly registered under the terms of the legislation in force; (c) comply with the obligations arising from the respective employment contracts and the labor and social security legislation in force;

(xiii) (a) complies with the legislation in force, in particular environmental legislation and regulations, including, but not limited to, the Brazilian Environmental Policy, the Resolutions of CONAMA - Brazilian Council on the Environment, as well as other supplementary environmental legislation and regulations, adopting preventive or remedial measures and actions aimed at avoiding or correcting possible environmental damage resulting from the exercise of the activities described in its corporate purpose, as well as to health and safety at work; (b) holds all permissions, licenses, authorizations, and approvals necessary for the regular exercise of its activities, in accordance with applicable environmental legislation, subject to the provisions of item (xi) of Clause 8.1. above; and (c) has all the necessary records, in compliance with the applicable civil and environmental legislation, except in cases where (1) the said non-compliance is, directly or indirectly, remedied or compensated for within the period indicated by the competent authority or, in the absence of a specific period, within thirty (30) days of the non-compliance and there is proof to this effect; and/or (2) said non-compliance is being discussed in good faith, in the administrative and/or arbitration and/or judicial levels; and/or (c) does not cause a Material Adverse Effect.

(xiv) the documents, information and informative materials provided to the Fiduciary agent and/or the Debentureholders are true, consistent, correct and sufficient, are updated up to the date they were provided and include the documents and information relevant to the investment decision-making on the Debentures, also providing information on the Company’s relevant operations, as well as on the relevant rights and obligations arising therefrom;

(xv) the execution of this instrument, the terms and conditions of this Deed of Issue, the fulfillment of the obligations set forth herein and the Issue (a) do not infringe its bylaws; (b) do not violate any legal provision, contract or instrument to which the Company is a party; (c) do not violate any administrative, judicial or arbitration order, decision or sentence against the Company; and (d) will not result in (i) early maturity of any obligation set forth in any such contract or instrument; (ii) creation of any lien or encumbrance on any asset of the Company; or (iii) termination of any such agreement or instrument;

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(xvi) except for laws, regulations, administrative rules and determinations which are being challenged in good faith in the administrative and/or judicial levels or whose non-compliance would not have a Material Adverse Effect on the Company’s ability to honor its obligations under this Deed of Issue or the Company’s reputation, is complying with the laws, regulations, administrative rules and determinations of the governmental agencies, autarchies or courts necessary for the conduct of its business;

(xvii) except for obligations that are being challenged in good faith at the administrative and/or judicial levels or whose non-compliance would not have a Material Adverse Effect on the Company’s ability to honor its obligations under this Deed of Issue or is not material enough to impact the decision-making by investors in relation to the investment in the Debentures and the Offering, is up to date with payment of all pecuniary obligations of a tax (municipal, state and federal), labor, social security, environmental and any other obligations imposed by law;

(xviii) there is no lawsuit, judicial or extrajudicial proceedings, inquiry or any other type of governmental investigation, in any of the cases of this item, aiming to annul, change, invalidate, question or in any way affect this Deed of Issue;

(xix) there is no connection between the Company and the Fiduciary agent that prevents the Fiduciary agent from fully exercising its functions;

(xx) the Reference Form (a) contains, at a minimum, and without prejudice to the relevant legal and regulatory provisions, all relevant information necessary for investors to know about the Issuer and its activities and economic-financial situation, the risks inherent in its activities, and any other relevant information; and (b) was prepared in accordance with the relevant rules, including CVM Instruction 480;

(xxi) the information contained in the Reference Form and in the notices of material act or fact disclosed by the Issuer since the date of the last presentation of the Reference Form, are true, consistent, correct and sufficient; and

(xxii) the Project was duly classified under the terms of Law 12431 and considered as a priority under the terms of the Ordinance;

11.2. The Issuer undertakes to notify the Fiduciary agent, within 2 (two) Business Days from the date on which it becomes aware, if any of the statements made under the terms of Clause 11.1. above become untrue, inconsistent, inaccurate, incomplete, incorrect, or insufficient.

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12. EXPENSES

12.1. All costs incurred with the Offering and with the structuring, issuance, formalization, registration, and execution of the Debentures will be borne by the Issuer, including publications, enrollments, registrations, hiring of the Fiduciary agent, the Bookkeeping Agent, the Settlement Bank, the Depository Bank, the legal advisor and other service providers, and any other costs related to the Debentures.

13. SUNDRY PROVISIONS

13.1. Any tolerance, partial exercise, or concession between the Parties will always be considered mere liberality, and will not constitute a waiver or loss of any right, faculty, privilege, prerogative, or powers conferred (including mandate), nor will it imply novation, alteration, compromise, remission, modification or reduction of the rights and obligations arising therefrom.

13.2. All communications made pursuant to this Deed of Issue must always be made in writing to the addresses below. Communications will be considered received when delivered, under the protocol, or upon “receipt notice” issued by Empresa Brasileira de Correios e Telégrafos, or by electronic mail at the addresses below. Communications made by electronic mail will be considered received on the date they are sent, provided that their receipt is confirmed by means of a callsign (receipt issued by the machine used by the sender). The change of any of the addresses below must be communicated to the other parties by the party that has its address changed.

(i) to the Issuer: Tim S.A.

Avenida Joao Cabral de Mello Neto, nº 850, Bloco 01, Salas 501 a 1208, Barra da Tijuca neighborhood, City and State of Rio de Janeiro, CEP 22775-057

Attn: Treasury

Telephone: +55 (21) 4109-3100

Email: babordin@timbrasil.com.br gcrahim@timbrasil.com.br

(ii) to the Fiduciary agent:

Avenida das Américas, nº 4.200, Bloco 08, Ala B, Salas 302, 303 e 304 CEP 22640-102, Rio de Janeiro, RJ

Attn: Mrs. Marcelle Motta Santoro, Mrs. Karolina Vangelotti and Mr. Marco Aurélio Ferreira Phone: +55 (21) 3385-4565

E-mail: assembleias@pentagonotrustee.com

44 

 

(iii) to B3:

B3 S.A. – BRASIL, BOLSA, BALCÃO – BALCÃO B3

Praça Antônio Prado, 48, 4º andar CEP: 01010-901, São Paulo, SP

Attn: Superintendence of Corporate Securities and Fund Offerings - SCF Telephone: +55 (11) 2565-5061

E-mail: valores.mobiliarios@b3.com.br

13.3. The change of any of the above addresses must be immediately communicated to all Parties by the Fiduciary agent or the Issuer.

13.4. The Parties recognize this Deed of Issue and the Debentures as an extrajudicial document valid to commence the execution process pursuant to article 784, items I to III, of the Civil Procedure Code.

13.4.1. For the purposes of this Deed of Issue, the Parties may, at their sole discretion, request the specific performance of the obligations assumed herein, pursuant to articles 497, 815 et seq. of the Civil Procedure Code, without prejudice to the right to declare early maturity obligations under the Debentures, pursuant to this Deed of Issue.

13.5. The obligations assumed in this Deed of Issue are irrevocable and irreversible, obliging the Parties and their successors, in any capacity, to fully comply with them.

13.6. The invalidity or nullity, in whole or in part, of any of the clauses of this Deed of Issue, will not affect the others, which will remain valid and effective until the Parties fulfill all their obligations hereunder. In the event of a declaration of invalidity or nullity of any clause of this Deed of Issue, the Parties undertake to negotiate, in good faith, within the shortest possible time, in place of the clause declared invalid or null, the inclusion, in this Deed of Issue, of valid terms and conditions that reflect the terms and conditions of the invalidated or void clause, complying with the intention and objective of the Parties when negotiating the invalidated or void clause and the context in which it is inserted.

13.7. Any amendment to this Deed of Issue will only be considered valid if formalized in writing, in a proper instrument signed by all Parties, which must be duly registered with JUCERJA, in compliance with the formalities provided for in Clauses 2.5 of this Deed of Issue.

13.8. This Deed of Issue is governed by the laws of the Federative Republic of Brazil.

13.9. The jurisdiction of the district of the City of São Paulo, State of São Paulo, is elected, to the exclusion of any other, however privileged it may be, to settle the issues that may result from this Deed of Issue.

13.10. If this Deed of Issue is executed digitally, the Parties (a)

45 

 

acknowledge that the declarations of the will of the Contracting Parties, by means of a digital signature, are presumed to be true in relation to the signatories when the certification process provided by the Brazilian Public Key Infrastructure - ICP-Brasil is used, constituting an extrajudicial document valid to commence execution process for all purposes of right, and (b) waive the right of challenge referred to in article 225 of the Brazilian Civil Code. Subject to the provisions of this Clause, this Deed of Issue may be digitally signed electronically

In witnesses whereof, the Parties sign this Deed of Issue, in electronic, digital, and computerized form, together with two (2) witnesses, who also sign it.

Rio de Janeiro, June 10, 2021.

(Signatures follow on the following pages.) (Remainder of this page intentionally left blank.)

46 

 

Signature Page of the “Private Deed for the Second Issue of Simple, Unsecured and Non-Convertible Debentures, in a Single Series, for Public Distribution with Restricted Efforts, of Tim S.A.” entered into between TIM S.A. and Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários.

TIM S.A.

Name: Position: Name: Position:

47 

 

Signature Page of the “Private Deed for the Second Issue of Simple, Unsecured and Non-Convertible Debentures, in a Single Series, for Public Distribution with Restricted Efforts, of Tim S.A.” entered into between TIM S.A. and Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários.

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS

Name:

Position:

WITNESSES:

Name: CPF [SSN]: Name: CPF [SSN]:

48 

 

ANNEX 4

ORDINANCE

FEDERAL OFFICIAL GAZETTE;

Published on: 04/23/2021| Edition: 75| Section: 1| Page: 88

Body: Ministry of Communications/Minister’s Office

MCOM ORDINANCE 2447, APRIL 22, 2021

It approves an infrastructure investment project in the telecommunications sector, considering it a priority for the purpose of issuing debentures, pursuant to art. 2 of Law 12431, of June 24, 2011.

THE STATE MINISTER OF COMMUNICATIONS, in the use of the powers conferred on him/her by art. 87, sole paragraph, items II and IV, of the Constitution, in view of the provisions of Law 12431, of June 24, 2011, Decree 8874, of October 11, 2016, and Ordinance 502, of September 1, 2020, resolves:

Art. 1 Approve the telecommunications infrastructure investment project described in the Annex to this Ordinance, considering it a priority for the purpose of issuing debentures, pursuant to art. 2, Law 12431, June 24, 2011.

Art. 2 In order to comply with the provisions of §5, art. 2, Law 12431, of June 24, 2011, the legal entity that owns the investment project must:

I - keep the following items updated, with the Ministry of Communications:

a) the list of legal entities that comprise it; or

b) identification of the parent company, in the case of a legal entity holding the project incorporated as a publicly-held company with securities admitted to trading on the stock market;

II - highlight, upon the public issue of the debentures, on the first page of the Prospectus and the Distribution Beginning Announcement or, in the case of distribution with restricted efforts, the Closing Notice and the disclosure material, the number and date of publication of the approval ordinance and the commitment to allocate the funds obtained in the approved priority project;

III - forward to the Ministry of Communications by April 30 of each year the information contained in art. 7, items I to IV, of MCOM Ordinance 502, September 1, 2020;

IV - send the final report provided for in art. 7, §2, MCOM Ordinance 502, September 1, 2020, within ninety (90) days after the use of all the amount raised in the investment project; and

V - maintain documentation relating to the use of funds raised, up to five years after the maturity of the debentures or certificates of real estate receivables or after the closing of the credit rights investment fund, for consultation and inspection by the supervision bodies.

Sole Paragraph. The obligation provided for in item II of the head provision must also be complied with, as applicable, in the event of public issue of certificates of real estate receivables or shares of investment funds in credit rights, and their administrator will be responsible for complying with this obligation.

Art. 3 The Ministry of Communications:

I - shall inform the unit of the Special Department of the Federal Revenue Service with authority over the head office of the legal entity holding the project, when it becomes aware of the occurrence of situations that show the non-implementation of the priority project in the form approved in this Ordinance; and

II - shall keep the records of the project analysis case archived, in electronic media, and available for consultation and inspection by the supervision bodies, for five years, counted from the date of completion of the project.

Art. 4 This Ordinance becomes effective on the date of its publication and is valid for five (5) years.

49 

 

ANNEX 5

FÁBIO FARIA

ANNEX

I. Legal Entity - Holder (Issuer):	TIM S.A. (CNPJ [EIN] 02.421.421/0001-11).
II. Legal Entity - Executing Party (Authorized):	TIM S.A. (CNPJ [EIN] 02.421.421/0001-11).
III. Description of project	The purpose of the project is to implement, expand, maintain, recover, adapt and/or modernize transportation network, fixed and mobile access network, data center, machine-to-machine communication network, 5G or higher network, and infrastructure for telecommunication network virtualization, improving the quality and availability of the services offered.
IV. Industry:	Telecommunications.
V. State:	AC, AL, AM, AP, BA, CE, DF, ES, GO, MA, MG, MS, MT, PA, PB, PE, PI, PR, RJ, RN, RO, RR, RS, SC, SE, SP and TO.
VI. Maximum amount authorized for issue of debentures:	R$ 5,753,207,065.97.
VII. Process:	53115.006065/2021-71.

This content does not replace that published in the certified version.

50 

 

ANNEX 5

ISSUES | FIDUCIARY AGENT

Type	Issuer	IF code	Amount	Quantity	Remuneration	Issue	Series	Issue date	Maturity	Guarantees
N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A

51 

 

ANNEX III ESG ASPECTS

Through this Issue, the Company will commit to certain sustainable development goals (“MDS”), which will be measured through key sustainable performance indicators or key performance indicators (“KPIs”), on a pre-defined schedule and at certain verification locations as described below:

Sustainable Development Goal - MDS	Key Performance Indicators - KPIs	2019 (basis line)	Verification Date
Reach 100% (one hundred percent) 4G presence in Brazilian municipalities by December 2023 (“Presence Goal”) 4G”).	Percentage (%) of 4G presence (“4G Presence KPI”)	3,477 municipalities (62%)	December 2023
Reach more than 80% (eighty percent) of Eco-efficiency in data traffic by December 2025 (“Eco-Efficiency Goal”).	Eco-efficiency in data traffic (bit/Joule) (“Eco-Efficiency KPI”)	9,827	December 2025

Definitions

For the purposes of this Annex, the following definitions apply:

“4G presence percentage”: is an indicator that measures the total number of municipalities served by TIM compared to the total number of Brazilian municipalities. For information on the number of existing Brazilian municipalities, the Company may consult the official government and IBGE websites. Localities that are not formally recognized as a municipality and that do not have the IBGE code will not be considered for the purpose of verifying the goal.

“Eco-efficiency in data traffic” is an energy efficiency indicator that establishes the relationship between the service offered to the customer (bits transmitted) and the company’s impact on the environment (joules of energy consumed). The factors that make up this indicator are data and voice traffic from fixed and mobile networks, and energy consumption on a yearly average.

“Eco-Efficiency KPI Verification Site” TIM will verify compliance with the eco-efficiency goal in all of its direct, existing operations (in 2019, in the baseline), organically expanded or implemented, in compliance with the exclusions and calibrations provided for in the Framework disclosed by the Company on its investor relations website.

52 

 

“4G Presence KPI Verification Date” means December 31, 2023 (“4G Presence KPI Verification Date”), which will be the base date for the Company to comply with the MDS, as verified by the External Verifier. The consolidation of data and the issuance of the Annual ESG Report must take place by June 11, 2024, so that the Company can comply with the obligations set forth in the Deed of Issue.

“Eco-Efficiency KPI Verification Date” means December 31, 2025 (“Eco-Efficiency KPI Verification Date”), which will be the base date for the Company to comply with the MDS, as verified by the External Verifier. The consolidation of data and the issuance of the Annual ESG Report must take place by June 10, 2026, so that the Company can comply with the obligations set forth in the Deed of Issue, in compliance with the exclusions and calibrations provided for in the Framework disclosed by the Company on its investor relations website.

“External Verifier” means the specialized and independent company, with renowned recognition in the area of sustainability, appointed by the Company for the annual verification of the MDS as measured by the ICDS and disclosed in its Annual ESG Report.

“Annual ESG Report” means the report to be released annually by the Company, which includes its performance in relation to the MDS as measured by the ICDS and verified by the External Verifier.

***

53 

EX-12.1

Exhibit 12.1

SECTION 302 CERTIFICATION

I, Alberto Mario Griselli, certify that:

1.       I have reviewed this annual report on Form 20-F of TIM S.A.;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.       The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)       Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)       Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.       The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s Board of Directors (or persons performing the equivalent functions):

a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated: April 14, 2022

By:	/s/ Alberto Mario Griselli
	Name:	Alberto Mario Griselli
	Title:	Chief Executive Officer

EX-12.2

Exhibit 12.2

SECTION 302 CERTIFICATION

I, Camille Loyo Faria, certify that:

1.       I have reviewed this annual report on Form 20-F of TIM S.A.;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.       The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)       Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)       Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.       The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s Board of Directors (or persons performing the equivalent functions):

a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b)       Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Dated: April 14, 2022

By:	/s/ Camille Loyo Faria
	Name:	Camille Loyo Faria
	Title:	Chief Financial Officer and Investor Relations Officer

EX-13.1

Exhibit 13.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2020 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002.

I, Alberto Mario Griselli, Chief Executive Officer of TIM S.A., certify that, to the best of my knowledge:

1.       the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2.       the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TIM S.A.

Dated: April 14, 2022

By:	/s/ Alberto Mario Griselli
	Name:	Alberto Mario Griselli
	Title:	Chief Executive Officer

EX-13.2

Exhibit 13.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2020 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002.

I, Camille Loyo Faria, Chief Financial Officer of TIM S.A., certify that, to the best of my knowledge:

1.       the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2.       the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TIM S.A.

Dated: April 14, 2022

By:	/s/ Camille Loyo Faria
	Name:	Camille Loyo Faria
	Title:	Chief Financial Officer and Investor Relations Officer

XML

Cover	12 Months Ended
	Dec. 31, 2021 shares
Entity Addresses [Line Items]
Document Type	20-F
Amendment Flag	false
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Document Period End Date	Dec. 31, 2021
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	001-39570
Entity Registrant Name	TIM S.A.
Entity Central Index Key	0001826168
Entity Incorporation, State or Country Code	D5
Entity Address, Address Line One	João Cabral de Melo Neto Avenue, 850 – South Tower – 12th floor
Entity Address, City or Town	Rio de Janeiro
Entity Address, Country	BR
Entity Address, Postal Zip Code	22775-057
Title of 12(b) Security	American Depositary Shares
Trading Symbol	TIMB
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Document Accounting Standard	International Financial Reporting Standards
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	2,420,804,398
ICFR Auditor Attestation Flag	true
Auditor Firm ID	1448
Auditor Name	Ernst & Young Auditores Independentes S.S.
Auditor Location	Rio de Janeiro, Brazil
Business Contact [Member]
Entity Addresses [Line Items]
Entity Address, Address Line One	João Cabral de Melo Neto Avenue, 850 – South Tower – 12th floor
Entity Address, City or Town	Rio de Janeiro
Entity Address, Country	BR
Entity Address, Postal Zip Code	22775-057
City Area Code	55
Local Phone Number	4109-4167
Contact Personnel Name	Camille Loyo Faria

XML

BALANCE SHEETS - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Statement of financial position [abstract]
Assets	R$ 49,819,186	R$ 41,654,417
Current assets	15,398,048	10,411,556
Cash and cash equivalents	5,228,615	2,575,291
Marketable securities	4,568,020	2,070,438
Trade accounts receivable	3,066,906	3,051,834
Inventories	202,553	246,602
Recoverable indirect taxes, charges and contributions	354,620	374,015
Recoverable direct taxes, charges and contributions	1,311,906	1,421,112
Prepaid expenses	275,148	149,796
Derivative financial instruments	134,292	262,666
Leases	30,076	5,357
Other amounts recoverable	28,661	43,906
Other assets	197,251	210,539
Non-current assets	34,421,138	31,242,861
Marketable securities	11,508	7,061
Trade accounts receivable	186,301	128,827
Recoverable indirect taxes, charges and contributions	905,312	856,786
Recoverable direct taxes, charges and contributions	730,455	1,277,127
Deferred income tax and social contribution	536,888	550,646
Judicial deposits	718,773	794,755
Prepaid expenses	83,139	73,598
Derivative financial instruments	521,627	239,423
Leases	213,045	156,841
Other assets	18,908	30,024
Investment in an associate	1,601,703
Property, plant and equipment	18,308,400	18,100,698
Intangible assets	10,585,079	9,027,075
Total liabilities and shareholders' equity	49,819,186	41,654,417
Total liabilities	24,712,080	18,471,672
Current liabilities	10,611,482	8,301,956
Suppliers	3,267,404	3,128,732
Loans and financing	538,450	1,689,385
Lease liabilities	1,269,878	1,054,709
Derivative financial instruments	194,837	7,273
Payroll and related charges	303,239	272,635
Indirect taxes, charges and contributions payable	1,418,682	935,778
Direct taxes, charges and contributions payable	245,113	296,299
Dividends and interest on shareholders' equity payable	533,580	538,576
Authorizations payable	2,630,169	102,507
Deferred revenues	197,179	266,436
Other liabilities	12,951	9,626
Non-current liabilities	14,100,598	10,169,716
Loans and financing	3,307,015	655,647
Derivative financial instruments	13,950	28,893
Lease liabilities	7,793,661	7,324,126
Indirect taxes, charges and contributions payable	3,273	3,102
Direct taxes, charges and contributions payable	13,227	212,444
Provision for legal and administrative proceedings	960,881	886,947
Pension plans and other post-employment benefits	6,492	7,346
Authorizations payable	1,250,918	232,940
Deferred revenues	689,161	755,488
Other liabilities	62,020	62,783
Shareholders' equity	25,107,106	23,182,745
Share capital	13,477,891	13,477,891
Capital reserves	401,806	397,183
Profit reserves	11,236,551	9,317,356
Other comprehensive income	(4,285)	(4,848)
Treasury shares	R$ 4,857	R$ 4,837

XML

STATEMENTS OF INCOME R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)	Dec. 31, 2020 BRL (R$)	Dec. 31, 2019 BRL (R$)
Profit or loss [abstract]
Revenue	R$ 18,058,027	R$ 17,267,812	R$ 17,377,194
Costs of services provided and goods sold	(8,443,023)	(7,996,615)	(7,433,731)
Gross income	9,615,004	9,271,197	9,943,463
Operating income (expenses)
Selling expenses	(4,621,788)	(4,443,027)	(4,986,289)
General and administrative expenses	(1,723,384)	(1,673,290)	(1,717,859)
Share of loss of an associate	(11,572)
Other income (expenses), net	497,771	(351,854)	1,275,542
Total operating expenses	(5,858,973)	(6,468,171)	(5,428,606)
Profit before financial income and expenses	3,756,031	2,803,026	4,514,857
Financial income	1,091,748	438,598	1,430,171
Financial expenses	(1,745,213)	(1,242,255)	(1,408,053)
Foreign exchange variations, net	659	(6,965)	(908)
Total financial income(expenses)	(652,806)	(810,622)	21,210
Profit before income tax and social contribution	3,103,225	1,992,404	4,536,067
Income tax and social contribution	(146,051)	(164,150)	(913,940)
Profit for the year	R$ 2,957,174	R$ 1,828,254	R$ 3,622,127

XML

STATEMENTS OF COMPREHENSIVE INCOME - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Profit or loss [abstract]
Profit for the year	R$ 2,957,174	R$ 1,828,254	R$ 3,622,127
Item that will not be reclassified to profit or loss in subsequent periods:
Pension plans and other post-employment benefits	853	(1,562)	(2,932)
Deferred taxes	(290)	531	997
Total comprehensive income for the year, net of tax	R$ 2,957,737	R$ 1,827,223	R$ 3,620,192

XML

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - BRL (R$) R$ in Thousands	Issued capital [member]	Capital reserve [member]	Other reserves [member]	Reserve For Expansion [Member]	Tax Bbenefit Reserve [Member]	Treasury shares [member]	Equity Valuation Adjustment [Member]	Retained earnings [member]	Total	Accumulated other comprehensive income [member]
Balances as at January 01, 2019 at Dec. 31, 2018	R$ 9,866,298	R$ 412,091	R$ 838,692	R$ 7,267,574	R$ 1,417,858	R$ (8,523)			R$ 19,794,837	R$ 847
Total comprehensive income for the year
Profit for the year								3,622,127	3,622,127
Remeasurement of post-employment benefit obligation									(1,935)	(1,935)
Total comprehensive income for the year								3,622,127	3,620,192	(1,935)
Total contributions from shareholders and distributions to shareholders
Long-term incentive plan (note 26)		(1,441)							(1,441)
Purchases of treasury shares, net of disposals						5,319			5,319
Allocation of profit for the year:
Legal Reserve (note 25)			171,398					(171,398)
Interest on shareholders’ equity (note 25)								995,438	995,438
Tax benefit reserve (note 25)					194,161			(194,161)
Reserve for expansion (note 25)				2,261,130				(2,261,130)
Total contributions from shareholders and distributions to shareholders		(1,441)	171,398	2,269,479	194,161	5,319		(3,622,127)	(983,211)
Interest on shareholders’ equity (note 25)								(995,438)	(995,438)
Unclaimed dividends (note 25)				8,349					8,349
Balances as at December 31, 2019 at Dec. 31, 2019	9,866,298	410,650	1,010,090	9,537,053	1,612,019	(3,204)			22,431,818	(1,088)
Total comprehensive income for the year
Profit for the year								1,828,254	1,828,254
Remeasurement of post-employment benefit obligation									(1,031)	(1,031)
Total comprehensive income for the year								1,828,254	1,827,223	(1,031)
Total contributions from shareholders and distributions to shareholders
Long-term incentive plan (note 26)		7,425							7,425
Purchases of treasury shares, net of disposals						(7,089)			(7,089)
Allocation of profit for the year:
Legal Reserve (note 25)			83,708					(83,708)
Interest on shareholders’ equity (note 25)								1,083,000	1,083,000
Tax benefit reserve (note 25)					169,541			(169,541)
Reserve for expansion (note 25)				492,005				(492,005)
Total contributions from shareholders and distributions to shareholders	3,611,593	(13,467)	26,104	(3,037,451)	169,541	(1,633)		(1,828,254)	(1,076,296)	(2,729)
Corporate restructure (note 1)	3,611,593	(20,892)	(57,604)	(3,535,824)		5,456				(2,729)
Interest on shareholders’ equity (note 25)								(1,083,000)	(1,083,000)
Unclaimed dividends (note 25)				6,368					6,368
Balances as at December 31, 2019 at Dec. 31, 2020	13,477,891	397,183	1,036,194	6,499,602	1,781,560	(4,837)	R$ (4,848)		23,182,745	R$ (4,848)
Total comprehensive income for the year
Profit for the year								2,957,174	2,957,174
Remeasurement of post-employment benefit obligation							563		563
Total comprehensive income for the year							563	2,957,174	2,957,737
Total contributions from shareholders and distributions to shareholders
Long-term incentive plan (note 26)		4,623							4,623
Purchases of treasury shares, net of disposals						(20)			(20)
Allocation of profit for the year:
Legal Reserve (note 25)			139,021					(139,021)
Interest on shareholders’ equity (note 25)								(1,047,500)	(1,047,500)
Tax benefit reserve (note 25)					176,741			(176,741)
Reserve for expansion (note 25)				1,593,912				(1,593,912)
Unclaimed dividends (note 25)				9,521					9,521
Total contributions from shareholders and distributions to shareholders		4,623	139,021	1,603,433	176,741	(20)		(2,957,174)	(1,033,376)
Interest on shareholders’ equity (note 25)								1,047,500	1,047,500
Balances as at December 31, 2019 at Dec. 31, 2021	R$ 13,477,891	R$ 401,806	R$ 1,175,215	R$ 8,103,035	R$ 1,958,301	R$ (4,857)	R$ (4,285)		R$ 25,107,106

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STATEMENT OF CASH FLOW - BRL (R$) R$ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Operating activities
Profit before income tax and social contribution		R$ 3,103,225	R$ 1,992,404	R$ 4,536,067
Adjustments to reconcile profit before income tax and social contribution to net cash generated by operating activities:
Depreciation and amortization		5,691,696	5,527,012	5,128,981
Share of loss of an associate		11,572
Residual value of property, plant and equipment and intangible written-off		51,913	(88,085)	32,411
Gain on sale of 51% of I-Systems (formerly FiberCo) (note 1)		(782,237)
Interest on asset retirement obligation		1,486	(284)	226
Provision for legal and administrative proceedings		278,789	333,724	547,691
Inflation adjustment on judicial deposits and legal and administrative proceedings		(27,768)	138,109	200,469
Interest, monetary and foreign exchange variations on loans and other financial adjustments		119,864	168,362	(950,675)
Interest on lease liabilities		858,259	910,691	821,463
Interest on lease receivable		56	(10,698)	(6,422)
Provision for expected credit losses		544,642	552,817	748,291
Long-term incentive plans		15,672	2,588	3,443
Total adjustments to reconcile income with net cash from operations		9,867,169	9,526,640	11,061,945
Decrease (increase) in operating assets
Trade accounts receivable		(583,346)	(390,087)	(1,027,131)
Recoverable taxes, charges and contributions		664,397	1,260,949	(1,601,276)
Inventories		44,050	(43,325)	(20,219)
Prepaid expenses		(134,893)	20,928	100,917
Judicial deposits		215,698	203,567	296,486
Other assets		41,610	(111,003)	5,059
Increase (decrease) in operating liabilities
Payroll and related charges		35,506	53,667	6,736
Suppliers		153,357	(818,989)	(401,200)
Taxes, charges and contributions payable		366,605	(320,674)	40,045
Authorizations payable		(8,604)	(10,871)	(100,182)
Payments for legal and administrative proceedings		(316,804)	(413,635)	(715,203)
Deferred revenues		(135,583)	(87,188)	(204,355)
Other liabilities		(116,981)	(126,530)	(215,063)
Cash generated by operations		10,092,181	8,743,449	7,226,559
Income tax and social contribution paid		(14,094)	(69,578)	(161,833)
Net cash flows from operating activities		10,078,087	8,673,871	7,064,726
Investing activities
Marketable securities		(2,502,030)	(1,428,888)	131,742
Cash from the sale of 51% of I-Systems (formerly FiberCo) (note 1)		1,096,294
Cash from the merger of TIM Participações			21,959
Additions to property, plant and equipment and intangible assets	[1]	(5,283,707)	(3,891,306)	(3,853,484)
Other derivatives			(161,429)
Proceeds received fromleases		47	4,879	9,100
Net cash flows used in investing activities		(6,689,396)	(5,454,785)	(3,712,642)
Financing activities
New loans		3,062,000	1,800,000	1,000,000
Amortization of loans		(1,710,935)	(1,806,922)	(723,500)
Interest paid on loans		78,952	72,643	96,649
Lease payments		(1,179,723)	(927,903)	(800,621)
Interest paid on lease liabilities		(832,928)	(794,391)	(785,091)
Proceeds from financing for the 5G license acquisition		843,020
Derivative financial instruments		216,197	27,070	32,761
Purchase of treasury shares, net of disposals		(11,069)		435
Dividends and interest on shareholders’ equity paid		(1,042,976)	(1,153,054)	(770,139)
Net cash flows used in financing activities		(735,366)	(2,927,843)	(2,142,804)
Increase in cash and cash equivalents		2,653,325	291,243	1,209,280
Cash and cash equivalents at the beginning of the year		2,575,290	2,284,048	1,075,530
Cash and cash equivalents at the end of the year		R$ 5,228,615	R$ 2,575,291	R$ 2,284,810

[1] For the effects of the 5G acquisition with no cash impact, see note 40. 

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Operations

12 Months Ended

Dec. 31, 2021

Operations

Operations

 1. Operations

Corporate structure

TIM S.A. (“TIM” “Company” and/or “TIM Group”) is a public limited company with Registered office in the city of Rio de Janeiro, RJ, and a subsidiary of TIM Brasil Serviços e Participações S.A. (“TIM Brasil”). TIM Brasil is a subsidiary of the Telecom Italia Group that held 66.59% of the share capital of TIM S.A. on December 31, 2021 (66.58% on December 31, 2020).

The Company provides Landline Switched Telephone Service (”STFC“) in Local, National Long-Distance and International Long-Distance modes, as well as Personal Mobile Service (”SMP“) and Multimedia Communication Service (”SCM"), in all Brazilian states and in the Federal District.

The Company's shares are traded on B3 (formerly BM&F/Bovespa). Additionally, TIM S.A. has American Depositary Receipts (ADRs), Level II, traded on the New York Stock Exchange (NYSE) – USA. As a result, the company is subject to the rules of the Securities and Exchange Commission of Brazil (“CVM”) and the Securities and Exchange Commission (“SEC”). In order to comply with good market practices, the company adopts as a principle the simultaneous disclosure of its financial information in both markets, in reais, in Portuguese and English.

In December 2020, TIM’s Board of Directors, after analyzing the studies prepared and the non-binding proposals received, approved, in a meeting held on December 10, 2020, the incorporation of FiberCo Soluções de Infraestrutura Ltda., as preparation for future segregation of assets and provision of infrastructure services for residential fiber optic of TIM S.A.

On May 5, 2021, TIM S.A. informed its shareholders and the market in general that, at a meeting of the Company’s Board of Directors held on the same day, an agreement between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda. (“IHS”) was approved for the acquisition, by IHS, of an equity interest in FiberCo Soluções de Infraestrutura S.A. (“FiberCo”).

The process for acquisition of equity interest at FiberCo, later named I–Systems, by IHS was completed on November 16, 2021. As a result, IHS currently holds 51% of the share capital of I-Systems, with TIM S.A. having a minority (non-controlling) interest of 49% in I-Systems.

The details of the sale of FiberCo’s equity interest are described below.

Corporate Reorganization

Sale of 51% of I-Systems (formerly FiberCo) to IHS

On May 5, 2021, the Company disclosed the decision of its Board of Directors on the sale by TIM of 51% of the share capital of FiberCo to IHS, with the remaining 49% remaining under the control of the Company upon closing of the transaction.

FiberCo was established by the Company to segregate network assets and provide infrastructure services. FiberCo was born to implement, operate and maintain last-mile infrastructure for broadband access to be offered in the wholesale market. Nevertheless, the terms of the agreement define TIM as current main customer, having the prerogative of 6 months of exclusivity after entering new areas.

In November 2021, as a result of the spin-off of net assets from the broadband business and with the subsequent disposal of 51% of its equity interest on behalf of IHS, TIM S.A. recorded an investment in an associated company in the amount of R$ 1,612,957, at fair value, for the remaining minority interest (non-controlling) of 49%.

Currently, due to the closing of the transaction, TIM S.A. wrote-off about 90% of the total goodwill recorded in the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A. in the amount of R$ 1,051,477.

According to the valuation report of the net assets and liabilities, the calculated amount of R$ 1,211,789 was paid-in as share capital of I-Systems on November 1, 2021.

The process of selling the 51% equity interest in the new company, I-Systems, to IHS was completed on November 16, 2021. For the conclusion of the sale, IHS made a capital contribution of R$ 582,498 (primary) in the new company (I-Systems) and the payment of R$ 1,096,294 (secondary) directly to TIM S.A., thus totaling R$ 1,678,792 for the acquisition of a 51% equity interest. The fair value calculated for 100% of the new company was R$ 3,291,749.

Upon closing, the interest in the investee was recorded at fair value as provided for by IFRS 10, and evaluated by the equity method subsequently, as defined in IAS 28.

As provided for in IFRS 10, the sale of an investment with loss of control must be recognized by the total write-off of the investment and recognition of part of the associated company’s investment at fair value.

The effects of the transaction are detailed below: 

Description	12/31/2021
Transaction price	1,096,294
Investment registration at fair value	1,612,957
Cost of assets
Derecognition of the assets and liabilities of the subsidiary	(1,211,472)
Write-off of goodwill	(1,051,477)
Write-off of deferred tax on goodwill amortized	335,935
Gain on transaction	782,237
Income tax and social contribution	(509,245)
Net gain on transaction	272,992
Gain before income tax and social contribution on remeasurement of investment at fair value	668,720
Gain before income tax and social contribution on asset disposal	113,517

Merger of TIM Participações by TIM S.A.

On July 29, 2020, the Board of Directors of the Company approved the submission to the Extraordinary General Meeting of the proposed merger of TIM Participações by TIM S.A.

The Extraordinary General Meeting was held on August 31, 2020, and approved, by a majority of votes, the incorporation of TIM Participações by TIM S. A, in accordance with the protocol and justification of Incorporation concluded between the administrations of the Companies on July 29, 2020.

As a result the Company’s Management proceeded with the merger on August 31, 2020, based on the net book assets of TIM Participações, in the amount of R$ 355,323.

The changes in TIM Participações’s equity between the date of the report (March 31, 2020) and the merger (August 31, 2020) were transferred, absorbed and incorporated into the operating income of TIM Participações S.A. (incorporated), as set forth in the protocol of incorporation. As a result of the merger, all operations of TIM Participações were transferred to TIM S.A., which succeeded it in all its assets, rights and obligations, universally and for all purposes of law. This transaction had no economic or tax impact and the incorporated goodwill will not be used for the purposes of any tax offsets.

This corporate reorganization aimed to provide greater efficiency and simplification of the organizational structure of the TIM Group, making the structure of internal controls more efficient. In addition, the corporate reorganization provides a better tax efficiency in future distributions of Interest on Shareholders’ Equity, and also, greater integration of administrative and financial unities allowing a cut-off in operational costs and expenses, as well as improvement of synergies, which shall result in a more efficient operation. As a result from this transaction, there was no impact on the controlling and non-controlling shareholders.

After the merger, TIM S.A. started to be traded with the codes TIMS3 on B3 and TIMB on the NYSE.

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Management statement and basis of preparation of the financial statements

12 Months Ended

Dec. 31, 2021

Management Statement And Basis Of Preparation Of Financial Statements

Management statement and basis of preparation of the financial statements

2. Management statement and basis of preparation of the financial statements

The financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties.

The significant accounting policies applied to the preparation of this financial statements are described below and/or presented in the respective notes. These policies were consistently applied to the years presented, unless otherwise indicated.

a. Basis of presentation of Company’s consolidated financial statements – Predecessor method

As previously described with completion of the merger, TIM S.A. became the surviving entity, and the new SEC registrant. Further, since the merger effective date, TIM S.A. shares replaced TIM Participações S.A. shares and are currently listed in the Brazilian Stock Exchange (“B3”) as well as in the New York Stock Exchange (“NYSE”).

Upon the completion of the Corporate restructure, the historical consolidated financial statements of TIM Participações S.A. became the historical consolidated financial statements of TIM S.A. The transaction was recorded at book value since it was a transaction under common control. The consolidated financial statements for the prior periods are presented for TIM Participações S.A. as the predecessor of the Company as the historical operations of TIM Participações S.A. are deemed to be those of the Company.  

The related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the year ended December 31, 2019 are those of TIM Participações.

The number of shares of TIM S.A. prior to the Corporate reorganization was 2,420,447,019, an equivalent number of common shares of the extinguished entity TIM Participações as of the date of the merger. Consequently, basic and diluted earnings per share presented in note 34 were not impacted by the corporate reorganization.

The impact of the reverse merger of TIM Participações by TIM S.A. was limited to reclassifications among certain accounts within the current year statement of changes in shareholders’ equity as follows:

Equity accounts	The Company’s equity reserves	Impact on TIM S.A. statement of changes in equity	TIM Participações
Share capital	13,477,891	3,611,593	9,866,298
Capital reserve	397,183	(20,892)	418,075
Legal reserve	1,036,194	(57,603)	1,093,797
Tax benefit reserve	1,781,560	-	1,781,560
Reserve for expansion	6,499,602	(3,535,824)	10,035,426
Treasury shares	(4,837)	5,456	(10,293)
Other comprehensive income	(4,848)	(2,730)	(2,118)
Total	23,182,745	-	23,182,745

b. General criteria for preparation and disclosure

The financial statements were prepared taking into account the historical cost as the base value as well as financial assets and liabilities (including derivative financial instruments) measured at fair value.

Assets and liabilities are reported according to their degree of liquidity and collectability. They are reported as current when they are likely to be realized or settled over the next 12 months. Otherwise, they are recorded as non-current. The exception to this procedure involves deferred income tax and social contribution balances (assets and liabilities) and contingent liabilities that are fully classified as long-term.

Interests paid are classified as financing cash flow in the statement of cash flows as it represents costs of obtaining financial resources.

c. Functional currency and presentation currency

The presentation currency of the financial statements is the Real (R$), which is also the Company´s functional currency.

Foreign currency transactions are recognized at the exchange rate on the date of the transaction. Monetary items in foreign currency are converted into reais at the exchange rate on the balance sheet date, informed by Banco Central do Brasil (Central Bank of Brazil). Foreign exchange gains and losses linked to these items are recorded in the statement of income.

d. Segment information

Operating segments are components of the entity that carry out business activities from which revenues can be obtained and expenses incurred. Its operating results are regularly reviewed by the entity's main operations manager, who makes decisions on resource allocation and evaluates segment performance. For the segment to exist, individualized financial information is required.

The main operational decision maker in the Company, responsible for the allocation of resources and periodically evaluating performance, is the Executive Board, which, along with the Board of Directors, are responsible for making the strategic decisions of the company and its management.

The Group's strategy is focused on optimizing results, and from the corporate reorganization mentioned in note 1, all the operating activities of the group are concentrated exclusively in TIM S.A.. Although there are diverse activities, decision makers understand that the company represents only one business segment and do not contemplate specific strategies focused only on one service line. All decisions regarding strategic, financial planning, purchases, investments and investment of resources are made on a consolidated basis. The aim is to maximize the consolidated result obtained by operating the SMP, STFC and SCM licenses.

e. Consolidation procedures

Subsidiaries are all the entities in which the Group retains control. The Group controls an entity when it is exposed to, or has a right over the variable returns arising from its involvement with the entity and has the ability to interfere in those returns due to its power over the entity. The subsidiaries are fully consolidated as of the date control is transferred to the Group. Consolidation is interrupted beginning as of the date in which the Group no longer holds control.

The purchase accounting method is used to record the acquisition of subsidiaries by the Group. The acquisition cost is measured as the fair value of the assets acquired, equity instruments (i.e.: shares) and liabilities incurred or assumed by the acquirer on the date of the change of control. Identifiable assets acquired, contingencies and liabilities assumed in a business combination are initially measured at fair value on the date of acquisition, regardless of the proportion of any minority interest. The portion exceeding the acquisition cost of the Group's interest in the acquired identifiable net assets, is recorded as goodwill. Should the acquisition cost be less than the fair value of the net assets of the acquired subsidiary, the difference is recognized directly in the statement of income as a revenue once concepts and calculations applied are reviewed.

Intercompany transactions, as well as the balances and unrealized gains and losses in those transactions, are eliminated. The base date of the financial information used for consolidation purposes is the same for all the companies in the Group.

As of December 31, 2020, the Company only had one subsidiary named I-Systems (formerly FiberCo). The consolidated financial statements as of December 31, 2021 is not being presented since I-Systems had been sold before December 31, 2021, as described in Note 1. The Company had 51% of its equity interest on the investee sold to IHS, and TIM S.A. now holds a non-controlling minority interest of 49%. At that moment, TIM S.A. started having I-Systems as an affiliated company and to record the income (loss) of this company under the equity method, no longer consolidating it. That said, the balances of December 31, 2021 are not comparable to the same of December 31, 2020.

f. Approval of financial statements

These financial statements were approved by the Board of Directors of the Company on April 14, 2022.

g. New standards, amendments and interpretations of standards

The following new standards/amendments were issued by the International Accounting Standards Board (IASB), are effective for the year ended December 31, 2021.

· Amendments to IFRS 16, IFRS 4, IFRS 7 and IFRS 9: Benchmark Interest Rate Reform

The amendments to Pronouncements IAS 39 and IFRS 9 provide for temporary exceptions that address the financial statement effects when a rate of interbank deposit certificate is replaced with an alternative to an almost risk-free rate. The amendments include the following practical expedients:

· A practical expedient that requires contractual changes, or changes in cash flows which are directly required by the reform, to be treated as changes in a floating interest rate, equivalent to a change in a market rate;

· A practical expedient that allows changes required by the reform, to be carried out in hedge designation and documentation and hedge relationship will not be discontinued.

· A practical expedient that provides a temporary exception to entities so they will comply with the separately identifiable requirement when a risk-free rate instrument is designated as a hedge risk component.

These changes have not impacted the individual and consolidated financial statements of the Group.

If they become applicable, the group intends to use the practical expedients in future periods.

· IFRS 16 COVID-19 related benefits granted to leaseholders in lease agreements that go beyond June 30, 2021.

The amendments provide for the granting of benefits to lessees upon adoption of the guidelines of IFRS 16 on the modification of the lease agreement, when accounting for the related benefits as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may choose not to assess whether a benefit related to Covid-19 granted by the lessor is a modification of the lease agreement. The lessee who makes this option must account for any change in the lease payment resulting from the benefit granted in the lease agreement related to Covid-19 in the same way that it would account for the change by adopting IFRS 16 if the change was not a modification of the lease agreement.

The amendment was intended to be applied until June 30, 2021, but as the impact of COVID-19 pandemic may continue, on March 31, 2021, the IASB extended the application period of this practical expedient to June 30, 2022. This amendment becomes effective for the fiscal years beginning on or after January 1, 2021. However, the Group has not yet received COVID-19 benefits granted to lessees, but the application of practical expedient is planned to be applied once it is available within the standard period.

The following new standards were issued by the International Accounting Standards Board (IASB), but are not effective for the year ended December 31, 2021.

· IFRS 17 - Insurance Contracts

In May 2017, the IASB issued IFRS 17 - Insurance Contracts, a new comprehensive accounting standard for insurance contracts that includes recognition and measurement, presentation and disclosure. As soon as it comes into force, IFRS 17 will replace IFRS 4 - Insurance Contracts, issued in 2005. IFRS 17 applies to all types of insurance contracts (such as life, non-life, direct insurance and reinsurance), regardless of the type of entity that issues them, as well as certain guarantees and financial instruments with discretionary participation characteristics. Some scope exceptions apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements of IFRS 4, which are largely based on local accounting policies in force in previous periods, IFRS 17 provides for a comprehensive model for insurance contracts, covering all relevant accounting aspects. The focus of IFRS 17 is the general model, covering the following:

• A specific adaptation for contracts with direct participation characteristics (variable rate approach).

• A simplified approach (premium allocation approach), mainly for short-term contracts. IFRS 17 is effective for periods beginning on or after January 1, 2023, requiring the presentation of comparative amounts. Early adoption is allowed if the entity also adopts IFRS 9 and IFRS 15 on the same date or before the first-time adoption of IFRS 17.

This standard does not apply to the Company.

· Amendments to IAS 1: Classification of liabilities as current or non-current

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1, aiming to specify the requirements for classifying the liabilities as current or non-current. The amendments clarify the following:

• What a right to postpone settlement means;

• That the right to postpone settlement must exist on the base date of the report;

• That this classification is not affected by the likelihood that an entity will exercise its right to postpone settlement;

• That only if a derivative embedded in a convertible liability is itself an equity instrument would the terms of a liability not affect its classification. Amendments are valid for periods started on January 1, 2023 and must be applied on a retrospective basis.

The Company currently assesses the impact that the changes will have on current practice and whether existing loan agreements may require renegotiation.

· Amendments to IAS 8: Definition of accounting estimates

In February 2021, IASB issued amendments to IAS 8, in which the definition of ‘accounting estimates’ is introduced. The amendments clarify the difference between changes in accounting estimates and changes in accounting policies and correction of errors. Additionally, they clarify how entities use measurement and input techniques to develop accounting estimates.

The amendments will become effective for periods beginning on or after January 1, 2023 and will be applied to changes in accounting policies and estimates that occur on or after the beginning of that period. If disclosed, early adoption is allowed.

Amendments are not expected to have a significant impact on the Group’s financial statements.

· Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies

In February 2021, IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgments, in which guides and examples are provided to help entities to apply materiality judgment to the disclosure of accounting policies. The aim of amendments is to assist entities in the disclosure of accounting policies that are most useful by replacing the requirement for disclosure of significant accounting policies to material accounting policies and adding guides about how entities should apply the concept of materiality to make decisions about the disclosure of accounting policies.

The amendments to IAS 1 are applicable for periods started as of or after January 1, 2023, with early adoption allowed. Since the amendments to Practice Statement 2 provide non-mandatory guides about the application of material definition to the accounting policy information, an adoption date is not required for this amendment.

The Group is currently evaluating the impacts of these amendments to the accounting policies disclosed. 

COVID-19 impacts

Since March 2020, a pandemic was declared by the World Health Organization due to the outbreak of the new Coronavirus (COVID-19). The main impacts and first cases were recorded in Brazil and in the world also in the first quarter of 2020.

The outbreak of COVID-19 developed rapidly in 2020 and continues until 2021. The measures taken to contain the virus greatly affected economic activity, including some impacts on the operating results and cash flows of the Companies in Brazil. Throughout 2020, lockdowns were decreed in several states in Brazil, lasting from March to June 2020.

In 2020, the Company has a robust infrastructure and is part of an extremely important segment in this period of crisis, essential for the population, government and health system.  After an internal analysis, there was no indication of impairment of assets or risks associated with the fulfillment of obligations since the Company is not highly leveraged and still has credit lines available to be used in the event of a significant reduction in cash volume. 

In 2021, the crisis worsened with an increase in the number of cases. Consequently, there was a need for new restrictive measures, including the closing of the trade, impacting the operation of stores again; however, the restrictions’ period was shorter in relation to 2020, thus, reducing the impact of closing of stores. Said restrictions were implemented mainly in the month of March in different cities in Brazil.

In September 2021, the country showed a significant evolution in vaccination levels, with a reduction in the transmission rate and number of cases. Thus, there was a slight improvement in economic activities. In June, the stores returned with activities with a positive impact on device sales.

We are in the 2nd year of the pandemic and there is no impact on the Company’s financial statements.

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Estimates and areas where judgment is significant in the application of the Company's accounting policies

12 Months Ended

Dec. 31, 2021

Estimates and areas where judgment is significant in the application of the Company's accounting policies

3. Estimates and areas where judgment is significant in the application of the Company's accounting policies

Accounting estimates and judgments are continuously assessed. They are based on the Company's historical experience and on other factors, such as expectations of future events, considering the circumstances present on the base date of financial statements.

By definition, the resulting accounting estimates will rarely be the same as the actual results. The estimates and assumptions that present a significant risk, with the probability of causing a material adjustment to the book values of assets and liabilities for the fiscal period, are covered below.

(a)       Impairment loss on non-financial assets and investments in associated companies

Impairment losses occur when book value of an asset or cash generating unit exceeds its recoverable value, which is the highest of fair value less selling costs and value in use. Calculation of fair value less selling costs is based on information available on similar assets’ selling transactions or market prices less additional costs to dispose of the asset. The calculation of value in use is based on the discounted cash flow model.

Any reorganization activities with which the Company is not committed to on the reporting date of the Presentation of financial statements or significant future investments that could improve the asset base of the cash generating unit under test are excluded for impairment testing purposes.

The main non-financial assets for which this assessment was made are goodwill recorded by the Company (note 15) and its tangible and intangible assets.

Net investments in associated companies are valued after applying the equity method to determine whether there is any objective evidence of impairment. The recoverable amount of an investment in an associated company must be determined for each investment, unless the associated company does not generate cash inflows on an ongoing basis that are largely independent of those generated by the entity’s other assets. The investment in an associated company was valued as described in Note 13.

(b)       Income tax and social contribution (current and deferred)

Income tax and social contribution (current and deferred) are calculated according to interpretations of current legislation and IAS 12. This process typically involves complex estimates to determine taxable income and temporary differences. In particular, the deferred assets on tax losses, negative basis of social contribution and temporary differences is recognized in proportion to the probability that future taxable income is available and can be used. The measurement of the recoverability of deferred income tax on tax losses, negative basis of social contribution and temporary differences takes the history of taxable income into account, as well as the estimate of future taxable income (note 10).

(c)       Provision for legal and administrative proceedings

The legal and administrative proceedings are analyzed by the Management along with its legal advisors (internal and external). The Company considers factors in its analysis such as hierarchy of laws, precedents available, recent court judgments, their relevance in the legal system and payment history. These assessments involve Management’s judgment (note 24).

(d)       Fair value of derivatives and other financial instruments

The financial instruments presented in the balance sheet at fair value are measured using valuation techniques that consider observable data or observable data derived from market (note 37).

(e)       Unbilled revenues

Since some cut dates for billing occur at intermediate dates within the months of the year, as the end of each month there are revenues earned by the Company, but not actually invoiced to its customers. These unbilled revenues are recorded based on estimate that takes into consideration historical consumption data, number of days elapsed since the last billing date, among others (note 27).

(f)       Leases

The Company has a significant number of the lease contracts in which it acts a lessee (note 16), and with the adoption of the accounting standard IFRS 16 – Leases, on 01/01/2019, certain judgments were exercised by Company’s management in measuring lease liabilities and right-of-use assets, such as: (i) estimate of the lease term, considering non-cancellable period and the period covered by options to extend the contract term, when the exercise depends only from the Company, and this exercise is reasonably certain; and (ii) using certain assumptions to calculate the discount rate.

The company is not able to readily determine the interest rate implicit on the lease and, therefore, considers its incremental rate on loans to measure lease liabilities. Incremental rate on the lessee’s loan is the interest rate that the lessee would have to pay when borrowing, for a similar term and with a similar guarantee, the resources necessary to obtain the asset with a value similar to the right of use asset in a similar economic environment. The company estimates the incremental rate using observable data (such as market interest rates) when available and considers aspects that are specific to the Company (such as the cost of debt) in this estimate.

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Cash and cash equivalents

12 Months Ended

Dec. 31, 2021

Cash and cash equivalents

4. Cash and cash equivalents

These are financial assets measured at amortized cost through the effective interest rate method.

The Company’s Management determines the classification of its financial assets upon initial recognition.

	2021	2020
Cash and banks	99,821	100,009
Unrestrictedly available financial investments investments:
Bank Deposit Certificates (CDB)/Repurchase and resale agreements	5,128,794	2,475,282
	5,228,615	2,575,291

Bank certificates of deposit (“CDBs”) and committed transactions are nominative securities issued by banks and sold to the public as a form of fund raising. Such securities may be traded during the contracted term, at any time, without significant loss in their value and are used for the fulfilment of short-term obligations by the company.

The annual average return of the Company's investments related to CDBs and Committed Operations is 101.57% (101.24% as of December 31, 2020) of the variation of the Interbank Deposit Certificate – CDI.

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Marketable securities

12 Months Ended

Dec. 31, 2021

Marketable Securities

Marketable securities

5. Marketable securities

Comprise financial assets measured at fair value through profit or loss.

 Schedule of marketable securities

	2021	2020
FUNCINE (i)	11,508	7,061
Fundo Soberano (ii)	9,624	5,220
FIC: (iii)
Government bonds (iv)	2,975,613	1,345,797
CDB (v)	40,496	17,370
Financial bills (vi)	703,118	292,500
Other (vii)	839,169	409,551
	4,579,528	2,077,499
Current portion	(4,568,020)	(2,070,438)
Non-current portion	11,508	7,061

(i)	As of December 2017, the Company, with the aim of using tax deductibility benefit for income tax and social contribution purposes, started investing in the National Film Industry Financing Fund (FUNCINE). The average remuneration in 2021 is -0.06% p.a. (-3.34% p.a. on December 31, 2020).
(ii)	Fundo Soberano is composed only of federal government bonds. The average remuneration in 2021 is 95.13% (87.71% on December 31, 2020) of the variation of the interbank deposit certificate – CDI.
(iii)	In August 2017, the Company invested in open FIC's (Quota Investment Fund). Funds are mostly made up of federal government bonds and papers from top-tier financial institutions. The average remuneration in 2021 of the FICs was 122.76% (112.72% on December 31, 2020) of the variation of the Interbank Deposit Certificate – CDI.
(iv)	Government bonds are fixed income financial instruments issued by the National Treasury to finance the activities of the Federal Government.
(v)	The CDB operations are emitted by the banks with the commitment of stock buyback by the bank itself and with predetermined taxes.
(vi)	The Financial bills is a fix income tittle emitted by financial institutions with the objective of a long-term fund raising
(vii)	Is represented by: Debentures, FIDC, commercial notes, promissory notes, bank credit note.

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Trade accounts receivable

12 Months Ended

Dec. 31, 2021

Trade accounts receivable

6. Trade accounts receivable

These are financial assets measured at amortized cost, and refer to accounts receivable from users of telecommunications services, from network use (interconnection) and from sales of handsets and accessories. Accounts receivable are recorded at the price charged at the time of the transaction. The balances of accounts receivable also include services provided and not billed (“unbilled”) up to the balance sheet date. Accounts receivable from clients are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method less the provision for expected credit losses ("impairment").

The provision for expected credit losses was recognized as a reduction in accounts receivable based on the profile of the subscriber portfolio, the aging of overdue accounts receivable, the economic situation, the risks involved in each case and the collection curve, at an amount deemed sufficient by Management, as adjusted to reflect current and prospective information on macroeconomic factors that affect the customers’ ability to settle the receivables.

The fair value of trade accounts receivable is close to the book value recorded on December 31, 2021 and December 31, 2020.

The average rate considered in calculating the present value of accounts receivable recorded in the long term is 0.19% (0.22% on December 31, 2020).

	2021	2020
Trade accounts receivable	3,253,207	3,180,661
Gross accounts receivables	4,000,026	3,831,921
Billed services	2,107,682	2,039,403
Unbilled services	849,762	817,669
Network use (interconnexion)	504,333	399,083
Goods sold	521,362	552,962
Contractual assets (note 23)	15,340	14,914
Other accounts receivable	1,547	7,890
Provision for expected credit losses	(746,819)	(651,260)
Current portion	(3,066,906)	(3,051,834)
Non-current portion	186,301	128,827

The movement of the provision for loss on expected settlement credits, accounted for as an asset reduction account, was as follows:

	2021	2020
Opening balance	651,260	774,077
Supplement to expected losses	544,642	552,817
Write-off of provision	(449,083)	(675,634)
Closing Balance	746,819	651,260

The aging of accounts receivable is as follows: 

	2021	2020
Total	4,000,026	3,831,921
Undue	2,895,999	2,785,469
Overdue up to (days):
30	246,195	248,955
60	100,027	84,218
90	77,280	71,635
>90	680,525	641,644

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Inventories

12 Months Ended

Dec. 31, 2021

Inventories

7. Inventories

Inventories are presented at the average acquisition cost. A loss is recognized to adjust the cost of Handsets and accessories to the net realizable value (selling price) when this value is less than the average acquisition cost.

	2021	2020
Inventories	202,553	246,602
Inventories	214,605	257,477
Mobile handsets and tablets	140,934	186,961
Accessories and prepaid cards	53,791	55,558
TIM chips	19,880	14,958
Losses on adjustment to realizable amount	(12,052)	(10,875)

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Recoverable indirect taxes, charges and contributions

12 Months Ended

Dec. 31, 2021

Recoverable Indirect Taxes Charges And Contributions

Recoverable indirect taxes, charges and contributions

8. Recoverable indirect taxes, charges and contributions

	2021	2020
Recoverable indirect taxes, fees and contributions	1,259,932	1,230,801
ICMS	1,216,912	1,188,018
Other	43,020	42,783
Current portion	(354,620)	(374,015)
Non-current portion	905,312	856,786

The amounts of recoverable ICMS (state VAT) are mainly comprised by:

(i)	credits on the acquisition of property, plant and equipment directly related to the provision of telecommunication services (credits divided over 48 months).
(ii)	ICMS amounts paid under the tax substitution regime from goods acquired for resale, mainly mobile handsets, chips, tablets and modems sold by TIM.
(iii)	ICMS credits from the final and unappealable decision in May 2021 for a lawsuit involving the repetition of prepaid telephone services in Santa Catarina, in the amount of R$52 million.

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Recoverable direct taxes, charges and contributions

12 Months Ended

Dec. 31, 2021

Recoverable Direct Taxes Charges And Contributions

Recoverable direct taxes, charges and contributions

9. Recoverable direct taxes, charges and contributions

 Schedule of direct taxes, fees and contributions recoverable

	2021	2020
Recoverable direct taxes, charges and contributions	2,042,361	2,698,239
Income tax (IR) and social contribution (CS) (i)	807,096	381,905
PIS / COFINS (ii)	1,164,772	2,253,545
Other	70,493	62,789
Current portion	(1,311,906)	(1,421,112)
Non-current portion	730,455	1,277,127

(i)

Income tax and social contribution amounts are mainly related to other income tax and social contribution credits from previous years, whose current estimated term for use is later than 12 months. In September 2021, the Federal Supreme Court (STF), with general repercussions, established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement using the SELIC rate in cases of undue payment. Although the aforementioned decision is still pending publication, as well as the specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to date, in the amount of R$ 547 million, since the likelihood of a favorable outcome for the Company becomes probable.

(ii)

The Recoverable PIS/COFINS amounts mainly refer to credits from a legal proceeding filed by TIM Celular S.A. (ultimately merged into TIM S.A., as well as TIM S.A. itself), with a favorable final decision in Higher Courts which discussed the exclusion of the ICMS from the PIS and COFINS calculation bases. According to the Company’s internal assessment, we expect to use these credits by the 2nd quarter of 2022.

In March 2017, the Federal Supreme Court (“STF”) recognized the unconstitutionality of including ICMS amounts in the calculation base of PIS and COFINS contributions.  TIM S.A. (previously named “Intelig Telecomunicações Ltda.”), as the surviving company from the merger of TIM Celular S.A. and other entities existing in the Group in the past, which had filed proceedings of the same nature, has been challenging this issue in court since 2006, with effects retroactive to five years, as permitted by the legislation. The total amount recorded in 2019 related to these credits was R$ 3,023 million, of which R$1,795 million relates to principal and R$1,228 million was inflation adjustment.

The amount recorded are updated monthly at the interest rate equivalent to the reference rate of the Special Settlement and Custody System (Selic), available on the website of the Brazilian Federal Revenue.

In 2020, TIM had utilized credits arising from the process of exclusion of ICMS from the calculation bases of PIS and COFINS, for payments of federal taxes, in the total amount of R$ 1,516 million. In 2021, total offsetting of R$ 957 million was made for said PIS and COFINS credits.

In May 2021, the Brazilian Supreme Court (STF) ended the discussion regarding the credit rights of the companies, defining in the judgment of Motions for Clarification that the exclusion of ICMS from the PIS and COFINS calculation basis is valid as of March 15, 2017, when the general repercussion thesis (Topic 69) was established, in the judgment of Special Appeal (RE) No. 574706.

Considering that the judges ratified that the ICMS not included in the PIS/COFINS calculation basis is highlighted in the invoice, we confirm that the procedures adopted by TIM S.A., when providing for PIS/COFINS credits, are adequate. 

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Deferred income tax and social contribution

12 Months Ended

Dec. 31, 2021

Deferred Income Tax And Social Contribution

Deferred income tax and social contribution

10. Deferred income tax and social contribution

Deferred income tax and social contribution are recognized regarding the (1) accumulated tax losses and negative bases of social contribution and (2) temporary differences arising from differences between the tax basis of assets and liabilities and their book values in the financial statements. Deferred income tax is determined using the tax rates (and tax laws) enacted, or substantially enacted, up to the balance sheet date. Subsequent changes in tax rates or tax legislation may modify the deferred tax credit and debit balances.

Deferred tax assets on income tax and social contribution are recognized only in the event of a profitable track record and/or when the annual forecasts prepared by the Company, examined by the Tax Council and Statutory Audit Committee and approved by other Management bodies, indicate the likelihood of the future realization of those tax credits.

The balances of deferred income tax assets and liabilities are presented at net value in balance sheet when there is the legal right and the intention of offsetting them upon calculation of current taxes, in general related to the same legal entity and the same tax authority. Thus, deferred tax assets and liabilities belonging to different entities are in general shown separately, not at their net amounts.

On December 31, 2021 and 2020, the rates in force were 25% for income tax and 9% for social contribution. In addition, there is no statute of limitation in regard to the income tax and social contribution carried forward losses, which it can be offset by up to 30% of the taxable profit reached at each fiscal year, according to the current tax legislation. 

The amounts recorded are as follows:

	2021	2020
Tax loss and negative basis of social contribution	219,876	475,128
Temporary differences:
Provision for legal and administrative proceedings	330,627	303,948
Losses on doubtful accounts receivable	257,529	224,459
Adjustments to present value – 3G license	3,298	5,240
Lease of LT Amazonas infrastructure	32,377	29,971
Employee profit sharing	40,177	36,915
Taxes with enforceability suspended (i)	437,950	258,246
Amortized Goodwill – TIM Fiber (ii)	(34,560)	(370,494)
Derivative financial instruments	(143,948)	(154,718)
Capitalized interest on 4G authorization	(233,433)	(262,608)
Deemed costs – TIM S.A	(42,617)	(53,792)
Adjustments to lease agreements	369,521	303,833
Accelerated depreciation (iii)	(466,863)	(266,464)
Fair value adjustment I–Systems (former FiberCo) (iv)	(249,477)	-
Other	16,431	20,982
	536,888	550,646
Deferred active tax portion	536,888	550,646

(i)	Mainly represented by the Fistel fee for the financial years 2020 and 2021. The Operating Inspection Fee (TFF) for the years 2020 and 2021 had its payments suspended by virtue of an injunction and, therefore, still do not have a specific date for payment. See note 21 for details.
(ii)	Represented by the goodwill on the business combination of companies TIM Fiber RJ and SP acquired by TIM in 2012, partially realized in November 2021 once this transaction is completed.
(iii)	As of the 1Q20, TIM S.A. excludes the portion of acceleration of depreciation of movable assets belonging to property, plant and equipment from the calculation basis of the IRPJ and CSLL, due to their uninterrupted use in three operating shifts, supported by technical expert report, as provided for in Article 323 of the RIR/2018, or by the adequacy to the tax depreciation provided for in IN 1700/2017. Such tax adjustment generated a deferred liability of R$ 467 million until December 31, 2021 (R$ 266.5 million up to December 31, 2020) and applied as of January 1, 2020.
(iv)	Refers to deferred charges on the fair value of the non-majority interest calculated in the sale transaction described in Note 1 that took place in November 2021 between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda.

Expectation of recovery of tax credits

The estimates of recoverability of tax credits were calculated taking into consideration financial and business assumptions available on December 31, 2021.

Based on these projections, the company has the following expectation of recovery of credits:

Deferred income tax and social contribution	Tax losses and negative basis
2022	103,847
2023	79,581
2024	36,448
2025	-
Total	219,876

The company based on a history of profitability and based on projections of future taxable results, constitutes deferred income tax credits and social contribution on all of its tax losses, negative social contribution basis and temporary differences.

The Company used credits from tax losses and the negative basis of social contribution in the amount of R$ 255,252 during the year up to December 31, 2021 (R$ 325,583 on December 31, 2020, including tax losses).

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Prepaid expenses

12 Months Ended

Dec. 31, 2021

Prepaid Expenses

Prepaid expenses

11. Prepaid expenses

 Schedule of prepaid expenses

	2021	2020
	358,287	223,394
Advertisements not released (i)	86,154	1,679
Rentals and insurance	67,034	69,208
Incremental costs for obtaining contracts with customers (ii)	153,988	125,114
IT Services (iii)	28,626	10,535
Other	22,485	16,858
Current portion	(275,148)	(149,796)
Non-current portion	83,139	73,598

(i)	Represent prepaid payments of advertising expenses for products and services of the TIM brand that are recognized in the result according to the period of serving the advertisement.
(ii)	It is substantially represented by incremental costs related to sales commissions paid to partners for obtaining customer contracts arising from the adoption of IFRS 15, which are deferred to the result in accordance with the term of the contract and/or economic benefit, usually from 1 to 2 years.
(iii)	They represent prepayments of IT services expenses for network migration of information to the “cloud.”

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Judicial deposits

12 Months Ended

Dec. 31, 2021

Judicial Deposits

Judicial deposits

12. Judicial deposits

 Schedule of detailed information about judicial deposits

They are recorded at historical cost and updated according to current legislation:

	2021	2020
	718,773	794,755
Civil	285,583	315,312
Labor	128,607	149,390
Tax	178,914	181,670
Regulatory	111	111
Online attachment (i)	125,558	148,272

(i) Refer to legal blockages directly in the company's current accounts and financial investments linked to certain legal proceedings. This amount is periodically analyzed and when identified, reclassification is made to one of the other specific accounts of the legal deposit item.

Civil

These are court deposits to guarantee the execution of civil proceedings where the Company is challenging the amounts involved. Most of these proceedings refer to lawsuits filed by customers, involving issues of consumer rights, among others.

There are some processes with differentiated matters, for instance, in which the value set by ANATEL for vacating certain transmission sub-bands is discussed, enabling the implementation of 4G technology. In this case, the amount deposited updated in court under discussion is R$ 72,533 (R$ 70,560 on December 31, 2020). 

Labor

These are amounts deposited in court as guarantees for the execution and the filing of appropriate appeals, where the relevant matters or amounts involved are still being discussed. The total amount has been allocated between the various claims filed by registered employees and third-party service providers.

Tax

The company has legal deposits, relating to tax matters, made to support several ongoing legal discussions. Such deposits mainly relate to the following discussions:

(a) Use of credit in the acquisition of electricity directly employed in the production process of companies, matter with positive bias in the judiciary. The current value of the deposits referring to this discussion is R$ 34,289 (R$ 34,544 on December 31, 2020).

(b) CPMF levy on loan conversion operations into the Company’s equity; recognition of the right not to collect the contribution allegedly levied on the simple change of ownership of current accounts due to merger. The current value of the deposits referring to this discussion is R$ 9,073 (R$ 8,862 on December 31, 2020).

(c) Constitutionality of the collection of the functioning supervision fee (TFF - Taxa de Fiscalização do Funcionamento) by municipal authorities of different localities. The current value of the deposits related to this discussion is R$ 20,022 (R$ 18,883 as of December 31, 2020).

(d) Non-homologation of compensation of federal debts withholding income tax credits (IRRF) for the alleged insufficiency of credits, as well as the deposit made for the purposes of release of negative Certificate of debts. The current value of the deposits related to this discussion is R$ 11,254 (R$ 11,317 as of December 31, 2020).

(e) Incidence of ISS on import services and third parties; alleged lack of collection in relation to ground cleaning and maintenance service of BRS (Base Radio Station), the ISS itself, the ISS incident on co-billing services and software licensing (blackberry). Guarantee of the right to take advantage of the benefit of spontaneous denunciation and search for the removal of confiscatory fines in the case of late payment. The current value of the deposits related to this discussion is R$ 8,048 (R$ 7,843 as of December 31, 2020).

(f) Accessory services provided for in the agreement 69/98 ICMS incident on the provision of communication services of the amounts charged for ACCESS, Membership, Activation, qualification, availability, subscription and use of the services, among others. The current value of the deposits related to this discussion is R$ 3,478 (R$ 3,329 as of December 31, 2020).

(g) Requirement by ANATEL of the public price for the administration of numbering resources. The current value of the deposits related to this discussion is R$ 3,582 (R$ 3,514 as of December 31, 2020).

(h) Deposit made by TIM S. A – unconstitutionality and illegality of the collection of FUST (Fund for Universalisation of Telecommunications Services). The right not to collect FUST, failing to include in its calculation base the revenues transferred by way of interconnection and EILD (Industrial Exploitation of Dedicated Line), as well as the right not to suffer the retroactive collection of the differences determined in function of not observing sum 7/2005 of ANATEL. The current value of the deposits referring to this discussion is R$ 61,752 (R$ 58,664 on December 31, 2020).

(i) ICMS - Miscellaneous. Deposits made in several processes that discuss ICMS charges, mainly related to discussions on loan, DIFAL, exempt and non-taxed services, ICAP and Covenant 39. The current value of the deposits related to this discussion is R$ 9,960 (R$ 14,505 on December 31, 2020).

(j) CSLL - charges related to cases of Jornal do Brasil that were directed to the company, as well as charges related to successful Negative BC Compensation/Tax Loss. The current value of the deposits related to this discussion is R$ 9,730 (R$ 9,739 on December 31, 2020).

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Investment

12 Months Ended

Dec. 31, 2021

Investment

13. Investment

The ownership interest in associated company or subsidiary is valued using the equity accounting method.

TIM’s Board of Directors, after analyzing the studies prepared and the non-binding proposals received, approved, in a meeting held on December 10, 2020, the incorporation of FiberCo Soluções de Infraestrutura Ltda. (“FiberCo”), a limited liability company, in preparation for a possible (or eventual) segregation of assets and provision of residential fiber optic infrastructure services. The Company was organized on December 16, 2020 and transformed on a limited liability corporation in May 2021.

This process was one of the intermediate steps in the transformation of TIM in a provider of broadband services, and aimed to create an open fiber optic infrastructure vehicle (“FiberCo”) with the acquisition of a strategic partner that will become a partner of FiberCo. FiberCo operates in the wholesale market and can provide last-mile fiber connectivity and transportation services to market operators, with TIM as the client (see note 1).

As mentioned in note 1, in November 2021, as a result of the spin-off of net assets of the broadband business and the creation of I-Systems (formerly FiberCo) with subsequent sale of 51% of its equity interest on behalf of IHS, TIM S.A. assessed the transaction as a loss of control and stopped consolidating it, recording the investment in an associated company, in the amount of R$ 1,612,957 at fair value for the remaining minority interest (non-controlling) of 49% (R$ 1,601,703 as of December 31, 2021).

TIM S.A. has 49% (100% as of December 31, 2020) in the share capital of I-Systems (formerly FiberCo).

On December 31, 2021, the Company does not present indications of impairment in the recorded net investment.

a) Interest in subsidiary

As of December 31, 2020, TIM S.A. held 100% control over FiberCo (currently I-Systems).

	2021 Fiber Co (current I-Systems)	2020 Fiber Co (current I-Systems)
Number of quotas/shares held	1,000	1,000
Interest in total capital	100%	100%
Shareholders' equity at 10/31/2021	(318)	1
Net loss from January to October 2021	(318)	-
Share of loss until October 31, 2021	(318)	-
Amount of the investment on December 31	-	1

Changes in investments in subsidiaries:

	FiberCo (current I-Systems) (subsidiary)
Balance of investment at December 31, 2020	1
Share of loss until October 2021	(318)
Capital increase	1,211,789
Write-off of investment	(1,211,472)
Balance of investment at November 16, 2021	-

b) Interest in associate

On December 31, 2021, the Company does not have subsidiaries in its corporate structure. In November 2021, TIM S.A. started having I-Systems as an affiliated company and to record the income (loss) of this company under the equity method, no longer consolidating it.

	2021 I-Systems
Number of shares held	1,794,287,995
Interest in total capital	49%
Shareholders' equity	1,794,288
Net loss for the year	(22,968)
Equity in earnings	(11,254)
Investment amount	1,601,703

Change of investment in associate:

	I-Systems (associated company)
Balance of investment at December 31, 2020	-
Revaluation of minority interest at fair value	1,612,957
Share of loss - November 2021 and December 2021	(11,254)
Balance of investment at December 31, 2021	1,601,703

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Property, plant and equipment

12 Months Ended

Dec. 31, 2021

Property, plant and equipment

14. Property, plant and equipment

Property, plant and equipment are stated at acquisition and/or construction cost, less accumulated depreciation and impairment losses (the latter only if applicable). Depreciation is calculated based on the straight-line method over terms that take into account the expected useful lives of the assets and their residual values. As of December 31, 2021, and December 31, 2020, the Company has no indication of impairment in its property, plant and equipment.

The estimated costs of dismantling towers and equipment on rented properties are capitalized and depreciated over the estimated useful lives of these assets. The Company recognizes the present value of these costs in property, plant and equipment with a counter-entry to the liability “provision for future asset retirement.” Interest incurred on updating the provision is classified within financial expenses.

Gains and losses on disposal are determined by comparing the amounts of these disposals with the book value at the time of the transaction and are recognized in “other operating income (expenses), net” in the statement of income.

· Changes in property, plant and equipment

	Balance at December 2020	Additions	Write-offs (i)	Transfers	Balance at December 2021
Total cost of property, plant and equipment, gross	47,429,167	5,572,362	(3,841,851)	-	49,159,678
Commutation/transmission equipment	25,875,916	26,905	(2,920,511)	2,872,144	25,854,454
Fiber optic cables	878,100	-	(125,366)	25,778	778,512
Leased handsets	2,643,336	805	(13,495)	175,808	2,806,454
Infrastructure	6,436,572	-	(511,635)	518,348	6,443,285
Informatics assets	1,770,386	-	(46,584)	32,538	1,756,340
General use assets	902,287	-	(43,401)	57,959	916,845
Right-of-use assets	8,367,895	1,591,307	(179,875)	-	9,779,327
Land	40,794	-	-	-	40,794
Construction in progress	513,881	3,953,345	(984)	(3,682,575)	783,667
Total Accumulated Depreciation	(29,328,469)	(3,951,760)	2,428,951	-	(30,851,278)
Commutation/transmission equipment	(18,130,526)	(1,983,589)	1,926,121	-	(18,187,994)
Fiber optic cables	(482,613)	(65,669)	26,077	-	(522,205)
Leased handsets	(2,398,217)	(145,661)	9,187	-	(2,534,691)
Infrastructure	(4,018,854)	(408,540)	384,239	-	(4,043,155)
Informatics assets	(1,617,970)	(58,209)	46,449	-	(1,629,730)
General use assets	(637,903)	(48,204)	36,878	-	(649,229)
Right-of-use assets	(2,042,386)	(1,241,888)	-	-	(3,284,274)
Total property, plant and equipment, net	18,100,698	1,620,602	(1,412,900)	-	18,308,400
Commutation/transmission equipment	7,745,390	(1,956,684)	(994,390)	2,872,144	7,666,460
Fiber optic cables	395,487	(65,669)	(99,289)	25,778	256,307
Leased handsets	245,119	(144,856)	(4,308)	175,808	271,763
Infrastructure	2,417,718	(408,540)	(127,396)	518,348	2,400,130
Informatics assets	152,416	(58,209)	(135)	32,538	126,610
General use assets	264,384	(48,204)	(6,523)	57,959	267,616
Right-of-use assets	6,325,509	349,419	(179,875)	-	6,495,053
Land	40,794	-	-	-	40,794
Construction in progress	513,881	3,953,345	(984)	(3,682,575)	783,667

(i) Net write-offs are mainly represented by:

· R$ 1,218,340 as write-off of property, plant and equipment, which makes up part of the balance of R$ 1,211,789 of net assets that was paid-in as share capital of I-Systems (formerly FiberCo) on November 1, 2021, as described in note 1.

· R$ 179,875 in right-of-use assets due to remeasurement of contracts, including changes in the term and scope of leases.

	Balance in December 2019	Additions	Write-offs (i)	Transfers	Balance in December 2020
Total cost of property, plant and equipment, gross	43,358,751	4,687,207	(616,791)	-	47,429,167
Commutation/transmission equipment	22,817,681	10,464	(174,249)	3,222,020	25,875,916
Fiber optic cables	813,589	-	-	64,511	878,100
Leased handsets	2,489,995	912	(7,140)	159,569	2,643,336
Infrastructure	6,096,847	92,234	(8,063)	255,554	6,436,572
Informatics assets	1,721,251	1	(9,996)	59,130	1,770,386
General use assets	859,505	1	(1,544)	44,325	902,287
Right-of-use assets	6,933,416	1,849,539	(415,060)	-	8,367,895
Land	40,794	-	-	-	40,794
Construction in progress	1,585,673	2,734,056	(739)	(3,805,109)	513,881
					-
Total accumulated depreciation	(25,746,587)	(3,767,678)	185,796	-	(29,328,469)
Commutation/transmission equipment	(16,389,213)	(1,906,480)	165,167	-	(18,130,526)
Fiber optic cables	(410,567)	(72,046)	-	-	(482,613)
Leased handsets	(2,256,863)	(143,309)	1,955	-	(2,398,217)
Infrastructure	(3,593,833)	(432,549)	7,528	-	(4,018,854)
Informatics assets	(1,565,309)	(62,649)	9,988	-	(1,617,970)
General use assets	(590,658)	(48,403)	1,158	-	(637,903)
Right-of-use assets	(940,144)	(1,102,242)	-	-	(2,042,386)
Total property, plant and equipment, net	17,612,164	919,529	(430,995)	-	18,100,698
Commutation/transmission equipment	6,428,468	(1,896,016)	(9,082)	3,222,020	7,745,390
Fiber optic cables	403,022	(72,046)	-	64,511	395,487
Leased handsets	233,132	(142,397)	(5,185)	159,569	245,119
Infrastructure	2,503,014	(340,315)	(535)	255,554	2,417,718
Informatics assets	155,942	(62,648)	(8)	59,130	152,416
General use assets	268,847	(48,402)	(386)	44,325	264,384
Right-of-use assets	5,993,272	747,297	(415,060)	-	6,325,509
Land	40,794	-	-	-	40,794
Construction in progress	1,585,673	2,734,056	(739)	(3,805,109)	513,881

(i) The amount of R$ 415,060 is represented by remeasurement of contracts and includes changes in the term and scope of leases and a review of the estimate in relation to low-value vehicle contracts.

The construction in progress represent the cost of projects in progress related to the construction of networks and/or other tangible assets in the period of their construction and installation, until the moment they come into operation, when they will be transferred to the corresponding accounts of these assets.

The lease rights of use are represented by leased agreements of identifiable assets within the scope of IFRS16 standard. These rights refer to leases of network infrastructure, stores and kiosks, real estate, land (Network) and fiber, as below:

Right-of-use assets	Network infrastructure	Shops & kiosks & real estate	Land (Network)	Fiber	Total
Balances at December 31, 2020	3,019,900	400,262	1,500,909	1,404,438	6,325,509
Additions	630,805	295,874	237,150	427,478	1,591,307
Remeasurement	(83,606)	(45,312)	(23,772)	(27,185)	(179,875)
Depreciation	(518,590)	(109,512)	(210,054)	(403,732)	(1,241,888)
Balances at December 31, 2021	3,048,509	541,312	1,504,233	1,400,999	6,495,053
Useful life – %	7.86%	9.70%	9.47%	3.24%

· Depreciation rates

	Annual fee %
Commutation/transmission equipment	08–14.29
Fiber optic cables	4–10
Leased handsets	14.28–50
Infrastructure	4–20
Informatics assets	10–20
General use assets	10–20

In 2021, pursuant to IAS 16, approved by a CVM Deliberation, the Company assessed the useful life estimates for their property, plant and equipment, and concluded that there were no significant changes or alterations to the circumstances on which the estimates were based that would justify changes to the useful lives currently in use. As of December 31, 2021, and December 31, 2020, the Company has no indication of impairment in its property, plant and equipment.

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Intangible assets

12 Months Ended

Dec. 31, 2021

Intangible assets

15. Intangible assets

Intangible assets are measured at historical cost less accumulated amortization and impairment losses (if applicable) and reflect: (i) the purchase of authorizations and rights to use radio frequency bands, and (ii) software in use and/or development. Intangible assets also include: (i) infrastructure right-of-use of other companies, and (ii) goodwill on expectation of future profits in purchases of companies.

Amortization charges are calculated using the straight-line method over the estimated useful life of the assets contracted and over the terms of the authorizations. The useful life estimates of intangible assets are reviewed regularly.

Financial costs on funds raised generically (with no specific allocation), used to obtain a qualifying asset, which is an asset that necessarily demands a substantial period of time to become ready for intended use is capitalized as part of this asset’s cost when it is probable that will result in future economic benefits to the Company and such costs can be reliably measured. Within this concept, we had the capitalization of costs for the 700MHz 4G license between 2014 and 2019 and we currently have the capitalization of costs on the acquisition of the 5G license for the radio frequency not readily available and other obligations related to such radio frequency. Said capitalization occurs until the asset is considered available for use by Management, and as of that date onwards, capitalization of interest and charges on this asset ends. These costs are amortized over the estimated useful lives.

The values of permits for the operation of SMP and rights to use radio frequencies, as well as software, goodwill and others are demonstrated as follows:

 Schedule of movement in intangible assets

(a) Changes in intangible assets

	Balance in December 2020	Additions/ Amortization	Write-offs	Transfers	Balance in December 2021
Total cost of intangible assets, gross	31,444,050	4,352,331	(1,165,840)	-	34,630,541
Right to use software	19,117,515	-	(112,626)	906,115	19,911,004
Authorizations	9,931,248	50,408	(1,737)	1,171,578	11,151,497
Goodwill (i)	1,527,220	-	(1,051,477)	-	475,743
Infrastructure right-of-use - LT Amazonas	177,866	-	-	8,355	186,221
Other assets	329,626	-	-	3,490	333,116
Intangible assets under development	360,575	4,301,923	-	(2,089,538)	2,572,960
Total accumulated amortization	(22,416,975)	(1,739,937)	111,450	-	(24,045,462)
Right to use software	(16,378,487)	(1,164,210)	110,679	-	(17,432,018)
Authorizations	(5,816,241)	(542,196)	771	-	(6,357,666)
Infrastructure right-of-use - LT Amazonas	(67,966)	(8,731)	-	-	(76,697)
Other assets	(154,281)	(24,800)	-		(179,081)
Total intangible assets, net	9,027,075	2,612,394	(1,054,390)	-	10,585,079
Right to use software (c)	2,739,028	(1,164,210)	(1,947)	906,115	2,478,986
Authorizations (f)	4,115,007	(491,788)	(966)	1,171,578	4,793,831
Goodwill (d)	1,527,220	-	(1,051,477)	-	475,743
Infrastructure right-of-use - LT Amazonas (e)	109,900	(8,731)	-	8,355	109,524
Other assets	175,345	(24,800)	-	3,490	154,035
Intangible assets under development	360,575	4,301,923	-	(2,089,538)	2,572,960

(i) Includes the write-off of approximately 90% of the total goodwill recorded on the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A., in the amount of R$ 1,051,477.

	Balance in December 2019	Balance of merged company	Additions/ Amortization	Write-offs	Transfers	Balance in December 2020
Total cost of intangible assets, gross	29,861,788	367,571	1,215,636	(945)	-	31,444,050
Right to use software	18,184,382	-	-	(939)	934,072	19,117,515
Authorizations	9,811,794	-	32,105	(6)	87,355	9,931,248
Goodwill	1,159,649	367,571	-	-	-	1,527,220
Infrastructure right-of-use - LT Amazonas	169,327	-	8,539	-	-	177,866
Other assets	327,360	-	-	-	2,266	329,626
Intangible assets under development	209,276	-	1,174,992	-	(1,023,693)	360,575
Total Accumulated Amortization	(20,561,032)		(1,856,917)	974	-	(22,416,975)
Right to use software	(15,093,166)	-	(1,286,295)	974	-	(16,378,487)
Authorizations	(5,278,413)	-	(537,828)	-	-	(5,816,241)
Infrastructure right-of-use - LT Amazonas	(60,204)	-	(7,762)	-	-	(67,966)
Other assets	(129,249)	-	(25,032)	-		(154,281)
Total intangible assets, net	9,300,756	367,571	(641,281)	29	-	9,027,075
Right to use software (c)	3,091,216	-	(1,286,295)	35	934,072	2,739,028
Authorizations (f)	4,533,381	-	(505,723)	(6)	87,355	4,115,007
Goodwill (d)	1,159,649	367,571	-	-	-	1,527,220
Infrastructure right-of-use - LT Amazonas (e)	109,123	-	777	-	-	109,900
Other assets	198,111	-	(25,032)	-	2,266	175,345
Intangible assets under development	209,276	-	1,174,992	-	(1,023,693)	360,575

The intangible assets in progress represent the cost of projects in progress related to the intangible assets in the period of their construction and installation, until the moment they come into operation, when they will be transferred to the corresponding accounts of these assets. Includes 5G License acquisition values, pursuant to note 15.f.

 Schedule of amortization rates

(b) Amortization rates

	Annual fee %
Software licenses	20
Authorizations	5–50
Right to use infrastructure	5
Other assets	7–10

(c) Right to use software 

The costs associated with maintaining software are recognized as expense, as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the group are recognized as intangible assets when capitalization criteria are met.

Directly attributable costs that are capitalized as part of the software product are related to employee costs directly allocated in its development.

(d) Goodwill registered in previous years

The Company has the following goodwill, based on the expected future profitability on December 31, 2021 and 2020:

Goodwill from TIM Fiber SP and TIM Fiber RJ acquisitions - TIM Celular S.A (merged by Intelig, current TIM S.A) acquired, at the end of 2011, the companies Eletropaulo Telecomunicações Ltda. (which subsequently had its trade name changed to TIM Fiber SP Ltda. – “TIM Fiber SP”) and AES Communications Rio de Janeiro S.A. (which subsequently had its trade name changed to TIM Fiber RJ S.A. – “TIM Fiber RJ”). These companies were SCM providers in the main municipalities of the Greater São Paulo and Greater Rio de Janeiro areas, respectively. TIM Fiber SP Ltda. and TIM Fiber RJ. S.A. were merged into TIM Celular S.A. on August 29, 2012. TIM Celular S.A. recorded the goodwill allocation related to the purchase of the companies TIM Fiber SP and TIM Fiber RJ, at the end of the purchase price allocation process, in the amount of R$ 1,159,649.

In November 2021, the Company concluded the drop-down of liquid assets related to the residential broadband business linked to the secondary network infrastructure to the wholly-owned subsidiary FiberCo and sold 51% of the equity interest in FiberCo, currently named I- Systems, on behalf of IHS. Currently, due to the closing of the transaction, TIM S.A. wrote-off about 90% of the total goodwill recorded in the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A. in the amount of R$ 1,051,477. As a result, IHS currently holds 51% of the share capital of I-Systems, with TIM S.A. having a minority (non-controlling) interest of 49% in I-Systems. Consequently, with the closing of this deal in November 2021, the goodwill initially recorded on the acquisition of the companies Fiber RJ and Fiber SP was reduced to R$ 108,171. This is the balance recorded on December 31, 2021.

On August 31, 2020, with the merger of TIM Participações S.A. by TIM S.A, the Company recorded the goodwill arising from the merger of the net assets of TIM Participações, which were originated in acquisition transactions as described below:

Goodwill acquisition of "Intelig" by TIM Participações – the goodwill arising from the acquisition of TIM S.A. (formerly "Intelig") in December 2009 in the amount of R$ 210,015 is represented/based on the expectation of future profitability of the Company. Its recoverability is tested annually, through the impairment testing.

Goodwill from the acquisition of minority interests in TIM Sul and TIM Nordeste – TIM Participações S.A. (merged by TIM S.A. in August 2020) acquired in 2005, all the shares of the minority shareholders of TIM Sul and TIM Nordeste, in exchange for shares issued by TIM Participações, converting these companies into full subsidiaries. The goodwill resulting from this transaction amounted to R$ 157,556. 

Impairment test

As required by the accounting standard, the Company tests goodwill on business combinations involving TIM Group companies.

The methodology and assumptions used by Management for the aforementioned impairment test is summarized below:

The management of the Company understands that the smallest unit generating cash for impairment testing of goodwill in the acquisition of the companies previously described covers the business at the consolidated level, therefore it covers the consolidated group. This methodology is aligned with the company's strategic direction. It is important to note that the results of the group are essentially represented by TIM S.A. Thus, the results of TIM S.A. are the main cash generator of the TIM Group, since the only operating company operating in Brazil is TIM S.A., and thus the Company represents a single cash-generating unit for the purpose of impairment test of assets with indefinite useful lives, pursuant to IAS 36.

On December 31, 2021, the impairment test was performed by comparing the book value with the fair value minus the disposal costs of the asset, as foreseen in IAS 36.

For the calculation of fair value, the level of hierarchy within which the measurement of the fair value of the asset (cash generating unit) is classified was considered. For the company, as there is only one CGU this was classified in its entirety as Level 1, for the disposal costs we consider that it is irrelevant considering the variation between the fair value level 1 and the book value of the cash generating unit.

The fair value of Level 1 financial instruments comprises the instruments traded in active markets and based on quoted market prices on the balance sheet date. A market is considered active when the quoted prices are readily and regularly available from an Exchange, distributor, broker, industry group, pricing service or regulatory agency, and these prices represent actual market transactions which occur regularly on a purely commercial basis.

Its securities are traded on BOVESPA with code (TIMS3) and have a regular trading volume that allows the measurement (Level 1) as the product between the quoted price for the individual asset or liability and the amount held by the entity.

The measurement was made based on the value of the share at the balance sheet closing date and sensitivity tests were also performed and in none of the scenarios was identified any indication of impairment, being the fair value determined higher than the book value. Therefore, being the fair value higher than the book value, it is not necessary to calculate the value in use. The effects of TIM Participações holding (incorporated by TIM S.A) on the value of the book value in 2021 were irrelevant and also its effects on the result of the Consolidated Group. Therefore, the calculations carried out at the consolidated level essentially contemplate the results and accounting balances of TIM S.A., so the management of the Company concludes that the use of the fair value less of cost of sales methodology is adequate to conclude that there is no provision for impairment since the fair value less the cost of sales is higher than the total book value of the cash generating unit.

(e) Infrastructure right-of-use - LT Amazonas

The company has signed infrastructure rights agreements with companies that operate electricity transmission lines in the Northern Region of Brazil. These contracts fall within the scope of IFRIC 4 as financial commercial leases.

Additionally, the Company has signed network infrastructure sharing agreements with Telefónica Brasil S.A., also in the North Region. In these, the two operators optimize resources and reduce their respective operating costs (note 16).

(f) Authorizations

In this item are recorded the values related to the acquisition of Lot 2 in the auction of the 700 MHz band in the amount of R$ 1,739 million, in addition to the costs related to the cleaning of the frequency of the 700 MHZ band acquired, which totaled R$1,199 million, in nominal values. As it is a long-term obligation, the amount payable of R$ 1,199 million was reduced by R$ 47 million by applying the concept of adjustment to present value (“AVP”). The aforementioned license falls under the concept of qualifying asset. Consequently, the financial charges on resources raised without a specific destination, used for the purpose of obtaining a qualifying asset, were capitalized between the years 2014 to 2019.

In 2021, the Company recorded the values related to the acquisition of the 5th Generation (“5G”) mobile telephony radio frequencies. In November 2021, TIM participated in the 5G Auction and was the winner of several lots in the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands. These licenses will be paid over a period of 10 to 20 years, subject to the Selic rate. In December 2021, the Company signed the Terms of Authorization for these radio frequencies, generating the accounting of an intangible asset related to the licenses in the amount of R$ 884 million and the obligations related to said licenses (among them, disbursements with costs of the public notice and disbursement obligations with the management entities described below) in the amount of R$ 2,680 million.

Aiming to fulfill the additional obligations, the Company foresees, according to the notice, that there will the constitution of managing entities, which are only intended to fulfill the commitments provided for in the Auction. The companies that win the Auction must disburse only the amounts provided for in the public notice so that such entities comply with the defined obligations. There are additional obligations provided for related to 3.5GHz radio frequency (the band cleaning obligation, interference solution, among others), which must be complied with by the Band Management Entity (“EAF”), and related to 26GHz radio frequency (connectivity project for public schools), which must be complied with by the Entity Managing the Connectivity of Schools (“EACE”).

The 2.3GHz and 26GHz radio frequencies are readily available for use by the Company (operating assets), generating the registration in “Authorizations” of the amounts related to the licenses (R$ 614 million) and the obligations related to the 26GHz license, which will be fulfilled through EACE (R$ 550 million). The disbursements with EACE (R$ 633 million), provided for in the Public Notice, will occur in 5 semi-annual installments between 2022 and 2024, and are monetarily restated by the IGP-DI. The Company evaluated the application of the concept of adjustment to present value (“AVP”) upon initial recognition (R$ 83 million).

The 3.5GHz radio frequency is not readily available, requiring spectrum cleaning activities to be available for use, and, thus, it is registered in assets in progress (R$ 270 million). Therefore, the obligations related to this activity, to be carried out by EAF (R$ 2,104 million) are also recorded under assets in progress. The disbursements with EAF, provided for in the Notice, will occur in 2 installments throughout the year 2022, and are restated by the IGP-DI.

Furthermore, as described above, the Company capitalizes loan costs for qualifying assets that require a substantial period of time to be in a condition for use as intended by Management. This concept includes the 3.5GHz radio frequency. On December 31, 2021, the Company recorded R$ 1 million in intangible assets referring to Selic interest incurred on the 3.5GHz radio frequency and R$ 19 million related to the monetary restatement of amounts due to EAF. Said balances are recorded under assets in progress.

Thus, the total effect on the Company’s intangible assets in 2021 referring to 5G radio frequencies and related obligations was R$ 3,584 million, of which R$ 2,394 in assets in progress and R$ 1,190 million in Authorizations.

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Leases

12 Months Ended

Dec. 31, 2021

Leases

16. Leases

Leases that the Company, as a lessee, holds substantially all the risks and rewards of ownership are classified as finance leases. They are capitalized at the lease's commencement at the lower of the fair value of the leased asset and the present value of payments provided for in contract, and lease liability as a counterparty. Interest related to the leases is recognized in the statement of income as financial costs over the term of the contract.

Leases in which the Company, as a lessor, transfers substantially all the risks and rewards of ownership to the other party (lessee) are classified as finance leases. These lease values are transferred from the intangible assets of the Company and are recognized as a lease receivable at the lower of the fair value of the leased item and/or the present value of the receipts provided for in the agreement. Interest related to the lease is recognized in the statement of income as financial income over the contractual term. 

Asset leases are financial assets or liabilities classified and/or measured at amortized cost.

Assets

	2021	2020
LT Amazonas	166,944	162,198
Subleases - Stores – IFRS 16	76,177	-
	243,121	162,198
Current portion	(30,076)	(5,357)
Non-current portion	213,045	156,841

The table below presents the schedule of cash receipts for the agreement currently in force, representing the estimated receipts (nominal values) in the signed agreements. These balances differ from those shown in the books since, in the case of the latter, the amounts are shown at present value:

Schedule of lease receivables nominal and present value 

	Up to December 2022	Jan 2023–Dec 2026	Jan 2027 onwards	Nominal values	Present value
	55,939	167,320	176,895	400,154	243,121
LT Amazonas (i)	26,124	106,491	176,895	309,510	166,944
Subleases - Stores – IFRS 16 (ii)	29,815	60,829	-	90,644	76,177

(i) LT Amazonas

As a result of the contract signed with LT Amazonas, the Company signed network infrastructure sharing agreements with Telefónica Brasil S.A. In these agreements, the company and Telefónica Brasil S.A. share investments made in the Northern Region of Brazil. The company has monthly amounts receivable from Telefónica Brasil S.A. for a period of 20 years, adjusted annually by the IPC-A. The discount rate used to calculate the present value of the installments due is 12.56% per annum, considering the date of signing the agreement.

(ii) Subleases - Stores - IFRS 16

The Company, due to sublease agreements for third parties in some of its stores, recognized the present value of short and long term receivables, which are equal in value and term to the liability cash flows of the contracts called “resale stores.” The impact on lease liabilities is reflected in “Leases - Stores & Kiosks.”

Liabilities

	2021	2020
LT Amazonas (i)	302,091	290,385
Sale of Towers (leaseback) (ii)	1,507,629	1,256,410
Other (iv)	142,458	115,027
Sub-total	1,952,178	1,661,822
Other leases (iii):
Leases – Network Infrastructure	3,345,930	3,252,463
Leases - Shops & kiosks & real estate	653,422	434,990
Leases - Land (Network)	1,657,345	1,606,567
Leases – Fiber	1,454,664	1,422,993
Subtotal lease IFRS 16	7,111,361	6,717,013
Total	9,063,539	8,378,835
Current portion	(1,269,878)	(1,054,709)
Non-current portion	7,793,661	7,324,126

The amount of interest paid in the year ended December 31, 2021 related to IFRS 16 is R$ 599,296 (R$ 567,261 in the year ended December 31, 2020).

Changes to the lease liabilities are shown in note 37.

The table below presents the future payment schedule for the agreements in force, representing the estimated disbursements (nominal values) in the signed agreements. These nominal balances differ from those shown in the books since, in the case of the latter, the amounts are shown at present value:

	Up to December 2022	Jan 2023–Dec 2026	Jan 2027 onwards	Nominal values	Present value
Total - Lease liability	2,139,718	6,431,022	5,898,599	14,469,339	9,063,539
LT Amazonas (i)	57,349	202,271	336,138	595,758	302,091
Sale and leaseback of Towers (ii)	245,800	992,299	2,135,989	3,374,088	1,507,629
Other (iv)	28,348	112,493	142,458	283,299	142,458
Total other leases (iii)	1,808,221	5,123,959	3,284,014	10,216,194	7,111,361
Leases – Network infrastructure	752,818	2,450,689	1,735,619	4,939,126	3,345,930
Leases - Shops & kiosks & real estate	183,468	440,996	356,198	980,662	653,422
Leases - Land (Network)	340,099	1,135,266	1,192,197	2,667,562	1,657,345
Leases – Fiber	531,836	1,097,008	-	1,628,844	1,454,664

i) LT Amazonas

The Company executed agreements for the right to use the infrastructure of companies that operate electric power transmission lines in Northern Brazil (“LT Amazonas”). The terms of these agreements are for 20 years, counted from the date on which the assets are ready to operate. The contracts provide for monthly payments to the electric power transmission companies, restated annually at the IPCA.

The discount rate used to calculate the present value of the installments due is 14.44% per annum, considering the signing date of agreements with transmission companies.

ii) Sale and leaseback of Towers

The Company entered into two Sales Agreements with American Tower do Brasil Cessão de Infraestruturas Ltda. (“ATC”) in November 2014 and January 2015 for up to 6,481 telecommunications towers then owned by TIM Celular, for an amount of approximately R$  3 billion, and a Master Lease Agreement (“MLA”) for part of the space on these towers for a period of 20 years from the date of transfer of each tower, under a sale and leaseback transaction, with a provision for monthly rental amounts depending on the type of tower (greenfield or rooftop). The sales agreements provided for the towers to be transferred in tranches to ATC, due to the need to meet certain conditions precedent.

In total, 5,873 transfers of towers occurred, being 54, 336 and 5,483 in the years 2017, 2016 and 2015, respectively. This transaction resulted in a sales amount of R$ 2,651,247, of which R$ 1,088,390 was booked as deferred revenue and will be amortized over the period of the contract (note 23).

The discount rates used at the date of the transactions, ranging from 11.01% to 17.08% per annum, were determined based on observable market transactions that the company (the lessee) would have to pay on a similar lease and/or loan.

(iii) Other leases:

In addition to lease agreements mentioned above, the Company also has lease agreements that qualify within the scope of IFRS 16.

The present value, principal and interest value on December 31, 2021 for the above contracts was estimated month-to-month, based on the average incremental rate of the Company’s loans, namely 8.94% (9.06% in 2020).

(iv) It is substantially represented by lease transactions in transmission towers.

The lease amounts considered low value or lower in the 12-month period recognized as rental expense on December 31, 2021 is R$ 36,310 (R$ 28,523 on December 31, 2020).

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Other amounts recoverable

12 Months Ended

Dec. 31, 2021

Other Amounts Recoverable

Other amounts recoverable

17. Other amounts recoverable

These refer to Fistel credit amounts arising from the reduction of the client base, which may be offset by future changes in the base, or used to reduce future obligations, and are expected to be used in the reduction of the TFF contribution (operating supervision fee) due to Fistel.

As of December 31, 2021, this credit is R$ 28,661 (R$ 43,906 as of December 31, 2020).

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Supplier

12 Months Ended

Dec. 31, 2021

Supplier

18. Supplier

Accounts payable to suppliers are obligations payable for goods or services that were acquired in the usual course of business. They are initially recognized by fair value and subsequently measured by amortized cost using the effective interest rate method. Given the short maturity of these obligations, in practical terms, they are usually recognized at the value of the corresponding invoice.

	2021	2020
	3,267,404	3,128,732
Local currency	3,063,458	2,932,486
Suppliers of materials and services (i)	2,966,897	2,839,547
Interconnection (ii)	65,464	64,066
Roaming (iii)	212	212
Co-billing (iv)	30,885	28,661
Foreign currency	203,946	196,246
Suppliers of materials and services (i)	153,082	148,888
Roaming (iii)	50,864	47,358
Current portion	3,267,404	3,128,732

(i) Represents the amount to be paid to suppliers in the acquisition of materials and in the provision of services applied to the tangible and intangible asset or for consumption in the operation, maintenance and administration, in accordance with the terms of the contract between the parties.

(ii)	Refers to as the use of the network of other fixed and mobile operators such cases where calls are initiated on the TIM network and terminated on the other operators.
(iii)	Refers to calls made when the customer is outside their registration area and is considered a visitor on the other network.
(vi)	Refers to calls made by the customer when choosing another long-distance operator.

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Authorizations payable

12 Months Ended

Dec. 31, 2021

Authorizations Payable

Authorizations payable

19. Authorizations payable

	2021	2020
Renewal of authorizations (i)	191,329	188,498
Updated ANATEL liability (ii)	164,269	146,949
Authorizations payable (iii)	3,525,489	-
	3,881,087	335,447
Current portion	(2,630,169)	(102,507)
Non-current portion	1,250,918	232,940

(i)To provide the SMP, the Company obtained authorizations of the right to use radio frequency for a fixed term, renewable for another 15 (fifteen) years. In the option for the extension of the right of this use, it is due the payment of the amount of 2% on the net revenue of the region covered by the authorization that ends each biennium. On December 31, 2021, the Company had balances falling due related to renovation of authorizations in the amount of R$ 191,329 (R$ 188,498 on December 31, 2020).

(ii) On December 5, 2014, the company signed the authorization term of the 700 MHz band and paid the equivalent of R$1,678 million, recording the remaining balance in the amount of R$ 61 million as commercial liability, according to the payment method provided for in the notice.

On June 30, 2015, the company filed a lawsuit questioning the collection of the excess nominal value of R$ 61 million (R$ 164 million on December 31, 2021) which is still pending trial.

(iii) As described in note 15.f, in November 2021, TIM participated in the 5G Auction of the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands for the deployment of the 5th Generation mobile telephony, winning several lots in these radio frequencies. In December 2021, the Authorization Terms were signed, characterizing the actual acquisition of the right over the lots of these radio frequencies.

For the amounts related to radio frequencies (R$ 884 million upon initial registration), Selic interest is levied, and the Company will make annual payments for a period of 20 years. Regarding amounts related to disbursement obligations with EAF and EACE entities (R$ 2,737 million upon initial registration, of which R$ 2,654 million net of adjustment do present value), there is a monetary restatement by IGP-DI, and disbursements will occur between 2022 and 2024. As of December 31, 2021, the outstanding balance is 3,525 million.

The authorizations payable on December 31, 2021 due in long-term is in accordance with the following schedule:

2023	406,371
2024	141,151
2025	46,535
2026	46,535
2027	46,535
2028	46,535
2029	46,535
2030	46,535
2031	424,186
	1,250,918

The primary authorizations held by TIM S.A. on December 31, 2021, as well as their expiration dates, are shown in the table below:

	Maturity date
Terms of authorization	450 MHz	800 MHz, 900 MHz and 1,800 MHz	Additional frequencies 1800 MHz	1900 MHz and 2100 MHz (3G)	2500 MHz V1 band (4G)	2500 MHz (P band**) (4G)	700 MHz (4G)	2.3 GHz (5G)	3.5 GHz (5G)	26 GHz (5G)
Amapá, Roraima, Pará, Amazonas and Maranhão	-	Mar 2031*	Apr 2023	Apr 2023	Oct 2027	Part of AR92 (PA), Feb 2024*	Dec 2029	-	Dec 2041	Dec 2031
Rio de Janeiro and Espírito Santo	Oct 2027	Mar 2031*	ES, Apr 2023	Apr 2023	Oct 2027	Part of AR21 (RJ), Feb 2024*	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Acre, Rondônia, Mato Grosso, Mato Grosso do Sul, Tocantins, Distrito Federal, Goiás, Rio Grande do Sul (except county of Pelotas and region) and municipalities of Londrina and Tamarana in Paraná	PR, Oct 2027	Mar 2031*	Apr 2023	Apr 2023	Oct 2027	Part of AR61 (DF), Feb 2024*	Dec 2029	South – Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
São Paulo	-	Mar 2031*	Countryside, Apr 2023	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Paraná (except counties of Londrina and Tamarana)	Oct 2027	Sep 2022*	Apr 2023	Apr 2023	Oct 2027	AR41, except Curitiba and the Metropolitan Region, Feb 2024* AR41, Curitiba and Metropolitan Region, July 2031	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Santa Catarina	Oct 2027	Sep 2023*	Apr 2023	Apr 2023	Oct 2027	-	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
County and region of Pelotas, in the state of Rio Grande do Sul	-	Apr 2024*	-	Apr 2023	Oct 2027	-	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Pernambuco	-	May 2024*	-	Apr 2023	Oct 2027	Part of AR81, July 2031	Dec 2029	-	Dec 2041	Dec 2031
Ceará	-	Nov 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec S2031
Paraíba	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Rio Grande do Norte	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Alagoas	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Piauí	-	Mar 2024*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Minas Gerais (except the counties of Sector 3 of the PGO for 3G radio frequencies, leftovers and 5G)	-	Apr 2028*	Apr 2023	Apr 2023	Oct 2027	Part of AR31, Feb 2030*	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Bahia and Sergipe	-	Aug 2027*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031

*	Terms already renewed for 15 years.
**	Only complementary areas in specific states.

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Loans and financing

12 Months Ended

Dec. 31, 2021

Loans and financing

20. Loans and financing

They are classified as financial liabilities measured at amortized cost, being represented by non-derivative financial liabilities that are not usually traded before maturity.

At the initial recognition they are recorded by their fair value, and after initial recognition, they are measured by the effective interest rate method. Appropriations of financial expenses according to the effective interest rate method are recognized in income, under financial expenses. 

Description	Currency	Charge	Maturity	December 2021	December 2020
KFW Finnvera (ii)	USD	Libor 6M+ 0.75% p.a.	Jan 2024–Dec 2025	278,176	344,125
BAML (ii)	EUR	0.2790% p.a.	Aug 2021	-	570,844
Scotia¹ (ii)	USD	1.2410–1.7340% p.a.	Apr 2024	559,650	1,030,761
BNP Paribas (ii)	USD	2.8220% p.a.	Jan 2022	428,793	399,302
BNP Paribas (ii)	BRL	7.0907% p.a.	Jan 2024	515,166	-
Debêntures² (ii)	BRL	IPCA + 4.1682% p.a. (i)	June 2028	1,667,399	-
BNDES (i)	BRL	IPCA + 4.2283% p.a.	Nov 2031	396,281	-
Total				3,845,465	2,345,032
Current				(538,450)	(1,689,385)
Non-current				3,307,015	655,647

¹ The outstanding debt rate on December 31, 2021 with Scotia Bank is 1.4748% p.a.

² The automatic decrease of up to 0.25bps is estimated in remunerative interest will comply with sustainable targets established in the indenture.

Insurances

_(i) Certain receivables from TIM S.A.;

_(ii) Do not have a guarantee.

The Company's financing, contracted with BNDES, was obtained for the expansion of the mobile telephone network and has restrictive contractual clauses that provide for the fulfilment of certain financial and non-financial rates calculated every six months. In February 2020, the company made the full prepayment of financing obtained from BNDES, active at that time; however, there are still contracts in effect with the bank regulating the lines of credit available for withdrawal that are shown in the table below: Financial indices are: (1) Shareholders' equity over total assets; (2) EBITDA on net financial expenses; (3) Total financial debt on EBITDA and (4) Short-term net financial debt to EBITDA. The Company has been complying with all the established ratios.

In April 2021, the Company contracted a new loan with The Bank of Nova Scotia, in the amount of R$ 572 million, at the cost of CDI + 1.05% p.a. and a 3-year term. The operation aimed to strengthen the Company's cash for working capital.

In April 2021, the Company contracted a new loan with BNP Paribas, in the amount of R$ 500 million, at the cost of CDI + 1.07% p.a. and a 2.9-year term. The operation aimed to strengthen the Company's cash for working capital.

In June 2021, the Company carried out the second issue of simple, non-convertible, unsecured debentures, carried out pursuant to CVM Instruction No. 476, in the amount of R$ 1,600 million. The debentures have a sustainable component that allows them to be qualified as sustainability-linked and, in case of compliance with the sustainable targets established in the indenture, the remunerative interest of IPCA + 4.1682% p.a. can be automatically reduced by up to 0.25bps. The debentures will bear semiannual interest and amortization will take place, respectively, in the 5th, 6th and 7th year. The issue was aimed at financing projects for the implementation, expansion and modernization of fixed and mobile networks in different technologies, including 5G, and falls within the provisions of Law No. 12431 of June 24, 2011. Within the scope of this operation, the Company elected to sign an interest rate swap contract for hedging purposes, at the cost of CDI + 0.95% per annum. During the term of the operation, compliance with the financial ratio of Net debt to EBITDA, an indicator that has been met to date, must also be observed.

In November 2021, the Company obtained from BNDES the FINAME credit facility in the total available amount of R$ 390 million, at the cost of IPCA + 4.2283% p.a. and a total term of 10 years with a 3-year grace period to start of amortization. The Company elected to sign an interest rate swap contract for hedging purposes, at the final cost of 96.95% of CDI.

The table below shows the position of financing and available lines of credit:

					Amount used until 30 September 2020
Type	Currency	Term	Term	Remaining value		Amount used up to December 31, 2021
BNDES (i)	TJLP	May 2018	Mar 2022	1,090,000	1,090,000	-
BNDES (ii)	TJLP	May 2018	Mar 2022	20,000	20,000	-
FINAME (iii)	IPCA	Mar 2019	Mar 2022	390,000	-	390,000
BNB (iv)	IPCA	Jan 2020	June 2023	752,479	752,479	-
Total R$:				2,252,479	1,862,479	390,000

Objective:

(i) Support to TIM's investment plan for the years 2017 to 2019 including, but not limited to, the acquisition of National equipment

(ii) Investments in social projects within the community

(iii) Exclusive application in the acquisition of machinery and equipment, industrial systems and/or other components of national manufacture.

(iv) Support to TIM's investment plan for the years 2020 to 2022 in the region of operation of Banco do Nordeste do Brasil

Loans and financing on December 31, 2021 due in long-term is in accordance with the following schedule:

2023	88,818
2024	1,125,526
2025	80,712
2026	615,727
2027	615,727
2028	618,006
2029	55,714
2030	55,714
2031	51,071
	3,307,015

The nominal value of the loans and financing is consistent with their respective payment schedule.

	Nominal value
2022	538,450
2023	88,818
2024	1,125,526
2025	80,712
2026	615,727
2027	615,727
2028	618,006
2029	55,714
2030	55,714
2031	51,071
	3,845,465

Fair value of loans

In Brazil, there is no consolidated long-term debt market with the characteristics verified in the financing obtained from KFW Finnvera, which has the Finnish development agency Finnvera as guarantor. Both are financing for the purchase of equipment and, therefore, have a character of subsidy and promotion of commercial activity between the company and certain suppliers. For the purposes of fair value analysis, considering the characteristics of this transaction, the company understands that its fair value is equal to that recorded on the balance sheet.

With respect to proceeds contracted with the Bank of Nova Scotia, BNP Paribas, Debentures and BNDES, the fair value of these loans is considered to be the present value of the active tip of the swap contracts that protect the company from changes in exchange rates and interest. The fair value of the operations on December 31, 2021 is, respectively, R$ 563,259, R$ 524,422, R$ 1,635,203 and R$ 384,073.

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Indirect taxes, charges and contributions payable

12 Months Ended

Dec. 31, 2021

Indirect Taxes Charges And Contributions Payable

Indirect taxes, charges and contributions payable

21. Indirect taxes, charges and contributions payable

	2021	2020
Indirect taxes, charges and contributions payable	1,421,955	938,880
Value added tax on goods and services - ICMS	303,721	359,498
ANATEL’s taxes and fees (i)	1,042,933	509,087
Imposto sobre Serviço (Service tax) - ISS	66,075	66,082
Other	9,226	4,213
Current portion	(1,418,682)	(935,778)
Non-current portion	3,273	3,102

(i) In 2020, to minimize the impacts of the pandemic, Provisional Act 952, dated April 15, 2020, was enacted, authorizing the postponement of payment of taxes, such as TFF, Condecine and CFRP, in the amount of R$ 790 million, to August 31, 2020. In the third quarter of 2020, the Company made a partial payment in the amount of R$ 300 million referring to CFRP and Condecine, but due to a preliminary injunction in court, there was no need to pay the Fistel (TFF), which remains outstanding until the final and unappealable decision.

In 2021, there was the partial payment of fees of approximately R$ 300 million related to CFRP and Condecine and the remaining amount of R$ 480 million related to 2021 Fistel (TFF) remains suspended, with no defined date for payment based on injunction also issued by the Regional Court of the 1st Region.

During 2021, there was the recognition of R$ 51.2 million in default interest on Fistel (TFF) amounts related to fiscal years 2020 and 2021 with suspended payment by preliminary injunction.

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Direct taxes, charges and contributions payable

12 Months Ended

Dec. 31, 2021

Direct Taxes Charges And Contributions Payable

Direct taxes, charges and contributions payable

22. Direct taxes, charges and contributions payable

Current income tax and social contribution charges are calculated on the basis of the tax laws enacted, or substantially enacted, up to the balance sheet date.

The legislation allows companies to opt for quarterly or monthly payment of income tax and social contribution. In 2021, the Company has chosen to make the quarterly payment of income tax and social contribution.

	2021	2020
Direct taxes, charges and contributions payable	258,340	508,743
Income tax (IR) and social contribution (CS) (i)	186,294	313,145
PIS/COFINS (Social integration program/Social security)	41,916	154,353
Other (ii)	30,130	41,245
Current portion	(245,113)	(296,299)
Non-current portion	13,227	212,444

(i) The variation is related to the changes in the calculation of the Annual Taxable Income by the Quarterly Taxable Income. Thus, the amount presented in December 2020 comprised the IRPJ and CSLL due between January and December of that year, while in 2021 the liabilities presented represent only the amount due in the fourth quarter.

(ii) The breakdown of this account mainly refers to the company's adhesion to the Tax Recovery Program - REFIS from 2009 for payment of installments of the outstanding debts of federal taxes (PIS – Social Integration Program, COFINS – Contribution to Social Security Financing, IRPJ – Corporate Income Tax and CSLL – social contribution on Net Profit), whose final maturity will be on October 31, 2024.

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Deferred revenues

12 Months Ended

Dec. 31, 2021

Deferred revenues

23. Deferred revenues

	2021	2020
Deferred revenues	886,340	1,021,924
Prepaid services (i)	118,795	189,482
Government grants (ii)	11,184	24,732
Anticipated revenues	8,522	11,163
Deferred revenues on sale of towers (iii)	734,826	788,921
Contractual liabilities (iv)	13,013	7,626
Current portion	(197,179)	(266,436)
Non-current portion	689,161	755,488

(i) Referring to the recharge of voice credits and data not yet used by customers relating to prepaid system services that are appropriate to the result when the actual use of these services by clients.

(ii) Referring to the release of resources related to the financing line with BNDES (Investment Support Program-BNDES PSI). The sum of grants granted by BNDES up to December 31, 2021 is R$ 203 million and the outstanding amount on December 31, 2021 is R$ 11,184 (R$ 24,732 on December 31, 2020). This amount is being amortized by the lifespan of the asset being financed and appropriated in the group of “other net revenues (expenses)” (note 29).

(iii) Referring to the amount of revenue to be appropriated by the sale of the towers (note 16).

(iv) Contracts with customers. The table below includes information on the portion of trade accounts receivable, from which contractual assets and liabilities originate.

	2021
Accounts receivable included in trade accounts	2,051,120
Contractual assets	15,340
Contractual liabilities	(13,013)

The contracts with customers gave rise to the allocation of discounts under combined loyalty offers, where the discount may be given on equipment and / or service, generating a contractual asset or liability, respectively, depending on the nature of the offer in question.

Summary of the main variations in the year.

	Contractual assets (liabilities)
Balance at December 31, 2020	7,288
Additions	8,800
Write-offs	(13,761)
Balance at December 31, 2021	2,327

The balances of contractual assets and liabilities are expected to be realized according to the table below:

	2022	2023
Contractual assets (liabilities)	3,685	(1,358)

The Company in line with paragraph 121 of IFRS 15, is not presenting the effects of information on customer contracts with terms of duration of less than 1 year.

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Provision for legal and administrative proceedings

12 Months Ended

Dec. 31, 2021

Provision for legal and administrative proceedings

24. Provision for legal and administrative proceedings

The company is an integral part in judicial and administrative proceedings in the civil, labor, tax and regulatory spheres, which arise in the normal course of its business.

The provision is constituted based on the opinions of the company's legal advisors and management, for amounts considered sufficient and adequate to cover losses and risks considered probable. Situations where losses are considered probable and possible are recorded and disclosure, respectively, by their updated values, and those in which losses are considered remote are not disclosed.

The provision for judicial and administrative proceedings constituted, updated, is composed as follows:

	2021	2020
Provision for judicial and administrative proceedings	960,881	886,947
Civil (a)	309,019	245,432
Labor (b)	192,132	213,026
Tax (c)	429,951	399,288
Regulatory (d)	29,779	29,201

The changes in the provision for judicial and administrative proceedings are summarized below:

	December 31, 2020	Additions, net of reversals	Payment	Currency update	December 31, 2021
	886,947	278,789	(316,804)	111,949	960,881
Civil (a)	245,432	175,715	(194,501)	82,373	309,019
Labor (b)	213,026	71,961	(98,730)	5,875	192,132
Tax (c)	399,288	31,078	(23,539)	23,124	429,951
Regulatory (d)	29,201	35	(34)	577	29,779

	December 31, 2019	Balance company incorporated	Additions, net of reversals	Payment	Currency update	December 31, 2020
	703,522	125,956	333,724	(413,634)	137,379	886,947
Civil (a)	208,202	4,501	224,416	(266,872)	75,185	245,432
Labor (b)	208,224	45,691	63,649	(138,899)	34,361	213,026
Tax (c)	254,833	75,646	48,897	(7,792)	27,704	399,288
Regulatory (d)	32,263	118	(3,238)	(71)	129	29,201

The company is subject to several legal actions and administrative procedures proposed by consumers, suppliers, service providers and consumer protection agencies and treasury agencies, which deal with various matters that arise in the normal course of the entities' business. The main processes are summarized below:

a. Civil proceedings

a.1 Consumer lawsuits

The company is a party in lawsuits related to various claims filed by consumers, in the judicial and administrative spheres. The aforementioned actions in the amount provisioned of R$ 150,881 (R$ 139,429 on December 31, 2020) refer mainly to alleged improper collection, cancellation of contract, quality of services, unilateral contract amendment and undue negative entry.

a.2 Consumer Protection Agencies

TIM is a party to legal and administrative lawsuits filed by the Public Prosecutor's Office, Procon and other consumer protection agencies, arising from consumer complaints, in which, and among other topics, discusses: (i) alleged failures in the provision of network services; (ii) questions of quality in service; (iii) alleged violations of the SAC [customer service hotline] decree; (iv) alleged contractual violations; (v) alleged misleading advertising and; (vi) discussion of the collection of loyalty fines, in cases of theft and theft of the device. The amounts involved are equivalent to R$ 116,985 (R$ 51,713 on December 31, 2020).

a.3 Former trading partners

TIM is a defendant in lawsuits proposed by former trade partners claiming, among others, amounts on the basis of alleged non-compliance with agreements. The amounts involved are equivalent to R$ 20,708 (R$ 18,634 on December 31, 2020).

a.4 Other

TIM is a defendant in other actions of essentially non-consumer objects proposed by the most diverse agents from those described above, in which, among others, it is discussed: (i) share subscription; (ii) claims for civil liability indemnification; (iii) alleged breach of contract and; (iv). The amounts involved are equivalent to R$ 20,089 (R$ 33,682 on December 31, 2020).

a.5 Social and environmental and infrastructure

The Company is a party to lawsuits involving various agents who discuss aspects related to licensing, among which environmental licensing and infrastructure licensing (installation/operation). The amounts involved and provisioned are equivalent to R$ 356 (R$ 610 on December 31, 2020).

a.6 ANATEL

The Company is a party to lawsuits in front of ANATEL, in which it is discussed: (i) debit related to the collection of 2% of revenues from Value - Added Services-VAS and interconnection; (ii) pro-rata inflation adjustment applied to the price proposal defined in the notice for the use of 4G frequencies and (iii) alleged non-compliance with service quality targets. No correspondent amount on December 31, 2021 (R$ 1,364 on December 31, 2020).

b. Labor lawsuits

These are processes involving several labor claims filed by both former employees, in relation to matters such as salary differences, leveling, payments of variable compensation, additional legal and working hours, as well as by former employees of service providers, all of whom, taking advantage of the labor laws in force require it to keep the Company in compliance with labor obligations does not abide by contractors hired for that purpose.

From the total of 1,314 Labor claims on December 31, 2021 (1,873 on December 31, 2020) filed against the company, the majority relate to claims involving former employees of service providers followed by lawsuits from employees of their own. The provisioning of these claims totals R$ 192,132 updated monetarily (R$ 213,026 as of December 31, 2020).

c. Tax lawsuits

		2021		2020
Federal Taxes	202,743		182,146
State Taxes	145,436		135,891
Municipal Taxes	7,626		5,633
TIM S.A. processes (Purchase price allocation)	74,146		75,618
	429,951		399,288

The total recorded provision is substantially composed of the following processes whose indicated values are estimated by the indices established by the federal government for late taxes, being linked to the variation in the SELIC rate.

Federal taxes

The provision is substantially composed of the following processes:

(i) The provision for TIM S.A. supports sixty-four proceedings, relating to questions involving the impact on operations of CIDE, CPMF, CSLL, IRRF, spontaneous denunciation of the fine in the payment of FUST and ancillary obligations. Of this total, the amounts involved in the legal proceedings that seek recognition of the right not to collect the CPMF allegedly incident on simultaneous transactions of purchase and sale of foreign currency and exchange of account ownership arising from corporate incorporation, whose provisioned values, updated, equal to R$ 8,510 (R$ 8,355 on December 31, 2020), as well as the amount related to the fine and interest 2009, where the benefit of spontaneous denunciation is not being recognized, whose provisioned and updated value is R$ 15,149 (R$ 14,771 on December 31, 2020).

(ii) The Company constituted a provision for a process aimed to collecting the pension contribution withheld at the rate of 11% to which, allegedly, payments made by the company to other legal entities should have been submitted as remuneration for various activities, whose provisioned and updated value is R$ 39,554 (R$ 38,584 on December 31, 2020).

(iii) Additionally, in the second quarter of 2019, the Company constituted the provision for the FUST process, which seeks the unconstitutionality and illegality of the collection of FUST (Telecommunications Services Universalization Fund). Lawsuit for the recognition of the right not to collect Fust, failing to include in its calculation base the revenues transferred by way of interconnection and EILD (Dedicated Line Industrial Exploitation), as well as the right not to suffer the retroactive collection of the differences determined due to not observing sum 7/2005 of ANATEL, in the amount of R$ 60,382 (R$ 58,988 on December 31, 2020).

(iv) The company made a provision for federal compensation processes arising from a repurchase carried out in 2006, for which the documentary support was not robust enough after appraisals carried out. The provisioned and updated value is R$ 18,579 (R$ 5,313 on December 31, 2020).

State Taxes

The provision is substantially composed of the following processes:

The provision of the TIM S.A. in support of ninety-one cases, among which the following stand out: (i) the amounts involved in the proceedings, that the question of the reversal of the amounts payable for the ICMS tax, as well as the supporting documentation for the verification of the loan are appropriate for a Company whose values are recorded up-to-date, amounting to R$ 41,352 (R$ 36,491 on December 31, 2020), (ii) the amount not offered to tax for the provision of telecommunications services, which is up-to-date, equals to R$ 5,291 (R$ 5,135 on December 31, 2020), as well as (iii) the charges on the grounds of supposed differences in both the inputs as the output of goods in the process of the withdrawal amount of the inventory, whose values are updated to the equivalent of R$ 16,216 (R$ 15,751 on December 31, 2020); (iv) amounts allegedly improperly credited relating to CIAP credits, whose updated amounts are equivalent to R$ 16,374 (R$ 14,912 as of December 31, 2020) and (v) credits related to tax substitution operations, whose updated amounts are equivalent to R$ 22,183 without equivalence on December 31, 2020. (vi) alleged lack of collection or alleged misappropriation of credits related to ICMS rate difference (DIFAL), whose restated amounts are equivalent to R$ 13,963 (without equivalence on December 31, 2020).

Municipal Taxes

It is also worth noting the amounts involved in the assessments that questions the withholding and collection of the ISS-source of third-party services without employment relationship, as well as the collection of its own ISS corresponding to services provided in co-billing.

PPA TIM S.A.

There are tax lawsuits arising from the acquisition of former Intelig (current TIM S.A.) due to the former parent company of the TIM Participações group, which comprise the process of allocating the acquisition price of the former Intelig and amount to R$ 74,146 (R$ 75,618 as of December 31, 2020).

d. Regulatory processes

ANATEL initiated administrative proceedings against the company for: (i) non-compliance with certain quality indicators; (ii) non-compliance with other obligations derived from the terms of authorization and; (iii) non-compliance with the SMP and STFC regulations, among others.

On December 31, 2021, the amount indicated for the procedures for the determination of non-compliance with obligations (“PADOs”), considering the inflation adjustment, classified with risk of probable loss is R$ 29,779 (R$ 29,201 on December 31, 2020).

e. Judicial and administrative proceedings whose losses are assessed as possible

The company has actions of a civil, labor, tax and regulatory nature involving risks of loss classified by its legal advisers and the administration as possible, for which there is no provision for legal and administrative proceedings constituted, and no adverse material effects are expected in the financial statements, according to the values presented below:

	2021	2020
	18,140,556	18,147,562
Civil (e. 1)	1,292,202	1,101,332
Labor and Social Security (e. 2)	392,035	340,801
Tax (e. 3)	16,309,439	16,586,353
Regulatory (e. 4)	146,880	119,076

Legal and administrative proceedings whose losses are assessed as possible and monitored by Management are disclosed at their updated values.

The main actions with risk of loss classified as possible are described below:

e.1. Civil

		2021		2020
Consumer actions (e. 1. 1)	160,696		220,347
ANATEL (e.1.2)	258,683		223,066
Consumer protection bodies (e.1.3)	493,806		160,279
Former trading partners (e.1.4)	216,054		193,529
Environmental and infrastructure (e.1.5)	99,743		154,187
Other (e.1.6)	63,220		149,924
	1,292,202		1,101,332

e. 1. 1 Actions filed by consumers

They mainly refer to actions for alleged improper collection, cancellation of contract, quality of services, defects and failures in the delivery of devices and undue negative entry.

e.1.2 ANATEL

The Company is a party to lawsuits in front of ANATEL, in which it is discussed: (i) debit related to the collection of 2% of revenues from Value - Added Services-VAS and interconnection; (ii) pro-rata inflation adjustment applied to the price proposal defined in the notice for the use of 4G frequencies and (iii) alleged non-compliance with service quality targets.

e.1.3 Consumer protection agencies

TIM is a party to legal and administrative lawsuits filed by the Public Prosecutor's Office, Procon and other consumer protection agencies, arising from consumer complaints, in which, and among other topics, discusses: (i) alleged failures in the provision of network services; (i) alleged failure in the delivery of handsets; (iii) alleged non-compliance with state laws; (iv) hiring model and alleged improper charges of Value-Added Services-VAS; (v) alleged violations of the SAC decree; (vi) alleged contractual violations; and (vii) blocking of data. 

e.1.4 Former Trading Partners

TIM is a defendant in actions proposed by several former trading partners in which are claimed, among others, values based on alleged contractual defaults.

1. 5 Social and environmental and infrastructure

The Company is a party to lawsuits involving various agents that discuss aspects related to (1) environmental licensing and structure licensing (installation/operation) and (2) (i) electromagnetic radiation emitted by Telecom structures; (ii) renewal of land leases for site installation; (iii) dumping on leased land for site installation; (iv) presentation of registering data, among others.

e.1.6 Other

TIM is a defendant in other actions of essentially non-consumer objects proposed by the most diverse agents from those described above, in which, among others, it is discussed: ; (ii) amounts supposedly due as a result of share subscription; (iii) civil liability claims; (iv) alleged breach of contract.

e.2. Labor and Social Security

e.2.1. Social Security

TIM S.A received a Tax Notice for the Release of the Debt relating to the alleged irregularity in the payment of social security contributions relating to the payment of Profit Sharing, in the likely restated amount of R$ 23,786 (R$ 10,467 on December 31, 2020). Moreover, it received Tax Notifications of Release of Debts, referring to the alleged irregularity in the collection of Social Security contributions on installments received as indemnity allowances, unadjusted bonuses, hiring bonuses and incentives, in the total possible amount of R$ 85,720, updated (R$ 22,829 updated on December 31, 2020).

e.2.2. Labor

There are 3,067 Labor claims as of December 31, 2021 (3,038 as of December 31, 2020) filed against the company and with possible risk, concerning claims involving former employees and employees of service providers in the amount of updated R$ 306,315 (R$ 317,971 as of December 31, 2020).

The other values are related to labor processes of various requests filed by former employees of their own and third-party companies.

e.3. Tax

	2021	2020
	16,309,439	16,586,353
Federal taxes (e. 3.1)	3,026,326	4,268,212
State taxes (e. 3. 2)	8,782,114	8,562,352
Municipal taxes (e. 3. 3)	1,234,618	740,813
FUST, FUNTTEL e EBC (e.3.4)	3,266,381	3,014,976

The values presented are corrected, in an estimated way, based on the SELIC index. The historical amount involved is R$ 12,133,168 (R$ 11,976,959 on December 31, 2020).

e.3.1. Federal taxes

The total amount assessed against the TIM Group in relation to federal taxes is R$ 3,026,326 on December 31, 2021 (R$ 4,268,212 on December 31, 2020). Of this value, the following discussions stand out mainly:

a. Allegation of alleged incorrect use of tax credits for carrying out a reverse merger, amortization of goodwill paid on the acquisition of cell phone companies, deduction of goodwill amortization expenses, exclusion of goodwill reversal, other reflections and disallowances of compensations and deductions paid by estimate, allegedly improper use of the SUDENE benefit due to lack of formalization of the benefit at the Internal Revenue Service (RFB), and failure to pay IRPJ and CSLL due by estimate. The amount involved is R$ 1,467,409 (R$ 2,715,670 on December 31, 2020). The Company was notified of the decision on April 28, 2021 and, as a result, the partial payment of R$ 1.4 billion was confirmed.

b. Compensation method for tax losses and negative bases. The amount involved is R$ 231,810 (R$ 193,181 on December 31, 2020).

c. Collection of CSLL on currency changes arising from swap transactions accounted for by the cash regime. The amount involved is R$ 69,124 (R$ 67,572 on December 31, 2020).

d. Collection of IRRF [withholding income tax] on income of residents abroad, including those remitted by way of international roaming and payment to unidentified beneficiaries, as well as the collection of CIDE on payment of royalties on remittances abroad, including remittances by way of international roaming. The amount involved is R$ 268,170 (R$ 259,088 on December 31, 2020).

e. Collection of IRPJ, PIS/COFINS and CSLL debits arising from non-homologation or partial homologation of compensations made by the company from credits of withholding taxes on financial investments and negative balance of IRPJ. The amount involved is R$ 410,662 (R$ 399,691 on December 31, 2020).

e.3.2. State Taxes

The total assessed amount against TIM Group regarding state taxes on December 31, 2021 is R$ 8,782,114 (R$ 8,562,352 on December 31, 2020). Of this value, the following discussions stand out mainly:

a. Non-inclusion in the ICMS calculation basis of unconditional discounts offered to customers, as well as a fine for the alleged failure to comply with a related accessory obligation, including for the failure to present the 60i record of the SINTEGRA file. The amount involved is R$ 1,140,553 (R$ 1,128,741 on December 31, 2020).

b. Use of tax benefit (program for the promotion of integrated and sustainable economic development of the Federal District - PRÓ-DF) granted by the taxing entity itself, but later declared unconstitutional, as well as alleged improper credit of ICMS arising from the interstate purchase of goods with tax benefit granted in the state of origin. The amount involved is R$ 356,251 (R$ 492,935 on December 31, 2020).

c. Credit reversal and extemporaneous credit related to acquisitions of permanent assets. The amount involved for TIM S.A. is R$ 654,011 (R$ 608,316 on December 31, 2020).

d. Credits and chargebacks of ICMS, as well as the identification and documentary support of values and information released in customer accounts, such as tax rates and credits granted in anticipation of future surcharges (special credit), as well as credits related to tax substitution operations and exempt and untaxed operations. On December 31, 2021, the involved amount is R$ 3,449,439 (R$ 3,356,501 on December 31, 2020).

e. Use of credit in the acquisition of electricity directly employed in the production process of companies. The amount involved is R$ 138,242 (R$ 136,286 on December 31, 2020).

f. Alleged conflict between the information contained in ancillary obligations and the collection of the tax, as well as specific questioning of fine for non-compliance with ancillary obligations. The amount involved is R$ 727,057 (R$ 698,673 on December 31, 2020).

g. Alleged lack of collection of ICMS due to the gloss of chargebacks related to the prepaid service, improper credit of ICMS in the outputs of goods allegedly benefited with reduction of the calculation base, as well as an allegation of improper non-inclusion of Value-Added Services (VAS) of the ICMS calculation base. The amount involved is R$ 547,575 (R$ 249,271 on December 31, 2020).

h. Launch of credits related to the return of mobile devices lent on loan. The amount involved is R$ 116,700 (R$ 197,521 on December 31, 2020).

i. Collection of ICMS related to subscription services and their alleged improper non-inclusion in the ICMS calculation base due to their nature. The amount involved is R$ 286,519 (R$ 260,447 on December 31, 2020).

e.3.3. Municipal Taxes

The total assessed amount against TIM Group regarding municipal taxes with possible risk is R$ 1,234,618 on December 31, 2021 (R$ 740,813 on December 31, 2020). Of this value, the following discussions stand out mainly:

a. Collection of ISS, as well as the punitive fine for the absence of the supposed tax due, on several revenue accounts of the company. The amount involved is R$ 618,343 (R$ 150,023 on December 31, 2020).

b. Collection of ISS on importation of services or services performed in other municipalities. The amount involved is R$ 399,141 (R$ 385,536 on December 31, 2020).

c. Constitutionality of the collection of the functioning supervision fee (TFF - Taxa de Fiscalização do Funcionamento) by municipal authorities of different localities. The amount involved is R$ 137,944 (R$ 126,159 on December 31, 2020).

e.3.4. FUST and FUNTTEL

The total amount charged against the TIM Group in relation to the contributions to FUST and FUNTTEL with a possible risk rating is R$ 3,266,381 (R$ 3,014,976 on December 31, 2020). The main discussion involves the collection of the contribution to FUST and FUNTTEL (Fund for the technological development of Telecommunications) from the issuance by ANATEL of Sum no. 07/2005, aiming, among others, and mainly, the collection of the contribution to FUST and FUNTTEL on interconnection revenues earned by mobile telecommunications service providers, from the validity of Law 9998/2000.

e.4. Regulatory

ANATEL filed administrative proceedings against the Company for: (i) non-compliance with certain quality indicators; (ii) non-compliance with other obligations derived from the terms of authorization and; (iii) non-compliance with the SMP and STFC regulations, among others.

On December 31, 2021, the value indicated for the PADOs (procedure for determining non-compliance with obligations), considering the inflation adjustment, classified with possible risk was R$ 120,218 (R$ 119,076 on December 31, 2020). The variation was mainly due to monetary adjustment for the year.

On August 22, 2019, ANATEL's Board of Directors unanimously approved TIM's conduct adjustment term (TAC), which had been negotiated since June 2018 with the regulator. The agreement covers a sanctions reference value of R$ 627 million. The commitment includes actions to improve three pillars of action-customer experience, quality and infrastructure - through initiatives associated with improvements in the licensing process of stations, efficient use of numbering resources, evolution of digital service channels, reduction of complaint rates, repair of users and strengthening of transport and access networks. In addition, it contemplates the additional commitment to bring mobile broadband, through the 4G network, to 366 municipalities with less than 30 thousand inhabitants thus reaching more than 3.4 million people. The new infrastructure will be implemented in three years - more than 80% in the first two years – being guaranteed by the company the sharing regime with the other providers.

On June 19, 2020, the Board of Directors of the company approved the said TAC after final deliberation of the regulator and the signing of the term took place on June 25. The agreement covers sanctions totaling a value of approximately R$ 639 million, updated, which will be filed according to commitments represented in actions to improve quality and customer experience as well as increase network infrastructure in more than 2,000 locations.

During the fourth quarter of 2021, the Company carried out all the activities planned for the strict compliance with the Conduct Adjustment Instrument (TAC) 001/2020 entered into with Anatel, aiming at achieving the goals associated with the TAC for the second year. With the closing of the 1st TAC Year, inspection activities by the Agency are taking place in relation to commitments due and they were recognized as met by Anatel: Additional commitments; Internal controls; Complaints Index; General quality index; Numbering; Interconnection and; Impediment. The Company will continue fully implementing the internal monitoring mechanisms through the quarterly report on the evolution of the schedules by the Governance Office in Management and Board of Directors. So far, the Company has been complying with the TAC implementation schedule without the need for any additional obligations.

By obtaining the extension of the term of the authorizations to use the radio frequencies associated with the SMP, TIM S.A. becomes liable for the contractual burden on the net revenue arising from the service plans marketed under each authorization. However, since 2011 ANATEL began to include in the basis of calculation of said burden also the revenues obtained with interconnection, and from 2012, the revenues obtained with Value-Added Services. In the company's opinion, the inclusion of such revenues is improper because it is not expressly provided for in the terms of original authorizations, so the collections received are discussed in the administrative and/or judicial sphere.

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Shareholders' equity

12 Months Ended

Dec. 31, 2021

Shareholders' equity

25. Shareholders' equity

a. Share capital

The share capital is recorded by the amount effectively raised from the shareholders, net of the costs directly linked to the funding process.

The subscribed and paid-up share capital on December 31, 2021, is represented by 2,420,804,398 common shares (2,420,804,398 common shares on December 31, 2020).

The Company is authorized to increase its share capital up to the limit of 4,450,000,000 common shares, by resolution of Board of Directors, regardless of any amendment to its bylaws.

As of July 2, 2020, the Board of Directors of the Company approved the reverse split of all of the 42,296,789,606 of common shares without par value issued by the Company pursuant to the terms of Art. 12 of Law 6404/76, with no change in the share capital, at a ratio of 100 shares to form 1 common stock, through the share capital, to be represented by the 422,967,896 common shares, without par value, while preserving all of the rights and privileges of those shares are common shares. The proposed grouping did not result in fractions of shares. The incorporation resulted in the cancellation of all the shares issued by the company, which were owned by TIM Participações.

Following the merger mentioned in note 1, is checked for the condition precedent, the shareholders of TIM Participações received 1 common share issued by the TIM S.A. for each 1 common share issued by TIM Participações, of ownership, and that, assuming the maintenance of the number of shares issued by TIM Participações, ex-treasury shares, resulting in the issuance of a 2,420,447,019 the common shares by the management of TIM S.A., all nominative, book-entry and with no par value.

On August 31, 2020, the increase in the share capital of the company in the amount of R$ 1,719defined in the incorporation protocol was approved at an ordinary and Extraordinary General Meeting, which was represented by R$ 13,477,891.

On September 28, 2020, at a meeting of the Board of directors, and the directors of the Company has become aware of the payments relating to the awards of the 2018 and 2019, based on the transfer of shares held in treasury stock to the beneficiaries as provided for in the Plans and pursuant to the terms of the share buy-back Programme as approved by the Board of Directors of TIM Participações S.A. (merged into TIM S.A.) in the meeting held on the 29th of July 2020, in the amount of 357,379 shares (note 1).

b. Capital reserves

The use of capital reserves complies with the precepts of art. 200 of Law 6404/76, which provides for Joint-Stock Companies. This reserve is composed as follows:

	2021	2020
	401,806	397,183
Special Reserve of goodwill	353,604	353,604
Long-term incentive plan	48,202	43,579

b.1 Special Reserve of goodwill

The special reserve of goodwill was constituted from the incorporation of the net assets of the former parent company Tim Participações S.A. (note 1)

b.2 Long-term incentive plan

The balances recorded under these items represent the Company's expenses related to the long-term incentive program granted to employees (note 26).

c. Profit reserves

c.1 Legal Reserve

It refers to the allocation of 5% of the net profit for the year ended December 31 of each year, until the Reserve equals 20% of the share capital, excluding from 2018 the balance allocated to the reserve of tax incentives. In addition, the company may cease to constitute the legal reserve when this, added to the capital reserves, exceeds 30% of the share capital.

This Reserve may only be used to increase capital or offset accumulated losses.

c. 2 Reserve for expansion

The allocation to this reserve is foreseen in Paragraph 2 of art. 46 of the bylaws of the company and is aimed at the expansion of social business.

The balance of profit that is not compulsorily allocated to other reserves and is not intended for the payment of dividends is allocated to this reserve, which may not exceed 80% of the share capital. Reaching this limit, it will be up to the General Meeting to decide on the balance, distributing it to shareholders or increasing capital.

c.3 Tax Benefit Reserve

The company enjoys tax benefits that provide for restrictions on the distribution of profits. According to the legislation that establishes these tax benefits, the amount of tax that is no longer paid due to exemptions and reductions in the tax burden may not be distributed to members and will constitute a reserve of tax incentive of the legal entity. Such a reserve may only be used to absorb losses or increase the share capital. As of December 31, 2021, the cumulative value of the benefits enjoyed by the Company amounts to R$ 1,958,301 (R$ 1,781,560 as of December 31, 2020).

The said tax benefit basically corresponds to the reduction of the Corporate Income Tax (IRPJ) incident on the profit of the exploitation calculated in the units encouraged. The Company operates in the area of the defunct Superintendence of development of the Amazon (SUDENE / SUDAM), being the tax incentive awards granted by state of the Federation, for a period of 10 years, subject to renewal.

d. Dividends

Dividends are calculated in conformity with the bylaws and the Brazilian Corporate Law.

According to its latest bylaws, approved on August 31, 2020, the company must distribute as a mandatory dividend each year ending December 31, provided that there are amounts available for distribution, an amount equivalent to 25% of Adjusted Net Profit.

As provided in the company's bylaws, unclaimed dividends within 3 years will revert to the company.

As of December 31, 2021, and 2020, dividends and interest on shareholders' equity were calculated as follows:

	2021	2020
Net profit for the year	2,957,174	1,828,254
(-) non-distributable tax incentives	(176,741)	(169,540)
(-) Constitution of legal reserve	(139,021)	(83,707)
Adjusted Net Profit	2,641,412	1,575,007
Minimum dividends calculated on the basis of 25% of adjusted profit	660,353	397,752
Breakdown of dividends payable interest on equity:
Interest on shareholders' equity	1,047,500	1,083,000
Total dividends and interest on shareholders' equity distributed and proposed	1,047,500	1,083,000
Withholding income tax (IRRF) on interest on shareholders' equity	(142,977)	(162,450)
Total dividends and interest on shareholders’ equity, net	904,523	920,550

Interest on Shareholders' Equity paid and/or payable is accounted for against financial expenses which, for the purposes of presenting the quarterly information, are reclassified and disclosed as allocation of net profit for the year, in changes in shareholders' equity.

During 2021, the amount of R$ 1,047,500 was distributed, as follows:

Interest on shareholders’ equity	Approval	Payment
R$ 350,000	06/09/2021	07/20/2021
R$ 137,500	09/24/2021	10/27/2021
R$ 560,000	12/15/2021	01/25/2022

The balance on December 31, 2021 of the item “dividends and interest on shareholders' equity payable” totaling R$ 533,580, is composed of the outstanding amounts of previous years in the amount of R$ 49,955 (R$ 43,026 on December 31, 2020) in addition to the paid amount January 25, 2022, in the amount of R$ 483,625, net.

As set forth in the Law 6404/76 and the Bylaws of the Company, unclaimed dividends - as established in the Joint Stock Company Law, dividends and Interest on Shareholders' Equity declared and unclaimed by shareholders within 3 years, are reverted to shareholders' equity at the time of its prescription and allocated to a supplementary reserve to expand businesses.

For the statement of cash flows, Interest on Shareholders' Equity and dividends paid to its shareholders are being allocated in the group of “financing activities.” 

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Long-Term Incentive Plan

12 Months Ended

Dec. 31, 2021

Long-Term Incentive Plan

26. Long-Term Incentive Plan

2011-2013 Plan, 2014-2016 Plan, 2018-2020 Plan and 2021-2023 Plan

On August 5, 2011, April 10, 2014, April 19, 2018 and March 30, 2021, they were approved by the General Meeting of shareholders of TIM S.A. (TIM Participações S.A. before the merger by TIM S.A. on August 31, 2020), long-term incentive plans; “2011-2013 Plan”, “2014-2016 Plan”, “2018-2020 Plan” and “2021-2023 Plan” respectively, granted to senior directors and to those who occupy the position of key positions in the Company.

The 2011-2013 and 2014-2016 Plans addresses the granting of stock options, while the 2018-2020 and 2021-2023 Plans provides for the granting of shares (performance shares and/or restricted shares).

The exercise of the options of the 2011-2013 Plan is conditioned on the achievement of specific performance targets that could prevent the exercise of options, while when in the exercise of the options of the 2014-2016 Plan, the achievement of goals may affect only the acquisition price of the shares. The strike price is calculated by applying a plus or minus adjustment to the Base price of the share as a result of shareholder performance, taking into account the criteria provided for in each plan.

The 2018-2020 and 2021-2023 Plans propose to grant participants shares issued by the Company, subject to the participant’s permanence in the Company (achievement of specific goals). The number of shares may vary, for more or for less, as a result of the performance and possibly of the dividend award, considering the criteria provided for in each Grant.

The term of validity of the options of the 2011-2013 and 2014-2016 plans is 6 years and TIM S.A. has no legal or non-formalized obligation to repurchase or settle the options in cash. For the 2018-2020 and 2021-2023 plan, the term of validity has the same periodicity of 3 years related to its vesting. In turn, the new Plans, in addition to considering the transfer of shares, also provides for the possibility of making payment to participants of the equivalent amount in cash.

The total amount of the expense was calculated considering the fair value of the options and the value of the shares and is recognized in the results over the vesting period.

Stock Options Program Table

Grant date	Options granted	Expiry date	Base Price	Balance at the beginning of the year	Granted during the year	Exercise during exercise	Expired during exercise	Overdue during the year	Balance at the end of the year
2014-2016 Plan – 3rd Grant	3,922,204	Nov 2022	R$ 8.10	295,063	-	(182,511)	-	-	112,552
2014-2016 Plan – 2nd Grant	3,355,229	Oct 2021	R$ 8.45	21,771	-	(21,771)	-	-	0
Plan 2014-2016-1st Grant	1,687,686	Sep 2020	R$ 13.42	-	-	-	-	-	-
2011-2013 Plan – 3rd Grant	3,072,418	July 2019	R$ 8.13	-	-	-	-	-	-
2011-2013 Plan – 2nd Grant	2,661,752	Sep 2018	R$ 8.96	-	-	-	-	-	-
2011-2013 Plan – 1st Grant	2,833,595	Aug 2017	R$ 8.84	-	-	-	-	-	-
Total	17,532,884			316,834	-	(204,282)	-	-	112,552
Weighted average price of the balance of grants				R$ 8.10

Stock Program Table (Performance Shares and Restricted Shares)

Identification of grant:	Shares granted	Expiry date	Grant Price		Balance at the beginning of the year	Granted during the year	Transferred during the year*			Paid in cash*			Canceled during the year	Balance at the end of the year
							Volume Vested	Performance change	Additional Dividends	Volume Vested	Performance change	Additional dividends
2021-2023 Plan 2021 Grant(s)	3,431,610	May 2024	R$ 12.95		-	3,431,610	-	-	-	-	-	-	(311,876)	3,119,734
2018-2020 Plan 2020 Grant(s)	796,054	Apr 2023	R$ 14.40		796,054	-	(206,578)	(51,634)	(8,933)	-	-	-	(70,378)	519098
2018-2020 Plan 2019 Grant(s)	930,662	July 2022	R$ 11.28		687,895	-	(207,859)	(78,111)	(23,252)	-	-	-	(53,006)	427,030
2018-2020 Plan 2018 Grant*	849,932	Apr 2021	R$ 14.41		199,594	-	(187,039)	(42,854)	(22,250)	(9,101)	(2,305)	(1,094)	(3,454)	-
Total	6,008,258				1,683,543	3,431,610	(601,476)	(172,599)	(54,435)	(9,101)	(2,305)	(1,094)	(438,714)	4,065,862
Weighted average price of the balance of grants				R$ 12.96

The significant data included in the model, for the Stock Option Grants, was as follows:

Grant date	Base price - weighted average share in the period of measurement of the grant	Volatility	Expected life of the option	Annual interest rate without risk
2011 Grant	R$ 8.84	51.73% p.a.	6 years	11.94% p.a.
2012 Grant	R$ 8.96	50.46% p.a.	6 years	8.89% p.a.
2013 Grant	R$ 8.13	48.45% p.a.	6 years	10.66% p.a.
2014 Grant	R$ 13.42	44.60% p.a.	6 years	10.66% p.a.
2015 Grant	R$ 8.45	35.50% p.a.	6 years	16.10% p.a.
2016 Grant	R$ 8.10	36.70% p.a.	6 years	11.73% p.a.

Note: Significant data is characteristic of an option-based plan, considering the use of fair value as the appropriate method for calculating expenses with option remuneration.

The base price of the share of each share was calculated using the weighted averages of TIM S.A.’s share price. (TIM Participações S.A. before the merger by TIM S.A. on August 31, 2020), considering the following periods:

· 2011-2013 Plan - 1st Grant-traded volume and trading price of TIM Participações shares in the period of 30 days prior to the date of 07/20/2011 (date on which the Board of Directors of TIM Participações approved the benefit).

· 2011–2013 Plan – 2nd Grant – traded volume and trading price of shares of TIM Participações for the period 07/01/2012–08/31/2012.

· 2011–2013 Plan – 3rd Grant-traded volume and trading price of TIM Participações shares for the period of 30 days prior to 07/20/2013.

· 2014-2016 Plan – 1st Grant-traded volume and trading price of TIM Participações in the 30 days prior to the date defined by the Board of Directors of TIM Participações (September 29, 2014).

· 2014-2016 Plan – 2nd Grant-traded volume and trading price of TIM Participações in the 30 days prior to the date defined by the Board of Directors of TIM Participações (September 29, 2015).

· 2014-2016 Plan – 3rd Grant-traded volume and trading price of TIM Participações in the 30 days prior to the date defined by the Board of Directors of TIM Participações (September 29, 2016).

· 2018-2020 Plan – 1st Grant-traded volume and trading price of TIM Participações shares for the period 03/01/2018–03/31/2018.

· 2018-2020 Plan – 2nd Grant-traded volume and trading price of TIM Participações shares for the period 06/01/2019–06/30/2019.

· 2018-2020 Plan – 3rd Grant-traded volume and trading price of TIM Participações shares for the period 03/01/2020–03/31/2020.

· 2021-2023 Plan - 1st Grant - traded volume and trading price of TIM S.A. shares in the period from March 01, 2021 to March 31, 2021.

On December 31, 2021, expenses pegged to these long-term benefit plans totaled R$ 22,212 (R$ 9,999, on December 31, 2020). 

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Revenue

12 Months Ended

Dec. 31, 2021

Revenue

27. Revenue

Revenue from services rendered

The principal service revenue derives from monthly subscription, the provision of separate voice, SMS and data services, and user packages combining these services, roaming charges and interconnection revenue. The revenue is recognized as the services are used, net of sales taxes and discounts granted on services. This revenue is recognized only when the amount of services rendered can be estimated reliably.

Revenues are recognized monthly, through billing, and revenues to be billed between the billing date and the end of the month (unbilled) are identified, processed, and recognized in the month in which the service was provided. These non-billed revenues are recorded on an estimated basis, which takes into account consumption data, number of days elapsed since the last billing date.

Interconnection traffic and roaming revenue are recorded separately, without offsetting the amounts owed to other telecom operators (the latter are accounted for as operating costs).

The minutes not used by customers and/or reload credits in the possession of commercial partners regarding the prepaid service system are recorded as deferred revenue and allocated to income when these services are actually used by customers.

The net service revenue item also includes revenue from new partnership agreements, and the amount of revenue recognized in the year ended December 31, 2021 is R$ 119,457.

Arbitration Procedure No. 28/2021/SEC8 was filed before the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce (“CCBC” and “Arbitration Procedure”, respectively), by TIM against Banco C6 S.A., Carbon Holding Financeira S.A. and Carbon Holding S.A (together, “Defendants”), through which the interpretation of certain clauses in the contracts that rule the partnership between the parties will be discussed. In case of loss, the partnership may be terminated. 

Revenues from sales of goods

Revenues from sales of goods (telephones, mini-modems, tablets and other equipment) are recognized when the performance obligations associated with the contract are transferred to the buyer. Revenues from sales of devices to trading partners are accounted for at the time of their physical delivery to the partner, net of discounts, and not at the time of sale to the end customer, since the Company has no control over the good sold. 

Contract identification 

The Company monitors commercial contracts in order to identify the main contractual clauses and other elements present in the contracts that could be relevant in the application of the accounting rule IFRS 15 – Revenue from Contracts with Customers. 

Identification of the performance obligation 

Based on the review of its contracts, the Company mainly verified the existence of the following performance obligations:

(i) sale of equipment; and e

(ii) provision of mobile, fixed and internet telephony services.

Thus, the Company started to recognize revenues when (or as) the Company meets the performance obligation by transferring the asset or service promised to the client; and the asset is considered transferred when (or as) the client obtains control of that asset. 

 Determining and Allocating the Transaction Price to the Performance Obligation 

The Company understands that its commercial packages that combine services and sale of cellular handsets with discounts. In accordance with IFRS 15, the Company is required to perform the discount allocation and recognize revenues related to each performance obligation based on their standalone selling prices. 

Cost to obtain contract 

All incremental costs related to obtaining a contract (sales commissions and other costs of acquisition from third parties) are recorded as prepaid expenses and (as described in note 11) amortized over the same period as the revenue associated with this asset. Similarly, certain contract compliance costs are also deferred to the extent that they relate to performance obligations under the customer agreement, i.e. when the customer obtains control over the asset. 

	2021	2020	2019
Net revenue	18,058,027	17,267,812	17,377,194
Gross revenue	25,357,429	24,346,101	25,182,831
Service revenue	24,264,246	23,279,423	23,820,343
Service revenue-Mobile	22,433,225	21,522,135	22,145,033
Service revenue - Landline	1,831,021	1,757,288	1,675,310
Goods sold	1,093,183	1,066,678	1,362,488
Deductions from gross revenue	(7,299,402)	(7,078,289)	(7,805,637)
Taxes incidents	(4,679,722)	(4,534,582)	(4,939,980)
Discounts granted	(2,610,388)	(2,531,920)	(2,843,670)
Returns and other	(9,292)	(11,787)	(21,987)

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Operating costs and expenses

12 Months Ended

Dec. 31, 2021

Operating costs and expenses

28. Operating costs and expenses

	2021				2020
	Cost of services rendered and goods sold	Selling expenses	General and administrative expenses	Total	Cost of services rendered and goods sold	Selling expenses	General and administrative expenses	Total
	(8,443,023)	(4,621,788)	(1,723,384)	(14,788,195)	(7,996,615)	(4,443,027)	(1,673,290)	(14,112,932)
Personal	(62,214)	(676,479)	(387,735)	(1,126,428)	(58,024)	(632,231)	(321,967)	(1,012,222)
Third party services	(560,039)	(1,763,360)	(668,641)	(2,992,040)	(587,835)	(1,743,644)	(538,584)	(2,870,063)
Interconnection and means of connection	(1,840,139)	-	-	(1,840,139)	(1,672,655)	-	-	(1,672,655)
Depreciation and amortization	(4,847,995)	(265,565)	(578,136)	(5,691,696)	(4,569,064)	(247,666)	(710,282)	(5,527,012)
Taxes, fees and contributions	(34,732)	(777,819)	(29,388)	(841,939)	(28,675)	(761,152)	(23,809)	(813,636)
Rent and insurance	(362,171)	(109,781)	(20,082)	(492,034)	(316,650)	(107,550)	(15,753)	(439,953)
Cost of goods sold	(731,007)	-	-	(731,007)	(756,060)	-	-	(756,060)
Publicity and advertising	-	(459,811)	-	(459,811)	-	(377,184)	-	(377,184)
Expected credit losses of trade accounts receivable	-	(544,642)	-	(544,642)	-	(552,817)	-	(552,817)
Other	(4,726)	(24,331)	(39,402)	(68,459)	(7,652)	(20,783)	(62,895)	(91,330)

	2019
	Cost of services provided and goods sold	Seling expenses	General and administrative expenses	Total
	(7,433,731)	(4,986,289)	(1,717,859)	(14,137,879)
Personnel	(53,392)	(624,353)	(392,984)	(1,070,729)
Third-party services	(569,242)	(2,041,646)	(512,643)	(3,123,531)
Interconnection and means of connection	(1,419,464)	-	-	(1,419,464)
Depreciation and amortization	(4,132,223)	(256,898)	(739,860)	(5,128,981)
Taxes, fees and contributions	(32,120)	(817,369)	(18,846)	(868,335)
Rent and insurance	(291,302)	(121,795)	(20,590)	(433,687)
Cost of goods sold	(931,818)	-	-	(931,818)
Publicity and advertising	-	(355,234)	-	(355,234)
Expected credit losses of trade accounts receivable	-	(748,291)	-	(748,291)
Other	(4,170)	(20,703)	(32,936)	(57,809)

The company makes contributions to public or private pension insurance plans on a mandatory, contractual or voluntary basis while the employee is on the staff of the company. Such plans do not bring any additional obligations to the company. If the employee ceases to be part of the company's staff in the period necessary to have the right to withdraw contributions made by sponsors, the amounts to which the employee is no longer entitled and which may represent a reduction in the company's future contributions to active employees, or a cash refund of these amounts, are released as assets.

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Other income (expenses), net

12 Months Ended

Dec. 31, 2021

Other Income Expenses Net

Other income (expenses), net

29. Other income (expenses), net

	2021	2020	2019
Income
Income from grant, net	13,548	17,427	21,572
Fines on telecommunications services	58,793	37,490	50,499
Revenue on disposal of assets (ii)	2,711,535	5,375	2,214
PIS/COFINS credits (i)	-	-	1,795,000
Other income	65,482	68,651	83,558
	2,849,358	128,943	1,952,843
Expenses
FUST/FUNTTEL (iii)	(134,962)	(133,378)	(137,169)
Taxes, fees and contributions	(2,274)	(10,316)	(4,024)
Provision for legal and administrative proceedings, net of reversal	(248,987)	(290,789)	(466,460)
Expense on disposal of assets (ii)	(1,942,791)	(13,538)	(7,055)
Other expenses	(22,573)	(32,776)	(62,593)
	(2,351,587)	(480,797)	(677,301)
Other income (expenses), net	497,771	(351,854)	1,275,542

(i) The change refers to the update of claims arising from judicial proceedings with a final decision passed in favor of the company in higher courts, in 2019, which discussed the exclusion of ICMS from calculation basis of PIS and COFINS contributions. The amount of R$ 1,795 million was recorded under Other income in 2019 (note 9).

(ii) Represents the revenue from the sale of 51% equity interest in I-Systems (formerly FiberCo) to IHS, in the amount of R$ 2,709,251, which is composed of the (secondary) cash paid to TIM S.A. and the fair value of the minority interest of 49% that remained with TIM S.A.

In expenses, the amount of 1,927,014 is represented by the write-off of the net assets written-off at TIM S.A. and paid-in as share capital at I-Systems, in addition to the write-off of goodwill and deferred income tax related to goodwill due to the sale of 51% of I -Systems (formerly FiberCo). The gain on this transaction before income tax and social contribution is R$ 782,237. See note 1.

(iii) Representing the expenses incurred with contributions on the various telecommunications revenues due to ANATEL, according to current legislation.S 

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Financial income

12 Months Ended

Dec. 31, 2021

Financial income

30. Financial income

	2021	2020	2019
Financial income	1,091,748	438,598	1,430,171
Interest on financial investments	339,681	82,512	88,224
Interest received from clients	28,427	28,686	37,233
Swap interest	203,852	32,955	15,536
Interest on lease	24,788	19,924	20,528
Inflation adjustment (i)	208,029	116,441	1,263,793
Other derivatives (ii)	285,009	155,165	-
Other income	1,962	2,915	4,857

(i)

A substantial part is related to the monetary restatement on judicial and administrative proceedings and judicial deposits.

(ii)

It is the difference between the market cost and value of the share subscription option related to Banco C6 partnership; therefore, the mark-to-market value of these derivatives includes a gain of R$ 285 million referring to the company’s stock option obtained through achievement of contractual target defined in an operational partnership started in 2020. The market value was calculated based on information available in the last investment transaction carried out by the partner and disclosed in the market. The disclosures of this derivative financial instrument are detailed in note 37, which was measured at fair value, and will subsequently be measured in the Company’s income, also considering the risks related to arbitration disclosed in note 27.

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Financial expenses

12 Months Ended

Dec. 31, 2021

Financial expenses

31. Financial expenses

	2021	2020	2019
Financial expenses	(1,745,213)	(1,242,255)	(1,408,053)
Interest on loans and financing	(99,183)	(70,400)	(116,735)
Interest on taxes and fees	(61,745)	(43,616)	(28,396)
Swap interest	(352,029)	(45,970)	(24,604)
Interest on lease	(845,033)	(766,263)	(821,463)
Inflation adjustment (i)	(247,200)	(161,892)	(191,309)
Discounts granted	(52,509)	(33,725)	(36,047)
Other expenses	(87,514)	(120,389)	(189,499)

(i) Substantial portion related to the inflation adjustment of lawsuits, in the amount of R$ 111,949 - see note 24 (R$ 137,379 as of December 31, 2020).

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Foreign exchange variations, net

12 Months Ended

Dec. 31, 2021

Foreign Exchange Variations Net

Foreign exchange variations, net

32. Foreign exchange variations, net

	2021	2020	2019
Revenues
Loans and financing (ii)	215,262	-	22,494
Suppliers	13,190	15,981	9,004
Swap (i)	275,836	305,012	40,742
Other	16,640	43,155	15,952
	520,928	364,148	88,192
Expenses
Loans and financing (ii)	(275,724)	(305,010)	(40,715)
Suppliers	(20,061)	(46,112)	(13,201)
Swap (i)	(215,262)	-	(22,493)
Other	(9,222)	(19,991)	(12,691)
	(520,269)	(371,113)	(89,100)
Foreign exchange variations, net	659	(6,965)	(908)

(i) Referring to derivative financial instruments to mitigate risks of foreign exchange variations related to foreign currency debts (note 37).

(ii) It mainly refers to foreign exchange variation on loans and financing in foreign currency.

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Expense with current and deferred income tax and social contribution

12 Months Ended

Dec. 31, 2021

Expense with current and deferred income tax and social contribution

33. Expense with current and deferred income tax and social contribution

	2021	2020	2019
Current income tax and social contribution
Income tax for the period	9,697	(684,099)	(155,521)
Social contribution for the period	26,538	(232,671)	(58,905)
Tax incentive – SUDENE/SUDAM (i)	167,118	164,442	156,594
	203,353	(752,328)	(57,832)
Deferred income tax and social contribution
Deferred income tax	(255,972)	453,127	(625,516)
Deferred social contribution	(93,432)	144,722	(225,186)
	(349,404)	597,849	(850,702)
Provision for income tax and social contribution contingencies	-	(9,671)	(5,406)
	(349,404)	588,178	(856,108)
	(146,051)	(164,150)	(913,940)

The reconciliation of income tax expense and social contribution calculated by applying the combined tax rates with the values reflected in the result is shown below:

	2021	2020	2019
Income before income tax and social contribution	3,103,225	1,992,404	4,536,067
Combined tax rate	34%	34%	34%
Combined tax rate on income tax and social contribution	(1,055,097)	(677,417)	(1,542,263)
(Additions) / deletions:
Permanent additions and exclusions:
Non-taxable revenues	135,465	11,370	7,790
Non-deductible expenses for tax purposes	(53,505)	(42,329)	(18,748)
Tax incentive – SUDENE/SUDAM (i)	167,118	164,442	194,161
Tax benefit related to interest on shareholders’ equity	356,150	368,220	338,449
Sale I – Systems (formerly FiberCo) (ii)	(335,935)	-	-
IR/CS credit on Selic related do tax overpayment (iii)	534,804	-	-
Reversal of Provision for IR/CS - TIM Nordeste (iv)	87,565	-	-
Other amounts	17,384	11,564	106,670
	909,046	513,267	628,322
Income tax and social contribution recorded in income for the period
	(146,051)	(164,150)	(913,941)
Effective rate	4.71%	8.24%	20.15%

(i) As mentioned in note 25 c.3, in order for investment grants not to be computed in taxable income, they must be recorded as a tax incentive reserve, which can only be used to absorb losses or be incorporated into the share capital. TIM S.A. has tax benefits that fall under these rules.

(ii) Refers to deferred taxes on goodwill written-off, according to the sale transaction described in Note 1, which took place in November 2021 between TIM S.A. and IHS. See note 15.d.

(iii) As mentioned in note 9, in September 2021, the Federal Supreme Court (STF), with general repercussions, established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement using the SELIC rate in cases of undue payment. Although the aforementioned decision is still pending publication, as well as the specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to date, in the amount of R$ 534 million, since the likelihood of a favorable outcome for the Company becomes probable.

(iv) In the second quarter of 2021, there was a positive impact of R$ 87 million arising from the write-off of assets and reversal of the provision for income tax and social contribution, set up in 2009, due to the partial success in an administrative proceeding related to the merger of the company TIM Nordeste by TIM Celular.

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Earnings per share

12 Months Ended

Dec. 31, 2021

Earnings per share

34. Earnings per share

The number of TIM.SA shares before the corporate reorganization was 2,420,447,019, equivalent to the number of TIM Participações common shares on the merger date. Consequently, basic and diluted earnings per share were calculated considering the retrospective impact of the change in the number of shares, pursuant to IAS 33.

(a)       Basic

Basic earnings per share are calculated by dividing profit attributable to Company’s shareholders by the weighted average number of shares issued during the year.

	2021	2020	2019
Income attributable to the shareholders of the company	2,957,174	1,828,254	3,622,127
Weighted average number of common shares issued (thousands)	2,420,314	2,420,804	2,420,481
Basic earnings per share (expressed in R$)	1.22	0.76	1.50

(b)       Diluted

Diluted earnings per share are calculated by adjusting the weighted average amount of shares outstanding to assume the conversion of all potential dilutive shares.

	2021	2020	2019
Income attributable to the shareholders of the company	2,957,174	1,828,254	3,622,127
Weighted average number of common shares issued (thousands)	2,420,638	2,421,065	2,421,018
Diluted earnings per share (in R$)	1.22	0.76	1.50

The calculation of diluted earnings per share considered 324 thousands (261 thousands on December 31, 2020) shares related to the long-term incentive plan, as mentioned in note 26.

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Balances and transactions with related parties

12 Months Ended

Dec. 31, 2021

Balances and transactions with related parties

35. Balances and transactions with related parties

The balances of transactions with Telecom Italia Group companies are as follows:

	Assets
	2021	2020
Telecom Italia Sparkle (i)	1,414	1,630
Gruppo Havas (vi)	83,613	-
TI Sparkle (iii)	5,084	1,915
TIM Brasil (vii)	23,069	6,129
Telecom Italia S.p.A. (ii)	1,502	370
I Systems (ix)	5,879	-
Other	674	674
Total	121,235	10,718

	Liabilities
	2021	2020
Telecom Italia S.p.A. (ii)	71,288	75,317
Telecom Italia Sparkle (i)	3,689	10,576
TI Sparkle (iii)	10,205	7,333
TIM Brasil (iv)	6,558	6,145
Vivendi Group (v)	1,238	1,150
Gruppo Havas (vi)	19,794	24,068
I Systems (viii)	31,596	-
Other	4,585	2,797
Total	148,953	127,386

	Revenue
	2021	2020	2019
Telecom Italia S.p.A. (ii)	1,112	1,197	775
Telecom Italia Sparkle (i)	353	2,994	5,371
TI Sparkle (iii)	3,347	4,059	2,052
I Systems (ix)	5,881	-	-
Total	10,693	8,250	8,198

	Cost / Expense
	2021	2020	2019
Telecom Italia S.p.A. (ii)	105,137	110,407	93,188
Telecom Italia Sparkle (i)	19,219	27,485	24,914
TI Sparkle (iii)	20,533	19,923	18,700
Vivendi Group (v)	1,271	1,207	1,386
Gruppo Havas (vi)	206,349	207,682	264,318
I Systems (viii)	31,596	-	-
Other	22,597	22,308	18,713
Total	406,702	389,012	421,219

(i) amounts refer to roaming, Value-Added Services – VAS, transfer of means and international voice-wholesale.

(ii) The amounts refer to international roaming, technical assistance and value added services – VAS and licensing for the use of a registered trademark, granting TIM. S.A. the right to use the “TIM” brand upon payment of royalties in the amount of 0.5% of the company’s net revenue, with payment made on a quarterly basis.

(iii) Values refer to link rental, EILD rental, media rental (submarine cable) and signaling service.

(iv) Mainly refer to judicial deposits made on account of labor causes and transfers of employees.

(v) the values refer to Value Added Services-VAS.

(vi) From the values described above, in the result, they refer to advertising services, of which, R$ 143,439 (R$ 195,117 on December 31, 2020), are related to media transfers.

(vii) Refer to judicial deposits made on account of labor claims.

(viii) The amounts refer to fiber infrastructure services.

(ix) The amounts are related to services provided by TIM S.A., mainly related to network operation and maintenance in the scope of Transition Service Agreement, signed when closing the transaction.

The company has social investment actions that include donations, projects developed by the Tim Institute and sponsorships. On December 31, 2021, the Company invested R$ 9,147 (R$ 4,829 on December 31, 2020).

Balances on equity accounts are recorded in the groups: trade accounts receivable, prepaid expenses, suppliers and other current assets and liabilities.

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Management remuneration

12 Months Ended

Dec. 31, 2021

Management remuneration

36. Management remuneration

The key management personnel includes statutory directors and the Board of Directors. The payment of key management personnel for the provision of their services is presented below:

	2021	2020	2019
Short-term benefits	31,494	23,949	22,524
Other long-term benefits	1,052	4,544	900
Share-based payments remuneration	15,176	6,343	5,379
	47,722	34,836	28,803

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Financial instruments and risk management

12 Months Ended

Dec. 31, 2021

Financial instruments and risk management

37. Financial instruments and risk management

Among the financial instruments registered in the Company, there are derivatives that are financial assets or liabilities measured at fair value through the result. At each balance sheet date such assets/liabilities are measured at their fair value. Interest, monetary correction, foreign exchange variation and variations arising from the fair value measurement, where applicable, shall be recognized in the statement of income when incurred, under the line item financial income or financial expenses.

Initially, derivatives are recognized at fair value on the date a derivative contract is concluded and are subsequently remeasured at fair value. The company does not apply “hedge accounting.”

The Company carries out transactions with derivative financial instruments, without speculative purposes, only with the aim of i) reducing risks related to foreign exchange variation and ii) managing interest rate exposure. The Company's derivative financial instruments are specifically represented by swap contracts.

The company's financial instruments are being presented in compliance with IFRS 9.

The main risk factors that the company is exposed to are as follows:

(i) Risks of foreign exchange variations

The risks of foreign exchange variations relate to the possibility of the Company computing i) losses derived from fluctuations in exchange rates by increasing the balances of debt with loans and financing obtained in the market and the corresponding financial expenses or ii) increase in cost in commercial contracts that have some type of link to foreign exchange variation. In order for these types of risks to be mitigated, the company performs: swap contracts with financial institutions with the aim of canceling the impacts arising from the fluctuation of exchange rates on the balance sheet and financial result and commercial contracts with foreign exchange band clauses with the aim of partially mitigating foreign exchange risks or derivative financial instruments to reduce the remaining risks of foreign exchange exposure in commercial contracts.

On December 31, 2021, the Company's loans and financings indexed to the variation of foreign currencies are fully protected, both in terms and in value, by swap contracts. Gains or losses on these swap contracts are recorded in the company's earnings.

In addition to the risks mentioned above, there are no other financial assets and liabilities in significant amounts that are indexed to foreign currencies.

(ii) Interest rate risks

Interest rate risks relate to:

The possibility of variations in the fair value of the loans obtained by the company indexed to TJLP, IPCA, fixed rate and/or TLP, when such rates pose a risk to the company’s perspective of not corresponding proportionally to the rates relating to Interbank Certificates of Deposit (CDI). The Company opted to hedge the exposure linked to the IPCA arising from the issuance of debentures, financing to BNDES and the exposure to a rate linked to the debt with BNP Paribas, all of them until maturity.

The possibility of an unfavorable movement in interest rates would cause an increase in the financial expenses of the Company, as a result of the share of the debt and the passive positions that the Company has in swap contracts linked to floating interest rates (percentage of the CDI). However, on December 31, 2021, the Company maintains its financial resources applied to Interbank Certificates of Deposit (CDI), which substantially reduces this risk.

(iii) Credit risk inherent in the provision of services

The risk is related to the possibility of the company computing losses derived from the inability of the subscribers to honor the payments of the invoiced amounts. To minimize this risk, the company preventively performs credit analysis of all orders imputed by the sales areas and monitors the accounts receivable of subscribers, blocking the ability to use services, among other actions, if customers do not pay their debts. There are no customers who have contributed more than 10% of net accounts receivable on December 31, 2021 and December 31, 2020 or revenues from services rendered during the year ended December 31, 2021 and 2020.

(iv) Credit risk inherent in the sale of telephone sets and prepaid telephone cards

The group's policy for the sale of telephone devices and the distribution of prepaid telephone cards is directly related to the credit risk levels accepted during the normal course of business. The selection of partners, the diversification of the portfolio of accounts receivable, the monitoring of loan conditions, the positions and limits of orders established for traders, the formation of collateral are procedures adopted by the company to minimize possible collection problems with its trading partners. There are no customers who contributed more than 10% of revenues from sale of goods during the year ended December 31, 2021 and 2020. There are no customers who contributed more than 10% of the net accounts receivable from the sale of goods on December 31, 2021 and December 31, 2020.

(v)       Liquidity risk

- Liquidity risk arises from the need for cash before the obligations assumed. The company structures the maturities of its non-derivative financial instruments and their respective derivative financial instruments so as not to affect liquidity.

- The management of liquidity and cash flow of the Company are performed on a daily basis to ensure that cash operating generation and previous fund raising, as necessary, are sufficient to maintain the schedule of operating and financial commitments.

- All financial investments of the Company have daily liquidity and the Management may, even in specific cases: i) revise the dividend payment policy; ii) issue new shares; and/or, iii) sell assets to increase liquidity.

(vi) Financial credit risk

The cash flow forecast is performed by the Finance Executive Board, which monitors the continuous forecasts of the liquidity requirements to ensure that the Company has enough cash to satisfy its operating needs. This forecast takes into account investment plans, debt financing, compliance with contractual clauses, compliance with internal goals and, if applicable, external regulatory or legal requirements.

The risk is related to the possibility of the company computing losses derived from the difficulty of redemption of short-term financial investments and swap contracts, due to possible insolvency of counter-parties. The company minimizes the risk associated with these financial instruments by maintaining operations only with financial institutions of recognized market strength, in addition to following a policy that establishes maximum levels of risk concentration per financial institution. 

Fair value of derivative financial instruments:

The consolidated derivative financial instruments are presented below:

	2021		2020
	Assets	Liabilities	Assets	Liabilities
Derivative transactions	198,027	208,787	340,660	36,166
Other derivatives (i)	457,892	-	161,429	-
	655,919	208,787	502,089	36,166
Current portion	(134,292)	(194,837)	(262,666)	(7,273)
Non-current portion	521,627	13,950	239,423	28,893

(i) Other derivatives are instruments of share subscription options represent the option of the Company to subscribe 4.08% of the shares of C6 capital, where the Group/Company paid a share subscription premium in the amount of R$ 17.7 million. As required by IFRS 9, the financial instrument must be valued at its fair value that on December 31, 2021 and December 31, 2020 corresponds to R$ 458 million and R$ 161 million, respectively. The impact of the mark-to-market of the stock conversion option calculated, of R$ 440.3 million, represents the difference in the fair value of the option less the amount paid for the share subscription premium. This financial instrument was measured at fair value and will be subsequently verified in the company’s results for the year, also considering the arbitration risks disclosed in note 27.

The long-term derivative financial instruments on December 31, 2021 are due in accordance with the following schedule:

	Assets
2023	39,335
2024	16,843
2025 onwards	465,449
	521,627

Non-derivative financial liabilities are substantially composed of accounts payable with suppliers, dividends payable and other obligations, the maturity of which will occur in the next 12 months, except for loans and financing and leases, the nominal flows of payments of which are disclosed in notes 20 and 16.

Financial instruments measured at fair value:

	2021
	Level 1	Level 2	TOTAL
Total assets	4,579,528	655,919	5,235,447
Financial assets at fair value through profit or loss	4,579,528	655,919	5,235,447
Derivative financial instruments	-	198,027	198,027
Other derivatives	-	457,892	457,892
Marketable securities	4,579,528	-	4,579,528
Total liabilities	-	208,787	208,787
Financial liabilities at fair value through profit or loss	-	208,787	208,787
Derivative financial instruments	-	208,787	208,787
	2020
	Level 1	Level 2	TOTAL
Total assets	2,077,499	502,089	2,579,588
Financial assets at fair value through profit or loss	2,077,499	502,089	2,579,588
Derivative financial instruments	-	340,660	340,660
Other derivatives	-	161,429	161,429
Marketable securities	2,077,499	-	2,077,499
Total liabilities	-	36,166	36,166
Financial liabilities at fair value through profit or loss	-	36,166	36,166
Derivative financial instruments	-	36,166	36,166

The fair value of financial instruments traded on active markets is based on market prices quoted on the balance sheet date. A market is considered active when the quoted prices are readily and regularly available from an Exchange, distributor, broker, industry group, pricing service or regulatory agency, and these prices represent actual market transactions which occur regularly on a purely commercial basis. These instruments are included in Level 1. The instruments included in Level 1 mainly comprise the equity investments of bank certificates of deposit (CDB) and committed classified as securities for trading.

The fair value of financial instruments that are not traded on active markets (e.g. over-the-counter derivatives) is determined through the use of valuation techniques. These valuation techniques maximize the use of data adopted by the market where it is available and rely as little as possible on entity-specific estimates. If all relevant information required for the fair value of an instrument is adopted by the market, the instrument is included in Level 2.

If one or more relevant information is not based on data adopted by the market, the instrument shall be included in Level 3.

Specific valuation techniques used to value financial instruments include:

· Quoted market prices or quotes of financial institutions or brokers for similar instruments.

· The fair value of interest rate swaps is calculated by the present value of estimated future cash flows based on the yield curves adopted by the market.

· Other techniques, such as analysis of discounted cash flows, available data of the last relevant transaction and analysis of results based on multiples of similar companies, are used to determine the fair value of the remaining financial instruments.

 The fair values of currency derivative financial instruments and interest rates of the Company were determined by means of future cash flows (active and passive position) using the contracted conditions and bringing these flows to present value through discounts for the use of future interest rate disclosed by market sources. Fair values were estimated at a specific time, based on available information and own evaluation methodologies.

Financial assets and liabilities by Category

The financial instruments of the company by category can be summarized as follows:

December 31, 2021

	Measured at amortized cost	Fair value through profit or loss	Total
Assets, as per balance sheet	9,472,377	5,235,447	14,707,824
Derivative financial instruments	-	198,027	198,027
Other derivatives	-	457,892	457,892
Trade accounts receivable and other accounts receivable, excluding prepayments	3,253,207	-	3,253,207
Marketable securities	-	4,579,528	4,579,528
Cash and cash equivalents	5,228,615	-	5,228,615
Leases	243,121	-	243,121
Judicial deposits	718,773	-	718,773
Other amounts recoverable	28,661	-	28,661
	Measured at amortized cost	Fair value through profit or loss	Total
Liabilities, as per balance sheet	16,095,802	208,787	16,304,589
Loans and financing	3,845,465	-	3,845,465
Derivative financial instruments	-	208,787	208,787
Suppliers and other obligations, excluding legal obligations	2,653,218	-	2,653,218
Lease liabilities	9,063,539	-	9,063,539
Dividends and interest on shareholders' equity payable	533,580	-	533,580

December 31, 2020

	Measured at amortized cost	Fair value through profit or loss	Total
Assets, as per balance sheet	6,756,811	2,579,588	9,336,399
Derivative financial instruments	-	340,660	340,660
Other derivatives		161,429	161,429
Trade accounts receivable and other accounts receivable, excluding prepayments	3,180,661	-	3,180,661
Marketable securities	-	2,077,499	2,077,499
Cash and cash equivalents	2,575,291	-	2,575,291
Leases	162,198	-	162,198
Judicial deposits	794,755	-	794,755
Other amounts recoverable	43,906	-	43,906
	Measured at amortized cost	Fair value through profit or loss	Total
Liabilities, as per balance sheet	14,391,175	36,166	14,427,341
Loans and financing	2,345,032	-	2,345,032
Derivative financial instruments	-	36,166	36,166
Suppliers and other obligations, excluding legal obligations	3,128,732	-	3,128,732
Leases	8,378,835	-	8,378,835
Dividends and interest on shareholders' equity payable	538,576	-	538,576

Regular purchases and sales of financial assets are recognized on the trading date - the date on which the Company undertakes to buy or sell the asset. Investments are initially recognized at fair value. After initial recognition, changes in fair value are recorded in the profit and loss for the year, in the financial income and expenses’ group.

Financial risk hedge policy adopted by the Company

The Company's policy establishes that mechanisms must be adopted to protect against financial risks arising from the contracting of financing in foreign currency or indexed to the interest rate, in order to manage said exposure.

The contracting of derivative financial instruments against foreign exchange exposure shall occur simultaneously with the contracting of the debt that gave rise to such exposure. The level of coverage to be contracted for such foreign exchange exposures shall be 100% of the risk, both in terms and in value. To cover interest rates, it is up to the Company to elect or not to contract a hedging mechanism, as provided for in the internal policies.

On December 31, 2021, there are no margins or guarantees applied to transactions with derivative financial instruments of the Company.

Criteria for selection of financial institutions obey parameters that take into consideration rating made available by renowned agencies of analysis of risk, shareholders' equity and transactions, and resources’ concentration levels.

The operations with derivative financial instruments contracted by the company and in force on December 31, 2021 and December 31, 2020 are shown in the following table:

December 31, 2021

COUNTERPARTY

% Coverage

AVERAGE SWAP RATES

Currency

SWAP type

Debt

SWAP

Total Debt

Total swap (Long position)¹

Active Tip

Short position

USD

LIBOR x DI

KFW/ Finnvera

JP Morgan and Bank of America

282,474

282,474

100%

LIBOR 6M + 0.75% p.a.

79.00% to 92.59% of CDI

USD

PRE x DI

BNP Paribas

BNP Paribas

428,793

429,247

100%

3.32% p.a.

155% CDI

USD

PRE x DI

The Bank of Nova Scotia

Scotiabank

559,650

559,933

100%

1.73% p.a.

CDI + 1.05%

BRL

PRE x DI

BNP Paribas

BNP Paribas

515,166

517,843

100%

8.34% p.a.

CDI + 1.07%

BRL

IPCA x DI

DEBENTURE

ITAU

1,696,999

1,696,999

100%

IPCA + 4.17% p.a.

CDI + 0.95%

BRL

IPCA x DI

BNDES

XP

396,281

396,281

100%

IPCA + 4.23% p.a.

96.95% CDI

¹ In certain swap contracts, active tip includes the cost of income tax (15%). After related taxes, coverage remains at 100%.

December 31, 2020

COUNTERPARTY

% Coverage

AVERAGE SWAP RATES

Currency

SWAP type

Debt

SWAP

Total Debt

Total swap (Long position)¹

Active Tip

Short position

USD

LIBOR x DI

KFW/ Finnvera

JP Morgan and Bank of America

351,233

351,233

100%

LIBOR 6M + 0.75% p.a.

85.25% CDI

EUR

PRE x DI

Bank of America

Bank of America

570,878

570,878

100%

0.33% p.a.

108.05% CDI

USD

PRE x DI

The Bank of Nova Scotia.

Scotiabank

1,031,526

1,031,526

100%

1.72% p.a.

134.43% CDI

USD

PRE x DI

BNP Paribas

BNP Paribas

399,725

399,725

100%

3.32% p.a.

155% CDI

Position showing the sensitivity analysis – effect of variations in the fair value of the swaps

For the purpose of identifying possible distortions arising from operations with consolidated derivative financial instruments currently in force, a sensitivity analysis was performed considering the variables CDI, US dollar (USD), Libor and IPCA, individually, in three distinct scenarios (probable, possible and remote), and their respective impacts on the results obtained.

Our assumptions basically observed the individual effect of the CDI, USD, Libor and IPCA variation used in the transactions as the case may be, and for each scenario the following percentages and quotes were used:

Sensitivity scenario		Fair value in USD, EUR, BRL and IPCA (1)	A) ∆ Accumulated variation in debt	Fair value of the active tip of the swap (+)	Fair value of the passive tip of the swap (-)	Swap result	B) ∆ Accumulated variation in swap	C) Final Result (B-A)
	Dez/21	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
CDI	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,388,105	(2,301)	3,388,105	(3,428,742)	(40,637)	(29,671)	(27,370)
	remote	3,385,955	(4,451)	3,385,955	(3,455,013)	(69,058)	(58,093)	(53,641)
USD	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,709,499	319,094	3,709,499	(3,401,372)	308,127	319,094	-
	remote	4,028,593	638,187	4,028,593	(3,401,372)	627,221	638,187	-
LIBOR	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,391,542	1,136	3,391,542	(3,401,372)	(9,830)	1,136	-
	remote	3,392,677	2,271	3,392,677	(3,401,372)	(8,695)	2,271	-
IPCA	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,277,656	(112,750)	3,277,656	(3,401,372)	(123,716)	(112,750)	-
	remote	3,173,004	(217,402)	3,173,004	(3,401,372)	(228,368)	(217,402)	-

(1) (KFW Finnvera, Scotia, BofA, BNP, Debenture and BNDES)

Risk variable	Sensitivity scenario	CDI	USD	LIBOR	IPCA
CDI	probable	9.15%	5.5805	0.3433%	10.06%
	possible	11.44%	5.5805	0.3433%	10.06%
	remote	13.73%	5.5805	0.3433%	10.06%
USD	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	6.3210	0.3433%	10.06%
	remote	9.15%	8.3708	0.3433%	10.06%
LIBOR	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	5.5805	0.4291%	10.06%
	remote	9.15%	5.5805	0.5149%	10.06%
IPCA	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	5.5805	0.3433%	12.58%
	remote	9.15%	5.5805	0.3433%	15.09%

As the Company has derivative financial instruments for the purposes of protection of its respective financial liabilities, the changes in the scenarios are accompanied by the respective object of protection, thus showing that the effects related to the exposure generated in the swaps will have their counterpart reflected in the debt. For these transactions, the Company discloses the fair value of the object (debt) and the protective derivative financial instrument on separate lines, as demonstrated above in the sensitivity analysis demonstration table, in order to report the company's net exposure in each of the scenarios mentioned.

It is noteworthy that the operations with derivative financial instruments contracted by the company have as sole objective the patrimonial protection. In this way, an improvement or worsening in their respective market values will be equivalent to an inverse movement in the corresponding portions of the value of the financial debt contracted, object of the derivative financial instruments of the company.

The sensitivity analyses for derivative financial instruments in force on December 31, 2021 were carried out considering, basically, the assumptions related to changes in market interest rates and the change in the US dollar used in swap contracts. The use of these assumptions in the analysis is due exclusively to the characteristics of derivative financial instruments, which have exposure only to changes in interest and exchange rates.

Chart of gains and losses with derivatives during the year

Schedule of position showing gains and losses with derivatives

	2021	2020
Net income from derivative operations	(87,603)	290,856
Income (loss) from operations with other derivatives	285,009	155,165

Capital Management

The group's objectives in managing its capital are to safeguard the group's ability to continue to deliver return to shareholders and benefits to other stakeholders, as well as maintain a capital structure to reduce this cost. To maintain or adjust the group's capital structure, management may review the dividend payment policy, return capital to shareholders, or issue new shares or sell assets to reduce, for example, the level of debt. The financial leverage ratios on December 31, 2021 and 2020 can be summarized as follows:

	2021	2020
Total loans and derivatives (note 20 and 37)	3,398,333	1,879,109
Leases - Liabilities (note 16)	9,063,539	8,378,835
Leases - Assets (note 16)	(243,121)	(162,198)
Less: Cash and cash equivalents (note 4)	(5,228,615)	(2,575,291)
FIC (note 5)	(4,568,020)	(2,070,438)
Net debt	2,422,116	5,450,017
Other derivatives (note 37)	457,892	161,429
Financing of 5G License	843,020	-
Adjusted net debt	3,723,028	5,611,447
Adjusted EBITDA (1) (last 12 months)	9,459,299	8,330,038
Leverage ratio	0.39	0.65
Reconciliation of profit for the year to Adjusted EBITDA:
Profit for the year	2,957,174	1,828,254
Depreciation and amortization	5,691,696	5,527,012
Finance Income (Cost), Net	652,806	810,622
Income tax and social contribution	146,051	164,150
Share of loss of an associate	11,572	-
Adjusted EBITDA(i)	9,459,299	8,330,038

(i) Adjusted EBITDA: Presentation of Adjusted EBITDA as a non-GAAP measure is useful to management, investors and other users of our financial information in evaluating operating profitability of the Company. Adjusted EBITDA is calculated by adding back financial income (expenses), income tax and social contribution, depreciation and amortization cost and expense, and share of loss of an associate to profit for the year.

Changes in financial liabilities

Changes in liabilities arising from financing activities such as loans and financing, lease liabilities lease and financial instruments are presented below:

	Loans and financing	Lease liabilities	Derivative financial instruments (assets) liabilities
December 31, 2020	2,345,032	8,378,835	(465,922)
Inflows	3,062,000	2,041,474	(296,464)
Cancellations	-	(202,379)	-
Financial expenses	167,857	858,260	148,177
Foreign exchange variations, net	60,463	-	(60,574)
Payment	(1,789,887)	(2,012,651)	227,651
		-
December 31, 2021	3,845,465	9,063,539	(447,132)

	Loans and financing	Lease liabilities	Derivative financial instruments (Assets) Liabilities
December 31, 2019	2,029,088	7,780,870	(42,106)
Inflows	1,800,000	1,966,355	(161,429)
Remeasurement	-	(443,666)	-
Financial expenses	90,500	797,569	13,016
Foreign exchange variations, net	305,010	-	(305,012)
Payment	(1,879,566)	(1,722,293)	29,610
December 31, 2020	2,345,032	8,378,835	(465,922)

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Defined benefit pension plans and other post-employment benefits

12 Months Ended

Dec. 31, 2021

Defined benefit pension plans and other post-employment benefits

38. Defined benefit pension plans and other post-employment benefits

	2021	2020
PAMEC/asset policy and medical plan	6,492	7,346

ICATU, SISTEL and VIVEST

The Company has been sponsoring defined benefit private pension plans for a group of employees from the former TELEBRÁS system, which are currently under the administration of the Sistel Foundation for Social Security and the ICATU multi-sponsor fund. In addition to the plans coming from the TELEBRÁS system, there is also the plan administered by the VIVEST foundation resulting from the incorporation of AES Atimus.

Such pension plans, as well as medical plans, are briefly explained below:

PBS assisted (PBS-Tele Celular Sul and PBS-Tele Nordeste Celular): SISTEL benefit plan with a defined benefit feature. It includes retired employees who were part of the plans sponsored by the companies of the old TELEBRÁS system;

PBS (PBS Tele Celular Sul and PBS Tele Nordeste Celular): pension plan for active and assisted employees with defined benefit characteristics. These benefit plans are managed by the ICATU Fundo MULTIPATROCINADO;

TIMPREV Plan (South and Northeast): pension plan for active and assisted employees with defined contribution characteristics. These benefit plans are managed by the ICATU Fundo MULTIPATROCINADO;

Administration agreement: administration agreement for retirement payment to retirees and pensioners of the company's predecessors. Said plan is managed by ICATU Fundo MULTIPATROCINADO;

PAMEC/Asset Policy: complementary health care plan for retirees of the Company's predecessors;

AES Telecom: Complementary pension plan managed by Vivest, which is the responsibility of TIM, due to the acquisition of AES Atimus, a company that belonged to the former Eletropaulo.

Fiber medical plan: Provision for maintenance of health plan as post-employment benefit to former employees of AES Atimus (as established in Law 9656/98, articles 30 and 31), which was acquired and incorporated by TIM.

The actuarial position of liabilities and assets related to retirement and health care plans, on December 31, 2020, in accordance with the rules provided for by IAS 19 is presented below.

a) Effects on the base date of December 31:

	Plans						Total
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan	2021	2020
Reconciliation of assets and liabilities on 12/31/2021	(*)		(*)
Present value of the actuarial obligations	38,869	9,176	119	672	14,100	3,231	66,167	69,362
Fair value of the plan assets	(56,478)	(14,739)	(405)	-	(11,511)	-	(83,133)	(80,856)
Present value of the obligations exceeding the fair value of the assets	(17,609)	(5,563)	(286)	672	2,589	3,231	(16,966)	(11,494)
Amount recognized in other comprehensive income	-	2,327	168	-	-	-	2,495	2,023
Net actuarial liabilities/(assets)	(17,609)	(3,236)	(118)	672	2,589	3,231	(14,471)	(9,471)

(*) No asset was recognized by the sponsors, due to the impossibility of reimbursing this surplus, and the fact that the sponsor’s contributions will not be reduced in the future.

b) Changes in net actuarial liabilities (assets)

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Actuarial liabilities (assets) on 12/31/2020	(15,731)	(1,360)	(287)	858	2,145	4,343
Expense (revenue) recognized in income (loss)	(1,063)	(90)	(20)	57	160	535
Contributions of the sponsor	-	-	-	(45)	-	(8)
Recognized actuarial (gains) or losses	(815)	(1,786)	189	(198)	284	(1,639)
Unrecognized actuarial (gains) or losses	-	-	-	-	-	-
Net actuarial liabilities (assets) on 12/31/2021	(17,609)	(3,236)	(118)	672	2,589	3,231

c) Reconciliation of present value of obligations

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Value of obligations on 12/31/2020	41,852	10,072	147	858	12,090	4,343
Cost of current service	17	-	-	-	-	213
Interest on actuarial obligation	2,743	640	10	57	868	322
Benefits paid in the year	(2,898)	(768)	(9)	(45)	(605)	(8)
Contributions paid by participants	-				0
(Gains)/losses in obligations	(2,845)	(768)	(29)	(198)	1,747	(1,639)
Value of obligations on 12/31/2021	38,869	9,176	119	672	14,100	3,231

d) Reconciliation of the fair value of the assets

Plans
PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan

Fair value of assets on 12/31/2020	57,479	12,998	434	-	9,945	-
Benefits paid in the year	(2,898)	(768)	(9)	-	(605)	-
Actual earnings from assets during the year	3,799	834	29	-	708	-
Actuarial gain (loss) on plan assets	(1,902)	1,675	(49)	-	1,463	-
Contributions paid by participants	-	-	-	-	-	-
Contributions of sponsor converted in the plan	-	-	-	-		-
Fair value of assets on 12/31/2021	56,478	14,739	405	-	11,511	-

e) Expenses planned for 2022

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Current service cost (with interest)	4	-	-	-	-	121
Interest on actuarial obligations	3,289	769	10	57	1,242	290
Earnings expected from assets	(4,841)	(1,257)	(35)	-	(1,008)	-
Interest on the effect of the (asset)/liability limit	1,552	284	10	-	-	-
Total unrecognized net expense (revenue)	4	(204)	(15)	57	234	411

Actuarial assumptions adopted in the calculations

The main actuarial assumptions adopted in the calculation were as follows:

Nominal discount rate for the actuarial obligation:	PBS South: 8.81% / 5.13%; PBS Nordeste: 8.84% / 5.16%; CA: 8.81% / 5.13%; PBS-A: 8.78% / 5.10%; AES: 9.02% / 5.33%; PAMEC: 8.81% / 5.13%; FIBER: 9.02% / 5.33%
Salary growth rate - nominal:	PBS: 3.50%/ 0.00% CA, PBS-A, AES, PAMEC and FIBER: Not applicable
Biometric general mortality table:	PBS, CA, PAMEC and FIBER: AT-2000 segregated per sex, decreased by 10%
Biometric table of new disability benefit vested:	PBS and FIBER: Álvaro Vindas; CA, PBS-A, AES and PAMEC: Not applicable
Expected turnover rate:	PBS: Null; CA, PBS-A, AES and PAMEC: Not applicable; FIBER: 0.15/ (length of service + 1), being null as of 50 years old
Probability of retirement:	PBS and FIBER: 100% at 1st eligibility; CA, PBS-A, AES and PAMEC: Not applicable
Estimated long-term inflation rate	PAMEC and FIBER: 6.60% / 3.00%
Determination method	Projected Unit Credit Method

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Insurances

12 Months Ended

Dec. 31, 2021

Insurances

39. Insurances

The Company maintains a policy of monitoring the risks inherent in its operations. As a result, on December 31, 2021, the company had insurance contracts in force to cover operational risks, civil liability, cyber risks, health, among others. The management of the company understands that the policies represent sufficient amounts to cover any losses. The main assets, liabilities or interests covered by insurance and their maximum indemnity limits are as follows:

Modalities	Maximum indemnity limits
Operational Risks	R$550,000
General Civil Liability - RCG	R$ 80,000
Cyber risks	R$ 30,001
Automobile (executive and operational fleet)	R$ 1,000 for optional civil liability (property damage and bodily harm) and R$ 100 for pain and suffering.

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Supplementary information to the cash flow

12 Months Ended

Dec. 31, 2021

Supplementary information to the cash flow

40. Supplementary information to the cash flow

Schedule of supplementary information to the cash flow

	2021	2020	2019
Non-cash transactions
Additions to property, plant and equipment and intangible assets - with no effect on cash	(1,929,392)	(1,315,151)	(6,653,985)
Additions to intangible assets - acquisition of licenses	2,682,469	-	-

TIM participated in the 5G Auction for the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands to deploy the 5th Generation mobile telephony, winning several lots in these radio frequencies. In December 2021, the Capex recorded for licenses and related obligations is R$ 3,584 million, with the amount of R$ 2,682 as a contra entry to commitments payable and R$ 902 million with a cash impac

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Subsequent events

12 Months Ended

Dec. 31, 2021

Subsequent events

41.       Subsequent events

Mr. Alberto Mario Griselli appointed as CEO of TIM S.A.

TIM S.A., in continuity with the Material Fact published on January 21, 2022, communicated that, on January 31, 2022, its Board of Directors accepted the resignation of Mr. Pietro Labriola from the positions of Chief Executive Officer (“CEO”) and Board Member of the Company.

The Company’s Board of Directors subsequently appointed Mr. Alberto Mario Griselli to effectively and immediately replace Mr. Labriola in the positions of CEO and Board member. The election of Mr. Griselli to the Company’s Board needs to be confirmed by the next Annual General Meeting of TIM.

The position of Chief Revenue Officer (“CRO”), previously held by Mr. Griselli, will be temporarily vacant, and the CEO will accumulate his responsibilities.

Mr. Griselli holds a degree in Electronic Engineering from La Sapienza University in Rome and a FMBA from Columbia University. With over 20 years of experience in the telecommunications industry, he has held relevant positions such as Vice-President for Latin America at TIMwe, a global provider of mobile engagement solutions for telecom operators, and Managing Director for Latin America at Value Partners, a management consulting firm. Mr. Griselli held the position of CRO at TIM since July 30, 2019.

Transfer control of Oi’s mobile telephony activities

TIM S.A. became aware that in an extraordinary public meeting of its Board of Directors held on January 31, 2022, ANATEL – the National Telecommunications Agency, unanimously granted prior consent to the implementation of the corporate transaction referring to the full transfer of control of the three specific purpose entities (“Mobile Assets SPE” or “SPE”) (1), which correspond to the mobile telephony activities of Oi Móvel S.A. – Under Judicial Reorganization (“Oi Móvel”), for the companies TIM, Telefônica Brasil S.A. and Claro S.A. (“Transaction”).

On February 9, 2022, the Administrative Court of the Administrative Council for Economic Defense (CADE), approved the implementation of the corporate transaction referring to the full transfer of control of the three special purpose entities (“Mobile Assets SPE” or “SPE”)1, which correspond to the mobile telephony activities of Oi Móvel S.A. – Under Judicial Recovery (“Oi Móvel,” “Seller”), for the companies TIM, Telefônica Brasil S.A. and Claro S.A.

On 13th April 2022, TIM, Telefônica Brasil S.A. and Claro S.A. (together “Buyers”) delivered to Oi Móvel S.A. – Under Judicial Reorganization (“Oi Móvel”, “Seller”), the closing notice related to the process of acquisition of the Seller's mobile assets (“Transaction”).

In order for such delivery to become possible, approvals were obtained by the Administrative Council for Economic Defense (CADE), through the signing of an Agreement on Concentration Control, which has already become final, and by the National Telecommunications Agency (ANATEL), in particular with the publication of Acts No. 4,949/2022, 4,950/2022 e 4,951/2022, in addition to being met or waived by the Buyers, as the case may be, all contractual precedent conditions. Thus, the parties scheduled the closing of the transaction for April 20th, 2022.

¹ Cozani RJ Infraestrutura e Rede de Telecomunicações S.A. (SPE TIM), Garliava RJ Infraestrutura e Rede de Telecomunicações S.A. (SPE Telefônica) and Jonava RJ Infraestrutura e Rede de Telecomunicações S.A. (SPE Claro).

Distribution of Interest on Shareholders’ Equity (JSCP)

The Company's Board of Directors approved on March 22, 2022 the payment of R$ 195,000 in Interest on Equity. The payment will occur until April 27th, 2022 and the date for identification of shareholders entitled to receive such values is March 28th, 2022.

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Estimates and areas where judgment is significant in the application of the Company's accounting policies (Policies)

12 Months Ended

Dec. 31, 2021

Impairment loss on non-financial assets and investments in associated companies

(a)       Impairment loss on non-financial assets and investments in associated companies

Impairment losses occur when book value of an asset or cash generating unit exceeds its recoverable value, which is the highest of fair value less selling costs and value in use. Calculation of fair value less selling costs is based on information available on similar assets’ selling transactions or market prices less additional costs to dispose of the asset. The calculation of value in use is based on the discounted cash flow model.

Any reorganization activities with which the Company is not committed to on the reporting date of the Presentation of financial statements or significant future investments that could improve the asset base of the cash generating unit under test are excluded for impairment testing purposes.

The main non-financial assets for which this assessment was made are goodwill recorded by the Company (note 15) and its tangible and intangible assets.

Net investments in associated companies are valued after applying the equity method to determine whether there is any objective evidence of impairment. The recoverable amount of an investment in an associated company must be determined for each investment, unless the associated company does not generate cash inflows on an ongoing basis that are largely independent of those generated by the entity’s other assets. The investment in an associated company was valued as described in Note 13.

Income tax and social contribution (current and deferred)

(b)       Income tax and social contribution (current and deferred)

Income tax and social contribution (current and deferred) are calculated according to interpretations of current legislation and IAS 12. This process typically involves complex estimates to determine taxable income and temporary differences. In particular, the deferred assets on tax losses, negative basis of social contribution and temporary differences is recognized in proportion to the probability that future taxable income is available and can be used. The measurement of the recoverability of deferred income tax on tax losses, negative basis of social contribution and temporary differences takes the history of taxable income into account, as well as the estimate of future taxable income (note 10).

Provision for legal and administrative proceedings

(c)       Provision for legal and administrative proceedings

The legal and administrative proceedings are analyzed by the Management along with its legal advisors (internal and external). The Company considers factors in its analysis such as hierarchy of laws, precedents available, recent court judgments, their relevance in the legal system and payment history. These assessments involve Management’s judgment (note 24).

Fair value of derivatives and other financial instruments

(d)       Fair value of derivatives and other financial instruments

The financial instruments presented in the balance sheet at fair value are measured using valuation techniques that consider observable data or observable data derived from market (note 37).

Unbilled revenues

(e)       Unbilled revenues

Since some cut dates for billing occur at intermediate dates within the months of the year, as the end of each month there are revenues earned by the Company, but not actually invoiced to its customers. These unbilled revenues are recorded based on estimate that takes into consideration historical consumption data, number of days elapsed since the last billing date, among others (note 27).

Leases

(f)       Leases

The Company has a significant number of the lease contracts in which it acts a lessee (note 16), and with the adoption of the accounting standard IFRS 16 – Leases, on 01/01/2019, certain judgments were exercised by Company’s management in measuring lease liabilities and right-of-use assets, such as: (i) estimate of the lease term, considering non-cancellable period and the period covered by options to extend the contract term, when the exercise depends only from the Company, and this exercise is reasonably certain; and (ii) using certain assumptions to calculate the discount rate.

The company is not able to readily determine the interest rate implicit on the lease and, therefore, considers its incremental rate on loans to measure lease liabilities. Incremental rate on the lessee’s loan is the interest rate that the lessee would have to pay when borrowing, for a similar term and with a similar guarantee, the resources necessary to obtain the asset with a value similar to the right of use asset in a similar economic environment. The company estimates the incremental rate using observable data (such as market interest rates) when available and considers aspects that are specific to the Company (such as the cost of debt) in this estimate.

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Operations (Tables)

12 Months Ended

Dec. 31, 2021

Operations

The effects of the transaction are detailed below:

The effects of the transaction are detailed below: 

Description	12/31/2021
Transaction price	1,096,294
Investment registration at fair value	1,612,957
Cost of assets
Derecognition of the assets and liabilities of the subsidiary	(1,211,472)
Write-off of goodwill	(1,051,477)
Write-off of deferred tax on goodwill amortized	335,935
Gain on transaction	782,237
Income tax and social contribution	(509,245)
Net gain on transaction	272,992
Gain before income tax and social contribution on remeasurement of investment at fair value	668,720
Gain before income tax and social contribution on asset disposal	113,517

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Management statement and basis of preparation of the financial statements (Tables)

12 Months Ended

Dec. 31, 2021

Management Statement And Basis Of Preparation Of Financial Statements

The impact of the reverse merger of TIM Participa??es by TIM S.A. was limited to reclassifications among certain accounts within the current year statement of changes in shareholders’ equity as follows:

The impact of the reverse merger of TIM Participações by TIM S.A. was limited to reclassifications among certain accounts within the current year statement of changes in shareholders’ equity as follows:

Equity accounts	The Company’s equity reserves	Impact on TIM S.A. statement of changes in equity	TIM Participações
Share capital	13,477,891	3,611,593	9,866,298
Capital reserve	397,183	(20,892)	418,075
Legal reserve	1,036,194	(57,603)	1,093,797
Tax benefit reserve	1,781,560	-	1,781,560
Reserve for expansion	6,499,602	(3,535,824)	10,035,426
Treasury shares	(4,837)	5,456	(10,293)
Other comprehensive income	(4,848)	(2,730)	(2,118)
Total	23,182,745	-	23,182,745

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Cash and cash equivalents (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of financial assets

The Company’s Management determines the classification of its financial assets upon initial recognition.

	2021	2020
Cash and banks	99,821	100,009
Unrestrictedly available financial investments investments:
Bank Deposit Certificates (CDB)/Repurchase and resale agreements	5,128,794	2,475,282
	5,228,615	2,575,291

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Marketable securities (Tables)

12 Months Ended

Dec. 31, 2021

Marketable Securities

Schedule of marketable securities

 Schedule of marketable securities

	2021	2020
FUNCINE (i)	11,508	7,061
Fundo Soberano (ii)	9,624	5,220
FIC: (iii)
Government bonds (iv)	2,975,613	1,345,797
CDB (v)	40,496	17,370
Financial bills (vi)	703,118	292,500
Other (vii)	839,169	409,551
	4,579,528	2,077,499
Current portion	(4,568,020)	(2,070,438)
Non-current portion	11,508	7,061

(i)	As of December 2017, the Company, with the aim of using tax deductibility benefit for income tax and social contribution purposes, started investing in the National Film Industry Financing Fund (FUNCINE). The average remuneration in 2021 is -0.06% p.a. (-3.34% p.a. on December 31, 2020).
(ii)	Fundo Soberano is composed only of federal government bonds. The average remuneration in 2021 is 95.13% (87.71% on December 31, 2020) of the variation of the interbank deposit certificate – CDI.
(iii)	In August 2017, the Company invested in open FIC's (Quota Investment Fund). Funds are mostly made up of federal government bonds and papers from top-tier financial institutions. The average remuneration in 2021 of the FICs was 122.76% (112.72% on December 31, 2020) of the variation of the Interbank Deposit Certificate – CDI.
(iv)	Government bonds are fixed income financial instruments issued by the National Treasury to finance the activities of the Federal Government.
(v)	The CDB operations are emitted by the banks with the commitment of stock buyback by the bank itself and with predetermined taxes.
(vi)	The Financial bills is a fix income tittle emitted by financial institutions with the objective of a long-term fund raising
(vii)	Is represented by: Debentures, FIDC, commercial notes, promissory notes, bank credit note.

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Trade accounts receivable (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of trade account receivables

The average rate considered in calculating the present value of accounts receivable recorded in the long term is 0.19% (0.22% on December 31, 2020).

	2021	2020
Trade accounts receivable	3,253,207	3,180,661
Gross accounts receivables	4,000,026	3,831,921
Billed services	2,107,682	2,039,403
Unbilled services	849,762	817,669
Network use (interconnexion)	504,333	399,083
Goods sold	521,362	552,962
Contractual assets (note 23)	15,340	14,914
Other accounts receivable	1,547	7,890
Provision for expected credit losses	(746,819)	(651,260)
Current portion	(3,066,906)	(3,051,834)
Non-current portion	186,301	128,827

Schedule of changes in the allowance for doubtful accounts

The movement of the provision for loss on expected settlement credits, accounted for as an asset reduction account, was as follows:

	2021	2020
Opening balance	651,260	774,077
Supplement to expected losses	544,642	552,817
Write-off of provision	(449,083)	(675,634)
Closing Balance	746,819	651,260

Schedule of aging of accounts receivable

The aging of accounts receivable is as follows: 

	2021	2020
Total	4,000,026	3,831,921
Undue	2,895,999	2,785,469
Overdue up to (days):
30	246,195	248,955
60	100,027	84,218
90	77,280	71,635
>90	680,525	641,644

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Inventories (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of inventory

Inventories are presented at the average acquisition cost. A loss is recognized to adjust the cost of Handsets and accessories to the net realizable value (selling price) when this value is less than the average acquisition cost.

	2021	2020
Inventories	202,553	246,602
Inventories	214,605	257,477
Mobile handsets and tablets	140,934	186,961
Accessories and prepaid cards	53,791	55,558
TIM chips	19,880	14,958
Losses on adjustment to realizable amount	(12,052)	(10,875)

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Recoverable indirect taxes, charges and contributions (Tables)

12 Months Ended

Dec. 31, 2021

Recoverable Indirect Taxes Charges And Contributions

Schedule of recoverable indirect taxes, fees and contributions

	2021	2020
Recoverable indirect taxes, fees and contributions	1,259,932	1,230,801
ICMS	1,216,912	1,188,018
Other	43,020	42,783
Current portion	(354,620)	(374,015)
Non-current portion	905,312	856,786

The amounts of recoverable ICMS (state VAT) are mainly comprised by:

(i)	credits on the acquisition of property, plant and equipment directly related to the provision of telecommunication services (credits divided over 48 months).
(ii)	ICMS amounts paid under the tax substitution regime from goods acquired for resale, mainly mobile handsets, chips, tablets and modems sold by TIM.
(iii)	ICMS credits from the final and unappealable decision in May 2021 for a lawsuit involving the repetition of prepaid telephone services in Santa Catarina, in the amount of R$52 million.

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Recoverable direct taxes, charges and contributions (Tables)

12 Months Ended

Dec. 31, 2021

Recoverable Direct Taxes Charges And Contributions

Schedule of direct taxes, fees and contributions recoverable

 Schedule of direct taxes, fees and contributions recoverable

	2021	2020
Recoverable direct taxes, charges and contributions	2,042,361	2,698,239
Income tax (IR) and social contribution (CS) (i)	807,096	381,905
PIS / COFINS (ii)	1,164,772	2,253,545
Other	70,493	62,789
Current portion	(1,311,906)	(1,421,112)
Non-current portion	730,455	1,277,127

(i)

Income tax and social contribution amounts are mainly related to other income tax and social contribution credits from previous years, whose current estimated term for use is later than 12 months. In September 2021, the Federal Supreme Court (STF), with general repercussions, established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement using the SELIC rate in cases of undue payment. Although the aforementioned decision is still pending publication, as well as the specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to date, in the amount of R$ 547 million, since the likelihood of a favorable outcome for the Company becomes probable.

(ii)

The Recoverable PIS/COFINS amounts mainly refer to credits from a legal proceeding filed by TIM Celular S.A. (ultimately merged into TIM S.A., as well as TIM S.A. itself), with a favorable final decision in Higher Courts which discussed the exclusion of the ICMS from the PIS and COFINS calculation bases. According to the Company’s internal assessment, we expect to use these credits by the 2nd quarter of 2022.

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Deferred income tax and social contribution (Tables)

12 Months Ended

Dec. 31, 2021

Deferred Income Tax And Social Contribution

Schedule of deferred taxes assets and liabilities

The amounts recorded are as follows:

	2021	2020
Tax loss and negative basis of social contribution	219,876	475,128
Temporary differences:
Provision for legal and administrative proceedings	330,627	303,948
Losses on doubtful accounts receivable	257,529	224,459
Adjustments to present value – 3G license	3,298	5,240
Lease of LT Amazonas infrastructure	32,377	29,971
Employee profit sharing	40,177	36,915
Taxes with enforceability suspended (i)	437,950	258,246
Amortized Goodwill – TIM Fiber (ii)	(34,560)	(370,494)
Derivative financial instruments	(143,948)	(154,718)
Capitalized interest on 4G authorization	(233,433)	(262,608)
Deemed costs – TIM S.A	(42,617)	(53,792)
Adjustments to lease agreements	369,521	303,833
Accelerated depreciation (iii)	(466,863)	(266,464)
Fair value adjustment I–Systems (former FiberCo) (iv)	(249,477)	-
Other	16,431	20,982
	536,888	550,646
Deferred active tax portion	536,888	550,646

(i)	Mainly represented by the Fistel fee for the financial years 2020 and 2021. The Operating Inspection Fee (TFF) for the years 2020 and 2021 had its payments suspended by virtue of an injunction and, therefore, still do not have a specific date for payment. See note 21 for details.
(ii)	Represented by the goodwill on the business combination of companies TIM Fiber RJ and SP acquired by TIM in 2012, partially realized in November 2021 once this transaction is completed.
(iii)	As of the 1Q20, TIM S.A. excludes the portion of acceleration of depreciation of movable assets belonging to property, plant and equipment from the calculation basis of the IRPJ and CSLL, due to their uninterrupted use in three operating shifts, supported by technical expert report, as provided for in Article 323 of the RIR/2018, or by the adequacy to the tax depreciation provided for in IN 1700/2017. Such tax adjustment generated a deferred liability of R$ 467 million until December 31, 2021 (R$ 266.5 million up to December 31, 2020) and applied as of January 1, 2020.
(iv)	Refers to deferred charges on the fair value of the non-majority interest calculated in the sale transaction described in Note 1 that took place in November 2021 between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda.

Schedule of expectations to recover the credits

Based on these projections, the company has the following expectation of recovery of credits:

Deferred income tax and social contribution	Tax losses and negative basis
2022	103,847
2023	79,581
2024	36,448
2025	-
Total	219,876

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Prepaid expenses (Tables)

12 Months Ended

Dec. 31, 2021

Prepaid Expenses

Schedule of prepaid expenses

 Schedule of prepaid expenses

	2021	2020
	358,287	223,394
Advertisements not released (i)	86,154	1,679
Rentals and insurance	67,034	69,208
Incremental costs for obtaining contracts with customers (ii)	153,988	125,114
IT Services (iii)	28,626	10,535
Other	22,485	16,858
Current portion	(275,148)	(149,796)
Non-current portion	83,139	73,598

(i)	Represent prepaid payments of advertising expenses for products and services of the TIM brand that are recognized in the result according to the period of serving the advertisement.
(ii)	It is substantially represented by incremental costs related to sales commissions paid to partners for obtaining customer contracts arising from the adoption of IFRS 15, which are deferred to the result in accordance with the term of the contract and/or economic benefit, usually from 1 to 2 years.
(iii)	They represent prepayments of IT services expenses for network migration of information to the “cloud.”

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Judicial deposits (Tables)

12 Months Ended

Dec. 31, 2021

Judicial Deposits

Schedule of detailed information about judicial deposits

 Schedule of detailed information about judicial deposits

They are recorded at historical cost and updated according to current legislation:

	2021	2020
	718,773	794,755
Civil	285,583	315,312
Labor	128,607	149,390
Tax	178,914	181,670
Regulatory	111	111
Online attachment (i)	125,558	148,272

(i) Refer to legal blockages directly in the company's current accounts and financial investments linked to certain legal proceedings. This amount is periodically analyzed and when identified, reclassification is made to one of the other specific accounts of the legal deposit item.

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Investment (Tables)

12 Months Ended

Dec. 31, 2021

As of December 31, 2020, TIM S.A. held 100% control over FiberCo (currently I-Systems).

As of December 31, 2020, TIM S.A. held 100% control over FiberCo (currently I-Systems).

	2021 Fiber Co (current I-Systems)	2020 Fiber Co (current I-Systems)
Number of quotas/shares held	1,000	1,000
Interest in total capital	100%	100%
Shareholders' equity at 10/31/2021	(318)	1
Net loss from January to October 2021	(318)	-
Share of loss until October 31, 2021	(318)	-
Amount of the investment on December 31	-	1

Changes in investments in subsidiaries:

Changes in investments in subsidiaries:

	FiberCo (current I-Systems) (subsidiary)
Balance of investment at December 31, 2020	1
Share of loss until October 2021	(318)
Capital increase	1,211,789
Write-off of investment	(1,211,472)
Balance of investment at November 16, 2021	-

On December 31, 2021, the Company does not have subsidiaries in its corporate structure. In November 2021, TIM S.A. started having I-Systems as an affiliated company and to record the income (loss) of this company under the equity method, no longer consolidating it.

On December 31, 2021, the Company does not have subsidiaries in its corporate structure. In November 2021, TIM S.A. started having I-Systems as an affiliated company and to record the income (loss) of this company under the equity method, no longer consolidating it.

	2021 I-Systems
Number of shares held	1,794,287,995
Interest in total capital	49%
Shareholders' equity	1,794,288
Net loss for the year	(22,968)
Equity in earnings	(11,254)
Investment amount	1,601,703

Change of investment in associate:

Change of investment in associate:

	I-Systems (associated company)
Balance of investment at December 31, 2020	-
Revaluation of minority interest at fair value	1,612,957
Share of loss - November 2021 and December 2021	(11,254)
Balance of investment at December 31, 2021	1,601,703

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Property, plant and equipment (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of changes in property, plant and equipment

· Changes in property, plant and equipment

	Balance at December 2020	Additions	Write-offs (i)	Transfers	Balance at December 2021
Total cost of property, plant and equipment, gross	47,429,167	5,572,362	(3,841,851)	-	49,159,678
Commutation/transmission equipment	25,875,916	26,905	(2,920,511)	2,872,144	25,854,454
Fiber optic cables	878,100	-	(125,366)	25,778	778,512
Leased handsets	2,643,336	805	(13,495)	175,808	2,806,454
Infrastructure	6,436,572	-	(511,635)	518,348	6,443,285
Informatics assets	1,770,386	-	(46,584)	32,538	1,756,340
General use assets	902,287	-	(43,401)	57,959	916,845
Right-of-use assets	8,367,895	1,591,307	(179,875)	-	9,779,327
Land	40,794	-	-	-	40,794
Construction in progress	513,881	3,953,345	(984)	(3,682,575)	783,667
Total Accumulated Depreciation	(29,328,469)	(3,951,760)	2,428,951	-	(30,851,278)
Commutation/transmission equipment	(18,130,526)	(1,983,589)	1,926,121	-	(18,187,994)
Fiber optic cables	(482,613)	(65,669)	26,077	-	(522,205)
Leased handsets	(2,398,217)	(145,661)	9,187	-	(2,534,691)
Infrastructure	(4,018,854)	(408,540)	384,239	-	(4,043,155)
Informatics assets	(1,617,970)	(58,209)	46,449	-	(1,629,730)
General use assets	(637,903)	(48,204)	36,878	-	(649,229)
Right-of-use assets	(2,042,386)	(1,241,888)	-	-	(3,284,274)
Total property, plant and equipment, net	18,100,698	1,620,602	(1,412,900)	-	18,308,400
Commutation/transmission equipment	7,745,390	(1,956,684)	(994,390)	2,872,144	7,666,460
Fiber optic cables	395,487	(65,669)	(99,289)	25,778	256,307
Leased handsets	245,119	(144,856)	(4,308)	175,808	271,763
Infrastructure	2,417,718	(408,540)	(127,396)	518,348	2,400,130
Informatics assets	152,416	(58,209)	(135)	32,538	126,610
General use assets	264,384	(48,204)	(6,523)	57,959	267,616
Right-of-use assets	6,325,509	349,419	(179,875)	-	6,495,053
Land	40,794	-	-	-	40,794
Construction in progress	513,881	3,953,345	(984)	(3,682,575)	783,667

(i) Net write-offs are mainly represented by:

· R$ 1,218,340 as write-off of property, plant and equipment, which makes up part of the balance of R$ 1,211,789 of net assets that was paid-in as share capital of I-Systems (formerly FiberCo) on November 1, 2021, as described in note 1.

· R$ 179,875 in right-of-use assets due to remeasurement of contracts, including changes in the term and scope of leases.

	Balance in December 2019	Additions	Write-offs (i)	Transfers	Balance in December 2020
Total cost of property, plant and equipment, gross	43,358,751	4,687,207	(616,791)	-	47,429,167
Commutation/transmission equipment	22,817,681	10,464	(174,249)	3,222,020	25,875,916
Fiber optic cables	813,589	-	-	64,511	878,100
Leased handsets	2,489,995	912	(7,140)	159,569	2,643,336
Infrastructure	6,096,847	92,234	(8,063)	255,554	6,436,572
Informatics assets	1,721,251	1	(9,996)	59,130	1,770,386
General use assets	859,505	1	(1,544)	44,325	902,287
Right-of-use assets	6,933,416	1,849,539	(415,060)	-	8,367,895
Land	40,794	-	-	-	40,794
Construction in progress	1,585,673	2,734,056	(739)	(3,805,109)	513,881
					-
Total accumulated depreciation	(25,746,587)	(3,767,678)	185,796	-	(29,328,469)
Commutation/transmission equipment	(16,389,213)	(1,906,480)	165,167	-	(18,130,526)
Fiber optic cables	(410,567)	(72,046)	-	-	(482,613)
Leased handsets	(2,256,863)	(143,309)	1,955	-	(2,398,217)
Infrastructure	(3,593,833)	(432,549)	7,528	-	(4,018,854)
Informatics assets	(1,565,309)	(62,649)	9,988	-	(1,617,970)
General use assets	(590,658)	(48,403)	1,158	-	(637,903)
Right-of-use assets	(940,144)	(1,102,242)	-	-	(2,042,386)
Total property, plant and equipment, net	17,612,164	919,529	(430,995)	-	18,100,698
Commutation/transmission equipment	6,428,468	(1,896,016)	(9,082)	3,222,020	7,745,390
Fiber optic cables	403,022	(72,046)	-	64,511	395,487
Leased handsets	233,132	(142,397)	(5,185)	159,569	245,119
Infrastructure	2,503,014	(340,315)	(535)	255,554	2,417,718
Informatics assets	155,942	(62,648)	(8)	59,130	152,416
General use assets	268,847	(48,402)	(386)	44,325	264,384
Right-of-use assets	5,993,272	747,297	(415,060)	-	6,325,509
Land	40,794	-	-	-	40,794
Construction in progress	1,585,673	2,734,056	(739)	(3,805,109)	513,881

(i) The amount of R$ 415,060 is represented by remeasurement of contracts and includes changes in the term and scope of leases and a review of the estimate in relation to low-value vehicle contracts.

The construction in progress represent the cost of projects in progress related to the construction of networks and/or other tangible assets in the period of their construction and installation, until the moment they come into operation, when they will be transferred to the corresponding accounts of these assets.

The lease rights of use are represented by leased agreements of identifiable assets within the scope of IFRS16 standard. These rights refer to leases of network infrastructure, stores and kiosks, real estate, land (Network) and fiber, as below:

Right-of-use assets	Network infrastructure	Shops & kiosks & real estate	Land (Network)	Fiber	Total
Balances at December 31, 2020	3,019,900	400,262	1,500,909	1,404,438	6,325,509
Additions	630,805	295,874	237,150	427,478	1,591,307
Remeasurement	(83,606)	(45,312)	(23,772)	(27,185)	(179,875)
Depreciation	(518,590)	(109,512)	(210,054)	(403,732)	(1,241,888)
Balances at December 31, 2021	3,048,509	541,312	1,504,233	1,400,999	6,495,053
Useful life – %	7.86%	9.70%	9.47%	3.24%

Schedule of depreciation rates

· Depreciation rates

	Annual fee %
Commutation/transmission equipment	08–14.29
Fiber optic cables	4–10
Leased handsets	14.28–50
Infrastructure	4–20
Informatics assets	10–20
General use assets	10–20

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Intangible assets (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of movement in intangible assets

 Schedule of movement in intangible assets

(a) Changes in intangible assets

	Balance in December 2020	Additions/ Amortization	Write-offs	Transfers	Balance in December 2021
Total cost of intangible assets, gross	31,444,050	4,352,331	(1,165,840)	-	34,630,541
Right to use software	19,117,515	-	(112,626)	906,115	19,911,004
Authorizations	9,931,248	50,408	(1,737)	1,171,578	11,151,497
Goodwill (i)	1,527,220	-	(1,051,477)	-	475,743
Infrastructure right-of-use - LT Amazonas	177,866	-	-	8,355	186,221
Other assets	329,626	-	-	3,490	333,116
Intangible assets under development	360,575	4,301,923	-	(2,089,538)	2,572,960
Total accumulated amortization	(22,416,975)	(1,739,937)	111,450	-	(24,045,462)
Right to use software	(16,378,487)	(1,164,210)	110,679	-	(17,432,018)
Authorizations	(5,816,241)	(542,196)	771	-	(6,357,666)
Infrastructure right-of-use - LT Amazonas	(67,966)	(8,731)	-	-	(76,697)
Other assets	(154,281)	(24,800)	-		(179,081)
Total intangible assets, net	9,027,075	2,612,394	(1,054,390)	-	10,585,079
Right to use software (c)	2,739,028	(1,164,210)	(1,947)	906,115	2,478,986
Authorizations (f)	4,115,007	(491,788)	(966)	1,171,578	4,793,831
Goodwill (d)	1,527,220	-	(1,051,477)	-	475,743
Infrastructure right-of-use - LT Amazonas (e)	109,900	(8,731)	-	8,355	109,524
Other assets	175,345	(24,800)	-	3,490	154,035
Intangible assets under development	360,575	4,301,923	-	(2,089,538)	2,572,960

(i) Includes the write-off of approximately 90% of the total goodwill recorded on the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A., in the amount of R$ 1,051,477.

	Balance in December 2019	Balance of merged company	Additions/ Amortization	Write-offs	Transfers	Balance in December 2020
Total cost of intangible assets, gross	29,861,788	367,571	1,215,636	(945)	-	31,444,050
Right to use software	18,184,382	-	-	(939)	934,072	19,117,515
Authorizations	9,811,794	-	32,105	(6)	87,355	9,931,248
Goodwill	1,159,649	367,571	-	-	-	1,527,220
Infrastructure right-of-use - LT Amazonas	169,327	-	8,539	-	-	177,866
Other assets	327,360	-	-	-	2,266	329,626
Intangible assets under development	209,276	-	1,174,992	-	(1,023,693)	360,575
Total Accumulated Amortization	(20,561,032)		(1,856,917)	974	-	(22,416,975)
Right to use software	(15,093,166)	-	(1,286,295)	974	-	(16,378,487)
Authorizations	(5,278,413)	-	(537,828)	-	-	(5,816,241)
Infrastructure right-of-use - LT Amazonas	(60,204)	-	(7,762)	-	-	(67,966)
Other assets	(129,249)	-	(25,032)	-		(154,281)
Total intangible assets, net	9,300,756	367,571	(641,281)	29	-	9,027,075
Right to use software (c)	3,091,216	-	(1,286,295)	35	934,072	2,739,028
Authorizations (f)	4,533,381	-	(505,723)	(6)	87,355	4,115,007
Goodwill (d)	1,159,649	367,571	-	-	-	1,527,220
Infrastructure right-of-use - LT Amazonas (e)	109,123	-	777	-	-	109,900
Other assets	198,111	-	(25,032)	-	2,266	175,345
Intangible assets under development	209,276	-	1,174,992	-	(1,023,693)	360,575

Schedule of amortization rates

 Schedule of amortization rates

(b) Amortization rates

	Annual fee %
Software licenses	20
Authorizations	5–50
Right to use infrastructure	5
Other assets	7–10

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Leases (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of lease receivables

Asset leases are financial assets or liabilities classified and/or measured at amortized cost.

Assets

	2021	2020
LT Amazonas	166,944	162,198
Subleases - Stores – IFRS 16	76,177	-
	243,121	162,198
Current portion	(30,076)	(5,357)
Non-current portion	213,045	156,841

Schedule of lease receivables nominal and present value

The table below presents the schedule of cash receipts for the agreement currently in force, representing the estimated receipts (nominal values) in the signed agreements. These balances differ from those shown in the books since, in the case of the latter, the amounts are shown at present value:

Schedule of lease receivables nominal and present value 

	Up to December 2022	Jan 2023–Dec 2026	Jan 2027 onwards	Nominal values	Present value
	55,939	167,320	176,895	400,154	243,121
LT Amazonas (i)	26,124	106,491	176,895	309,510	166,944
Subleases - Stores – IFRS 16 (ii)	29,815	60,829	-	90,644	76,177

(i) LT Amazonas

Schedule of lease liabilities

	2021	2020
LT Amazonas (i)	302,091	290,385
Sale of Towers (leaseback) (ii)	1,507,629	1,256,410
Other (iv)	142,458	115,027
Sub-total	1,952,178	1,661,822
Other leases (iii):
Leases – Network Infrastructure	3,345,930	3,252,463
Leases - Shops & kiosks & real estate	653,422	434,990
Leases - Land (Network)	1,657,345	1,606,567
Leases – Fiber	1,454,664	1,422,993
Subtotal lease IFRS 16	7,111,361	6,717,013
Total	9,063,539	8,378,835
Current portion	(1,269,878)	(1,054,709)
Non-current portion	7,793,661	7,324,126

Schedule of other lease operations

The table below presents the future payment schedule for the agreements in force, representing the estimated disbursements (nominal values) in the signed agreements. These nominal balances differ from those shown in the books since, in the case of the latter, the amounts are shown at present value:

	Up to December 2022	Jan 2023–Dec 2026	Jan 2027 onwards	Nominal values	Present value
Total - Lease liability	2,139,718	6,431,022	5,898,599	14,469,339	9,063,539
LT Amazonas (i)	57,349	202,271	336,138	595,758	302,091
Sale and leaseback of Towers (ii)	245,800	992,299	2,135,989	3,374,088	1,507,629
Other (iv)	28,348	112,493	142,458	283,299	142,458
Total other leases (iii)	1,808,221	5,123,959	3,284,014	10,216,194	7,111,361
Leases – Network infrastructure	752,818	2,450,689	1,735,619	4,939,126	3,345,930
Leases - Shops & kiosks & real estate	183,468	440,996	356,198	980,662	653,422
Leases - Land (Network)	340,099	1,135,266	1,192,197	2,667,562	1,657,345
Leases – Fiber	531,836	1,097,008	-	1,628,844	1,454,664

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Supplier (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of supplier accounts payable

	2021	2020
	3,267,404	3,128,732
Local currency	3,063,458	2,932,486
Suppliers of materials and services (i)	2,966,897	2,839,547
Interconnection (ii)	65,464	64,066
Roaming (iii)	212	212
Co-billing (iv)	30,885	28,661
Foreign currency	203,946	196,246
Suppliers of materials and services (i)	153,082	148,888
Roaming (iii)	50,864	47,358
Current portion	3,267,404	3,128,732

(i) Represents the amount to be paid to suppliers in the acquisition of materials and in the provision of services applied to the tangible and intangible asset or for consumption in the operation, maintenance and administration, in accordance with the terms of the contract between the parties.

(ii)	Refers to as the use of the network of other fixed and mobile operators such cases where calls are initiated on the TIM network and terminated on the other operators.
(iii)	Refers to calls made when the customer is outside their registration area and is considered a visitor on the other network.
(vi)	Refers to calls made by the customer when choosing another long-distance operator.

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Authorizations payable (Tables)

12 Months Ended

Dec. 31, 2021

Authorizations Payable

Schedule of licenses payables

	2021	2020
Renewal of authorizations (i)	191,329	188,498
Updated ANATEL liability (ii)	164,269	146,949
Authorizations payable (iii)	3,525,489	-
	3,881,087	335,447
Current portion	(2,630,169)	(102,507)
Non-current portion	1,250,918	232,940

(i)To provide the SMP, the Company obtained authorizations of the right to use radio frequency for a fixed term, renewable for another 15 (fifteen) years. In the option for the extension of the right of this use, it is due the payment of the amount of 2% on the net revenue of the region covered by the authorization that ends each biennium. On December 31, 2021, the Company had balances falling due related to renovation of authorizations in the amount of R$ 191,329 (R$ 188,498 on December 31, 2020).

(ii) On December 5, 2014, the company signed the authorization term of the 700 MHz band and paid the equivalent of R$1,678 million, recording the remaining balance in the amount of R$ 61 million as commercial liability, according to the payment method provided for in the notice.

On June 30, 2015, the company filed a lawsuit questioning the collection of the excess nominal value of R$ 61 million (R$ 164 million on December 31, 2021) which is still pending trial.

(iii) As described in note 15.f, in November 2021, TIM participated in the 5G Auction of the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands for the deployment of the 5th Generation mobile telephony, winning several lots in these radio frequencies. In December 2021, the Authorization Terms were signed, characterizing the actual acquisition of the right over the lots of these radio frequencies.

For the amounts related to radio frequencies (R$ 884 million upon initial registration), Selic interest is levied, and the Company will make annual payments for a period of 20 years. Regarding amounts related to disbursement obligations with EAF and EACE entities (R$ 2,737 million upon initial registration, of which R$ 2,654 million net of adjustment do present value), there is a monetary restatement by IGP-DI, and disbursements will occur between 2022 and 2024. As of December 31, 2021, the outstanding balance is 3,525 million.

The authorizations payable on December 31, 2021 due in long-term is in accordance with the following schedule:

The authorizations payable on December 31, 2021 due in long-term is in accordance with the following schedule:

2023	406,371
2024	141,151
2025	46,535
2026	46,535
2027	46,535
2028	46,535
2029	46,535
2030	46,535
2031	424,186
	1,250,918

The primary authorizations held by TIM S.A. on December 31, 2021, as well as their expiration dates, are shown in the table below:

The primary authorizations held by TIM S.A. on December 31, 2021, as well as their expiration dates, are shown in the table below:

	Maturity date
Terms of authorization	450 MHz	800 MHz, 900 MHz and 1,800 MHz	Additional frequencies 1800 MHz	1900 MHz and 2100 MHz (3G)	2500 MHz V1 band (4G)	2500 MHz (P band**) (4G)	700 MHz (4G)	2.3 GHz (5G)	3.5 GHz (5G)	26 GHz (5G)
Amapá, Roraima, Pará, Amazonas and Maranhão	-	Mar 2031*	Apr 2023	Apr 2023	Oct 2027	Part of AR92 (PA), Feb 2024*	Dec 2029	-	Dec 2041	Dec 2031
Rio de Janeiro and Espírito Santo	Oct 2027	Mar 2031*	ES, Apr 2023	Apr 2023	Oct 2027	Part of AR21 (RJ), Feb 2024*	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Acre, Rondônia, Mato Grosso, Mato Grosso do Sul, Tocantins, Distrito Federal, Goiás, Rio Grande do Sul (except county of Pelotas and region) and municipalities of Londrina and Tamarana in Paraná	PR, Oct 2027	Mar 2031*	Apr 2023	Apr 2023	Oct 2027	Part of AR61 (DF), Feb 2024*	Dec 2029	South – Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
São Paulo	-	Mar 2031*	Countryside, Apr 2023	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Paraná (except counties of Londrina and Tamarana)	Oct 2027	Sep 2022*	Apr 2023	Apr 2023	Oct 2027	AR41, except Curitiba and the Metropolitan Region, Feb 2024* AR41, Curitiba and Metropolitan Region, July 2031	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Santa Catarina	Oct 2027	Sep 2023*	Apr 2023	Apr 2023	Oct 2027	-	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
County and region of Pelotas, in the state of Rio Grande do Sul	-	Apr 2024*	-	Apr 2023	Oct 2027	-	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Pernambuco	-	May 2024*	-	Apr 2023	Oct 2027	Part of AR81, July 2031	Dec 2029	-	Dec 2041	Dec 2031
Ceará	-	Nov 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec S2031
Paraíba	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Rio Grande do Norte	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Alagoas	-	Dec 2023*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Piauí	-	Mar 2024*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031
Minas Gerais (except the counties of Sector 3 of the PGO for 3G radio frequencies, leftovers and 5G)	-	Apr 2028*	Apr 2023	Apr 2023	Oct 2027	Part of AR31, Feb 2030*	Dec 2029	Dec 2041	Dec 2041	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Bahia and Sergipe	-	Aug 2027*	-	Apr 2023	Oct 2027	-	Dec 2029	-	Dec 2041	Dec 2031

*	Terms already renewed for 15 years.
**	Only complementary areas in specific states.

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Loans and financing (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of appropriation of financial expenses

At the initial recognition they are recorded by their fair value, and after initial recognition, they are measured by the effective interest rate method. Appropriations of financial expenses according to the effective interest rate method are recognized in income, under financial expenses. 

Description	Currency	Charge	Maturity	December 2021	December 2020
KFW Finnvera (ii)	USD	Libor 6M+ 0.75% p.a.	Jan 2024–Dec 2025	278,176	344,125
BAML (ii)	EUR	0.2790% p.a.	Aug 2021	-	570,844
Scotia¹ (ii)	USD	1.2410–1.7340% p.a.	Apr 2024	559,650	1,030,761
BNP Paribas (ii)	USD	2.8220% p.a.	Jan 2022	428,793	399,302
BNP Paribas (ii)	BRL	7.0907% p.a.	Jan 2024	515,166	-
Debêntures² (ii)	BRL	IPCA + 4.1682% p.a. (i)	June 2028	1,667,399	-
BNDES (i)	BRL	IPCA + 4.2283% p.a.	Nov 2031	396,281	-
Total				3,845,465	2,345,032
Current				(538,450)	(1,689,385)
Non-current				3,307,015	655,647

¹ The outstanding debt rate on December 31, 2021 with Scotia Bank is 1.4748% p.a.

² The automatic decrease of up to 0.25bps is estimated in remunerative interest will comply with sustainable targets established in the indenture.

Insurances

_(i) Certain receivables from TIM S.A.;

_(ii) Do not have a guarantee.

Schedule of credit facilities

The table below shows the position of financing and available lines of credit:

					Amount used until 30 September 2020
Type	Currency	Term	Term	Remaining value		Amount used up to December 31, 2021
BNDES (i)	TJLP	May 2018	Mar 2022	1,090,000	1,090,000	-
BNDES (ii)	TJLP	May 2018	Mar 2022	20,000	20,000	-
FINAME (iii)	IPCA	Mar 2019	Mar 2022	390,000	-	390,000
BNB (iv)	IPCA	Jan 2020	June 2023	752,479	752,479	-
Total R$:				2,252,479	1,862,479	390,000

Objective:

(i) Support to TIM's investment plan for the years 2017 to 2019 including, but not limited to, the acquisition of National equipment

(ii) Investments in social projects within the community

(iii) Exclusive application in the acquisition of machinery and equipment, industrial systems and/or other components of national manufacture.

(iv) Support to TIM's investment plan for the years 2020 to 2022 in the region of operation of Banco do Nordeste do Brasil

Schedule of long term portions of borrowing and financing

Loans and financing on December 31, 2021 due in long-term is in accordance with the following schedule:

2023	88,818
2024	1,125,526
2025	80,712
2026	615,727
2027	615,727
2028	618,006
2029	55,714
2030	55,714
2031	51,071
	3,307,015

Schedule of nominal value of the loans

The nominal value of the loans and financing is consistent with their respective payment schedule.

	Nominal value
2022	538,450
2023	88,818
2024	1,125,526
2025	80,712
2026	615,727
2027	615,727
2028	618,006
2029	55,714
2030	55,714
2031	51,071
	3,845,465

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Indirect taxes, charges and contributions payable (Tables)

12 Months Ended

Dec. 31, 2021

Indirect Taxes Charges And Contributions Payable

Schedule of indirect taxes, charges and contributions payable

	2021	2020
Indirect taxes, charges and contributions payable	1,421,955	938,880
Value added tax on goods and services - ICMS	303,721	359,498
ANATEL’s taxes and fees (i)	1,042,933	509,087
Imposto sobre Serviço (Service tax) - ISS	66,075	66,082
Other	9,226	4,213
Current portion	(1,418,682)	(935,778)
Non-current portion	3,273	3,102

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Direct taxes, charges and contributions payable (Tables)

12 Months Ended

Dec. 31, 2021

Direct Taxes Charges And Contributions Payable

Schedule of direct taxes charges and contributions payable

The legislation allows companies to opt for quarterly or monthly payment of income tax and social contribution. In 2021, the Company has chosen to make the quarterly payment of income tax and social contribution.

	2021	2020
Direct taxes, charges and contributions payable	258,340	508,743
Income tax (IR) and social contribution (CS) (i)	186,294	313,145
PIS/COFINS (Social integration program/Social security)	41,916	154,353
Other (ii)	30,130	41,245
Current portion	(245,113)	(296,299)
Non-current portion	13,227	212,444

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Deferred revenues (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of deferred revenue

	2021	2020
Deferred revenues	886,340	1,021,924
Prepaid services (i)	118,795	189,482
Government grants (ii)	11,184	24,732
Anticipated revenues	8,522	11,163
Deferred revenues on sale of towers (iii)	734,826	788,921
Contractual liabilities (iv)	13,013	7,626
Current portion	(197,179)	(266,436)
Non-current portion	689,161	755,488

(i) Referring to the recharge of voice credits and data not yet used by customers relating to prepaid system services that are appropriate to the result when the actual use of these services by clients.

(ii) Referring to the release of resources related to the financing line with BNDES (Investment Support Program-BNDES PSI). The sum of grants granted by BNDES up to December 31, 2021 is R$ 203 million and the outstanding amount on December 31, 2021 is R$ 11,184 (R$ 24,732 on December 31, 2020). This amount is being amortized by the lifespan of the asset being financed and appropriated in the group of “other net revenues (expenses)” (note 29).

(iii) Referring to the amount of revenue to be appropriated by the sale of the towers (note 16).

(iv) Contracts with customers. The table below includes information on the portion of trade accounts receivable, from which contractual assets and liabilities originate.

Schedule of contractual assets and liabilities

	2021
Accounts receivable included in trade accounts	2,051,120
Contractual assets	15,340
Contractual liabilities	(13,013)

Summary of the main changes during the fiscal year:

Summary of the main variations in the year.

	Contractual assets (liabilities)
Balance at December 31, 2020	7,288
Additions	8,800
Write-offs	(13,761)
Balance at December 31, 2021	2,327

Schedule of balances of contractual assets and liabilities are expected to be realized

The balances of contractual assets and liabilities are expected to be realized according to the table below:

	2022	2023
Contractual assets (liabilities)	3,685	(1,358)

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Provision for legal and administrative proceedings (Tables)

12 Months Ended

Dec. 31, 2021

The provision for judicial and administrative proceedings constituted, updated, is composed as follows:

The provision for judicial and administrative proceedings constituted, updated, is composed as follows:

	2021	2020
Provision for judicial and administrative proceedings	960,881	886,947
Civil (a)	309,019	245,432
Labor (b)	192,132	213,026
Tax (c)	429,951	399,288
Regulatory (d)	29,779	29,201

The changes in the provision for judicial and administrative proceedings are summarized below:

The changes in the provision for judicial and administrative proceedings are summarized below:

	December 31, 2020	Additions, net of reversals	Payment	Currency update	December 31, 2021
	886,947	278,789	(316,804)	111,949	960,881
Civil (a)	245,432	175,715	(194,501)	82,373	309,019
Labor (b)	213,026	71,961	(98,730)	5,875	192,132
Tax (c)	399,288	31,078	(23,539)	23,124	429,951
Regulatory (d)	29,201	35	(34)	577	29,779

	December 31, 2019	Balance company incorporated	Additions, net of reversals	Payment	Currency update	December 31, 2020
	703,522	125,956	333,724	(413,634)	137,379	886,947
Civil (a)	208,202	4,501	224,416	(266,872)	75,185	245,432
Labor (b)	208,224	45,691	63,649	(138,899)	34,361	213,026
Tax (c)	254,833	75,646	48,897	(7,792)	27,704	399,288
Regulatory (d)	32,263	118	(3,238)	(71)	129	29,201

Tax lawsuits

c. Tax lawsuits

		2021		2020
Federal Taxes	202,743		182,146
State Taxes	145,436		135,891
Municipal Taxes	7,626		5,633
TIM S.A. processes (Purchase price allocation)	74,146		75,618
	429,951		399,288

The company has actions of a civil, labor, tax and regulatory nature involving risks of loss classified by its legal advisers and the administration as possible, for which there is no provision for legal and administrative proceedings constituted, and no adverse material effects are expected in the financial statements, according to the values presented below:

The company has actions of a civil, labor, tax and regulatory nature involving risks of loss classified by its legal advisers and the administration as possible, for which there is no provision for legal and administrative proceedings constituted, and no adverse material effects are expected in the financial statements, according to the values presented below:

	2021	2020
	18,140,556	18,147,562
Civil (e. 1)	1,292,202	1,101,332
Labor and Social Security (e. 2)	392,035	340,801
Tax (e. 3)	16,309,439	16,586,353
Regulatory (e. 4)	146,880	119,076

The main actions with risk of loss classified as possible are described below:

The main actions with risk of loss classified as possible are described below:

e.1. Civil

		2021		2020
Consumer actions (e. 1. 1)	160,696		220,347
ANATEL (e.1.2)	258,683		223,066
Consumer protection bodies (e.1.3)	493,806		160,279
Former trading partners (e.1.4)	216,054		193,529
Environmental and infrastructure (e.1.5)	99,743		154,187
Other (e.1.6)	63,220		149,924
	1,292,202		1,101,332

Tax

e.3. Tax

	2021	2020
	16,309,439	16,586,353
Federal taxes (e. 3.1)	3,026,326	4,268,212
State taxes (e. 3. 2)	8,782,114	8,562,352
Municipal taxes (e. 3. 3)	1,234,618	740,813
FUST, FUNTTEL e EBC (e.3.4)	3,266,381	3,014,976

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Shareholders' equity (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of reserves

The use of capital reserves complies with the precepts of art. 200 of Law 6404/76, which provides for Joint-Stock Companies. This reserve is composed as follows:

	2021	2020
	401,806	397,183
Special Reserve of goodwill	353,604	353,604
Long-term incentive plan	48,202	43,579

Schedule of dividends calculation

As of December 31, 2021, and 2020, dividends and interest on shareholders' equity were calculated as follows:

	2021	2020
Net profit for the year	2,957,174	1,828,254
(-) non-distributable tax incentives	(176,741)	(169,540)
(-) Constitution of legal reserve	(139,021)	(83,707)
Adjusted Net Profit	2,641,412	1,575,007
Minimum dividends calculated on the basis of 25% of adjusted profit	660,353	397,752
Breakdown of dividends payable interest on equity:
Interest on shareholders' equity	1,047,500	1,083,000
Total dividends and interest on shareholders' equity distributed and proposed	1,047,500	1,083,000
Withholding income tax (IRRF) on interest on shareholders' equity	(142,977)	(162,450)
Total dividends and interest on shareholders’ equity, net	904,523	920,550

During 2021, the amount of R$ 1,047,500

During 2021, the amount of R$ 1,047,500 was distributed, as follows:

Interest on shareholders’ equity	Approval	Payment
R$ 350,000	06/09/2021	07/20/2021
R$ 137,500	09/24/2021	10/27/2021
R$ 560,000	12/15/2021	01/25/2022

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Long-Term Incentive Plan (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of variations in quantity of options

Stock Options Program Table

Grant date	Options granted	Expiry date	Base Price	Balance at the beginning of the year	Granted during the year	Exercise during exercise	Expired during exercise	Overdue during the year	Balance at the end of the year
2014-2016 Plan – 3rd Grant	3,922,204	Nov 2022	R$ 8.10	295,063	-	(182,511)	-	-	112,552
2014-2016 Plan – 2nd Grant	3,355,229	Oct 2021	R$ 8.45	21,771	-	(21,771)	-	-	0
Plan 2014-2016-1st Grant	1,687,686	Sep 2020	R$ 13.42	-	-	-	-	-	-
2011-2013 Plan – 3rd Grant	3,072,418	July 2019	R$ 8.13	-	-	-	-	-	-
2011-2013 Plan – 2nd Grant	2,661,752	Sep 2018	R$ 8.96	-	-	-	-	-	-
2011-2013 Plan – 1st Grant	2,833,595	Aug 2017	R$ 8.84	-	-	-	-	-	-
Total	17,532,884			316,834	-	(204,282)	-	-	112,552
Weighted average price of the balance of grants				R$ 8.10

Stock Program Table (Performance Shares and Restricted Shares)

Identification of grant:	Shares granted	Expiry date	Grant Price		Balance at the beginning of the year	Granted during the year	Transferred during the year*			Paid in cash*			Canceled during the year	Balance at the end of the year
							Volume Vested	Performance change	Additional Dividends	Volume Vested	Performance change	Additional dividends
2021-2023 Plan 2021 Grant(s)	3,431,610	May 2024	R$ 12.95		-	3,431,610	-	-	-	-	-	-	(311,876)	3,119,734
2018-2020 Plan 2020 Grant(s)	796,054	Apr 2023	R$ 14.40		796,054	-	(206,578)	(51,634)	(8,933)	-	-	-	(70,378)	519098
2018-2020 Plan 2019 Grant(s)	930,662	July 2022	R$ 11.28		687,895	-	(207,859)	(78,111)	(23,252)	-	-	-	(53,006)	427,030
2018-2020 Plan 2018 Grant*	849,932	Apr 2021	R$ 14.41		199,594	-	(187,039)	(42,854)	(22,250)	(9,101)	(2,305)	(1,094)	(3,454)	-
Total	6,008,258				1,683,543	3,431,610	(601,476)	(172,599)	(54,435)	(9,101)	(2,305)	(1,094)	(438,714)	4,065,862
Weighted average price of the balance of grants				R$ 12.96

Schedule of significant data included in model

The significant data included in the model, for the Stock Option Grants, was as follows:

Grant date	Base price - weighted average share in the period of measurement of the grant	Volatility	Expected life of the option	Annual interest rate without risk
2011 Grant	R$ 8.84	51.73% p.a.	6 years	11.94% p.a.
2012 Grant	R$ 8.96	50.46% p.a.	6 years	8.89% p.a.
2013 Grant	R$ 8.13	48.45% p.a.	6 years	10.66% p.a.
2014 Grant	R$ 13.42	44.60% p.a.	6 years	10.66% p.a.
2015 Grant	R$ 8.45	35.50% p.a.	6 years	16.10% p.a.
2016 Grant	R$ 8.10	36.70% p.a.	6 years	11.73% p.a.

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Revenue (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of revenue

All incremental costs related to obtaining a contract (sales commissions and other costs of acquisition from third parties) are recorded as prepaid expenses and (as described in note 11) amortized over the same period as the revenue associated with this asset. Similarly, certain contract compliance costs are also deferred to the extent that they relate to performance obligations under the customer agreement, i.e. when the customer obtains control over the asset. 

	2021	2020	2019
Net revenue	18,058,027	17,267,812	17,377,194
Gross revenue	25,357,429	24,346,101	25,182,831
Service revenue	24,264,246	23,279,423	23,820,343
Service revenue-Mobile	22,433,225	21,522,135	22,145,033
Service revenue - Landline	1,831,021	1,757,288	1,675,310
Goods sold	1,093,183	1,066,678	1,362,488
Deductions from gross revenue	(7,299,402)	(7,078,289)	(7,805,637)
Taxes incidents	(4,679,722)	(4,534,582)	(4,939,980)
Discounts granted	(2,610,388)	(2,531,920)	(2,843,670)
Returns and other	(9,292)	(11,787)	(21,987)

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Operating costs and expenses (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of operating cost and expences

	2021				2020
	Cost of services rendered and goods sold	Selling expenses	General and administrative expenses	Total	Cost of services rendered and goods sold	Selling expenses	General and administrative expenses	Total
	(8,443,023)	(4,621,788)	(1,723,384)	(14,788,195)	(7,996,615)	(4,443,027)	(1,673,290)	(14,112,932)
Personal	(62,214)	(676,479)	(387,735)	(1,126,428)	(58,024)	(632,231)	(321,967)	(1,012,222)
Third party services	(560,039)	(1,763,360)	(668,641)	(2,992,040)	(587,835)	(1,743,644)	(538,584)	(2,870,063)
Interconnection and means of connection	(1,840,139)	-	-	(1,840,139)	(1,672,655)	-	-	(1,672,655)
Depreciation and amortization	(4,847,995)	(265,565)	(578,136)	(5,691,696)	(4,569,064)	(247,666)	(710,282)	(5,527,012)
Taxes, fees and contributions	(34,732)	(777,819)	(29,388)	(841,939)	(28,675)	(761,152)	(23,809)	(813,636)
Rent and insurance	(362,171)	(109,781)	(20,082)	(492,034)	(316,650)	(107,550)	(15,753)	(439,953)
Cost of goods sold	(731,007)	-	-	(731,007)	(756,060)	-	-	(756,060)
Publicity and advertising	-	(459,811)	-	(459,811)	-	(377,184)	-	(377,184)
Expected credit losses of trade accounts receivable	-	(544,642)	-	(544,642)	-	(552,817)	-	(552,817)
Other	(4,726)	(24,331)	(39,402)	(68,459)	(7,652)	(20,783)	(62,895)	(91,330)

	2019
	Cost of services provided and goods sold	Seling expenses	General and administrative expenses	Total
	(7,433,731)	(4,986,289)	(1,717,859)	(14,137,879)
Personnel	(53,392)	(624,353)	(392,984)	(1,070,729)
Third-party services	(569,242)	(2,041,646)	(512,643)	(3,123,531)
Interconnection and means of connection	(1,419,464)	-	-	(1,419,464)
Depreciation and amortization	(4,132,223)	(256,898)	(739,860)	(5,128,981)
Taxes, fees and contributions	(32,120)	(817,369)	(18,846)	(868,335)
Rent and insurance	(291,302)	(121,795)	(20,590)	(433,687)
Cost of goods sold	(931,818)	-	-	(931,818)
Publicity and advertising	-	(355,234)	-	(355,234)
Expected credit losses of trade accounts receivable	-	(748,291)	-	(748,291)
Other	(4,170)	(20,703)	(32,936)	(57,809)

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Other income (expenses), net (Tables)

12 Months Ended

Dec. 31, 2021

Other Income Expenses Net

Schedule of other income (expenses)

	2021	2020	2019
Income
Income from grant, net	13,548	17,427	21,572
Fines on telecommunications services	58,793	37,490	50,499
Revenue on disposal of assets (ii)	2,711,535	5,375	2,214
PIS/COFINS credits (i)	-	-	1,795,000
Other income	65,482	68,651	83,558
	2,849,358	128,943	1,952,843
Expenses
FUST/FUNTTEL (iii)	(134,962)	(133,378)	(137,169)
Taxes, fees and contributions	(2,274)	(10,316)	(4,024)
Provision for legal and administrative proceedings, net of reversal	(248,987)	(290,789)	(466,460)
Expense on disposal of assets (ii)	(1,942,791)	(13,538)	(7,055)
Other expenses	(22,573)	(32,776)	(62,593)
	(2,351,587)	(480,797)	(677,301)
Other income (expenses), net	497,771	(351,854)	1,275,542

(i) The change refers to the update of claims arising from judicial proceedings with a final decision passed in favor of the company in higher courts, in 2019, which discussed the exclusion of ICMS from calculation basis of PIS and COFINS contributions. The amount of R$ 1,795 million was recorded under Other income in 2019 (note 9).

(ii) Represents the revenue from the sale of 51% equity interest in I-Systems (formerly FiberCo) to IHS, in the amount of R$ 2,709,251, which is composed of the (secondary) cash paid to TIM S.A. and the fair value of the minority interest of 49% that remained with TIM S.A.

In expenses, the amount of 1,927,014 is represented by the write-off of the net assets written-off at TIM S.A. and paid-in as share capital at I-Systems, in addition to the write-off of goodwill and deferred income tax related to goodwill due to the sale of 51% of I -Systems (formerly FiberCo). The gain on this transaction before income tax and social contribution is R$ 782,237. See note 1.

(iii) Representing the expenses incurred with contributions on the various telecommunications revenues due to ANATEL, according to current legislation.S 

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Financial income (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of financial income

	2021	2020	2019
Financial income	1,091,748	438,598	1,430,171
Interest on financial investments	339,681	82,512	88,224
Interest received from clients	28,427	28,686	37,233
Swap interest	203,852	32,955	15,536
Interest on lease	24,788	19,924	20,528
Inflation adjustment (i)	208,029	116,441	1,263,793
Other derivatives (ii)	285,009	155,165	-
Other income	1,962	2,915	4,857

(i)

A substantial part is related to the monetary restatement on judicial and administrative proceedings and judicial deposits.

(ii)

It is the difference between the market cost and value of the share subscription option related to Banco C6 partnership; therefore, the mark-to-market value of these derivatives includes a gain of R$ 285 million referring to the company’s stock option obtained through achievement of contractual target defined in an operational partnership started in 2020. The market value was calculated based on information available in the last investment transaction carried out by the partner and disclosed in the market. The disclosures of this derivative financial instrument are detailed in note 37, which was measured at fair value, and will subsequently be measured in the Company’s income, also considering the risks related to arbitration disclosed in note 27.

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Financial expenses (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of financial expenses

	2021	2020	2019
Financial expenses	(1,745,213)	(1,242,255)	(1,408,053)
Interest on loans and financing	(99,183)	(70,400)	(116,735)
Interest on taxes and fees	(61,745)	(43,616)	(28,396)
Swap interest	(352,029)	(45,970)	(24,604)
Interest on lease	(845,033)	(766,263)	(821,463)
Inflation adjustment (i)	(247,200)	(161,892)	(191,309)
Discounts granted	(52,509)	(33,725)	(36,047)
Other expenses	(87,514)	(120,389)	(189,499)

(i) Substantial portion related to the inflation adjustment of lawsuits, in the amount of R$ 111,949 - see note 24 (R$ 137,379 as of December 31, 2020).

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Foreign exchange variations, net (Tables)

12 Months Ended

Dec. 31, 2021

Foreign Exchange Variations Net

Schedule of foreign exchange variations

	2021	2020	2019
Revenues
Loans and financing (ii)	215,262	-	22,494
Suppliers	13,190	15,981	9,004
Swap (i)	275,836	305,012	40,742
Other	16,640	43,155	15,952
	520,928	364,148	88,192
Expenses
Loans and financing (ii)	(275,724)	(305,010)	(40,715)
Suppliers	(20,061)	(46,112)	(13,201)
Swap (i)	(215,262)	-	(22,493)
Other	(9,222)	(19,991)	(12,691)
	(520,269)	(371,113)	(89,100)
Foreign exchange variations, net	659	(6,965)	(908)

(i) Referring to derivative financial instruments to mitigate risks of foreign exchange variations related to foreign currency debts (note 37).

(ii) It mainly refers to foreign exchange variation on loans and financing in foreign currency.

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Expense with current and deferred income tax and social contribution (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of income tax and social contribution

	2021	2020	2019
Current income tax and social contribution
Income tax for the period	9,697	(684,099)	(155,521)
Social contribution for the period	26,538	(232,671)	(58,905)
Tax incentive – SUDENE/SUDAM (i)	167,118	164,442	156,594
	203,353	(752,328)	(57,832)
Deferred income tax and social contribution
Deferred income tax	(255,972)	453,127	(625,516)
Deferred social contribution	(93,432)	144,722	(225,186)
	(349,404)	597,849	(850,702)
Provision for income tax and social contribution contingencies	-	(9,671)	(5,406)
	(349,404)	588,178	(856,108)
	(146,051)	(164,150)	(913,940)

The reconciliation of income tax expense and social contribution calculated by applying the combined tax rates with the values reflected in the result is shown below:

The reconciliation of income tax expense and social contribution calculated by applying the combined tax rates with the values reflected in the result is shown below:

	2021	2020	2019
Income before income tax and social contribution	3,103,225	1,992,404	4,536,067
Combined tax rate	34%	34%	34%
Combined tax rate on income tax and social contribution	(1,055,097)	(677,417)	(1,542,263)
(Additions) / deletions:
Permanent additions and exclusions:
Non-taxable revenues	135,465	11,370	7,790
Non-deductible expenses for tax purposes	(53,505)	(42,329)	(18,748)
Tax incentive – SUDENE/SUDAM (i)	167,118	164,442	194,161
Tax benefit related to interest on shareholders’ equity	356,150	368,220	338,449
Sale I – Systems (formerly FiberCo) (ii)	(335,935)	-	-
IR/CS credit on Selic related do tax overpayment (iii)	534,804	-	-
Reversal of Provision for IR/CS - TIM Nordeste (iv)	87,565	-	-
Other amounts	17,384	11,564	106,670
	909,046	513,267	628,322
Income tax and social contribution recorded in income for the period
	(146,051)	(164,150)	(913,941)
Effective rate	4.71%	8.24%	20.15%

(i) As mentioned in note 25 c.3, in order for investment grants not to be computed in taxable income, they must be recorded as a tax incentive reserve, which can only be used to absorb losses or be incorporated into the share capital. TIM S.A. has tax benefits that fall under these rules.

(ii) Refers to deferred taxes on goodwill written-off, according to the sale transaction described in Note 1, which took place in November 2021 between TIM S.A. and IHS. See note 15.d.

(iii) As mentioned in note 9, in September 2021, the Federal Supreme Court (STF), with general repercussions, established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement using the SELIC rate in cases of undue payment. Although the aforementioned decision is still pending publication, as well as the specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to date, in the amount of R$ 534 million, since the likelihood of a favorable outcome for the Company becomes probable.

(iv) In the second quarter of 2021, there was a positive impact of R$ 87 million arising from the write-off of assets and reversal of the provision for income tax and social contribution, set up in 2009, due to the partial success in an administrative proceeding related to the merger of the company TIM Nordeste by TIM Celular.

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Earnings per share (Tables)

12 Months Ended

Dec. 31, 2021

Basic earnings per share are calculated by dividing profit attributable to Company’s shareholders by the weighted average number of shares issued during the year.

Basic earnings per share are calculated by dividing profit attributable to Company’s shareholders by the weighted average number of shares issued during the year.

	2021	2020	2019
Income attributable to the shareholders of the company	2,957,174	1,828,254	3,622,127
Weighted average number of common shares issued (thousands)	2,420,314	2,420,804	2,420,481
Basic earnings per share (expressed in R$)	1.22	0.76	1.50

(b)       Diluted

Diluted earnings per share are calculated by adjusting the weighted average amount of shares outstanding to assume the conversion of all potential dilutive shares.

	2021	2020	2019
Income attributable to the shareholders of the company	2,957,174	1,828,254	3,622,127
Weighted average number of common shares issued (thousands)	2,420,638	2,421,065	2,421,018
Diluted earnings per share (in R$)	1.22	0.76	1.50

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Balances and transactions with related parties (Tables)

12 Months Ended

Dec. 31, 2021

The balances of transactions with Telecom Italia Group companies are as follows:

The balances of transactions with Telecom Italia Group companies are as follows:

	Assets
	2021	2020
Telecom Italia Sparkle (i)	1,414	1,630
Gruppo Havas (vi)	83,613	-
TI Sparkle (iii)	5,084	1,915
TIM Brasil (vii)	23,069	6,129
Telecom Italia S.p.A. (ii)	1,502	370
I Systems (ix)	5,879	-
Other	674	674
Total	121,235	10,718

	Liabilities
	2021	2020
Telecom Italia S.p.A. (ii)	71,288	75,317
Telecom Italia Sparkle (i)	3,689	10,576
TI Sparkle (iii)	10,205	7,333
TIM Brasil (iv)	6,558	6,145
Vivendi Group (v)	1,238	1,150
Gruppo Havas (vi)	19,794	24,068
I Systems (viii)	31,596	-
Other	4,585	2,797
Total	148,953	127,386

	Revenue
	2021	2020	2019
Telecom Italia S.p.A. (ii)	1,112	1,197	775
Telecom Italia Sparkle (i)	353	2,994	5,371
TI Sparkle (iii)	3,347	4,059	2,052
I Systems (ix)	5,881	-	-
Total	10,693	8,250	8,198

	Cost / Expense
	2021	2020	2019
Telecom Italia S.p.A. (ii)	105,137	110,407	93,188
Telecom Italia Sparkle (i)	19,219	27,485	24,914
TI Sparkle (iii)	20,533	19,923	18,700
Vivendi Group (v)	1,271	1,207	1,386
Gruppo Havas (vi)	206,349	207,682	264,318
I Systems (viii)	31,596	-	-
Other	22,597	22,308	18,713
Total	406,702	389,012	421,219

(i) amounts refer to roaming, Value-Added Services – VAS, transfer of means and international voice-wholesale.

(ii) The amounts refer to international roaming, technical assistance and value added services – VAS and licensing for the use of a registered trademark, granting TIM. S.A. the right to use the “TIM” brand upon payment of royalties in the amount of 0.5% of the company’s net revenue, with payment made on a quarterly basis.

(iii) Values refer to link rental, EILD rental, media rental (submarine cable) and signaling service.

(iv) Mainly refer to judicial deposits made on account of labor causes and transfers of employees.

(v) the values refer to Value Added Services-VAS.

(vi) From the values described above, in the result, they refer to advertising services, of which, R$ 143,439 (R$ 195,117 on December 31, 2020), are related to media transfers.

(vii) Refer to judicial deposits made on account of labor claims.

(viii) The amounts refer to fiber infrastructure services.

(ix) The amounts are related to services provided by TIM S.A., mainly related to network operation and maintenance in the scope of Transition Service Agreement, signed when closing the transaction.

The company has social investment actions that include donations, projects developed by the Tim Institute and sponsorships. On December 31, 2021, the Company invested R$ 9,147 (R$ 4,829 on December 31, 2020).

Balances on equity accounts are recorded in the groups: trade accounts receivable, prepaid expenses, suppliers and other current assets and liabilities.

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Management remuneration (Tables)

12 Months Ended

Dec. 31, 2021

The payment of key management personnel for the provision of their services is presented below:

The key management personnel includes statutory directors and the Board of Directors. The payment of key management personnel for the provision of their services is presented below:

	2021	2020	2019
Short-term benefits	31,494	23,949	22,524
Other long-term benefits	1,052	4,544	900
Share-based payments remuneration	15,176	6,343	5,379
	47,722	34,836	28,803

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Financial instruments and risk management (Tables)

12 Months Ended

Dec. 31, 2021

The consolidated derivative financial instruments are presented below:

The consolidated derivative financial instruments are presented below:

	2021		2020
	Assets	Liabilities	Assets	Liabilities
Derivative transactions	198,027	208,787	340,660	36,166
Other derivatives (i)	457,892	-	161,429	-
	655,919	208,787	502,089	36,166
Current portion	(134,292)	(194,837)	(262,666)	(7,273)
Non-current portion	521,627	13,950	239,423	28,893

(i) Other derivatives are instruments of share subscription options represent the option of the Company to subscribe 4.08% of the shares of C6 capital, where the Group/Company paid a share subscription premium in the amount of R$ 17.7 million. As required by IFRS 9, the financial instrument must be valued at its fair value that on December 31, 2021 and December 31, 2020 corresponds to R$ 458 million and R$ 161 million, respectively. The impact of the mark-to-market of the stock conversion option calculated, of R$ 440.3 million, represents the difference in the fair value of the option less the amount paid for the share subscription premium. This financial instrument was measured at fair value and will be subsequently verified in the company’s results for the year, also considering the arbitration risks disclosed in note 27.

The long-term derivative financial instruments on December 31, 2021 are due in accordance with the following schedule:

The long-term derivative financial instruments on December 31, 2021 are due in accordance with the following schedule:

	Assets
2023	39,335
2024	16,843
2025 onwards	465,449
	521,627

Financial instruments measured at fair value:

Financial instruments measured at fair value:

	2021
	Level 1	Level 2	TOTAL
Total assets	4,579,528	655,919	5,235,447
Financial assets at fair value through profit or loss	4,579,528	655,919	5,235,447
Derivative financial instruments	-	198,027	198,027
Other derivatives	-	457,892	457,892
Marketable securities	4,579,528	-	4,579,528
Total liabilities	-	208,787	208,787
Financial liabilities at fair value through profit or loss	-	208,787	208,787
Derivative financial instruments	-	208,787	208,787
	2020
	Level 1	Level 2	TOTAL
Total assets	2,077,499	502,089	2,579,588
Financial assets at fair value through profit or loss	2,077,499	502,089	2,579,588
Derivative financial instruments	-	340,660	340,660
Other derivatives	-	161,429	161,429
Marketable securities	2,077,499	-	2,077,499
Total liabilities	-	36,166	36,166
Financial liabilities at fair value through profit or loss	-	36,166	36,166
Derivative financial instruments	-	36,166	36,166

The financial instruments of the company by category can be summarized as follows:

The financial instruments of the company by category can be summarized as follows:

December 31, 2021

	Measured at amortized cost	Fair value through profit or loss	Total
Assets, as per balance sheet	9,472,377	5,235,447	14,707,824
Derivative financial instruments	-	198,027	198,027
Other derivatives	-	457,892	457,892
Trade accounts receivable and other accounts receivable, excluding prepayments	3,253,207	-	3,253,207
Marketable securities	-	4,579,528	4,579,528
Cash and cash equivalents	5,228,615	-	5,228,615
Leases	243,121	-	243,121
Judicial deposits	718,773	-	718,773
Other amounts recoverable	28,661	-	28,661
	Measured at amortized cost	Fair value through profit or loss	Total
Liabilities, as per balance sheet	16,095,802	208,787	16,304,589
Loans and financing	3,845,465	-	3,845,465
Derivative financial instruments	-	208,787	208,787
Suppliers and other obligations, excluding legal obligations	2,653,218	-	2,653,218
Lease liabilities	9,063,539	-	9,063,539
Dividends and interest on shareholders' equity payable	533,580	-	533,580

December 31, 2020

	Measured at amortized cost	Fair value through profit or loss	Total
Assets, as per balance sheet	6,756,811	2,579,588	9,336,399
Derivative financial instruments	-	340,660	340,660
Other derivatives		161,429	161,429
Trade accounts receivable and other accounts receivable, excluding prepayments	3,180,661	-	3,180,661
Marketable securities	-	2,077,499	2,077,499
Cash and cash equivalents	2,575,291	-	2,575,291
Leases	162,198	-	162,198
Judicial deposits	794,755	-	794,755
Other amounts recoverable	43,906	-	43,906
	Measured at amortized cost	Fair value through profit or loss	Total
Liabilities, as per balance sheet	14,391,175	36,166	14,427,341
Loans and financing	2,345,032	-	2,345,032
Derivative financial instruments	-	36,166	36,166
Suppliers and other obligations, excluding legal obligations	3,128,732	-	3,128,732
Leases	8,378,835	-	8,378,835
Dividends and interest on shareholders' equity payable	538,576	-	538,576

The operations with derivative financial instruments contracted by the company and in force on December 31, 2021 and December 31, 2020 are shown in the following table:

The operations with derivative financial instruments contracted by the company and in force on December 31, 2021 and December 31, 2020 are shown in the following table:

December 31, 2021

COUNTERPARTY

% Coverage

AVERAGE SWAP RATES

Currency

SWAP type

Debt

SWAP

Total Debt

Total swap (Long position)¹

Active Tip

Short position

USD

LIBOR x DI

KFW/ Finnvera

JP Morgan and Bank of America

282,474

282,474

100%

LIBOR 6M + 0.75% p.a.

79.00% to 92.59% of CDI

USD

PRE x DI

BNP Paribas

BNP Paribas

428,793

429,247

100%

3.32% p.a.

155% CDI

USD

PRE x DI

The Bank of Nova Scotia

Scotiabank

559,650

559,933

100%

1.73% p.a.

CDI + 1.05%

BRL

PRE x DI

BNP Paribas

BNP Paribas

515,166

517,843

100%

8.34% p.a.

CDI + 1.07%

BRL

IPCA x DI

DEBENTURE

ITAU

1,696,999

1,696,999

100%

IPCA + 4.17% p.a.

CDI + 0.95%

BRL

IPCA x DI

BNDES

XP

396,281

396,281

100%

IPCA + 4.23% p.a.

96.95% CDI

¹ In certain swap contracts, active tip includes the cost of income tax (15%). After related taxes, coverage remains at 100%.

December 31, 2020

COUNTERPARTY

% Coverage

AVERAGE SWAP RATES

Currency

SWAP type

Debt

SWAP

Total Debt

Total swap (Long position)¹

Active Tip

Short position

USD

LIBOR x DI

KFW/ Finnvera

JP Morgan and Bank of America

351,233

351,233

100%

LIBOR 6M + 0.75% p.a.

85.25% CDI

EUR

PRE x DI

Bank of America

Bank of America

570,878

570,878

100%

0.33% p.a.

108.05% CDI

USD

PRE x DI

The Bank of Nova Scotia.

Scotiabank

1,031,526

1,031,526

100%

1.72% p.a.

134.43% CDI

USD

PRE x DI

BNP Paribas

BNP Paribas

399,725

399,725

100%

3.32% p.a.

155% CDI

Our assumptions basically observed the individual effect of the CDI, USD, Libor and IPCA variation used in the transactions as the case may be, and for each scenario the following percentages and quotes were used:

Our assumptions basically observed the individual effect of the CDI, USD, Libor and IPCA variation used in the transactions as the case may be, and for each scenario the following percentages and quotes were used:

Sensitivity scenario		Fair value in USD, EUR, BRL and IPCA (1)	A) ∆ Accumulated variation in debt	Fair value of the active tip of the swap (+)	Fair value of the passive tip of the swap (-)	Swap result	B) ∆ Accumulated variation in swap	C) Final Result (B-A)
	Dez/21	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
CDI	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,388,105	(2,301)	3,388,105	(3,428,742)	(40,637)	(29,671)	(27,370)
	remote	3,385,955	(4,451)	3,385,955	(3,455,013)	(69,058)	(58,093)	(53,641)
USD	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,709,499	319,094	3,709,499	(3,401,372)	308,127	319,094	-
	remote	4,028,593	638,187	4,028,593	(3,401,372)	627,221	638,187	-
LIBOR	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,391,542	1,136	3,391,542	(3,401,372)	(9,830)	1,136	-
	remote	3,392,677	2,271	3,392,677	(3,401,372)	(8,695)	2,271	-
IPCA	probable	3,390,406	-	3,390,406	(3,401,372)	(10,966)	-	-
	possible	3,277,656	(112,750)	3,277,656	(3,401,372)	(123,716)	(112,750)	-
	remote	3,173,004	(217,402)	3,173,004	(3,401,372)	(228,368)	(217,402)	-

(1) (KFW Finnvera, Scotia, BofA, BNP, Debenture and BNDES)

Schedule of risk variable of derivative financial instruments

Risk variable	Sensitivity scenario	CDI	USD	LIBOR	IPCA
CDI	probable	9.15%	5.5805	0.3433%	10.06%
	possible	11.44%	5.5805	0.3433%	10.06%
	remote	13.73%	5.5805	0.3433%	10.06%
USD	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	6.3210	0.3433%	10.06%
	remote	9.15%	8.3708	0.3433%	10.06%
LIBOR	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	5.5805	0.4291%	10.06%
	remote	9.15%	5.5805	0.5149%	10.06%
IPCA	probable	9.15%	5.5805	0.3433%	10.06%
	possible	9.15%	5.5805	0.3433%	12.58%
	remote	9.15%	5.5805	0.3433%	15.09%

Schedule of capital management

The sensitivity analyses for derivative financial instruments in force on December 31, 2021 were carried out considering, basically, the assumptions related to changes in market interest rates and the change in the US dollar used in swap contracts. The use of these assumptions in the analysis is due exclusively to the characteristics of derivative financial instruments, which have exposure only to changes in interest and exchange rates.

Chart of gains and losses with derivatives during the year

Schedule of position showing gains and losses with derivatives

	2021	2020
Net income from derivative operations	(87,603)	290,856
Income (loss) from operations with other derivatives	285,009	155,165

Capital Management

The group's objectives in managing its capital are to safeguard the group's ability to continue to deliver return to shareholders and benefits to other stakeholders, as well as maintain a capital structure to reduce this cost. To maintain or adjust the group's capital structure, management may review the dividend payment policy, return capital to shareholders, or issue new shares or sell assets to reduce, for example, the level of debt. The financial leverage ratios on December 31, 2021 and 2020 can be summarized as follows:

	2021	2020
Total loans and derivatives (note 20 and 37)	3,398,333	1,879,109
Leases - Liabilities (note 16)	9,063,539	8,378,835
Leases - Assets (note 16)	(243,121)	(162,198)
Less: Cash and cash equivalents (note 4)	(5,228,615)	(2,575,291)
FIC (note 5)	(4,568,020)	(2,070,438)
Net debt	2,422,116	5,450,017
Other derivatives (note 37)	457,892	161,429
Financing of 5G License	843,020	-
Adjusted net debt	3,723,028	5,611,447
Adjusted EBITDA (1) (last 12 months)	9,459,299	8,330,038
Leverage ratio	0.39	0.65
Reconciliation of profit for the year to Adjusted EBITDA:
Profit for the year	2,957,174	1,828,254
Depreciation and amortization	5,691,696	5,527,012
Finance Income (Cost), Net	652,806	810,622
Income tax and social contribution	146,051	164,150
Share of loss of an associate	11,572	-
Adjusted EBITDA(i)	9,459,299	8,330,038

(i) Adjusted EBITDA: Presentation of Adjusted EBITDA as a non-GAAP measure is useful to management, investors and other users of our financial information in evaluating operating profitability of the Company. Adjusted EBITDA is calculated by adding back financial income (expenses), income tax and social contribution, depreciation and amortization cost and expense, and share of loss of an associate to profit for the year.

Schedule of capital management

The group's objectives in managing its capital are to safeguard the group's ability to continue to deliver return to shareholders and benefits to other stakeholders, as well as maintain a capital structure to reduce this cost. To maintain or adjust the group's capital structure, management may review the dividend payment policy, return capital to shareholders, or issue new shares or sell assets to reduce, for example, the level of debt. The financial leverage ratios on December 31, 2021 and 2020 can be summarized as follows:

	2021	2020
Total loans and derivatives (note 20 and 37)	3,398,333	1,879,109
Leases - Liabilities (note 16)	9,063,539	8,378,835
Leases - Assets (note 16)	(243,121)	(162,198)
Less: Cash and cash equivalents (note 4)	(5,228,615)	(2,575,291)
FIC (note 5)	(4,568,020)	(2,070,438)
Net debt	2,422,116	5,450,017
Other derivatives (note 37)	457,892	161,429
Financing of 5G License	843,020	-
Adjusted net debt	3,723,028	5,611,447
Adjusted EBITDA (1) (last 12 months)	9,459,299	8,330,038
Leverage ratio	0.39	0.65
Reconciliation of profit for the year to Adjusted EBITDA:
Profit for the year	2,957,174	1,828,254
Depreciation and amortization	5,691,696	5,527,012
Finance Income (Cost), Net	652,806	810,622
Income tax and social contribution	146,051	164,150
Share of loss of an associate	11,572	-
Adjusted EBITDA(i)	9,459,299	8,330,038

(i) Adjusted EBITDA: Presentation of Adjusted EBITDA as a non-GAAP measure is useful to management, investors and other users of our financial information in evaluating operating profitability of the Company. Adjusted EBITDA is calculated by adding back financial income (expenses), income tax and social contribution, depreciation and amortization cost and expense, and share of loss of an associate to profit for the year.

Changes in financial liabilities

Changes in financial liabilities

Changes in liabilities arising from financing activities such as loans and financing, lease liabilities lease and financial instruments are presented below:

	Loans and financing	Lease liabilities	Derivative financial instruments (assets) liabilities
December 31, 2020	2,345,032	8,378,835	(465,922)
Inflows	3,062,000	2,041,474	(296,464)
Cancellations	-	(202,379)	-
Financial expenses	167,857	858,260	148,177
Foreign exchange variations, net	60,463	-	(60,574)
Payment	(1,789,887)	(2,012,651)	227,651
		-
December 31, 2021	3,845,465	9,063,539	(447,132)

	Loans and financing	Lease liabilities	Derivative financial instruments (Assets) Liabilities
December 31, 2019	2,029,088	7,780,870	(42,106)
Inflows	1,800,000	1,966,355	(161,429)
Remeasurement	-	(443,666)	-
Financial expenses	90,500	797,569	13,016
Foreign exchange variations, net	305,010	-	(305,012)
Payment	(1,879,566)	(1,722,293)	29,610
December 31, 2020	2,345,032	8,378,835	(465,922)

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Defined benefit pension plans and other post-employment benefits (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of asset policy and medical plan

	2021	2020
PAMEC/asset policy and medical plan	6,492	7,346

The actuarial position of liabilities and assets related to retirement and health care plans, on December 31, 2020, in accordance with the rules provided for by IAS 19 is presented below.

The actuarial position of liabilities and assets related to retirement and health care plans, on December 31, 2020, in accordance with the rules provided for by IAS 19 is presented below.

a) Effects on the base date of December 31:

	Plans						Total
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan	2021	2020
Reconciliation of assets and liabilities on 12/31/2021	(*)		(*)
Present value of the actuarial obligations	38,869	9,176	119	672	14,100	3,231	66,167	69,362
Fair value of the plan assets	(56,478)	(14,739)	(405)	-	(11,511)	-	(83,133)	(80,856)
Present value of the obligations exceeding the fair value of the assets	(17,609)	(5,563)	(286)	672	2,589	3,231	(16,966)	(11,494)
Amount recognized in other comprehensive income	-	2,327	168	-	-	-	2,495	2,023
Net actuarial liabilities/(assets)	(17,609)	(3,236)	(118)	672	2,589	3,231	(14,471)	(9,471)

(*) No asset was recognized by the sponsors, due to the impossibility of reimbursing this surplus, and the fact that the sponsor’s contributions will not be reduced in the future.

b) Changes in net actuarial liabilities (assets)

b) Changes in net actuarial liabilities (assets)

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Actuarial liabilities (assets) on 12/31/2020	(15,731)	(1,360)	(287)	858	2,145	4,343
Expense (revenue) recognized in income (loss)	(1,063)	(90)	(20)	57	160	535
Contributions of the sponsor	-	-	-	(45)	-	(8)
Recognized actuarial (gains) or losses	(815)	(1,786)	189	(198)	284	(1,639)
Unrecognized actuarial (gains) or losses	-	-	-	-	-	-
Net actuarial liabilities (assets) on 12/31/2021	(17,609)	(3,236)	(118)	672	2,589	3,231

c) Reconciliation of present value of obligations

c) Reconciliation of present value of obligations

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Value of obligations on 12/31/2020	41,852	10,072	147	858	12,090	4,343
Cost of current service	17	-	-	-	-	213
Interest on actuarial obligation	2,743	640	10	57	868	322
Benefits paid in the year	(2,898)	(768)	(9)	(45)	(605)	(8)
Contributions paid by participants	-				0
(Gains)/losses in obligations	(2,845)	(768)	(29)	(198)	1,747	(1,639)
Value of obligations on 12/31/2021	38,869	9,176	119	672	14,100	3,231

d) Reconciliation of the fair value of the assets

d) Reconciliation of the fair value of the assets

Plans
PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan

Fair value of assets on 12/31/2020	57,479	12,998	434	-	9,945	-
Benefits paid in the year	(2,898)	(768)	(9)	-	(605)	-
Actual earnings from assets during the year	3,799	834	29	-	708	-
Actuarial gain (loss) on plan assets	(1,902)	1,675	(49)	-	1,463	-
Contributions paid by participants	-	-	-	-	-	-
Contributions of sponsor converted in the plan	-	-	-	-		-
Fair value of assets on 12/31/2021	56,478	14,739	405	-	11,511	-

e) Expenses planned for 2022

e) Expenses planned for 2022

	Plans
	PBS	PBS Assisted	Administration agreement	PAMEC/ Asset Policy	AES Telecom	Medical plan
Current service cost (with interest)	4	-	-	-	-	121
Interest on actuarial obligations	3,289	769	10	57	1,242	290
Earnings expected from assets	(4,841)	(1,257)	(35)	-	(1,008)	-
Interest on the effect of the (asset)/liability limit	1,552	284	10	-	-	-
Total unrecognized net expense (revenue)	4	(204)	(15)	57	234	411

The main actuarial assumptions adopted in the calculation were as follows:

The main actuarial assumptions adopted in the calculation were as follows:

Nominal discount rate for the actuarial obligation:	PBS South: 8.81% / 5.13%; PBS Nordeste: 8.84% / 5.16%; CA: 8.81% / 5.13%; PBS-A: 8.78% / 5.10%; AES: 9.02% / 5.33%; PAMEC: 8.81% / 5.13%; FIBER: 9.02% / 5.33%
Salary growth rate - nominal:	PBS: 3.50%/ 0.00% CA, PBS-A, AES, PAMEC and FIBER: Not applicable
Biometric general mortality table:	PBS, CA, PAMEC and FIBER: AT-2000 segregated per sex, decreased by 10%
Biometric table of new disability benefit vested:	PBS and FIBER: Álvaro Vindas; CA, PBS-A, AES and PAMEC: Not applicable
Expected turnover rate:	PBS: Null; CA, PBS-A, AES and PAMEC: Not applicable; FIBER: 0.15/ (length of service + 1), being null as of 50 years old
Probability of retirement:	PBS and FIBER: 100% at 1st eligibility; CA, PBS-A, AES and PAMEC: Not applicable
Estimated long-term inflation rate	PAMEC and FIBER: 6.60% / 3.00%
Determination method	Projected Unit Credit Method

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Insurances (Tables)

12 Months Ended

Dec. 31, 2021

The main assets, liabilities or interests covered by insurance and their maximum indemnity limits are as follows:

The Company maintains a policy of monitoring the risks inherent in its operations. As a result, on December 31, 2021, the company had insurance contracts in force to cover operational risks, civil liability, cyber risks, health, among others. The management of the company understands that the policies represent sufficient amounts to cover any losses. The main assets, liabilities or interests covered by insurance and their maximum indemnity limits are as follows:

Modalities	Maximum indemnity limits
Operational Risks	R$550,000
General Civil Liability - RCG	R$ 80,000
Cyber risks	R$ 30,001
Automobile (executive and operational fleet)	R$ 1,000 for optional civil liability (property damage and bodily harm) and R$ 100 for pain and suffering.

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Supplementary information to the cash flow (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of supplementary information to the cash flow

Schedule of supplementary information to the cash flow

	2021	2020	2019
Non-cash transactions
Additions to property, plant and equipment and intangible assets - with no effect on cash	(1,929,392)	(1,315,151)	(6,653,985)
Additions to intangible assets - acquisition of licenses	2,682,469	-	-

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The effects of the transaction are detailed below: (Details) R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)
Operations
Transaction price	R$ 1,096,294
Investment registration at fair value	1,612,957
Write-off of investment	(1,211,472)
[custom:WriteoffOfGoodwillAtFiberrjfiberspAcquisition]	(1,051,477)
Write-off of deferred tax on goodwill amortized	335,935
Gain on transaction	782,237
Income tax and social contribution	(509,245)
Net gain on transaction	272,992
xxx_Gain before income tax and social contribution on remeasurement of investment to fair value	668,720
Gain before income tax and social contribution on asset disposal	R$ 113,517

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Operations (Details Narrative) - BRL (R$)			12 Months Ended
	Nov. 30, 2021	Nov. 16, 2021	Dec. 31, 2021	Dec. 31, 2020	Nov. 02, 2021	May 05, 2021
IfrsStatementLineItems [Line Items]
Total for the acquisition of a equity interest		R$ 1,678,792,000
I H S [Member]
IfrsStatementLineItems [Line Items]
Percentage of voting equity interests control of the new company	51.00%	51.00%				51.00%
T I M S A [Member]
IfrsStatementLineItems [Line Items]
Percentage of voting equity interests control of the new company	49.00%	49.00%				49.00%
Investment in an associated company	R$ 1,612,957
[custom:PercentageOfGoodwillWrittenOff]	90.00%
Goodwill recorded in the acquisition	R$ 1,051,477,000
T I M S A [Member] | Tranche One [Member]
IfrsStatementLineItems [Line Items]
Total for the acquisition of a equity interest		R$ 582,498,000
T I M S A [Member] | Tranche Two [Member]
IfrsStatementLineItems [Line Items]
Total for the acquisition of a equity interest		R$ 1,096,294,000
I Systems [Member]
IfrsStatementLineItems [Line Items]
Percentage of voting equity interests control of the new company		51.00%
Valuation report of the net assets and liabilities					R$ 1,211,789,000
Fair value of new company		R$ 3,291,749,000
T I M Brasil Servicos E Participacoes S A [Member]
IfrsStatementLineItems [Line Items]
Proportion of ownership interest in subsidiary			66.59%	66.58%

XML

The impact of the reverse merger of TIM Participa??es by TIM S.A. was limited to reclassifications among certain accounts within the current year statement of changes in shareholders’ equity as follows: (Details) R$ in Thousands	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
The Company's equity reserves	R$ 23,182,745
T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	23,182,745
Issued capital [member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	13,477,891
Impact on TIM S.A. statement of changes in equity	3,611,593
Issued capital [member] | T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	9,866,298
Capital reserve [member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	397,183
Impact on TIM S.A. statement of changes in equity	(20,892)
Capital reserve [member] | T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	418,075
Other reserves [member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	1,036,194
Impact on TIM S.A. statement of changes in equity	(57,603)
Other reserves [member] | T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	1,093,797
Tax Bbenefit Reserve [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	1,781,560
Impact on TIM S.A. statement of changes in equity
Tax Bbenefit Reserve [Member] | T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	1,781,560
Reserve For Expansion [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	6,499,602
Impact on TIM S.A. statement of changes in equity	(3,535,824)
Reserve For Expansion [Member] | T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	10,035,426
Treasury shares [member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	(4,837)
Impact on TIM S.A. statement of changes in equity	5,456
Treasury shares [member] | T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	(10,293)
Amount recognised in other comprehensive income and accumulated in equity relating to non-current assets or disposal groups held for sale [member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	(4,848)
Impact on TIM S.A. statement of changes in equity	(2,730)
Amount recognised in other comprehensive income and accumulated in equity relating to non-current assets or disposal groups held for sale [member] | T I M Participacoes [Member]
IfrsStatementLineItems [Line Items]
The Company's equity reserves	R$ (2,118)

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Management statement and basis of preparation of the financial statements (Details Narrative)	Dec. 31, 2020 shares
Management Statement And Basis Of Preparation Of Financial Statements
Issuance of common shares	2,420,447,019

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Schedule of financial assets (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Cash and banks	R$ 99,821	R$ 100,009
Unrestrictedly available financial investments investments:
Bank Deposit Certificates (CDB)/Repurchase and resale agreements	5,128,794	2,475,282
Total cash and cash equivalents	R$ 5,228,615	R$ 2,575,291

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Cash and cash equivalents (Details Narrative)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Return rate on cash and cash equivalent	101.57%	101.24%

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Schedule of marketable securities (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Marketable securities	R$ 4,579,528	R$ 2,077,499
Current portion	(4,568,020)	(2,070,438)
Non-current portion	11,508	7,061
F U N C I N E [Member]
IfrsStatementLineItems [Line Items]
Marketable securities	R$ 11,508	R$ 7,061
[custom:AverageYieldRate]	0.06%	3.34%
Sovereign Fund [Member]
IfrsStatementLineItems [Line Items]
Marketable securities	R$ 9,624	R$ 5,220
F I C Government Bonds [Member]
IfrsStatementLineItems [Line Items]
Marketable securities	2,975,613	1,345,797
F I C C D B [Member]
IfrsStatementLineItems [Line Items]
Marketable securities	40,496	17,370
Financial Bill [Member]
IfrsStatementLineItems [Line Items]
Marketable securities	703,118	292,500
Other [Member]
IfrsStatementLineItems [Line Items]
Marketable securities	R$ 839,169	R$ 409,551
Fundo Soberano [Member]
IfrsStatementLineItems [Line Items]
[custom:AverageYieldRate]	95.13%	87.71%
F I Cs [Member]
IfrsStatementLineItems [Line Items]
[custom:AverageYieldRate]	122.76%	112.72%

XML

Schedule of trade account receivables (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Trade accounts receivable	R$ 3,253,207	R$ 3,180,661
Gross accounts receivable	4,000,026	3,831,921
Provision for expected credit losses	(746,819)	(651,260)
Current portion	(3,066,906)	(3,051,834)
Non-current portion	186,301	128,827
Billed Services [Member]
IfrsStatementLineItems [Line Items]
Gross accounts receivable	2,107,682	2,039,403
Unbilled Services [Member]
IfrsStatementLineItems [Line Items]
Gross accounts receivable	849,762	817,669
Network Use [Member]
IfrsStatementLineItems [Line Items]
Gross accounts receivable	504,333	399,083
Sale Of Goods [Member]
IfrsStatementLineItems [Line Items]
Gross accounts receivable	521,362	552,962
Contractual Asset [Member]
IfrsStatementLineItems [Line Items]
Gross accounts receivable	15,340	14,914
Other Accounts Receivable [Member]
IfrsStatementLineItems [Line Items]
Gross accounts receivable	R$ 1,547	R$ 7,890

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Schedule of changes in the allowance for doubtful accounts (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Opening balance	R$ 651,260	R$ 774,077
Supplement to expected losses	544,642	552,817
Write-off of provision	(449,083)	(675,634)
Closing Balance	R$ 746,819	R$ 651,260

XML

Schedule of aging of accounts receivable (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Trade account receivables gross	R$ 4,000,026	R$ 3,831,921
Current [member]
IfrsStatementLineItems [Line Items]
Trade account receivables gross	2,895,999	2,785,469
Not later than one month [member]
IfrsStatementLineItems [Line Items]
Trade account receivables gross	246,195	248,955
Later than one month and not later than two months [member]
IfrsStatementLineItems [Line Items]
Trade account receivables gross	100,027	84,218
Later than two months and not later than three months [member]
IfrsStatementLineItems [Line Items]
Trade account receivables gross	77,280	71,635
Later than three months [member]
IfrsStatementLineItems [Line Items]
Trade account receivables gross	R$ 680,525	R$ 641,644

XML

Schedule of inventory (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Total inventories	R$ 202,553	R$ 246,602
Inventories gross	214,605	257,477
Losses on adjustment to realizable amount	(12,052)	(10,875)
Cell Phones And Tablets [Member]
IfrsStatementLineItems [Line Items]
Inventories gross	140,934	186,961
Accessories And Prepaid Cards [Member]
IfrsStatementLineItems [Line Items]
Inventories gross	53,791	55,558
T I M Chips [Member]
IfrsStatementLineItems [Line Items]
Inventories gross	R$ 19,880	R$ 14,958

XML

Trade accounts receivable (Details Narrative)	Dec. 31, 2021	Dec. 31, 2020
Other Telephone Carriers [Member]
IfrsStatementLineItems [Line Items]
Average rate	19.00%	22.00%

XML

Schedule of recoverable indirect taxes, fees and contributions (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Reserve Quantities [Line Items]
Recoverable indirect taxes, fees and contributions	R$ 1,259,932	R$ 1,230,801
Current portion	(354,620)	(374,015)
Non-current portion	905,312	856,786
Imposto Sobre Circulacao De Mercadorias Servicos [Member] | Indirect [Member]
Reserve Quantities [Line Items]
Recoverable indirect taxes, fees and contributions	1,216,912	1,188,018
Other Indirect Taxes [Member] | Indirect [Member]
Reserve Quantities [Line Items]
Recoverable indirect taxes, fees and contributions	R$ 43,020	R$ 42,783

XML

Schedule of direct taxes, fees and contributions recoverable (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Direct taxes, fees and contributions recoverable	R$ 2,042,361	R$ 2,698,239
Current portion	(1,311,906)	(1,421,112)
Non-current portion	730,455	1,277,127
T I M S A [Member]
IfrsStatementLineItems [Line Items]
[custom:MonetaryAdjustments]	547,000
Income Tax And Social Contribution On Income [Member] | Direct [Member]
IfrsStatementLineItems [Line Items]
Direct taxes, fees and contributions recoverable	807,096	381,905
P I S And C O F I N S [Member] | Direct [Member]
IfrsStatementLineItems [Line Items]
Direct taxes, fees and contributions recoverable	1,164,772	2,253,545
Other Direct Taxes [Member] | Direct [Member]
IfrsStatementLineItems [Line Items]
Direct taxes, fees and contributions recoverable	R$ 70,493	R$ 62,789

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Recoverable direct taxes, charges and contributions (Details Narrative) R$ in Millions	12 Months Ended
	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
Total amount recorded	R$ 1,516
Principal amount	957
Intelig Telecomunicacoes Ltda [Member]
IfrsStatementLineItems [Line Items]
Total amount recorded	3,023
Principal amount	1,795
[custom:MonetaryAdjustments]	R$ 1,228

XML

Schedule of deferred taxes assets and liabilities (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021	Dec. 31, 2020
Deferred Income Tax And Social Contribution
Tax loss and negative basis of social contribution		R$ 219,876	R$ 475,128
Temporary differences:
Provision for legal and administrative proceedings		330,627	303,948
Losses on doubtful accounts receivable		257,529	224,459
Adjustments to present value – 3G license		3,298	5,240
Lease of LT Amazonas infrastructure		32,377	29,971
Employee profit sharing		40,177	36,915
Taxes with enforceability suspended	[1]	437,950	258,246
Amortized Goodwill – TIM Fiber	[2]	(34,560)	(370,494)
Derivative financial instruments		(143,948)	(154,718)
Capitalized interest on 4G authorization		(233,433)	(262,608)
Deemed costs – TIM S.A		(42,617)	(53,792)
Adjustments to lease agreements		369,521	303,833
Accelerated depreciation	[3]	(466,863)	(266,464)
Fair value adjustment I–Systems (former FiberCo)	[4]	(249,477)
Other		16,431	20,982
Total deferred taxes - Assets		536,888	550,646
Deferred active tax portion		R$ 536,888	R$ 550,646

[1] Mainly represented by the Fistel fee for the financial years 2020 and 2021. The Operating Inspection Fee (TFF) for the years 2020 and 2021 had its payments suspended by virtue of an injunction and, therefore, still do not have a specific date for payment. See note 21 for details.

[2] Represented by the goodwill on the business combination of companies TIM Fiber RJ and SP acquired by TIM in 2012, partially realized in November 2021 once this transaction is completed.

[3] As of the 1Q20, TIM S.A. excludes the portion of acceleration of depreciation of movable assets belonging to property, plant and equipment from the calculation basis of the IRPJ and CSLL, due to their uninterrupted use in three operating shifts, supported by technical expert report, as provided for in Article 323 of the RIR/2018, or by the adequacy to the tax depreciation provided for in IN 1700/2017. Such tax adjustment generated a deferred liability of R$ 467 million until December 31, 2021 (R$ 266.5 million up to December 31, 2020) and applied as of January 1, 2020.

[4] Refers to deferred charges on the fair value of the non-majority interest calculated in the sale transaction described in Note 1 that took place in November 2021 between TIM S.A. and IHS Fiber Brasil - Cessão de Infraestruturas Ltda.

XML

Schedule of expectations to recover the credits (Details) - Unused tax losses [member] R$ in Thousands	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
2022	R$ 103,847
2023	79,581
2024	36,448
2025
Total	R$ 219,876

XML

Deferred income tax and social contribution (Details Narrative) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Deferred Income Tax And Social Contribution
Applicable tax rate for income tax	25.00%	25.00%
Applicable tax rate for social contribution	9.00%	9.00%
Percentage of taxable profit offset	30.00%
Credit used amount	R$ 255,252	R$ 325,583

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Schedule of prepaid expenses (Details) - BRL (R$) R$ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Total		R$ 358,287	R$ 223,394
Advertisements not released	[1]	86,154	1,679
Rentals and insurance		67,034	69,208
Incremental costs for obtaining contracts with customers	[2]	153,988	125,114
IT Services	[3]	28,626	10,535
Other		22,485	16,858
Current portion		(275,148)	(149,796)
Non-current portion		R$ 83,139	R$ 73,598
Increase (decrease) due to changes in accounting policy required by IFRSs [member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Useful life measured as period of time, intangible assets other than goodwill		1 year
Increase (decrease) due to changes in accounting policy required by IFRSs [member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Useful life measured as period of time, intangible assets other than goodwill		2 years

[1] Represent prepaid payments of advertising expenses for products and services of the TIM brand that are recognized in the result according to the period of serving the advertisement.

[2]

[3] They represent prepayments of IT services expenses for network migration of information to the “cloud.”

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Schedule of detailed information about judicial deposits (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Non-current portion	R$ 718,773	R$ 794,755
Civil [Member]
IfrsStatementLineItems [Line Items]
Non-current portion	285,583	315,312
Labor [Member]
IfrsStatementLineItems [Line Items]
Non-current portion	128,607	149,390
Tax [Member]
IfrsStatementLineItems [Line Items]
Non-current portion	178,914	181,670
Regulatory [Member]
IfrsStatementLineItems [Line Items]
Non-current portion	111	111
Online Attachment [Member]
IfrsStatementLineItems [Line Items]
Non-current portion	R$ 125,558	R$ 148,272

XML

Judicial deposits (Details Narrative) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Civil [Member]
IfrsStatementLineItems [Line Items]
Court deposit	R$ 72,533	R$ 70,560
Tax [Member] | Tax Issues To Current Court Proceedings One [Member]
IfrsStatementLineItems [Line Items]
Court deposit	34,544	34,544
Tax [Member] | Tax Issues To Current Court Proceedings Two [Member]
IfrsStatementLineItems [Line Items]
Court deposit	9,073	8,862
Tax [Member] | Tax Issues To Current Court Proceedings Three [Member]
IfrsStatementLineItems [Line Items]
Court deposit	20,022	18,883
Tax [Member] | Tax Issues To Current Court Proceedings Four [Member]
IfrsStatementLineItems [Line Items]
Court deposit	11,254	11,317
Tax [Member] | Tax Issues To Current Court Proceedings Five [Member]
IfrsStatementLineItems [Line Items]
Court deposit	8,048	7,843
Tax [Member] | Tax Issues To Current Court Proceedings Six [Member]
IfrsStatementLineItems [Line Items]
Court deposit	3,478	3,329
Tax [Member] | Tax Issues To Current Court Proceedings Fourteen [Member]
IfrsStatementLineItems [Line Items]
Court deposit	3,582	3,514
Tax [Member] | Tax Issues To Current Court Proceedings Eight [Member]
IfrsStatementLineItems [Line Items]
Court deposit	61,752	58,664
Tax [Member] | Tax Issues To Current Court Proceedings Night [Member]
IfrsStatementLineItems [Line Items]
Court deposit	9,960	14,505
Tax [Member] | Tax Issues To Current Court Proceedings Ten [Member]
IfrsStatementLineItems [Line Items]
Court deposit	R$ 9,730	R$ 9,739

XML

As of December 31, 2020, TIM S.A. held 100% control over FiberCo (currently I-Systems). (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Reserve Quantities [Line Items]
Net loss	R$ 2,957,174	R$ 1,828,254	R$ 3,622,127
Equity in earning	R$ 11,236,551	R$ 9,317,356
Fiber Co [Member]
Reserve Quantities [Line Items]
Number of share held	1,000	1,000
Interest in total capital	100.00%	100.00%
Subsidary sareholders' equity	R$ (318)	R$ 1
Net loss	(318)
Equity in earning	(318)
Amount of investment		R$ 1

XML

Changes in investments in subsidiaries: (Details) - Subsidiaries [member] R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
Balance of investment at December 31, 2020	R$ 1
Share of loss until October 2021	(318)
Capital increase	1,211,789
Write-off of investment	(1,211,472)
Balance of investment at November 16, 2021

XML

On December 31, 2021, the Company does not have subsidiaries in its corporate structure. In November 2021, TIM S.A. started having I-Systems as an affiliated company and to record the income (loss) of this company under the equity method, no longer consol (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Profit for the year	R$ 2,957,174	R$ 1,828,254	R$ 3,622,127
Retained earnings	R$ 11,236,551	R$ 9,317,356
T I M S A [Member]
IfrsStatementLineItems [Line Items]
Number of shares in entity held by entity or by its subsidiaries or associates	1,794,287,995
[custom:InterestInTotalCapital]	49.00%
Issue of equity	R$ 1,794,288
Profit for the year	(22,968)
Retained earnings	(11,254)
Current held-to-maturity investments	R$ 1,601,703

XML

Change of investment in associate: (Details) - Associates [member] R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
Balance of investment at December 31, 2020
Revaluation of minority interest at fair value	1,612,957
Share of loss - November 2021 and December 2021	(11,254)
Balance of investment at December 31, 2021	R$ 1,601,703

XML

Investment (Details Narrative) - BRL (R$) R$ in Thousands	1 Months Ended
	Nov. 30, 2021	Nov. 30, 2020	Dec. 31, 2021	Dec. 31, 2020
T I M S A [Member]
IfrsStatementLineItems [Line Items]
Percentage of interest	49.00%	100.00%
Associates [member]
IfrsStatementLineItems [Line Items]
Fair value for the remaining minority interest			R$ 1,601,703
Associates [member] | Fiber Co [Member]
IfrsStatementLineItems [Line Items]
Fair value for the remaining minority interest	R$ 1,612,957		R$ 1,601,703
Percentage of interest	49.00%

XML

Schedule of changes in property, plant and equipment (Details) - BRL (R$) R$ in Thousands		12 Months Ended
		Dec. 31, 2021		Dec. 31, 2020		Dec. 31, 2019	Dec. 31, 2018
IfrsStatementLineItems [Line Items]
Balance end		R$ 18,308,400		R$ 18,100,698		R$ 17,612,164
Additions		1,620,602		919,529
Write-offs		(1,412,900)	[1]	(430,995)	[2]
[custom:RemeasurementOfContract]		415,060
Lease Network 1 [Member]
IfrsStatementLineItems [Line Items]
Balance end		3,048,509		3,019,900
Additions in the period, net of cancellation		630,805
Remensuration		(83,606)
Depreciation		R$ (518,590)
Amortization percentage per year		7860.00%
Lease Stores And Kiosks 1 [Member]
IfrsStatementLineItems [Line Items]
Balance end		R$ 541,312		400,262
Additions in the period, net of cancellation		295,874
Remensuration		(45,312)
Depreciation		R$ (109,512)
Amortization percentage per year		9700.00%
Lease Land Network 1 [Member]
IfrsStatementLineItems [Line Items]
Balance end		R$ 1,504,233		1,500,909
Additions in the period, net of cancellation		237,150
Remensuration		(23,772)
Depreciation		R$ (210,054)
Amortization percentage per year		9470.00%
Lease Fiber [Member]
IfrsStatementLineItems [Line Items]
Balance end		R$ 1,400,999		1,404,438
Additions in the period, net of cancellation		427,478
Remensuration		(27,185)
Depreciation		R$ (403,732)
Amortization percentage per year		3240.00%
Right Of Use In Lease 1 [Member]
IfrsStatementLineItems [Line Items]
Balance end		R$ 6,495,053		6,325,509
Additions in the period, net of cancellation		1,591,307
Remensuration		(179,875)
Depreciation		(1,241,888)
Switching Transmission Equipment [Member]
IfrsStatementLineItems [Line Items]
Balance end		7,666,460		7,745,390		6,428,468
Additions		(1,956,684)		(1,896,016)
Write-offs		(994,390)	[1]	(9,082)	[2]
Transfers		2,872,144		3,222,020
Fiber Optic Cables [Member]
IfrsStatementLineItems [Line Items]
Balance end						403,022
Additions				(72,046)
Transfers				64,511
Fiber Optic Cables 1 [Member]
IfrsStatementLineItems [Line Items]
Balance end		256,307		395,487
Additions		(65,669)
Transfers		25,778
Free Leased Handsets [Member]
IfrsStatementLineItems [Line Items]
Balance end						233,132
Additions				(142,397)
Write-offs	[2]			(5,185)
Transfers				159,569
Network infrastructure [member]
IfrsStatementLineItems [Line Items]
Balance end						2,503,014
Additions		(408,540)		(340,315)
Write-offs	[2]			(535)
Transfers		518,348		255,554
Informatics Assets [Member]
IfrsStatementLineItems [Line Items]
Balance end		126,610		152,416		155,942
Additions		(58,209)		(62,648)
Write-offs		(46,584)	[1]	(8)	[2]
Transfers		32,538
General Use Assets [Member]
IfrsStatementLineItems [Line Items]
Balance end		267,616		264,384		268,847
Additions		(48,204)		(48,402)
Write-offs		(6,523)	[1]	(386)	[2]
Transfers		57,959		44,325
Right-of-use assets [member]
IfrsStatementLineItems [Line Items]
Balance end		6,495,053		6,325,509
Write-offs	[1]	(179,875)
Land [member]
IfrsStatementLineItems [Line Items]
Balance end		40,794		40,794			R$ 40,794
Construction in progress [member]
IfrsStatementLineItems [Line Items]
Balance end		783,667		513,881		1,585,673
Additions		3,953,345		2,734,056
Write-offs	[1]	(984)
Transfers		(3,682,575)		(3,805,109)
Right Of Use In Leases [Member]
IfrsStatementLineItems [Line Items]
Balance end						5,993,272
Additions		349,419		747,297
Write-offs	[2]			(415,060)
Fiber Optic Cables 2 [Member]
IfrsStatementLineItems [Line Items]
Write-offs	[1]	(99,289)
Free Leased Handsets 1 [Member]
IfrsStatementLineItems [Line Items]
Balance end		271,763		245,119
Additions		(144,856)
Write-offs	[1]	(4,308)
Transfers		175,808
Network Infrastructure 1 [Member]
IfrsStatementLineItems [Line Items]
Balance end				2,417,718
Write-offs	[1]	(127,396)
Network Infrastructure 4 [Member]
IfrsStatementLineItems [Line Items]
Balance end		2,400,130
Gross carrying amount [member]
IfrsStatementLineItems [Line Items]
Balance end		49,159,678		47,429,167		43,358,751
Additions		5,572,362		4,687,207
Write-offs		(3,841,851)	[1]	(616,791)	[2]
Gross carrying amount [member] | Switching Transmission Equipment [Member]
IfrsStatementLineItems [Line Items]
Balance end		25,854,454		25,875,916		22,817,681
Additions		26,905		10,464
Write-offs		(2,920,511)		(174,249)	[2]
Transfers		2,872,144		3,222,020
Gross carrying amount [member] | Fiber Optic Cables [Member]
IfrsStatementLineItems [Line Items]
Balance end		778,512		878,100		813,589
Transfers		25,778		64,511
Gross carrying amount [member] | Fiber Optic Cables 1 [Member]
IfrsStatementLineItems [Line Items]
Write-offs	[1]	(125,366)
Gross carrying amount [member] | Free Leased Handsets [Member]
IfrsStatementLineItems [Line Items]
Balance end		2,806,454		2,643,336		2,489,995
Additions		805		912
Write-offs		(13,495)	[1]	(7,140)	[2]
Transfers		175,808		159,569
Gross carrying amount [member] | Network infrastructure [member]
IfrsStatementLineItems [Line Items]
Balance end		6,443,285		6,436,572		6,096,847
Additions				92,234
Write-offs	[2]			(8,063)
Transfers		518,348		255,554
Gross carrying amount [member] | Network Infrastructure 2 [Member]
IfrsStatementLineItems [Line Items]
Write-offs	[1]	(511,635)
Gross carrying amount [member] | Informatics Assets [Member]
IfrsStatementLineItems [Line Items]
Balance end		1,756,340		1,770,386		1,721,251
Additions				1
Write-offs		(46,584)	[1]	(9,996)	[2]
Transfers		32,538		59,130
Gross carrying amount [member] | General Use Assets [Member]
IfrsStatementLineItems [Line Items]
Balance end		916,845		902,287		859,505
Additions				1
Write-offs		(43,401)	[1]	(1,544)	[2]
Transfers		57,959		44,325
Gross carrying amount [member] | Right-of-use assets [member]
IfrsStatementLineItems [Line Items]
Balance end		9,779,327		8,367,895		6,933,416
Additions		1,591,307		1,849,539
Write-offs		(179,875)	[1]	(415,060)	[2]
Gross carrying amount [member] | Land [member]
IfrsStatementLineItems [Line Items]
Balance end		40,794		40,794		40,794
Gross carrying amount [member] | Construction in progress [member]
IfrsStatementLineItems [Line Items]
Balance end		783,667		513,881		1,585,673
Additions		3,953,345		2,734,056
Write-offs		(984)	[1]	(739)	[2]
Transfers		(3,682,575)		(3,805,109)
Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Balance end		(30,851,278)		(29,328,469)		(25,746,587)
Additions		(3,951,760)		(3,767,678)
Write-offs		2,428,951	[1]	185,796	[2]
Accumulated depreciation and amortisation [member] | Switching Transmission Equipment [Member]
IfrsStatementLineItems [Line Items]
Balance end		(18,187,994)		(18,130,526)		(16,389,213)
Additions		(1,983,589)		(1,906,480)
Write-offs		1,926,121		165,167	[2]
Accumulated depreciation and amortisation [member] | Fiber Optic Cables [Member]
IfrsStatementLineItems [Line Items]
Balance end				(482,613)		(410,567)
Additions		(65,669)		(72,046)
Write-offs	[1]	26,077
Accumulated depreciation and amortisation [member] | Free Leased Handsets [Member]
IfrsStatementLineItems [Line Items]
Balance end				(2,398,217)		(2,256,863)
Additions		(145,661)		(143,309)
Write-offs	[2]			1,955
Accumulated depreciation and amortisation [member] | Network infrastructure [member]
IfrsStatementLineItems [Line Items]
Balance end				(4,018,854)		(3,593,833)
Additions		(408,540)		(432,549)
Write-offs		384,239	[1]	7,528	[2]
Accumulated depreciation and amortisation [member] | Informatics Assets [Member]
IfrsStatementLineItems [Line Items]
Balance end		(1,629,730)		(1,617,970)		(1,565,309)
Additions		(58,209)		(62,649)
Write-offs		(46,584)	[1]	9,988	[2]
Accumulated depreciation and amortisation [member] | General Use Assets [Member]
IfrsStatementLineItems [Line Items]
Balance end		(649,229)		(637,903)		(590,658)
Additions		(48,204)		(48,403)
Write-offs		36,878	[1]	1,158	[2]
Accumulated depreciation and amortisation [member] | Right-of-use assets [member]
IfrsStatementLineItems [Line Items]
Balance end		(3,284,274)
Accumulated depreciation and amortisation [member] | Fiber Optic Cables 3 [Member]
IfrsStatementLineItems [Line Items]
Balance end		(522,205)
Accumulated depreciation and amortisation [member] | Free Leased Handsets 2 [Member]
IfrsStatementLineItems [Line Items]
Balance end		(2,534,691)
Write-offs	[1]	9,187
Accumulated depreciation and amortisation [member] | Network Infrastructure 3 [Member]
IfrsStatementLineItems [Line Items]
Balance end		(4,043,155)
Accumulated depreciation and amortisation [member] | Right Of Use In Leases [Member]
IfrsStatementLineItems [Line Items]
Balance end				(2,042,386)		R$ (940,144)
Additions		R$ (1,241,888)		R$ (1,102,242)

[1] Net write-offs are mainly represented by:

[2] The amount of R$ 415,060 is represented by remeasurement of contracts and includes changes in the term and scope of leases and a review of the estimate in relation to low-value vehicle contracts.

XML

Schedule of depreciation rates (Details)	12 Months Ended
	Dec. 31, 2021
Communication and network equipment [member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	8.00%
Communication and network equipment [member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	14.29%
Fiber Optic Cables [Member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	4.00%
Fiber Optic Cables [Member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	10.00%
Free Leased Handsets [Member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	14.28%
Free Leased Handsets [Member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	50.00%
Network infrastructure [member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	4.00%
Network infrastructure [member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	20.00%
Informatics Assets [Member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	10.00%
Informatics Assets [Member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	20.00%
General Use Assets [Member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	10.00%
General Use Assets [Member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Depreciation rates	20.00%

XML

Schedule of movement in intangible assets (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	R$ 10,585,079	R$ 9,027,075	R$ 9,300,756
Additions/(Amortization)	2,612,394	(641,281)
Write-offs	(1,054,390)	29
Transfers
Balance of merged company		367,571
Licences [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	2,478,986	2,739,028	3,091,216
Additions/(Amortization)	(1,164,210)	(1,286,295)
Write-offs	(1,947)	35
Transfers	906,115	934,072
Balance of merged company
Authorizations [Member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	4,793,831	4,115,007	4,533,381
Additions/(Amortization)	(491,788)	(505,723)
Write-offs	(966)	(6)
Transfers	1,171,578	87,355
Balance of merged company
Goodwill [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	475,743	1,527,220	1,159,649
Additions/(Amortization)
Write-offs	(1,051,477)
Transfers
Balance of merged company		367,571
Right To Use Infrastructure Of Lt Amazonas [Member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	109,524	109,900	109,123
Additions/(Amortization)	(8,731)	777
Write-offs
Transfers	8,355
Balance of merged company
Other intangible assets [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	154,035	175,345	198,111
Additions/(Amortization)	(24,800)	(25,032)
Write-offs
Transfers	3,490	2,266
Balance of merged company
Intangible assets under development [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	2,572,960	360,575	209,276
Additions/(Amortization)	4,301,923	1,174,992
Write-offs
Transfers	(2,089,538)	(1,023,693)
Balance of merged company
Gross carrying amount [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	34,630,541	31,444,050	29,861,788
Additions/(Amortization)	4,352,331	1,215,636
Write-offs	(1,165,840)	(945)
Transfers
Balance of merged company		367,571
Gross carrying amount [member] | Licences [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	19,911,004	19,117,515	18,184,382
Additions/(Amortization)
Write-offs	(112,626)	(939)
Transfers	906,115	934,072
Balance of merged company
Gross carrying amount [member] | Authorizations [Member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	11,151,497	9,931,248	9,811,794
Additions/(Amortization)	50,408	32,105
Write-offs	(1,737)	(6)
Transfers	1,171,578	87,355
Balance of merged company
Gross carrying amount [member] | Goodwill [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	475,743	1,527,220	1,159,649
Additions/(Amortization)
Write-offs	(1,051,477)
Transfers
Balance of merged company		367,571
Gross carrying amount [member] | Right To Use Infrastructure Of Lt Amazonas [Member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	186,221	177,866	169,327
Additions/(Amortization)		8,539
Write-offs
Transfers	8,355
Balance of merged company
Gross carrying amount [member] | Other intangible assets [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	333,116	329,626	327,360
Additions/(Amortization)
Write-offs
Transfers	3,490	2,266
Balance of merged company
Gross carrying amount [member] | Intangible assets under development [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	2,572,960	360,575	209,276
Additions/(Amortization)	4,301,923	1,174,992
Write-offs
Transfers	(2,089,538)	(1,023,693)
Balance of merged company
Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	(24,045,462)	(22,416,975)	(20,561,032)
Additions/(Amortization)	(1,739,937)	(1,856,917)
Write-offs	111,450	974
Transfers
Accumulated depreciation and amortisation [member] | Licences [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	(17,432,018)	(16,378,487)	(15,093,166)
Additions/(Amortization)	(1,164,210)	(1,286,295)
Write-offs	110,679	974
Transfers
Balance of merged company
Accumulated depreciation and amortisation [member] | Authorizations [Member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	(6,357,666)	(5,816,241)	(5,278,413)
Additions/(Amortization)	(542,196)	(537,828)
Write-offs	771
Transfers
Balance of merged company
Accumulated depreciation and amortisation [member] | Right To Use Infrastructure Of Lt Amazonas [Member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	(76,697)	(67,966)	(60,204)
Additions/(Amortization)	(8,731)	(7,762)
Write-offs
Transfers
Balance of merged company
Accumulated depreciation and amortisation [member] | Other intangible assets [member]
IfrsStatementLineItems [Line Items]
Intangible assets, beginning balance	(179,081)	(154,281)	R$ (129,249)
Additions/(Amortization)	(24,800)	(25,032)
Write-offs
Balance of merged company

XML

Schedule of amortization rates (Details) Pure in Thousands	12 Months Ended
	Dec. 31, 2021
Licences [member]
IfrsStatementLineItems [Line Items]
Amortization rates	2000.00%
Authorizations [Member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Amortization rates	500.00%
Authorizations [Member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Amortization rates	5000.00%
Righ To Use Infrastructure [Member]
IfrsStatementLineItems [Line Items]
Amortization rates	500.00%
Other intangible assets [member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Amortization rates	700.00%
Other intangible assets [member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Amortization rates	1000.00%

XML

Schedule of lease receivables (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Finance lease receivables	R$ 243,121	R$ 162,198
Current portion	(30,076)	(5,357)
Non-current portion	213,045	156,841
L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Finance lease receivables	166,944	R$ 162,198
Sublease Stores [Member]
IfrsStatementLineItems [Line Items]
Finance lease receivables	R$ 76,177

XML

Schedule of lease receivables nominal and present value (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Subleases stores		R$ 390,000	R$ 1,862,479
Lt amazon		243,121	162,198
L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Lt amazon		166,944	R$ 162,198
Up To December [Member]
IfrsStatementLineItems [Line Items]
Subleases stores		55,939
Up To December [Member] | L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Subleases stores	[1]	26,124
Up To December [Member] | Sub Leases [Member]
IfrsStatementLineItems [Line Items]
Subleases stores	[2]	29,815
Jan 2023 Dec 2026 [Member]
IfrsStatementLineItems [Line Items]
Subleases stores		167,320
Jan 2023 Dec 2026 [Member] | L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Subleases stores	[1]	106,491
Jan 2023 Dec 2026 [Member] | Sub Leases [Member]
IfrsStatementLineItems [Line Items]
Subleases stores	[2]	60,829
January 2027 Onwards [Member]
IfrsStatementLineItems [Line Items]
Subleases stores		176,895
January 2027 Onwards [Member] | L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Subleases stores	[1]	176,895
Nominal Value [Member]
IfrsStatementLineItems [Line Items]
Subleases stores		400,154
Nominal Value [Member] | L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Subleases stores	[1]	309,510
Nominal Value [Member] | Sub Leases [Member]
IfrsStatementLineItems [Line Items]
Subleases stores	[2]	90,644
Present Value [Member]
IfrsStatementLineItems [Line Items]
Lt amazon		243,121
Present Value [Member] | L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Lt amazon	[1]	166,944
Present Value [Member] | Sub Leases [Member]
IfrsStatementLineItems [Line Items]
Lt amazon	[1]	R$ 76,177

[1] LT Amazonas

[2] leaseback

XML

Intangible assets (Details Narrative) - BRL (R$) R$ in Thousands		1 Months Ended		11 Months Ended	12 Months Ended
	Aug. 29, 2012	Dec. 31, 2014	Dec. 31, 2009	Nov. 30, 2021	Dec. 31, 2021	Dec. 31, 2019	Dec. 31, 2005
Bottom of range [member]
IfrsStatementLineItems [Line Items]
Licenses period					10 years
Top of range [member]
IfrsStatementLineItems [Line Items]
Licenses period					20 years
Licences [member]
IfrsStatementLineItems [Line Items]
Subsidiary purchased Lot 2		R$ 1,199,000			R$ 1,739,000
Total auction amount						R$ 1,199,000
Intangible asset					884,000
Disbursements costs					R$ 2,680,000
Licences and franchises [member]
IfrsStatementLineItems [Line Items]
Description of additional obligations					The 2.3GHz and 26GHz radio frequencies are readily available for use by the Company (operating assets), generating the registration in “Authorizations” of the amounts related to the licenses (R$ 614 million) and the obligations related to the 26GHz license, which will be fulfilled through EACE (R$ 550 million). The disbursements with EACE (R$ 633 million), provided for in the Public Notice, will occur in 5 semi-annual installments between 2022 and 2024, and are monetarily restated by the IGP-DI. The Company evaluated the application of the concept of adjustment to present value (“AVP”) upon initial recognition (R$ 83 million).
Intangible assets					R$ 3,584,000
Assets in progress					2,394,000
Authorizations					R$ 1,190,000
Licences And Franchises 1 [Member]
IfrsStatementLineItems [Line Items]
Description of additional obligations					The 3.5GHz radio frequency is not readily available, requiring spectrum cleaning activities to be available for use, and, thus, it is registered in assets in progress (R$ 270 million). Therefore, the obligations related to this activity, to be carried out by EAF (R$ 2,104 million) are also recorded under assets in progress
Licences And Franchises 2 [Member]
IfrsStatementLineItems [Line Items]
Description of additional obligations					the Company recorded R$ 1 million in intangible assets referring to Selic interest incurred on the 3.5GHz radio frequency and R$ 19 million related to the monetary restatement of amounts due to EAF. Said balances are recorded under assets in progress.
T I M Fiber S P Ltda And T I M Fiber R J S A [Member]
IfrsStatementLineItems [Line Items]
Acquisition of goodwill	R$ 1,159,649
T I M S A [Member]
IfrsStatementLineItems [Line Items]
Acquisition of goodwill			R$ 210,015
Description of closing of the transaction				TIM S.A. wrote-off about 90% of the total goodwill recorded in the acquisition of TIM Fiber SP Ltda. and TIM Fiber RJ S.A. in the amount of R$ 1,051,477. As a result, IHS currently holds 51% of the share capital of I-Systems, with TIM S.A. having a minority (non-controlling) interest of 49% in I-Systems. Consequently, with the closing of this deal in November 2021, the goodwill initially recorded on the acquisition of the companies Fiber RJ and Fiber SP was reduced to R$ 108,171.
T I M Sul And T I M Nordeste [Member]
IfrsStatementLineItems [Line Items]
Acquisition of goodwill							R$ 157,556

XML

Schedule of lease liabilities (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021		Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Subtotal		R$ 1,952,178		R$ 1,661,822
Total		9,063,539		8,378,835
Current portion		(1,269,878)		(1,054,709)
Non-current portion		7,793,661		7,324,126
L T Amazonas 1 [Member]
IfrsStatementLineItems [Line Items]
Subtotal	[1]	302,091		290,385
Sale Of Towers [Member]
IfrsStatementLineItems [Line Items]
Subtotal		1,507,629	[2]	1,256,410
Other Finance Lease Liabilities [Member]
IfrsStatementLineItems [Line Items]
Subtotal		142,458		115,027	[3]
Lease Network [Member]
IfrsStatementLineItems [Line Items]
Subtotal		3,345,930		3,252,463
Lease Stores And Kiosks [Member]
IfrsStatementLineItems [Line Items]
Subtotal		653,422		434,990
Lease Land Network [Member]
IfrsStatementLineItems [Line Items]
Subtotal		1,657,345		1,606,567
Lease Fiber [Member]
IfrsStatementLineItems [Line Items]
Subtotal		1,454,664		1,422,993
Subtotal I F R S 16 [Member]
IfrsStatementLineItems [Line Items]
Subtotal		R$ 7,111,361		R$ 6,717,013

[1] LT Amazonas

[2] leaseback

[3] It is substantially represented by lease transactions in transmission towers.

XML

Schedule of other lease operations (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		R$ 1,952,178	R$ 1,661,822
Lease Stores And Kiosks [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		653,422	434,990
Lease Land Network [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		1,657,345	1,606,567
Lease Fiber [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		1,454,664	R$ 1,422,993
Up To December 2022 [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		2,139,718
[custom:FinanceLeaseLiabilities-0]	[1]	1,808,221
Up To December 2022 [Member] | Lease Network Infrastructure [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		752,818
Up To December 2022 [Member] | L T Amazonas 1 [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[2]	57,349
Up To December 2022 [Member] | Sale Of Towers [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[3]	245,800
Up To December 2022 [Member] | Other Finance Lease Liabilities [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[4]	28,348
January 2023 To December 2026 [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		6,431,022
[custom:FinanceLeaseLiabilities-0]	[1]	5,123,959
January 2023 To December 2026 [Member] | Lease Network Infrastructure [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		2,450,689
January 2023 To December 2026 [Member] | Lease Stores And Kiosks [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		440,996
January 2023 To December 2026 [Member] | Lease Land Network [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		1,135,266
January 2023 To December 2026 [Member] | Lease Fiber [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		1,097,008
January 2023 To December 2026 [Member] | L T Amazonas 1 [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[2]	202,271
January 2023 To December 2026 [Member] | Sale Of Towers [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[3]	992,299
January 2023 To December 2026 [Member] | Other Finance Lease Liabilities [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[4]	112,493
January 2026 Onwards [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		5,898,599
[custom:FinanceLeaseLiabilities-0]	[1]	3,284,014
January 2026 Onwards [Member] | L T Amazonas 1 [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[2]	336,138
January 2026 Onwards [Member] | Sale Of Towers [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[3]	2,135,989
January 2026 Onwards [Member] | Other Finance Lease Liabilities [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[4]	142,458
Nominal Value [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		14,469,339
[custom:FinanceLeaseLiabilities-0]	[1]	10,216,194
Nominal Value [Member] | L T Amazonas 1 [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[2]	595,758
Nominal Value [Member] | Sale Of Towers [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[3]	3,374,088
Nominal Value [Member] | Other Finance Lease Liabilities [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[4]	283,299
Nominal Value [Member] | Lease Network Infrastructure [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		4,939,126
Nominal Value [Member] | Lease Stores And Kiosks [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		980,662
Nominal Value [Member] | Lease Network [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		2,667,562
Nominal Value [Member] | Lease Fiber [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		1,628,844
Present Value [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		9,063,539
[custom:FinanceLeaseLiabilities-0]	[1]	7,111,361
Present Value [Member] | L T Amazonas 1 [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[2]	302,091
Present Value [Member] | Sale Of Towers [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[3]	1,507,629
Present Value [Member] | Other Finance Lease Liabilities [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]	[4]	142,458
Present Value [Member] | Lease Network Infrastructure [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		3,345,930
Present Value [Member] | Lease Stores And Kiosks [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		653,422
Present Value [Member] | Lease Network [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		1,657,345
Present Value [Member] | Lease Fiber [Member]
IfrsStatementLineItems [Line Items]
[custom:FinanceLeaseLiabilities-0]		1,454,664
January 2027 Onwards [Member] | Lease Network Infrastructure [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		1,735,619
January 2027 Onwards [Member] | Lease Stores And Kiosks [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		356,198
January 2027 Onwards [Member] | Lease Land Network [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		1,192,197
Up To December 2020 [Member] | Lease Stores And Kiosks [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		183,468
Up To December 2020 [Member] | Lease Land Network [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		340,099
Up To December 2020 [Member] | Lease Fiber [Member]
IfrsStatementLineItems [Line Items]
Total other lease operations		R$ 531,836

[1] Other leases:

[2] LT Amazonas

[3] leaseback

[4] It is substantially represented by lease transactions in transmission towers.

XML

Leases (Details Narrative) R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$) Number	Dec. 31, 2020 BRL (R$)
IfrsStatementLineItems [Line Items]
Interest paid	R$ 599,296	R$ 567,261
Average incremental rate	8.94%	9.06%
Rental expense	R$ 36,310	R$ 28,523
Two Sales Agreements [Member] | T I M Celular S A [Member]
IfrsStatementLineItems [Line Items]
Maximum number of towers owned | Number	6,481
Owned amount of telecommunications towers	R$ 3,000,000
L T Amazonas 1 [Member]
IfrsStatementLineItems [Line Items]
Finance lease liabilities interest rate	14.44%
Sale Of Towers [Member]
IfrsStatementLineItems [Line Items]
Sales	R$ 2,651,247
Deferred revenue	R$ 1,088,390
Sale Of Towers [Member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
Finance lease liabilities interest rate	11.01%
Sale Of Towers [Member] | Top of range [member]
IfrsStatementLineItems [Line Items]
Finance lease liabilities interest rate		17.08%
L T Amazonas [Member]
IfrsStatementLineItems [Line Items]
Finance lease receivables interest rate	12.56%

XML

Other amounts recoverable (Details Narrative) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Other Amounts Recoverable
Regulatory credits recoverable	R$ 28,661	R$ 43,906

XML

Schedule of supplier accounts payable (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Current portion	R$ 3,267,404	R$ 3,128,732
Trade Suppliers Related To Roaming [Member]
IfrsStatementLineItems [Line Items]
Current portion	3,267,404	3,128,732
Foreign Currency [Member]
IfrsStatementLineItems [Line Items]
Current portion	203,946	196,246
Foreign Currency [Member] | Current Installment [Member]
IfrsStatementLineItems [Line Items]
Current portion	3,267,404	3,128,732
Foreign Currency [Member] | Trade Suppliers Related To Roaming [Member]
IfrsStatementLineItems [Line Items]
Current portion	50,864	47,358
Foreign Currency [Member] | Trade Suppliers Related To Materials And Services 2 [Member]
IfrsStatementLineItems [Line Items]
Current portion	153,082	148,888
Local Currency [Member]
IfrsStatementLineItems [Line Items]
Current portion	3,063,458	2,932,486
Local Currency [Member] | Trade Suppliers Related To Materials And Services 1 [Member]
IfrsStatementLineItems [Line Items]
Current portion	2,966,897	2,839,547
Local Currency [Member] | Trade Suppliers Related To Interconnection [Member]
IfrsStatementLineItems [Line Items]
Current portion	65,464	64,066
Local Currency [Member] | Trade Suppliers Related To Roaming [Member]
IfrsStatementLineItems [Line Items]
Current portion	212	212
Local Currency [Member] | Trade Suppliers Related To Co Billing [Member]
IfrsStatementLineItems [Line Items]
Current portion	R$ 30,885	R$ 28,661

XML

Schedule of licenses payables (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021	Dec. 31, 2020
Authorizations Payable
Renewal of authorizations		R$ 191,329	R$ 188,498
Updated ANATEL liability	[1]	164,269	146,949
Authorizations payable	[2]	3,525,489
Total		3,881,087	335,447
Current portion		(2,630,169)	(102,507)
Non-current portion		R$ 1,250,918	R$ 232,940

[1] On December 5, 2014, the company signed the authorization term of the 700 MHz band and paid the equivalent of R$1,678 million, recording the remaining balance in the amount of R$ 61 million as commercial liability, according to the payment method provided for in the notice.

[2] As described in note 15.f, in November 2021, TIM participated in the 5G Auction of the 2.3GHz, 3.5Ghz and 26Ghz radio frequency bands for the deployment of the 5th Generation mobile telephony, winning several lots in these radio frequencies. In December 2021, the Authorization Terms were signed, characterizing the actual acquisition of the right over the lots of these radio frequencies.

XML

The authorizations payable on December 31, 2021 due in long-term is in accordance with the following schedule: (Details) R$ in Thousands	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
Total	R$ 1,250,918
Not later than one year [member]
IfrsStatementLineItems [Line Items]
Total	406,371
Later than one year [member]
IfrsStatementLineItems [Line Items]
Total	141,151
Later than one year and not later than two years [member]
IfrsStatementLineItems [Line Items]
Total	46,535
Later than two years and not later than three years [member]
IfrsStatementLineItems [Line Items]
Total	46,535
Later than three years and not later than four years [member]
IfrsStatementLineItems [Line Items]
Total	46,535
Later than four years and not later than five years [member]
IfrsStatementLineItems [Line Items]
Total	46,535
Later than five years and not later than seven years [member]
IfrsStatementLineItems [Line Items]
Total	46,535
Later than seven years and not later than ten years [member]
IfrsStatementLineItems [Line Items]
Total	46,535
Later than ten years [member]
IfrsStatementLineItems [Line Items]
Total	R$ 424,186

XML

The primary authorizations held by TIM S.A. on December 31, 2021, as well as their expiration dates, are shown in the table below: (Details) - T I M Celular S A [Member]	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Amapa Roraima Para Amazonasand Maranhao [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Mar 2031*
Additional frequencies 1,800 MHz	Apr 2023
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
2,500 MHz (P Band (4G)	Part of AR92 (PA), Feb 2024*
700 MHz (4G)	Dec 2029
2.3 GHz (5G)	-
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031
Riode Janeiroand Espirito Santo [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Mar 2031*
Additional frequencies 1,800 MHz	ES, Apr 2023
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
2,500 MHz (P Band (4G)	Part of AR21 (RJ), Feb 2024*
700 MHz (4G)	Dec 2029
2.3 GHz (5G)		Dec 2041
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031 (lots I&J) & Dec 2041 (lot H)
450 MHz	Oct 2027
Acre Rondonia Mato Grosso Mato Grossodo Sul Tocantins Distrito Federal Goias Rio Grandedo Sulexceptthemunicipalityof Pelotasandregionandthemunicipalitiesof Londrinaand Tamaranain Parana [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Mar 2031*
Additional frequencies 1,800 MHz	Apr 2023
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
2,500 MHz (P Band (4G)	Part of AR61 (DF), Feb 2024*
700 MHz (4G)	Dec 2029
2.3 GHz (5G)	South – Dec 2041
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031 (lots I&J) & Dec 2041 (lot H)
450 MHz	PR, Oct 2027
Sao Paulo [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Mar 2031*
Additional frequencies 1,800 MHz	Countryside, Apr 2023
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Paranaexceptthemunicipalitiesof Londrinaand Tamarana [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Sep 2022*
Additional frequencies 1,800 MHz	Apr 2023
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
2,500 MHz (P Band (4G)	AR41, except Curitiba and the Metropolitan Region, Feb 2024*
700 MHz (4G)	Dec 2029
2.3 GHz (5G)	Dec 2041
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031 (lots I&J) & Dec 2041 (lot H)
450 MHz	Oct 2027
Santa Catarina [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Sep 2023*
Additional frequencies 1,800 MHz	Apr 2023
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2029
2.3 GHz (5G)	Dec 2041
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031 (lots I&J) & Dec 2041 (lot H)
450 MHz	Oct 2027
Municipalityandregionof Pelotasinthe Stateof Rio Grandedo Sul [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Apr 2024*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2031 (lots I&J) & Dec 2041 (lot H)
2.3 GHz (5G)	Dec 2041
3.5 GHz (5G)	Dec 2041
Pernambuco [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	May 2024*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
2,500 MHz (P Band (4G)	Part of AR81, July 2031
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031
Ceara [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Nov 2023*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)		Oct 2027
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec S2031
Paraiba [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Dec 2023*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031
Rio Grandedo Norte [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Dec 2023*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031
Alagoas [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Dec 2023*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031
Piaui [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Mar 2024*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031
Minas Geraisexceptthemunicipalitiesofthe P G Osector 3for 3 Gtheradiofrequenciesandother [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Apr 2028*
Additional frequencies 1,800 MHz	Apr 2023
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
2,500 MHz (P Band (4G)	Part of AR31, Feb 2030*
700 MHz (4G)	Dec 2029
2.3 GHz (5G)	Dec 2041
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031 (lots I&J) & Dec 2041 (lot H)
Bahiaand Sergipe [Member]
IfrsStatementLineItems [Line Items]
800 MHz, 900 MHz and 1,800 MHz	Aug 2027*
1,900 MHz and 2,100 MHz (3G)	Apr 2023
2,500 MHz V1 Band (4G)	Oct 2027
700 MHz (4G)	Dec 2029
3.5 GHz (5G)	Dec 2041
26 GHz (5G)	Dec 2031

XML

Schedule of appropriation of financial expenses (Details) R$ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 BRL (R$)	Dec. 31, 2020 USD ($)
Reserve Quantities [Line Items]
Total	R$ 3,845,465		R$ 2,345,032
Current	(538,450)		(1,689,385)
Non-current	R$ 3,307,015		655,647
K F W Finnvera [Member]
Reserve Quantities [Line Items]
Currency	USD
Charges	Libor 6M+ 0.75% p.a.
Maturity	Jan 2024–Dec 2025
Total	R$ 278,176		344,125
B A M L [Member]
Reserve Quantities [Line Items]
Currency	EUR
Charges	0.2790% p.a.
Maturity	Aug 2021
Total	R$ (0)		570,844
Scotland [Member]
Reserve Quantities [Line Items]
Currency	USD
Charges	1.2410–1.7340% p.a.
Maturity	Apr 2024
Total	R$ 559,650		1,030,761
B N P Paribas [Member]
Reserve Quantities [Line Items]
Currency	USD
Charges	7.0907% p.a.
Maturity	Jan 2024
Total	R$ 515,166
B N P Paribas [Member] | United States of America, Dollars
Reserve Quantities [Line Items]
Currency	BRL
Charges	2.8220% p.a.
Maturity	Jan 2022
Total | $		$ 428,793		$ 399,302
Debentures [Member]
Reserve Quantities [Line Items]
Currency	BRL
Charges	IPCA + 4.1682% p.a. (i)
Maturity	June 2028
Total	R$ 1,667,399		(0)
B N D E S Investment Sustainment Program [Member]
Reserve Quantities [Line Items]
Currency	BRL
Charges	IPCA + 4.2283% p.a.
Maturity	Nov 2031
Total	R$ 396,281		R$ (0)

XML

Schedule of credit facilities (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021
Reserve Quantities [Line Items]
Total amount	R$ 1,862,479	R$ 390,000
Amount used as at end	R$ 2,252,479
Banco Nacional De Desenvolvimento Economico E Social [Member] | Financing And Credit Facilities One [Member]
Reserve Quantities [Line Items]
Currency	TJLP
[custom:BorrowingsMaturityStart]	May 2018
Term	Mar 2022
Remaining amount	R$ 1,090,000
Total amount	R$ 1,090,000	(0)
Banco Nacional De Desenvolvimento Economico E Social [Member] | Financing And Credit Facilities Two [Member]
Reserve Quantities [Line Items]
Currency	TJLP
[custom:BorrowingsMaturityStart]	May 2018
Term	Mar 2022
Remaining amount	R$ 20,000
Total amount	R$ 20,000	(0)
F I N A M E [Member] | Financing And Credit Facilities Three [Member]
Reserve Quantities [Line Items]
Currency	IPCA
[custom:BorrowingsMaturityStart]	Mar 2019
Term	Mar 2022
Remaining amount	R$ 390,000
Amount used as at end	R$ (0)	390,000
B N B [Member] | Financing And Credit Facilities Four [Member]
Reserve Quantities [Line Items]
Currency	IPCA
[custom:BorrowingsMaturityStart]	Jan 2020
Term	June 2023
Remaining amount	R$ 752,479
Total amount	R$ 752,479	R$ (0)

XML

Schedule of long term portions of borrowing and financing (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	R$ 3,307,015	R$ 655,647
Later than four years and not later than five years [member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	88,818
Later Than Five Years And Not Later Than Six Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	1,125,526
Later Than Six Years And Not Later Than Seven Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	80,712
Later Than Seven Years And Not Later Than Eight Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	615,727
Later Than Eight Years And Not Later Than Nine Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	615,727
Later Than Nine Years And Not Later Than Ten Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	618,006
Later Than Ten Years And Not Later Than Eleven Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	55,714
Later Than Eleven Years And Not Later Than Twelve Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	55,714
Later Than Twelve Years And Not Later Than Thirteen Years [Member]
IfrsStatementLineItems [Line Items]
Long-term portions of borrowing and financing	R$ 51,071

XML

Schedule of nominal value of the loans (Details) R$ in Thousands	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
Nominal value of loan	R$ 3,845,465
Later than two years and not later than three years [member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	538,450
Later than four years and not later than five years [member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	88,818
Later Than Five Years And Not Later Than Six Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	1,125,526
Later Than Six Years And Not Later Than Seven Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	80,712
Later Than Seven Years And Not Later Than Eight Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	615,727
Later Than Eight Years And Not Later Than Nine Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	615,727
Later Than Nine Years And Not Later Than Ten Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	618,006
Later Than Ten Years And Not Later Than Eleven Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	55,714
Later Than Eleven Years And Not Later Than Twelve Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	55,714
Later Than Twelve Years And Not Later Than Thirteen Years [Member]
IfrsStatementLineItems [Line Items]
Nominal value of loan	R$ 51,071

XML

Loans and financing (Details Narrative) - BRL (R$)	1 Months Ended			12 Months Ended
	Nov. 30, 2021	Jun. 30, 2021	Apr. 30, 2021	Dec. 31, 2021
Reserve Quantities [Line Items]
Notes and debentures issued		R$ 1,600,000,000
Description of credit facility agreement		the remunerative interest of IPCA + 4.1682% p.a. can be automatically reduced by up to 0.25bps. The debentures will bear semiannual interest and amortization will take place, respectively, in the 5th, 6th and 7th year. The issue was aimed at financing projects for the implementation, expansion and modernization of fixed and mobile networks in different technologies, including 5G, and falls within the provisions of Law No. 12431 of June 24, 2011. Within the scope of this operation, the Company elected to sign an interest rate swap contract for hedging purposes, at the cost of CDI + 0.95% per annum
Bank Of Nova A Scotia [Member]
Reserve Quantities [Line Items]
Fair value of operations				R$ 563,259
Banco Nacional De Desenvolvimento Economico E Social [Member] | Bank Of Nova A Scotia [Member]
Reserve Quantities [Line Items]
Description of debt			the Company contracted a new loan with The Bank of Nova Scotia, in the amount of R$ 572 million, at the cost of CDI + 1.05% p.a. and a 3-year term
B N P Paribas [Member]
Reserve Quantities [Line Items]
Description of debt			the Company contracted a new loan with BNP Paribas, in the amount of R$ 500 million, at the cost of CDI + 1.07% p.a. and a 2.9-year term. The operation aimed to strengthen the Company's cash for working capital.
Fair value of operations				524,422
F I N A M E [Member]
Reserve Quantities [Line Items]
Description of debt	the cost of IPCA + 4.2283% p.a. and a total term of 10 years with a 3-year grace period to start of amortization. The Company elected to sign an interest rate swap contract for hedging purposes, at the final cost of 96.95% of CDI.
Amount of credit facility	R$ 390
Debentures [Member]
Reserve Quantities [Line Items]
Fair value of operations				1,635,203
B I N D E S [Member]
Reserve Quantities [Line Items]
Fair value of operations				R$ 384,073

XML

Schedule of indirect taxes, charges and contributions payable (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021	Dec. 31, 2020
Reserve Quantities [Line Items]
Indirect taxes, charges and contributions payable		R$ 1,421,955	R$ 938,880
Current portion		(1,418,682)	(935,778)
Non-current portion		3,273	3,102
Imposto Sobre Circulacao De Mercadorias Servicos [Member]
Reserve Quantities [Line Items]
Indirect taxes, charges and contributions payable		303,721	359,498
Agencia Nacionl De Telecomunicacoes Taxes And Fees [Member]
Reserve Quantities [Line Items]
Indirect taxes, charges and contributions payable	[1]	1,042,933	509,087
Imposto Sobre Servicos [Member]
Reserve Quantities [Line Items]
Indirect taxes, charges and contributions payable		66,075	66,082
Other Direct Taxes [Member]
Reserve Quantities [Line Items]
Indirect taxes, charges and contributions payable		R$ 9,226	R$ 4,213

[1] In 2020, to minimize the impacts of the pandemic, Provisional Act 952, dated April 15, 2020, was enacted, authorizing the postponement of payment of taxes, such as TFF, Condecine and CFRP, in the amount of R$ 790 million, to August 31, 2020. In the third quarter of 2020, the Company made a partial payment in the amount of R$ 300 million referring to CFRP and Condecine, but due to a preliminary injunction in court, there was no need to pay the Fistel (TFF), which remains outstanding until the final and unappealable decision.

XML

Indirect taxes, charges and contributions payable (Details Narrative)	12 Months Ended
	Dec. 31, 2021 BRL (R$)
Indirect Taxes Charges And Contributions Payable
Partial payment of fees	R$ 300,000,000
Amount to be paid for fistel	480,000,000
Default interest on fistel	R$ 51,200,000

XML

Schedule of direct taxes charges and contributions payable (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021	Dec. 31, 2020
Reserve Quantities [Line Items]
Direct taxes, charges and contributions payable		R$ 258,340	R$ 508,743
Current portion		(245,113)	(296,299)
Non-current portion		13,227	212,444
Income Tax And Social Contribution On Income [Member]
Reserve Quantities [Line Items]
Direct taxes, charges and contributions payable	[1]	186,294	313,145
P I S And C O F I N S [Member]
Reserve Quantities [Line Items]
Direct taxes, charges and contributions payable		41,916	154,353
Other Direct Taxes [Member]
Reserve Quantities [Line Items]
Direct taxes, charges and contributions payable	[2]	R$ 30,130	R$ 41,245

[1] Referring to the recharge of voice credits and data not yet used by customers relating to prepaid system services that are appropriate to the result when the actual use of these services by clients.

[2] Referring to the release of resources related to the financing line with BNDES (Investment Support Program-BNDES PSI). The sum of grants granted by BNDES up to December 31, 2021 is R$ 203 million and the outstanding amount on December 31, 2021 is R$ 11,184 (R$ 24,732 on December 31, 2020). This amount is being amortized by the lifespan of the asset being financed and appropriated in the group of “other net revenues (expenses)” (note 29).

XML

Schedule of deferred revenue (Details) - BRL (R$) R$ in Thousands		Dec. 31, 2021	Dec. 31, 2020
Reserve Quantities [Line Items]
Deferred revenues		R$ 886,340	R$ 1,021,924
Current installment		(197,179)	(266,436)
Non-current portion		689,161	755,488
Banco Nacional De Desenvolvimento Economico E Social [Member]
Reserve Quantities [Line Items]
Subsidies granted		203
Subsidies granted outstanding		11,184	24,732
Services To Be Rendered Pre Paid [Member]
Reserve Quantities [Line Items]
Deferred revenues	[1]	118,795	189,482
Government Grants [Member]
Reserve Quantities [Line Items]
Deferred revenues	[2]	11,184	24,732
Prepaid Revenues [Member]
Reserve Quantities [Line Items]
Deferred revenues		8,522	11,163
Deferred Revenue On Sale Of Towers [Member]
Reserve Quantities [Line Items]
Deferred revenues	[3]	734,826	788,921
Contractual Liabilities [Member]
Reserve Quantities [Line Items]
Deferred revenues	[4]	R$ 13,013	R$ 7,626

[1] Referring to the recharge of voice credits and data not yet used by customers relating to prepaid system services that are appropriate to the result when the actual use of these services by clients.

[2] Referring to the release of resources related to the financing line with BNDES (Investment Support Program-BNDES PSI). The sum of grants granted by BNDES up to December 31, 2021 is R$ 203 million and the outstanding amount on December 31, 2021 is R$ 11,184 (R$ 24,732 on December 31, 2020). This amount is being amortized by the lifespan of the asset being financed and appropriated in the group of “other net revenues (expenses)” (note 29).

[3] Referring to the amount of revenue to be appropriated by the sale of the towers (note 16).

[4] Contracts with customers. The table below includes information on the portion of trade accounts receivable, from which contractual assets and liabilities originate.

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Schedule of contractual assets and liabilities (Details) R$ in Thousands	Dec. 31, 2021 BRL (R$)
Accounts receivable included in trade accounts receivable	R$ 2,051,120
Contractual assets (note 6)	15,340
Contractual liability	R$ (13,013)

XML

Summary of the main changes during the fiscal year: (Details) R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)
Balance beginning	R$ 7,288
Additions	8,800
Write-offs	(13,761)
Balance ending	R$ 2,327

XML

Schedule of balances of contractual assets and liabilities are expected to be realized (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Contractual assets (liabilities)	R$ 2,327	R$ 7,288
Accounting Estimates Two Thousand Twenty One [Member]
IfrsStatementLineItems [Line Items]
Contractual assets (liabilities)		R$ 3,685
Accounting Estimates Two Thousand Twenty Two [Member]
IfrsStatementLineItems [Line Items]
Contractual assets (liabilities)	R$ (1,358)

XML

The provision for judicial and administrative proceedings constituted, updated, is composed as follows: (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Provision for legal and administrative proceedings	R$ 960,881	R$ 886,947	R$ 703,522
Provision For Civil [Member]
IfrsStatementLineItems [Line Items]
Provision for legal and administrative proceedings	309,019	245,432	208,202
Provision For Labor [Member]
IfrsStatementLineItems [Line Items]
Provision for legal and administrative proceedings	192,132	213,026	208,224
Provision For Tax [Member]
IfrsStatementLineItems [Line Items]
Provision for legal and administrative proceedings	429,951	399,288	254,833
Provision For Regulatory [Member]
IfrsStatementLineItems [Line Items]
Provision for legal and administrative proceedings	R$ 29,779	R$ 29,201	R$ 32,263

XML

The changes in the provision for judicial and administrative proceedings are summarized below: (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Beginning balance	R$ 886,947	R$ 703,522
Additions, net of reversals	278,789	333,724
Payments	(316,804)	(413,634)
Monetary adjustment	111,949	137,379
Ending balance	960,881	886,947
[custom:BalanceCompanyIncorporated]		125,956
Provision For Civil [Member]
IfrsStatementLineItems [Line Items]
Beginning balance	245,432	208,202
Additions, net of reversals	175,715	224,416
Payments	(194,501)	(266,872)
Monetary adjustment	82,373	75,185
Ending balance	309,019	245,432
[custom:BalanceCompanyIncorporated]		4,501
Provision For Labor [Member]
IfrsStatementLineItems [Line Items]
Beginning balance	213,026	208,224
Additions, net of reversals	71,961	63,649
Payments	(98,730)	(138,899)
Monetary adjustment	5,875	34,361
Ending balance	192,132	213,026
[custom:BalanceCompanyIncorporated]		45,691
Provision For Tax [Member]
IfrsStatementLineItems [Line Items]
Beginning balance	399,288	254,833
Additions, net of reversals	31,078	48,897
Payments	(23,539)	(7,792)
Monetary adjustment	23,124	27,704
Ending balance	429,951	399,288
[custom:BalanceCompanyIncorporated]		75,646
Provision For Regulatory [Member]
IfrsStatementLineItems [Line Items]
Beginning balance	29,201	32,263
Additions, net of reversals	35	(3,238)
Payments	(34)	(71)
Monetary adjustment	577	129
Ending balance	R$ 29,779	29,201
[custom:BalanceCompanyIncorporated]		R$ 118

XML

Tax lawsuits (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Tax process	R$ 960,881	R$ 886,947	R$ 703,522
Provision For Tax [Member]
IfrsStatementLineItems [Line Items]
Tax process	429,951	399,288	R$ 254,833
Provision For Tax [Member] | Federal Taxes [Member]
IfrsStatementLineItems [Line Items]
Tax process	202,743	182,146
Provision For Tax [Member] | State Taxes [Member]
IfrsStatementLineItems [Line Items]
Tax process	145,436	135,891
Provision For Tax [Member] | Municipal Taxes [Member]
IfrsStatementLineItems [Line Items]
Tax process	7,626	5,633
Provision For Tax [Member] | Tim S A Proceedings Purchase Price Allocation [Member]
IfrsStatementLineItems [Line Items]
Tax process	R$ 74,146	R$ 75,618

XML

The company has actions of a civil, labor, tax and regulatory nature involving risks of loss classified by its legal advisers and the administration as possible, for which there is no provision for legal and administrative proceedings constituted, and no (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities	R$ 18,140,556	R$ 18,147,562
Provision For Civil [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities	1,292,202	1,101,332
Provision For Labor [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities	392,035	340,801
Provision For Tax [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities	16,309,439	16,586,353
Provision For Regulatory [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities	R$ 146,880	R$ 119,076

XML

The main actions with risk of loss classified as possible are described below: (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Total	R$ 18,140,556	R$ 18,147,562
Provision For Civil [Member]
IfrsStatementLineItems [Line Items]
Total	1,292,202	1,101,332
Provision For Civil [Member] | Civil Contingent Liability 1 [Member]
IfrsStatementLineItems [Line Items]
Total	160,696	220,347
Provision For Civil [Member] | Civil Contingent Liability 2 [Member]
IfrsStatementLineItems [Line Items]
Total	258,683	223,066
Provision For Civil [Member] | Civil Contingent Liability 3 [Member]
IfrsStatementLineItems [Line Items]
Total	493,806	160,279
Provision For Civil [Member] | Civil Contingent Liability 4 [Member]
IfrsStatementLineItems [Line Items]
Total	216,054	193,529
Provision For Civil [Member] | Civil Contingent Liability 5 [Member]
IfrsStatementLineItems [Line Items]
Total	99,743	154,187
Provision For Civil [Member] | Other contingent liabilities [member]
IfrsStatementLineItems [Line Items]
Total	R$ 63,220	R$ 149,924

XML

Tax (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Total	R$ 18,140,556	R$ 18,147,562
Provision For Tax [Member]
IfrsStatementLineItems [Line Items]
Total	16,309,439	16,586,353
Provision For Tax [Member] | Fst Funttel And Ebc [Member]
IfrsStatementLineItems [Line Items]
Total	3,266,381	3,014,976
Provision For Tax [Member] | Federal Taxes [Member]
IfrsStatementLineItems [Line Items]
Total	3,026,326	4,268,212
Provision For Tax [Member] | State Taxes [Member]
IfrsStatementLineItems [Line Items]
Total	8,782,114	8,562,352
Provision For Tax [Member] | Municipal Taxes [Member]
IfrsStatementLineItems [Line Items]
Total	R$ 1,234,618	R$ 740,813

XML

Provision for legal and administrative proceedings (Details Narrative) R$ in Thousands	1 Months Ended	12 Months Ended
	Aug. 22, 2019 BRL (R$)	Dec. 31, 2021 BRL (R$) Number	Dec. 31, 2020 BRL (R$) Number	Dec. 31, 2019 BRL (R$) Number
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		R$ 18,140,556	R$ 18,147,562
Provision amounts		960,881	886,947	R$ 703,522
Labor Contingent Liability 2 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		150,881	139,429
Civil Proceedings P R O C O N [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		116,985	51,713
Civil Proceedings Former Trade Partners [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		20,708	18,634
Civil Proceedings Others [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		20,089	33,682
Civil Proceedings Social Environmental And Infrastructure [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		R$ 356	610
Civil Proceedings A N A T E L [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities			1,364
Labor Proceedings Former Employees [Member]
IfrsStatementLineItems [Line Items]
Number of labour claims | Number		1,314		1,873
Tax Contingent Liability 27 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		R$ 192,132	213,026
Tax Contingent Liability 1 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		3,026,326	4,268,212
Provision amounts		8,510	8,355
Tax Contingent Liability 4 [Member]
IfrsStatementLineItems [Line Items]
Provision amounts		15,149	14,771
Tax Contingent Liability One [Member]
IfrsStatementLineItems [Line Items]
Provision amounts		R$ 39,554	38,584
Percentage of provision		11.00%
Tax Contingent Liability Two [Member]
IfrsStatementLineItems [Line Items]
Provision amounts		R$ 60,382	58,988
Tax Contingent Liability 2 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		8,782,114	8,562,352
Provision amounts		41,352	36,491
Revenue from rendering of telecommunication services		5,291	5,135
[custom:ClaimsAndLegalProccedingsForInputOutputOfGoods]		16,216	15,751
Gratuitous loan		16,374	14,912
Credits Related To Tax Substitution		22,183
Discount offered		1,140,553	1,128,741
Employee benefits		356,251	492,935
Acquisition of electricity		138,242	136,286
Tax Contingent Liability 44 [Member]
IfrsStatementLineItems [Line Items]
Cancellation of telecommunications		29,779	29,201
Social Security [Member]
IfrsStatementLineItems [Line Items]
Payment of social security contributions		23,786	10,467
Unadjusted bonuses, hiring bonuses and incentives		85,720	22,829
Tax adjustment amount		12,133,168	11,976,959
Labor Contingent Liability 1 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		R$ 306,315	R$ 317,971
Number of labour claims | Number		3,067	3,038
Tax Contingent Liability 5 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		R$ 1,467,409	R$ 2,715,670
Tax Contingent Liability 6 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		231,810	193,181
Tax Contingent Liability 7 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		69,124	67,572
Tax Contingent Liability 8 [Member] | T I M Celular S A [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		268,170	259,088
Tax Contingent Liability 99 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		410,662	399,691
Tax Contingent Liability 12 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		654,011	608,316
Tax Contingent Liability 13 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		3,449,439	3,356,501
Tax Contingent Liability 17 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		727,057	698,673
Tax Contingent Liability 18 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		547,575	249,271
Tax Contingent Liability 20 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		116,700	197,521
Tax Claim State Taxes Collection Of I C M S Tax On Subscription Services [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		286,519	260,447
Tax Contingent Liability 3 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		1,234,618	740,813
Tax Contingent Liability 22 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		618,343	150,023
Tax Contingent Liability 23 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		399,141	385,536
Tax Contingent Liability 25 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		137,944	126,159
Tax Contingent Liability 26 [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		3,266,381	3,014,976
Regulatory Contingent Liability [Member]
IfrsStatementLineItems [Line Items]
Estimated financial effect of contingent liabilities		R$ 120,218	R$ 119,076
Civil Contingent Liability 2 [Member] | Board Of Directors [Member]
IfrsStatementLineItems [Line Items]
Nominal amount	R$ 627,000
Description of additional commitment	additional commitment to bring mobile broadband, through the 4G network, to 366 municipalities with less than 30 thousand inhabitants thus reaching more than 3.4 million people.
Description of infrastruce implemented	The new infrastructure will be implemented in three years - more than 80% in the first two years – being guaranteed by the company the sharing regime with the other providers.

XML

Schedule of reserves (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Capital reserves	R$ 401,806	R$ 397,183
Special Reserve of goodwill	353,604	353,604
Long-term incentive plan	R$ 48,202	R$ 43,579

XML

Schedule of dividends calculation (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Profit for the year	R$ 2,957,174	R$ 1,828,254	R$ 3,622,127
(-) non-distributable tax incentives	(176,741)	(169,540)
(-) Constitution of legal reserve	(139,021)	(83,707)
Adjusted Net Profit	2,641,412	1,575,007
Minimum dividends calculated on the basis of 25% of adjusted profit	660,353	397,752
Interest on shareholders' equity	1,047,500	1,083,000
Total dividends and interest on shareholders' equity distributed and proposed	1,047,500	1,083,000
Withholding income tax (IRRF) on interest on shareholders' equity	(142,977)	(162,450)
Total dividends and interest on shareholders’ equity, net	R$ 904,523	R$ 920,550

XML

During 2021, the amount of R$ 1,047,500 (Details) R$ in Thousands	Dec. 31, 2021 BRL (R$)
Other equity interest [member]
IfrsStatementLineItems [Line Items]
Interest on shareholders equity	R$ 350,000
Appproval date	Jun. 09, 2021
Payment date	Jul. 20, 2021
Other Equity Interest One [Member]
IfrsStatementLineItems [Line Items]
Interest on shareholders equity	R$ 137,500
Appproval date	Sep. 24, 2021
Payment date	Oct. 27, 2021
Other Equity Interest Two [Member]
IfrsStatementLineItems [Line Items]
Interest on shareholders equity	R$ 560,000
Appproval date	Dec. 15, 2021
Payment date	Jan. 25, 2022

XML

Shareholders' equity (Details Narrative) - BRL (R$)		12 Months Ended
	Jul. 02, 2020	Dec. 31, 2021	Dec. 31, 2020	Jul. 31, 2020	Jul. 29, 2020
IfrsStatementLineItems [Line Items]
Number of share issued		2,420,804,398	2,420,804,398
Number of shares authorised	42,296,789,606	4,450,000,000		422,967,896	357,379
Reverse split ratio	100
Description of increase share capital		the amount of R$ 1,719defined in the incorporation protocol was approved at an ordinary and Extraordinary General Meeting, which was represented by R$ 13,477,891
Description of legal reserve percentage		It refers to the allocation of 5% of the net profit for the year ended December 31 of each year, until the Reserve equals 20% of the share capital, excluding from 2018 the balance allocated to the reserve of tax incentives. In addition, the company may cease to constitute the legal reserve when this, added to the capital reserves, exceeds 30% of the share capital.
Accumulated amount of benefits		R$ 1,958,301	R$ 1,781,560
Mandatory dividend percentage		25.00%
Dividend payables		R$ 533,580,000	538,576,000
Unpaid return on equity		49,955	R$ 43,026
Other Equity Interest Three [Member]
IfrsStatementLineItems [Line Items]
Dividend payables		533,580
Other equity interest [member]
IfrsStatementLineItems [Line Items]
Addition amount paid		R$ 483,625,000

XML

Schedule of variations in quantity of options (Details)	12 Months Ended
	Dec. 31, 2021 BRL (R$) shares	Dec. 31, 2021 BRL (R$) $ / shares	Dec. 31, 2020 BRL (R$)
IfrsStatementLineItems [Line Items]
Share options granted	R$ 6,008,258,000	R$ 6,008,258,000
Weighted average price of the balance of grants | $ / shares		R$ 8.10
Balance at the beginning of the period	R$ 316,834,000
Granted in the period | shares
Exercised in the period | shares	(204,282,000)
Exercised during the year | shares
Falling due in the period | shares
[custom:ShareBaseOptionsOutstanding-2]	R$ 112,552,000
Date of grant	Total
Balance at the beginning of the period	R$ 1,683,543,000	R$ 1,683,543,000
Transferred during the year, volume vested	(601,476,000)
Transferred during the year, performance change	(172,599,000)
Transferred during the year, additional dividends	(54,435,000)
Paid in cash, volume vested	(9,101,000)
Paid in cash, performance change	(2,305,000)
Paid in cash, additional dividends	(1,094,000)
Canceled during the year	(438,714,000)
Performance And Restricted Shares [Member]
IfrsStatementLineItems [Line Items]
Weighted average price of the balance of grants | $ / shares		R$ 12.96
Ranges Of Exercise Prices For Outstanding Share Options 1 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 3,922,204,000	R$ 3,922,204,000
ExpiryDateOfStockOptionProgram	Nov 2022	Nov 2022
Weighted average price of the balance of grants | $ / shares		R$ 8.10
Balance at the beginning of the period	R$ 295,063,000
Granted in the period | shares
Exercised in the period | shares	(182,511,000)
Exercised during the year | shares
Falling due in the period | shares
[custom:ShareBaseOptionsOutstanding-2]	R$ 112,552,000
Date of grant	2016 Grant
Ranges Of Exercise Prices For Outstanding Share Options 2 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 3,355,229,000	R$ 3,355,229,000
ExpiryDateOfStockOptionProgram	Oct 2021	Oct 2021
Weighted average price of the balance of grants | $ / shares		R$ 8.45
Balance at the beginning of the period	R$ 21,771,000
Granted in the period | shares
Exercised in the period | shares	(21,771,000)
Exercised during the year | shares
Falling due in the period | shares
[custom:ShareBaseOptionsOutstanding-2]	R$ 0
Date of grant	2015 Grant
Ranges Of Exercise Prices For Outstanding Share Options 3 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 1,687,686,000	R$ 1,687,686,000
ExpiryDateOfStockOptionProgram	Sep 2020	Sep 2020
Weighted average price of the balance of grants | $ / shares		R$ 13.42
Granted in the period | shares
Exercised in the period | shares
Exercised during the year | shares
Falling due in the period | shares
Ranges Of Exercise Prices For Outstanding Share Options 34 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 3,072,418,000	R$ 3,072,418,000
ExpiryDateOfStockOptionProgram	July 2019	July 2019
Weighted average price of the balance of grants | $ / shares		R$ 8.13
Granted in the period | shares
Date of grant	2014 Grant
Ranges Of Exercise Prices For Outstanding Share Options 4 [Member]
IfrsStatementLineItems [Line Items]
Exercised in the period | shares
Exercised during the year | shares
Falling due in the period | shares
Ranges Of Exercise Prices For Outstanding Share Options 5 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 2,661,752,000	R$ 2,661,752,000
ExpiryDateOfStockOptionProgram	Sep 2018	Sep 2018
Weighted average price of the balance of grants | $ / shares		R$ 8.96
Granted in the period | shares
Falling due in the period | shares
Date of grant	2012 Grant
Ranges Of Exercise Prices For Outstanding Share Options 6 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 2,833,595,000	R$ 2,833,595,000
ExpiryDateOfStockOptionProgram	Aug 2017	Aug 2017
Weighted average price of the balance of grants | $ / shares		R$ 8.84
Granted in the period | shares
Date of grant	2011 Grant
Ranges Of Exercise Prices For Outstanding Share Options Zero 0 [Member]
IfrsStatementLineItems [Line Items]
ExpiryDateOfStockOptionProgram	May 2024	May 2024
Weighted average price of the balance of grants | $ / shares		R$ 12.95
Date of grant	2021-2023 Plan 2021 Grant(s)
Ranges Of Exercise Prices For Outstanding Share Options One 0 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 3,431,610,000	R$ 3,431,610,000
Granted in the period | shares	3,431,610,000
Balance at the beginning of the period	R$ 3,119,734,000	3,119,734,000
Transferred during the year, volume vested
Transferred during the year, performance change
Transferred during the year, additional dividends
Paid in cash, volume vested
Paid in cash, performance change
Paid in cash, additional dividends
Canceled during the year	(311,876,000)
Ranges Of Exercise Prices For Outstanding Share Options One 1 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 796,054,000	R$ 796,054,000
ExpiryDateOfStockOptionProgram	Apr 2023	Apr 2023
Weighted average price of the balance of grants | $ / shares		R$ 14.40
Granted in the period | shares
Date of grant	2018-2020 Plan 2020 Grant(s)
Balance at the beginning of the period	R$ 519,098	R$ 519,098	796,054
Transferred during the year, volume vested	(206,578)
Transferred during the year, performance change	(51,634)
Transferred during the year, additional dividends	(8,933)
Paid in cash, volume vested
Paid in cash, performance change
Paid in cash, additional dividends
Canceled during the year	R$ (70,378)
Ranges Of Exercise Prices For Outstanding Share Options Two 2 [Member]
IfrsStatementLineItems [Line Items]
Date of grant	2018-2020 Plan 2019 Grant(s)
Ranges Of Exercise Prices For Outstanding Share Options Two 1 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 930,662,000	R$ 930,662,000
ExpiryDateOfStockOptionProgram	July 2022	July 2022
Weighted average price of the balance of grants | $ / shares		R$ 11.28
Granted in the period | shares
Balance at the beginning of the period	R$ 427,030	R$ 427,030	687,895
Transferred during the year, volume vested	(207,859)
Transferred during the year, performance change	(78,111)
Transferred during the year, additional dividends	(23,252)
Paid in cash, volume vested
Paid in cash, performance change
Paid in cash, additional dividends
Canceled during the year	R$ (53,006)
Ranges Of Exercise Prices For Outstanding Share Options Three 3 [Member]
IfrsStatementLineItems [Line Items]
Date of grant	2018-2020 Plan 2018 Grant*
Ranges Of Exercise Prices For Outstanding Share Options Three 1 [Member]
IfrsStatementLineItems [Line Items]
Share options granted	R$ 849,932,000	R$ 849,932,000
ExpiryDateOfStockOptionProgram	Apr 2021	Apr 2021
Weighted average price of the balance of grants | $ / shares		R$ 14.41
Granted in the period | shares
Balance at the beginning of the period			R$ 199,594
Transferred during the year, volume vested	(187,039)
Transferred during the year, performance change	(42,854)
Transferred during the year, additional dividends	(22,250)
Paid in cash, volume vested	(9,101)
Paid in cash, performance change	(2,305)
Paid in cash, additional dividends	(1,094)
Canceled during the year	R$ (3,454)
Ranges Of Exercise Prices For Outstanding Share Options 7 [Member]
IfrsStatementLineItems [Line Items]
Granted in the period | shares	3,431,610
Ranges Of Exercise Prices For Outstanding Share Options Three 7 [Member]
IfrsStatementLineItems [Line Items]
Balance at the beginning of the period	R$ 4,065,862,000	R$ 4,065,862,000

XML

Schedule of significant data included in model (Details)	12 Months Ended
	Dec. 31, 2021 $ / shares
IfrsStatementLineItems [Line Items]
Grant date	Total
Base price - weighted average share in the period of measurement of the grant	$ 8.10
Ranges Of Exercise Prices For Outstanding Share Options 6 [Member]
IfrsStatementLineItems [Line Items]
Grant date	2011 Grant
Base price - weighted average share in the period of measurement of the grant	$ 8.84
Volatility	51.73%
Expected useful life of the option	6 years
Ranges Of Exercise Prices For Outstanding Share Options 6 [Member] | Significant interest rate benchmarks subject to interest rate benchmark reform [member]
IfrsStatementLineItems [Line Items]
Annual interest rate without risk	11.94%
Ranges Of Exercise Prices For Outstanding Share Options 6 [Member] | Ranges Of Exercise Prices For Outstanding Share Options 1 [Member]
IfrsStatementLineItems [Line Items]
Annual interest rate without risk	11.73%
Ranges Of Exercise Prices For Outstanding Share Options 5 [Member]
IfrsStatementLineItems [Line Items]
Grant date	2012 Grant
Base price - weighted average share in the period of measurement of the grant	$ 8.96
Volatility	50.46%
Expected useful life of the option	6 years
Ranges Of Exercise Prices For Outstanding Share Options 8 [Member] | Significant interest rate benchmarks subject to interest rate benchmark reform [member]
IfrsStatementLineItems [Line Items]
Annual interest rate without risk	8.89%
Ranges Of Exercise Prices For Outstanding Share Options 23 [Member]
IfrsStatementLineItems [Line Items]
Grant date	2013 Grant
Base price - weighted average share in the period of measurement of the grant	$ 8.13
Volatility	48.45%
Expected useful life of the option	6 years
Ranges Of Exercise Prices For Outstanding Share Options 23 [Member] | Significant interest rate benchmarks subject to interest rate benchmark reform [member]
IfrsStatementLineItems [Line Items]
Annual interest rate without risk	10.66%
Ranges Of Exercise Prices For Outstanding Share Options 34 [Member]
IfrsStatementLineItems [Line Items]
Grant date	2014 Grant
Base price - weighted average share in the period of measurement of the grant	$ 8.13
Ranges Of Exercise Prices For Outstanding Share Options Six [Member]
IfrsStatementLineItems [Line Items]
Base price - weighted average share in the period of measurement of the grant	$ 13.42
Volatility	44.60%
Expected useful life of the option	6 years
Ranges Of Exercise Prices For Outstanding Share Options Six [Member] | Significant interest rate benchmarks subject to interest rate benchmark reform [member]
IfrsStatementLineItems [Line Items]
Annual interest rate without risk	10.66%
Ranges Of Exercise Prices For Outstanding Share Options 2 [Member]
IfrsStatementLineItems [Line Items]
Grant date	2015 Grant
Base price - weighted average share in the period of measurement of the grant	$ 8.45
Volatility	35.50%
Expected useful life of the option	6 years
Ranges Of Exercise Prices For Outstanding Share Options 2 [Member] | Significant interest rate benchmarks subject to interest rate benchmark reform [member]
IfrsStatementLineItems [Line Items]
Annual interest rate without risk	16.10%
Ranges Of Exercise Prices For Outstanding Share Options 1 [Member]
IfrsStatementLineItems [Line Items]
Grant date	2016 Grant
Base price - weighted average share in the period of measurement of the grant	$ 8.10
Volatility	36.70%
Expected useful life of the option	6 years

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Long-Term Incentive Plan (Details Narrative) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Expenses related to long term benefit plan	R$ 22,212	R$ 9,999

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Schedule of revenue (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Net revenue	R$ 18,058,027	R$ 17,267,812	R$ 17,377,194
Gross revenue	25,357,429	24,346,101	25,182,831
Service revenue	24,264,246	23,279,423	23,820,343
Goods sold	1,093,183	1,066,678	1,362,488
Deductions from gross revenue	(7,299,402)	(7,078,289)	(7,805,637)
Taxes incidents	(4,679,722)	(4,534,582)	(4,939,980)
Discounts granted	(2,610,388)	(2,531,920)	(2,843,670)
Returns and other	(9,292)	(11,787)	(21,987)
Mobile [Member]
IfrsStatementLineItems [Line Items]
Service revenue-Mobile	22,433,225	21,522,135	22,145,033
Landline [Member]
IfrsStatementLineItems [Line Items]
Service revenue - Landline	R$ 1,831,021	R$ 1,757,288	R$ 1,675,310

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Schedule of operating cost and expences (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	R$ (8,443,023)	R$ (7,996,615)	R$ (7,433,731)
Marketing expenses	(4,621,788)	4,443,027
General and administrative expenses	1,723,384	1,673,290	1,717,859
Total	5,858,973	6,468,171	5,428,606
Marketing expenses	4,621,788	(4,443,027)
Cost of services provided and products sold	8,443,023	7,996,615	7,433,731
General and administrative expenses	(1,723,384)	(1,673,290)	(1,717,859)
Total	(5,858,973)	(6,468,171)	(5,428,606)
[custom:CostOfSales1]			(7,433,731)
[custom:SalesAndMarketingExpense1]			(4,986,289)
[custom:AdministrativeExpense1]			1,717,859
[custom:OperatingExpense1]			14,137,879
Personnel [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	62,214	58,024	53,392
Marketing expenses	676,479	(632,231)	624,353
General and administrative expenses	387,735	321,967	392,984
Total	1,126,428	1,012,222	1,070,729
Marketing expenses	(676,479)	632,231	(624,353)
Cost of services provided and products sold	(62,214)	(58,024)	(53,392)
General and administrative expenses	(387,735)	(321,967)	(392,984)
Total	(1,126,428)	(1,012,222)	(1,070,729)
Third Party Services [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	560,039	587,835	569,242
Marketing expenses	1,763,360	1,743,644	2,041,646
General and administrative expenses	668,641	538,584	512,643
Total	2,992,040	2,870,063	3,123,531
Marketing expenses	(1,763,360)	(1,743,644)	(2,041,646)
Cost of services provided and products sold	(560,039)	(587,835)	(569,242)
General and administrative expenses	(668,641)	(538,584)	(512,643)
Total	(2,992,040)	(2,870,063)	(3,123,531)
Interconnection And Means Of Connection [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	1,840,139	1,672,655	1,419,464
Marketing expenses
General and administrative expenses
Total	1,840,139	1,672,655	1,419,464
Marketing expenses
Cost of services provided and products sold	(1,840,139)	(1,672,655)	(1,419,464)
General and administrative expenses
Total	(1,840,139)	(1,672,655)	(1,419,464)
Depreciation And Amortization [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	4,847,995	4,569,064	4,132,223
Marketing expenses	265,565	247,666	256,898
General and administrative expenses	578,136	710,282	739,860
Total	5,691,696	5,527,012	5,128,981
Marketing expenses	(265,565)	(247,666)	(256,898)
Cost of services provided and products sold	(4,847,995)	(4,569,064)	(4,132,223)
General and administrative expenses	(578,136)	(710,282)	(739,860)
Total	(5,691,696)	(5,527,012)	(5,128,981)
Taxes Fees And Contributions Operating Expense [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	34,732	28,675	32,120
Marketing expenses	777,819	761,152	817,369
General and administrative expenses	29,388	23,809	18,846
Total	841,939	813,636	868,335
Marketing expenses	(777,819)	(761,152)	(817,369)
Cost of services provided and products sold	(34,732)	(28,675)	(32,120)
General and administrative expenses	(29,388)	(23,809)	(18,846)
Total	(841,939)	(813,636)	(868,335)
Rent And Insurance Operating Expense [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	362,171	316,650	291,302
Marketing expenses	109,781	107,550	121,795
General and administrative expenses	20,082	15,753	20,590
Total	492,034	439,953	433,687
Marketing expenses	(109,781)	(107,550)	(121,795)
Cost of services provided and products sold	(362,171)	(316,650)	(291,302)
General and administrative expenses	(20,082)	(15,753)	(20,590)
Total	(492,034)	(439,953)	(433,687)
Cost Of Goods Sold Operating Expense [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	731,007	756,060	931,818
Marketing expenses
General and administrative expenses
Total	731,007	756,060	931,818
Marketing expenses
Cost of services provided and products sold	(731,007)	(756,060)	(931,818)
General and administrative expenses
Total	(731,007)	(756,060)	(931,818)
Publicity And Advertising Operating Expense [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold
Marketing expenses	459,811	377,184	355,234
General and administrative expenses
Total	459,811	377,184	355,234
Marketing expenses	(459,811)	(377,184)	(355,234)
Cost of services provided and products sold
General and administrative expenses
Total	(459,811)	(377,184)	(355,234)
Losses On Doubtful Accounts Operating Expense [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold
Marketing expenses	544,642	552,817	748,291
General and administrative expenses
Total	544,642	552,817	748,291
Marketing expenses	(544,642)	(552,817)	(748,291)
Cost of services provided and products sold
General and administrative expenses
Total	(544,642)	(552,817)	(748,291)
Others [Member]
IfrsStatementLineItems [Line Items]
Cost of services provided and products sold	4,726	7,652	4,170
Marketing expenses	24,331	20,783	20,703
General and administrative expenses	39,402	62,895	32,936
Total	68,459	91,330	57,809
Marketing expenses	(24,331)	(20,783)	(20,703)
Cost of services provided and products sold	(4,726)	(7,652)	(4,170)
General and administrative expenses	(39,402)	(62,895)	(32,936)
Total	R$ (68,459)	R$ (91,330)	R$ (57,809)

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Revenue (Details Narrative)	12 Months Ended
	Dec. 31, 2021 BRL (R$)
Revenue from services	R$ 119,457

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Schedule of other income (expenses) (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income
Income from grant, net	R$ 13,548	R$ 17,427	R$ 21,572
Fines on telecommunications services	58,793	37,490	50,499
Revenue on disposal of assets (ii)	2,711,535	5,375	2,214
PIS/COFINS credits (i)			1,795,000
Other income	65,482	68,651	83,558
Total Revenue	2,849,358	128,943	1,952,843
Expenses
FUST/FUNTTEL (iii)	(134,962)	(133,378)	(137,169)
Taxes, fees and contributions	(2,274)	(10,316)	(4,024)
Provision for legal and administrative proceedings, net of reversal	(248,987)	(290,789)	(466,460)
Expense on disposal of assets (ii)	(1,942,791)	(13,538)	(7,055)
Other expenses	(22,573)	(32,776)	(62,593)
Total Expenses	(2,351,587)	(480,797)	(677,301)
Other income (expenses), net	R$ 497,771	R$ (351,854)	R$ 1,275,542

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Schedule of financial income (Details) - BRL (R$) R$ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Financial income		R$ 1,091,748	R$ 438,598	R$ 1,430,171
Interest on financial investments		339,681	82,512	88,224
Interest received from clients		28,427	28,686	37,233
Swap interest		203,852	32,955	15,536
Interest on lease		24,788	19,924	20,528
Inflation adjustment	[1]	208,029	116,441	1,263,793
Other derivatives	[2]	285,009	155,165
Other income		R$ 1,962	R$ 2,915	R$ 4,857

[1] A substantial part is related to the monetary restatement on judicial and administrative proceedings and judicial deposits.

[2] It is the difference between the market cost and value of the share subscription option related to Banco C6 partnership; therefore, the mark-to-market value of these derivatives includes a gain of R$ 285 million referring to the company’s stock option obtained through achievement of contractual target defined in an operational partnership started in 2020. The market value was calculated based on information available in the last investment transaction carried out by the partner and disclosed in the market. The disclosures of this derivative financial instrument are detailed in note 37, which was measured at fair value, and will subsequently be measured in the Company’s income, also considering the risks related to arbitration disclosed in note 27.

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Schedule of financial expenses (Details) - BRL (R$) R$ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Financial expenses		R$ (1,745,213)	R$ (1,242,255)	R$ (1,408,053)
Interest on loans and financing		99,183	70,400	116,735
Interest on taxes and fees		(61,745)	(43,616)	(28,396)
Swap interest		(352,029)	(45,970)	(24,604)
Interest on lease		(845,033)	(766,263)	(821,463)
Inflation adjustment	[1]	(247,200)	(161,892)	(191,309)
Discounts granted		(52,509)	(33,725)	(36,047)
Other expenses		(87,514)	R$ (120,389)	R$ (189,499)
Substantial part related to inflation adjustment		R$ 137,379

[1] Substantial portion related to the inflation adjustment of lawsuits, in the amount of R$ 111,949 - see note 24 (R$ 

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Schedule of foreign exchange variations (Details) - BRL (R$) R$ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Income		R$ 520,928	R$ 364,148	R$ 88,192
Expenses		(520,269)	(371,113)	(89,100)
Foreign exchange variations		659	(6,965)	(908)
Borrowing And Financing [Member]
IfrsStatementLineItems [Line Items]
Income	[1]	215,262		22,494
Expenses	[1]	(275,724)	(305,010)	(40,715)
Suppliers [Member]
IfrsStatementLineItems [Line Items]
Income		13,190	15,981	9,004
Expenses		(20,061)	(46,112)	(13,201)
Swap contract [member]
IfrsStatementLineItems [Line Items]
Income	[2]	275,836	305,012	40,742
Expenses	[2]	(215,262)		(22,493)
Other Exchange Variations [Member]
IfrsStatementLineItems [Line Items]
Income		16,640	43,155	15,952
Expenses		R$ (9,222)	R$ (19,991)	R$ (12,691)

[1] It mainly refers to foreign exchange variation on loans and financing in foreign currency.

[2] Referring to derivative financial instruments to mitigate risks of foreign exchange variations related to foreign currency debts (note 37).

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Schedule of income tax and social contribution (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Current income tax and social contribution
Income tax for the period	R$ 9,697	R$ (684,099)	R$ (155,521)
Social contribution for the period	26,538	(232,671)	(58,905)
Tax incentive – SUDENE/SUDAM (i)	167,118	164,442	156,594
Current income tax	203,353	(752,328)	(57,832)
Deferred income tax and social contribution
Deferred income tax	(255,972)	453,127	(625,516)
Deferred social contribution	(93,432)	144,722	(225,186)
Deferred income tax	(349,404)	597,849	(850,702)
Provision for income tax and social contribution contingencies		(9,671)	(5,406)
Deferred income tax, net of tax	(349,404)	588,178	(856,108)
Income tax and social contribution	R$ (146,051)	R$ (164,150)	R$ (913,940)

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The reconciliation of income tax expense and social contribution calculated by applying the combined tax rates with the values reflected in the result is shown below: (Details) - BRL (R$) R$ in Thousands		12 Months Ended
		Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income before income tax and social contribution		R$ 3,103,225	R$ 1,992,404	R$ 4,536,067
Combined statutory rate		34.00%	34.00%	34.00%
Combined tax rate on income tax and social contribution		R$ (1,055,097)	R$ (677,417)	R$ (1,542,263)
Permanent additions and exclusions:
Non-taxable revenues		135,465	11,370	7,790
Non-deductible expenses for tax purposes		(53,505)	(42,329)	(18,748)
Tax incentive – SUDENE/SUDAM	[1]	167,118	164,442	194,161
Tax benefit related to interest on shareholders’ equity		356,150	368,220	338,449
Sale I – Systems (formerly FiberCo)	[2]	(335,935)
IR/CS credit on Selic related do tax overpayment	[3]	534,804
Reversal of Provision for IR/CS - TIM Nordeste	[4]	87,565
Other amounts		17,384	11,564	106,670
Income before income tax		909,046	513,267	628,322
Income tax and social contribution recorded in income for the period		R$ (146,051)	R$ (164,150)	R$ (913,941)
Effective rate		4.71%	8.24%	20.15%

[1] As mentioned in note 25 c.3, in order for investment grants not to be computed in taxable income, they must be recorded as a tax incentive reserve, which can only be used to absorb losses or be incorporated into the share capital. TIM S.A. has tax benefits that fall under these rules.

[2] Refers to deferred taxes on goodwill written-off, according to the sale transaction described in Note 1, which took place in November 2021 between TIM S.A. and IHS. See note 15.d.

[3] As mentioned in note 9, in September 2021, the Federal Supreme Court (STF), with general repercussions, established an understanding for the non-levy of Corporate Income Tax (IRPJ) and Social Contribution (CSLL) on the monetary restatement using the SELIC rate in cases of undue payment. Although the aforementioned decision is still pending publication, as well as the specific TIM lawsuit is still pending judgment, TIM recorded its best estimate to date, in the amount of R$ 534 million, since the likelihood of a favorable outcome for the Company becomes probable.

[4] In the second quarter of 2021, there was a positive impact of R$ 87 million arising from the write-off of assets and reversal of the provision for income tax and social contribution, set up in 2009, due to the partial success in an administrative proceeding related to the merger of the company TIM Nordeste by TIM Celular.

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Basic earnings per share are calculated by dividing profit attributable to Company’s shareholders by the weighted average number of shares issued during the year. (Details) R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$) shares	Dec. 31, 2021 $ / shares	Dec. 31, 2020 BRL (R$) shares	Dec. 31, 2020 $ / shares	Dec. 31, 2019 BRL (R$) shares	Dec. 31, 2019 $ / shares
Profit for the year | R$	R$ 2,957,174		R$ 1,828,254		R$ 3,622,127
Weighted average number of common shares issued (thousands) | shares	2,420,314		2,420,804		2,420,481
Basic earnings per share (expressed in R$) | $ / shares		$ 1.22		$ 0.76		$ 1.50
Income attributable to the shareholders of the company | R$	R$ 2,957,174		R$ 1,828,254		R$ 3,622,127
Weighted average number of common shares issued (thousands) | shares	2,420,638		2,421,065		2,421,018
Diluted earnings per share (in R$) | $ / shares		$ 1.22		$ 0.76		$ 1.50

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Earnings per share (Details Narrative)	12 Months Ended
	Dec. 31, 2021 shares
Number of shares as result of corporate reorganization	2,420,447,019

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The balances of transactions with Telecom Italia Group companies are as follows: (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Total assets	R$ 121,235	R$ 10,718
Total liabilities	148,953	127,386
Total revenue	10,693	8,250	R$ 8,198
Total costs/expenses	406,702	389,012	421,219
Advertising expense with related parties	143,439	195,117
Telecom Italia Sparkle [Member]
IfrsStatementLineItems [Line Items]
Total assets	1,414	1,630
Total liabilities	3,689	10,576
Total revenue	353	2,994	5,371
Total costs/expenses	19,219	27,485	24,914
Grupo Havas [Member]
IfrsStatementLineItems [Line Items]
Total assets	83,613
Total liabilities	19,794	24,068
Total costs/expenses	206,349	207,682	264,318
T I Sparkle [Member]
IfrsStatementLineItems [Line Items]
Total assets	5,084	1,915
Total liabilities	10,205	7,333
Total revenue	3,347	4,059	2,052
Total costs/expenses	20,533	19,923	18,700
T I M Brasil [Member]
IfrsStatementLineItems [Line Items]
Total assets	23,069	6,129
Total liabilities	6,558	6,145
Telecom Italia S P A [Member]
IfrsStatementLineItems [Line Items]
Total assets	1,502	370
Total liabilities	71,288	75,317
Total revenue	1,112	1,197	775
Total costs/expenses	105,137	110,407	93,188
I Systems [Member]
IfrsStatementLineItems [Line Items]
Total assets	5,879
Total liabilities	31,596
Total revenue	5,881
Total costs/expenses	31,596
Other related parties [member]
IfrsStatementLineItems [Line Items]
Total assets	674	674
Total liabilities	4,585	2,797
Total costs/expenses	22,597	22,308	18,713
Vivendi Group [Member]
IfrsStatementLineItems [Line Items]
Total liabilities	1,238	1,150
Total costs/expenses	R$ 1,271	R$ 1,207	R$ 1,386

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Balances and transactions with related parties (Details Narrative) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Social benefits	R$ 9,147	R$ 4,829

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The payment of key management personnel for the provision of their services is presented below: (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Short-term benefits	R$ 31,494	R$ 23,949	R$ 22,524
Other long-term benefits	1,052	4,544	900
Share-based payments remuneration	15,176	6,343	5,379
Total compensation	R$ 47,722	R$ 34,836	R$ 28,803

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The consolidated derivative financial instruments are presented below: (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Derivatives financial instruments	R$ 198,027	R$ 340,660
Derivatives financial instruments	208,787	36,166
Other derivatives	457,892	161,429
Other derivatives
Derivatives	655,919	502,089
Derivatives	208,787	36,166
Current installment	(134,292)	(262,666)
Current installment	(194,837)	(7,273)
Derivative financial instruments	521,627	239,423
Non-current installment	R$ 13,950	28,893
Percentage of share capital	4.08%
Financial instrument measured at fair value	R$ 17,700,000
Banco [Member]
IfrsStatementLineItems [Line Items]
Financial instrument measured at fair value	458,000	R$ 161,000
Difference in the fair value	R$ 440,300,000

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The long-term derivative financial instruments on December 31, 2021 are due in accordance with the following schedule: (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Derivative financial instruments	R$ 521,627	R$ 239,423
Later than two years and not later than three years [member]
IfrsStatementLineItems [Line Items]
Derivative financial instruments	39,335
Later than three months and not later than four months [member]
IfrsStatementLineItems [Line Items]
Derivative financial instruments	16,843
Later than four months [member]
IfrsStatementLineItems [Line Items]
Derivative financial instruments	R$ 465,449

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Financial instruments measured at fair value: (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Total assets	R$ 5,235,447	R$ 2,579,588
Financial assets at fair value	5,235,447	2,579,588
Derivative financial instruments	198,027	340,660
Other derivatives	457,892	161,429
Marketable securities	4,579,528	2,077,499
Total liabilities	208,787	36,166
Financial liabilities at fair value through profit or loss	208,787	36,166
Derivatives used for hedging	208,787	36,166
Level 1 of fair value hierarchy [member]
IfrsStatementLineItems [Line Items]
Total assets	4,579,528	2,077,499
Financial assets at fair value	4,579,528	2,077,499
Derivative financial instruments
Other derivatives
Marketable securities	4,579,528	2,077,499
Total liabilities
Financial liabilities at fair value through profit or loss
Derivatives used for hedging
Level 2 of fair value hierarchy [member]
IfrsStatementLineItems [Line Items]
Total assets	655,919	502,089
Financial assets at fair value	655,919	502,089
Derivative financial instruments	198,027	340,660
Other derivatives	457,892	161,429
Marketable securities
Total liabilities	208,787	36,166
Financial liabilities at fair value through profit or loss	208,787	36,166
Derivatives used for hedging	R$ 208,787	R$ 36,166

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The financial instruments of the company by category can be summarized as follows: (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Assets, per balance sheet	R$ 14,707,824	R$ 9,336,399
Derivative financial instruments	655,919	502,089
[custom:DerivativeFinancialAssetsTotal-0]	198,027
Other derivatives	457,892	161,429
Trade accounts receivable and other accounts receivable excluding prepayments	3,253,207	3,180,661
[custom:TradeReceivablesTotal-0]	3,253,207
Marketable securities	4,579,528	2,077,499
Cash and cash equivalents	5,228,615	2,575,291
Leases	243,121	162,198
Judicial deposits	718,773	794,755
Regulatory credits recoverable	28,661	43,906
Liabilities, according to the balance sheet	16,304,589	14,427,341
Loans and financing	3,845,465	2,345,032
Derivative financial instruments	208,787	36,166
[custom:DerivativeFinancialLiabilitiesTotal-0]	208,787
Suppliers and other obligations, excluding legal obligations	2,653,218	3,128,732
Leases	9,063,539
Dividends and interest on shareholders' equity payable	533,580	538,576
Derivative financial instruments	198,027	340,660
Borrowings total		2,345,032
Leases	1,952,178	1,661,822
[custom:FinanceLeaseLiabilitiesTotal-0]		8,378,835
Financial liabilities at amortised cost, category [member]
IfrsStatementLineItems [Line Items]
Liabilities, according to the balance sheet	16,095,802	14,391,175
Loans and financing	3,845,465	2,345,032
Derivative financial instruments
Suppliers and other obligations, excluding legal obligations	2,653,218	3,128,732
Leases	9,063,539
Dividends and interest on shareholders' equity payable	533,580	538,576
Leases		8,378,835
Financial liabilities at fair value through profit or loss, category [member]
IfrsStatementLineItems [Line Items]
Liabilities, according to the balance sheet	208,787	36,166
Loans and financing
Derivative financial instruments	208,787	36,166
Suppliers and other obligations, excluding legal obligations
Leases
Dividends and interest on shareholders' equity payable
Leases
Financial assets at amortised cost, category [member]
IfrsStatementLineItems [Line Items]
Assets, per balance sheet	9,472,377	6,756,811
Trade accounts receivable and other accounts receivable excluding prepayments	3,253,207	3,180,661
Marketable securities
Cash and cash equivalents	5,228,615	2,575,291
Leases	243,121	162,198
Judicial deposits	718,773	794,755
Regulatory credits recoverable	28,661	43,906
Derivative financial instruments
Financial assets at fair value through profit or loss, category [member]
IfrsStatementLineItems [Line Items]
Assets, per balance sheet	5,235,447	2,579,588
Derivative financial instruments	198,027
Other derivatives	457,892	161,429
Trade accounts receivable and other accounts receivable excluding prepayments
Marketable securities	R$ 4,579,528	2,077,499
Derivative financial instruments		R$ 340,660

XML

The operations with derivative financial instruments contracted by the company and in force on December 31, 2021 and December 31, 2020 are shown in the following table: (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Derivative Financial Instruments 1 [Member]
IfrsStatementLineItems [Line Items]
Currency	USD	USD
Type of SWAP	LIBOR x DI	LIBOR x DI
COUNTERPARTY, SWAP	JP Morgan and Bank of America	JP Morgan and Bank of America
Total Debt	R$ 282,474	R$ 351,233
Total swap (Long position)	R$ 282,474	R$ 351,233
% Coverage	100.00%	100.00%
AVERAGE SWAP RATES, Long position	LIBOR 6M + 0.75% p.a.	LIBOR 6M + 0.75% p.a.
AVERAGE SWAP RATES, Short position		85.25%
COUNTERPARTY, Debt		KFW/
Derivative Financial Instruments 1 [Member] | Bottom of range [member]
IfrsStatementLineItems [Line Items]
AVERAGE SWAP RATES, Short position	79.00%
Derivative Financial Instruments 1 [Member] | Top of range [member]
IfrsStatementLineItems [Line Items]
AVERAGE SWAP RATES, Short position	92.59%
Derivative Financial Instruments 2 [Member]
IfrsStatementLineItems [Line Items]
Currency	USD	EUR
Type of SWAP	PRE x DI	PRE x DI
COUNTERPARTY, SWAP	BNP Paribas	Bank of America
Total Debt	R$ 428,793	R$ 570,878
Total swap (Long position)	R$ 429,247	R$ 570,878
% Coverage	100.00%	100.00%
AVERAGE SWAP RATES, Long position	3.32% p.a.	0.33% p.a.
AVERAGE SWAP RATES, Short position	155.00%	108.05%
COUNTERPARTY, Debt	BNP Paribas	Bank of America
Derivative Financial Instruments 3 [Member]
IfrsStatementLineItems [Line Items]
Currency	USD	USD
Type of SWAP	PRE x DI	PRE x DI
COUNTERPARTY, SWAP	Scotiabank	Scotiabank
Total Debt	R$ 559,650	R$ 1,031,526
Total swap (Long position)	R$ 559,933	R$ 1,031,526
% Coverage	100.00%	100.00%
AVERAGE SWAP RATES, Long position	1.73% p.a.	1.72% p.a.
AVERAGE SWAP RATES, Short position	1.05%	134.43%
COUNTERPARTY, Debt	The Bank of Nova Scotia	The Bank of Nova Scotia.
Derivative Financial Instruments 4 [Member]
IfrsStatementLineItems [Line Items]
Currency	BRL	USD
Type of SWAP	PRE x DI	PRE x DI
COUNTERPARTY, SWAP	BNP Paribas	BNP Paribas
Total Debt	R$ 515,166	R$ 399,725
Total swap (Long position)	R$ 517,843	R$ 399,725
% Coverage	100.00%	100.00%
AVERAGE SWAP RATES, Long position	8.34% p.a.	3.32% p.a.
AVERAGE SWAP RATES, Short position	1.07%	155.00%
COUNTERPARTY, Debt	BNP Paribas	BNP Paribas
Derivative Financial Instruments 5 [Member]
IfrsStatementLineItems [Line Items]
Currency	BRL
Type of SWAP	IPCA x DI
COUNTERPARTY, SWAP	ITAU
Total Debt	R$ 1,696,999
Total swap (Long position)	R$ 1,696,999
% Coverage	100.00%
AVERAGE SWAP RATES, Long position	IPCA + 4.17% p.a.
AVERAGE SWAP RATES, Short position	0.95%
COUNTERPARTY, Debt	DEBENTURE
Derivative Financial Instruments 6 [Member]
IfrsStatementLineItems [Line Items]
Currency	BRL
Type of SWAP	IPCA x DI
COUNTERPARTY, SWAP	XP
Total Debt	R$ 396,281
Total swap (Long position)	R$ 396,281
% Coverage	100.00%
AVERAGE SWAP RATES, Long position	IPCA + 4.23% p.a.
AVERAGE SWAP RATES, Short position	96.95%
COUNTERPARTY, Debt	BNDES

XML

Our assumptions basically observed the individual effect of the CDI, USD, Libor and IPCA variation used in the transactions as the case may be, and for each scenario the following percentages and quotes were used: (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)		R$ 2,252,479
Probable Scenario [Member] | U S D Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	R$ 3,390,406
Fair value of the long position of swap	3,390,406
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(10,966)
Probable Scenario [Member] | Scenario Sensitivity To Libor [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,390,406
Fair value of the long position of swap	3,390,406
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(10,966)
Probable Scenario [Member] | E U R Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(10,966)
Probable Scenario [Member] | I P C A Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,390,406
Fair value of the long position of swap	3,390,406
Possible Scenario [Member] | U S D Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,709,499
Fair value of the long position of swap	3,709,499
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	308,127
Accumulated variation in debt	319,094
Accumulated variation in swap	319,094
Possible Scenario [Member] | Scenario Sensitivity To Libor [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,391,542
Fair value of the long position of swap	3,391,542
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(123,716)
Accumulated variation in debt	1,136
Accumulated variation in swap	(112,750)
Possible Scenario [Member] | E U R Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Income (loss) from swap	(9,830)
Accumulated variation in swap	1,136
Possible Scenario [Member] | I P C A Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,277,656
Fair value of the long position of swap	3,277,656
Accumulated variation in debt	(112,750)
Remote Scenario [Member] | U S D Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	4,028,593
Fair value of the long position of swap	4,028,593
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	627,221
Accumulated variation in debt	638,187
Accumulated variation in swap	638,187
Remote Scenario [Member] | Scenario Sensitivity To Libor [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,392,677
Fair value of the long position of swap	3,392,677
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(228,368)
Accumulated variation in debt	2,271
Accumulated variation in swap	(217,402)
Remote Scenario [Member] | E U R Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(8,695)
Accumulated variation in swap	2,271
Remote Scenario [Member] | I P C A Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,173,004
Fair value of the long position of swap	3,173,004
Fair value of the short position of swap	(3,401,372)
Accumulated variation in debt	(217,402)
C D I Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,390,406
Fair value of the long position of swap	3,390,406
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(10,966)
C D I Sensitivity Scenario [Member] | Probable Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,390,406
Fair value of the long position of swap	3,390,406
Fair value of the short position of swap	(3,401,372)
Income (loss) from swap	(10,966)
C D I Sensitivity Scenario [Member] | Possible Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,388,105
Fair value of the long position of swap	3,388,105
Fair value of the short position of swap	(3,428,742)
Income (loss) from swap	(40,637)
Accumulated variation in debt	(2,301)
Accumulated variation in swap	(29,671)
Final result	(27,370)
C D I Sensitivity Scenario [Member] | Remote Scenario [Member]
IfrsStatementLineItems [Line Items]
Fair value (Cisco and KFW)	3,385,955
Fair value of the long position of swap	3,385,955
Fair value of the short position of swap	(3,455,013)
Income (loss) from swap	(69,058)
Accumulated variation in debt	(4,451)
Accumulated variation in swap	(58,093)
Final result	R$ (53,641)

XML

Schedule of risk variable of derivative financial instruments (Details)	12 Months Ended
	Dec. 31, 2021
Probable Scenario [Member] | London Interbank Offered Rate 4 [Member] | U S D Sensitivity Scenario [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	34.33%
C D I Sensitivity Scenario 1 [Member] | Probable Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 1 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 1 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 1 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 4 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 5 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 5 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 6 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 6 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 7 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 7 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 8 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.4291%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 8 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 9 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.5149%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 9 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 10 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 10 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 11 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 11 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	12.58%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | London Interbank Offered Rate 12 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Probable Scenario [Member] | I P C A Sensitivity Scenario 12 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	15.09%
C D I Sensitivity Scenario [Member] | Possible Scenario [Member] | London Interbank Offered Rate 2 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Possible Scenario [Member] | I P C A Sensitivity Scenario 2 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario [Member] | Remote Scenario [Member] | London Interbank Offered Rate 3 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	0.3433%
C D I Sensitivity Scenario [Member] | Remote Scenario [Member] | I P C A Sensitivity Scenario 3 [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	10.06%
C D I Sensitivity Scenario 2 [Member] | Possible Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	11.44%
U S D Sensitivity Scenario 2 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 3 [Member] | Remote Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	13.73%
U S D Sensitivity Scenario 3 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 4 [Member] | Probable Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 4 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 5 [Member] | Possible Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 5 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	6.321%
C D I Sensitivity Scenario 6 [Member] | Remote Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 6 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	8.3708%
C D I Sensitivity Scenario 7 [Member] | Probable Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 7 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 8 [Member] | Possible Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 8 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 9 [Member] | Remote Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 9 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 10 [Member] | Probable Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 10 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 11 [Member] | Possible Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 11 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%
C D I Sensitivity Scenario 12 [Member] | Remote Scenario [Member] | Interbank Deposit Certificate [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	9.15%
U S D Sensitivity Scenario 12 [Member] | Probable Scenario [Member] | United States Dollars [Member]
IfrsStatementLineItems [Line Items]
Interest rate variable risk	5.5805%

XML

Schedule of capital management (Details) R$ in Thousands		12 Months Ended
		Dec. 31, 2021 BRL (R$)	Dec. 31, 2020 BRL (R$)	Dec. 31, 2019 BRL (R$)
Net income (loss) from derivative operations		R$ (87,603)	R$ 290,856
Income (loss) from operations with other derivatives		285,009	155,165
Total loans and derivatives (notes 19 and 36)		3,398,333	1,879,109
Lease - Liabilities (note 15)		9,063,539	8,378,835
Lease - Assets (note 15)		(243,121)	(162,198)
Less: Cash and cash equivalents (note 4)		(5,228,615)	(2,575,291)
FIC (note 5)		(4,568,020)	(2,070,438)
Net debt		2,422,116	5,450,017
Other derivatives (note 36)		457,892	161,429
Financing of 5G lincense		843,020
Adjusted net debt		3,723,028	5,611,447
EBITDA	[1]	R$ 9,459,299	R$ 8,330,038
Leverage ratio		0.0039	0.0065
Profit for the year		R$ 2,957,174	R$ 1,828,254	R$ 3,622,127
Depreciation and amortization		5,691,696	5,527,012
Financial Income (Expenses)		(652,806)	(810,622)	21,210
Income tax and social contribution		146,051	164,150	R$ 913,940
Equity in investment		R$ 11,572

[1] Adjusted EBITDA: Presentation of Adjusted EBITDA as a non-GAAP measure is useful to management, investors and other users of our financial information in evaluating operating profitability of the Company. Adjusted EBITDA is calculated by adding back financial income (expenses), income tax and social contribution, depreciation and amortization cost and expense, and share of loss of an associate to profit for the year.

XML

Changes in financial liabilities (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Loans And Financing [Member]
IfrsStatementLineItems [Line Items]
Beginning balance	R$ 2,345,032	R$ 2,029,088
Inflows	3,062,000	1,800,000
Cancellation
Financial expenses	167,857	90,500
Foreign exchange variations, net	60,463	305,010
Payment	(1,789,887)	(1,879,566)
Ending balance	3,845,465	2,345,032
Remeasurement
Leases [Member]
IfrsStatementLineItems [Line Items]
Beginning balance	8,378,835	7,780,870
Inflows	2,041,474	1,966,355
Cancellation	(202,379)
Financial expenses	858,260	797,569
Foreign exchange variations, net
Payment	(2,012,651)	(1,722,293)
Ending balance	9,063,539	8,378,835
Remeasurement		(443,666)
Derivative Financial Instruments Assets Liabilitie [Member]
IfrsStatementLineItems [Line Items]
Beginning balance	(465,922)	(42,106)
Inflows	(296,464)	(161,429)
Cancellation
Financial expenses	148,177	13,016
Foreign exchange variations, net	(60,574)	(305,012)
Payment	227,651	29,610
Ending balance	R$ (447,132)	(465,922)
Remeasurement

XML

Schedule of asset policy and medical plan (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Defined benefit pension plans and other post-employment benefits	R$ 22,212	R$ 9,999
P A M E C Asset Policy And Medical Plan [Member]
IfrsStatementLineItems [Line Items]
Defined benefit pension plans and other post-employment benefits	R$ 6,492	R$ 7,346

XML

The actuarial position of liabilities and assets related to retirement and health care plans, on December 31, 2020, in accordance with the rules provided for by IAS 19 is presented below. (Details) - BRL (R$) R$ in Thousands	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Present value of the actuarial obligations	R$ 66,167	R$ 69,362
Fair value of the plan assets	(83,133)	(80,856)
Present value of the obligations exceeding the fair value of the assets	(16,966)	(11,494)
Amount recognized in other comprehensive income	2,495	2,023
Net actuarial liabilities/(assets)	(14,471)
[custom:LiabilityAssetOfDefinedBenefitPlans1-0]		(9,471)
P B S [Member]
IfrsStatementLineItems [Line Items]
Present value of the actuarial obligations	38,869
Fair value of the plan assets	(56,478)
Present value of the obligations exceeding the fair value of the assets	(17,609)
Amount recognized in other comprehensive income
Net actuarial liabilities/(assets)	(17,609)
[custom:LiabilityAssetOfDefinedBenefitPlans1-0]	(17,609)	(15,731)
P B S Assisted [Member]
IfrsStatementLineItems [Line Items]
Present value of the actuarial obligations	9,176
Fair value of the plan assets	(14,739)
Present value of the obligations exceeding the fair value of the assets	(5,563)
Amount recognized in other comprehensive income	2,327
Net actuarial liabilities/(assets)	(3,236)
[custom:LiabilityAssetOfDefinedBenefitPlans1-0]	(3,236)	(1,360)
Administration Agreement [Member]
IfrsStatementLineItems [Line Items]
Present value of the actuarial obligations	119
Fair value of the plan assets	(405)
Present value of the obligations exceeding the fair value of the assets	(286)
Amount recognized in other comprehensive income	168
Net actuarial liabilities/(assets)	(118)
[custom:LiabilityAssetOfDefinedBenefitPlans1-0]	(118)	(287)
P A M E C Asset Policy [Member]
IfrsStatementLineItems [Line Items]
Present value of the actuarial obligations	672
Fair value of the plan assets
Present value of the obligations exceeding the fair value of the assets	672
Amount recognized in other comprehensive income
Net actuarial liabilities/(assets)	672
[custom:LiabilityAssetOfDefinedBenefitPlans1-0]	672	858
A E S Telecom [Member]
IfrsStatementLineItems [Line Items]
Present value of the actuarial obligations	14,100
Fair value of the plan assets	(11,511)
Present value of the obligations exceeding the fair value of the assets	2,589
Amount recognized in other comprehensive income
Net actuarial liabilities/(assets)	2,589
[custom:LiabilityAssetOfDefinedBenefitPlans1-0]	2,589	2,145
Medical Plan [Member]
IfrsStatementLineItems [Line Items]
Present value of the actuarial obligations	3,231
Fair value of the plan assets
Present value of the obligations exceeding the fair value of the assets	3,231
Amount recognized in other comprehensive income
Net actuarial liabilities/(assets)	3,231
[custom:LiabilityAssetOfDefinedBenefitPlans1-0]	R$ 3,231	R$ 4,343

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b) Changes in net actuarial liabilities (assets) (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Net actuarial liabilities (assets) on end		R$ (9,471)
P B S [Member]
IfrsStatementLineItems [Line Items]
Net actuarial liabilities (assets) on end	R$ (17,609)	(15,731)
Expense (revenue) recognized in income (loss)	(1,063)
Contributions of the sponsor
Recognized actuarial (gains) or losses	(815)
Recognized actuarial (gains) or losses
P B S Assisted [Member]
IfrsStatementLineItems [Line Items]
Net actuarial liabilities (assets) on end	(3,236)	(1,360)
Expense (revenue) recognized in income (loss)	(90)
Contributions of the sponsor
Recognized actuarial (gains) or losses	(1,786)
Recognized actuarial (gains) or losses
Administration Agreement [Member]
IfrsStatementLineItems [Line Items]
Net actuarial liabilities (assets) on end	(118)	(287)
Expense (revenue) recognized in income (loss)	(20)
Contributions of the sponsor
Recognized actuarial (gains) or losses	189
P A M E C Asset Policy [Member]
IfrsStatementLineItems [Line Items]
Net actuarial liabilities (assets) on end	672	858
Expense (revenue) recognized in income (loss)	57
Contributions of the sponsor	(45)
Recognized actuarial (gains) or losses	(198)
A E S Telecom [Member]
IfrsStatementLineItems [Line Items]
Net actuarial liabilities (assets) on end	2,589	2,145
Expense (revenue) recognized in income (loss)	160
Contributions of the sponsor
Recognized actuarial (gains) or losses	284
Medical Plan [Member]
IfrsStatementLineItems [Line Items]
Net actuarial liabilities (assets) on end	3,231	R$ 4,343
Expense (revenue) recognized in income (loss)	535
Contributions of the sponsor	(8)
Recognized actuarial (gains) or losses	R$ (1,639)

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c) Reconciliation of present value of obligations (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
P B S [Member]
IfrsStatementLineItems [Line Items]
Value of obligations on end	R$ 38,869	R$ 41,852
Cost of current service	17
Interest on actuarial obligation	2,743
Benefits paid in the year	(2,898)
(Gains)/losses in obligations	(2,845)
P B S Assisted [Member]
IfrsStatementLineItems [Line Items]
Value of obligations on end	9,176	10,072
Cost of current service
Interest on actuarial obligation	640
Benefits paid in the year	(768)
(Gains)/losses in obligations	(768)
Administration Agreement [Member]
IfrsStatementLineItems [Line Items]
Value of obligations on end	119	147
Cost of current service
Interest on actuarial obligation	10
Benefits paid in the year	(9)
(Gains)/losses in obligations	(29)
P A M E C Asset Policy [Member]
IfrsStatementLineItems [Line Items]
Value of obligations on end	672	858
Cost of current service
Interest on actuarial obligation	57
Benefits paid in the year	(45)
(Gains)/losses in obligations	(198)
A E S Telecom [Member]
IfrsStatementLineItems [Line Items]
Value of obligations on end	14,100	12,090
Cost of current service
Interest on actuarial obligation	868
Benefits paid in the year	(605)
Contributions paid by participants	0
(Gains)/losses in obligations	1,747
Medical Plan [Member]
IfrsStatementLineItems [Line Items]
Value of obligations on end	3,231	R$ 4,343
Cost of current service	213
Interest on actuarial obligation	322
Benefits paid in the year	(8)
(Gains)/losses in obligations	R$ (1,639)

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d) Reconciliation of the fair value of the assets (Details) R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)
P B S [Member]
IfrsStatementLineItems [Line Items]
Fair value of assets on beginning	R$ 57,479
Benefits paid in the year	(2,898)
Actual earnings from assets during the year	3,799
Actuarial gain (loss) on plan assets	(1,902)
Contributions paid by participants
Contributions of sponsor converted in the plan
Fair value of assets on end	56,478
P B S Assisted [Member]
IfrsStatementLineItems [Line Items]
Fair value of assets on beginning	12,998
Benefits paid in the year	(768)
Actual earnings from assets during the year	834
Actuarial gain (loss) on plan assets	1,675
Contributions paid by participants
Contributions of sponsor converted in the plan
Fair value of assets on end	14,739
Administration Agreement [Member]
IfrsStatementLineItems [Line Items]
Fair value of assets on beginning	434
Benefits paid in the year	(9)
Actual earnings from assets during the year	29
Actuarial gain (loss) on plan assets	(49)
Contributions paid by participants
Contributions of sponsor converted in the plan
Fair value of assets on end	405
P A M E C Asset Policy [Member]
IfrsStatementLineItems [Line Items]
Fair value of assets on beginning
Benefits paid in the year
Actual earnings from assets during the year
Actuarial gain (loss) on plan assets
Contributions paid by participants
Contributions of sponsor converted in the plan
Fair value of assets on end
A E S Telecom [Member]
IfrsStatementLineItems [Line Items]
Fair value of assets on beginning	9,945
Benefits paid in the year	(605)
Actual earnings from assets during the year	708
Actuarial gain (loss) on plan assets	1,463
Contributions paid by participants
Fair value of assets on end	11,511
Medical Plan [Member]
IfrsStatementLineItems [Line Items]
Fair value of assets on beginning
Benefits paid in the year
Actual earnings from assets during the year
Actuarial gain (loss) on plan assets
Contributions paid by participants
Contributions of sponsor converted in the plan
Fair value of assets on end

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e) Expenses planned for 2022 (Details) R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)
P B S [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)	R$ 17
Interest on actuarial obligations	(1,063)
Earnings expected from assets	3,799
P B S Assisted [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)
Interest on actuarial obligations	(90)
Earnings expected from assets	834
P A M E C Asset Policy [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)
Interest on actuarial obligations	57
Earnings expected from assets
A E S Telecom [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)
Interest on actuarial obligations	160
Earnings expected from assets	708
Medical Plan [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)	213
Interest on actuarial obligations	535
Earnings expected from assets
Expenditure Planned For 2021 [Member] | P B S [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)	4
Interest on actuarial obligations	3,289
Earnings expected from assets	(4,841)
Interest on the effect of the (asset)/liability limit	1,552
Total unrecognized net expense (revenue)	4
Expenditure Planned For 2021 [Member] | P B S Assisted [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)
Interest on actuarial obligations	769
Earnings expected from assets	(1,257)
Interest on the effect of the (asset)/liability limit	284
Total unrecognized net expense (revenue)	(204)
Expenditure Planned For 2021 [Member] | Managementagreement [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)
Interest on actuarial obligations	10
Earnings expected from assets	(35)
Interest on the effect of the (asset)/liability limit	10
Total unrecognized net expense (revenue)	(15)
Expenditure Planned For 2021 [Member] | P A M E C Asset Policy [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)
Interest on actuarial obligations	57
Earnings expected from assets
Interest on the effect of the (asset)/liability limit
Total unrecognized net expense (revenue)	57
Expenditure Planned For 2021 [Member] | A E S Telecom [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)
Interest on actuarial obligations	1,242
Earnings expected from assets	(1,008)
Interest on the effect of the (asset)/liability limit
Total unrecognized net expense (revenue)	234
Expenditure Planned For 2021 [Member] | Medical Plan [Member]
IfrsStatementLineItems [Line Items]
Current service cost (with interest)	121
Interest on actuarial obligations	290
Earnings expected from assets
Interest on the effect of the (asset)/liability limit
Total unrecognized net expense (revenue)	R$ 411

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The main actuarial assumptions adopted in the calculation were as follows: (Details)	12 Months Ended
	Dec. 31, 2021
Nominal discount rate for the actuarial obligation:	PBS South: 8.81% / 5.13%; PBS Nordeste: 8.84% / 5.16%; CA: 8.81% / 5.13%; PBS-A: 8.78% / 5.10%; AES: 9.02% / 5.33%; PAMEC: 8.81% / 5.13%; FIBER: 9.02% / 5.33%
Salary growth rate - nominal:	PBS: 3.50%/ 0.00% CA, PBS-A, AES, PAMEC and FIBER: Not applicable
Biometric general mortality table:	PBS, CA, PAMEC and FIBER: AT-2000 segregated per sex, decreased by 10%
Biometric table of new disability benefit vested:	PBS and FIBER: Álvaro Vindas; CA, PBS-A, AES and PAMEC: Not applicable
Expected turnover rate:	PBS: Null; CA, PBS-A, AES and PAMEC: Not applicable; FIBER: 0.15/ (length of service + 1), being null as of 50 years old
Probability of retirement:	PBS and FIBER: 100% at 1st eligibility; CA, PBS-A, AES and PAMEC: Not applicable
Estimated long-term inflation rate	PAMEC and FIBER: 6.60% / 3.00%
Determination method	Projected Unit Credit Method

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The main assets, liabilities or interests covered by insurance and their maximum indemnity limits are as follows: (Details) R$ in Thousands	12 Months Ended
	Dec. 31, 2021 BRL (R$)
Operating Risks [Member]
IfrsStatementLineItems [Line Items]
Amount of insured assets	R$ 550,000
General Liability R C G [Member]
IfrsStatementLineItems [Line Items]
Amount of insured assets	80,000
Cybernetic Risks Cyber [Member]
IfrsStatementLineItems [Line Items]
Amount of insured assets	R$ 30,001
Vehicles Executive And Operational Fleets [Member]
IfrsStatementLineItems [Line Items]
Description of insured assets	1,000 for optional civil liability (property damage and bodily harm) and R$ 100 for pain and suffering.

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Schedule of supplementary information to the cash flow (Details) - BRL (R$) R$ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Non-cash transactions
Additions to property, plant and equipment and intangible assets - with no effect on cash	R$ (1,929,392)	R$ (1,315,151)	R$ (6,653,985)
Additions to intangible assets - acquisition of licenses	R$ 2,682,469

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Financial instruments and risk management (Details Narrative) - Top of range [member] - Number	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Accounts Receivables [Member]
IfrsStatementLineItems [Line Items]
Concentration risk, percentage	10.00%
Number of customer	0	0
Revenues From Sale Of Goods [Member]
IfrsStatementLineItems [Line Items]
Concentration risk, percentage	10.00%	10.00%

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Supplementary information to the cash flow (Details Narrative) - T I M P Participated [Member] R$ in Millions	Dec. 31, 2021 BRL (R$)
IfrsStatementLineItems [Line Items]
Related obligations	R$ 3,584
[custom:CommitmentsPayable-0]	2,682
Cash impac	R$ 902