TIM targets over US$200mn in corporate contracts by mid-2025

Brazilian telecom operator TIM forecasts that it will be able to close over 1.2bn reais (US$207mn) in contracts for projects with corporates by mid-2025, mostly in the areas of IoT and connectivity, according to IoT and 5G business manager Fábio Alvarez.

The telco ended Q3 with 613mn reais in total contracted revenues related to projects for the B2B segment, an operation that began in 2022.

“Unlike other B2B projects, or even B2C in which the customer acquires a service and the revenue begins to fall as they pay the bill, these IoT projects are developed or activated over a few years. Typically, these contracts last an average of five years,” Alvarez said in a press conference on the firm's earnings. 

The operator is working on a pipeline of new contracts that could potentially add up to another 600mn reais by the end of June 2025.

“In other words, in the next nine months, we could almost double everything we generated in terms of results in this line in the last two or two and a half years,” said the executive.

The company's focuses in IoT are the agribusiness, utilities, industry 4.0 and logistics verticals.

As the leader in agribusiness deals, TIM reached 18.2mn hectares covered with 4G at end-September. it also had 4,700km of connected roads and highways, and more than 263,000 smart light points.

Among the most recent contracts, TIM closed a project with Usina Santa Terezinha in Paraná state, one of the largest sugarcane producers in Brazil, to cover one million hectares of land with 4G.

Another contract was signed with concessionaire Eco Noroeste Paulista, part of the EcoRodovias group, the largest highway operator in the country. The contract foresees 4G deployment on 597km of roads in São Paulo state.

Performance

In Q3, TIM’s revenues amounted to 6.41bn reais, up 6% year-on-year. The results were driven by mobile services, which increased 6.3%. 

The company also saw improvements in its margins and mobile ARPU, which was 31.7 reais in the quarter, up 4.8%. Meanwhile, net income grew 11.2% to 805mn reais.

The company’s client base reached 62.1mn. Postpaid continues to be the main driver, climbing 9.2% to 29.7mn accesses.

In 5G, the company reported almost 500 cities covered by the technology, which has absorbed most of its investments. 

During the third quarter, the company claims to have activated 5G signal in 142 cities. The carrier has the largest 5G coverage in the country.

Capex in July-September was 896mn reais, down 10.2%, as the company continues focusing on trimming investments and spending despite expanding its network. As a result, the capex-revenues ratio came down to 14% in 3Q24 from 16.5% in 3Q23.

Broadband an 'optionality’

The positive performance in mobile contrasts with limited operations in the fixed segment. Although TIM is the country's third largest mobile operator, it has just 1.2% of national broadband accesses.

In the earnings call, CEO Alberto Griselli described fixed service as an “optionality” for the company. He said that market remains highly competitive and with an excess number of players. He also suggested that divestment of this business could be an option.

For now, it is business as usual for the company's fixed network strategy, said Griselli, who also does not exclude looking at established assets for an acquisition, depending on price and network.

"With our size, we have the luxury of making the move we think is right at the right time. Those who are 100% exposed to this business have very different needs than we do. If we buy a company, we won't change the competitive landscape much," Griselli said in reply to a question from BNamericas.

"Besides, there are too many players. The consolidation process must first take place between them. It's easier for this to happen between small and medium-sized providers than between medium-sized providers," he added.

In 3Q24, TIM’s fiber broadband reached 28 municipalities in Rio Grande do Sul state and arrived in Amazonas state, starting with capital Manaus. There was also expansion in Bahia, Minas Gerais and Pernambuco states, it said.

Net revenues for the service were up 6.0% year-on-year to 234mn reais.

In total, TIM's FTTH service was available in 15mn homes in 212 Brazilian cities, of which 793,000 were clients. Griselli said that TIM no longer sets targets for growth in homes-passed, as its network now has a "reasonable" national size.

For its FTTH offering, TIM relies on the neutral network I-Systems, of which it is a partner, and on V.tal.

Renewable energy

In July-September, TIM added eight new plants serving its distributed generation project, giving it more than 120 in total. 

The company wants to end 2024 with 134 plants, mostly solar, in 25 states and have 60% of the energy it consumes coming from distributed generation facilities.